INSPIRED

by Marty Cagan

  INSPIRED

  HOW TO CREATE TECH PRODUCTS CUSTOMERS LOVE

  SECOND EDITION

  MARTY CAGAN

  Founder, Silicon Valley Product Group

  Copyright © 2018 by Wiley. All rights reserved.

  Published by John Wiley & Sons, Inc., Hoboken, New Jersey.

  Published simultaneously in Canada.

  No part of this publication may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording, scanning, or otherwise, except as permitted under Section 107 or 108 of the 1976 United States Copyright Act, without either the prior written permission of the Publisher, or authorization through payment of the appropriate per-copy fee to the Copyright Clearance Center, 222 Rosewood Drive, Danvers, MA 01923, (978) 750-8400, fax (978) 646-8600, or on the web at www.copyright.com. Requests to the Publisher for permission should be addressed to the Permissions Department, John Wiley & Sons, Inc., 111 River Street, Hoboken, NJ 07030, (201) 748-6011, fax (201) 748-6008, or online at www.wiley.com/go/permissions.

  Limit of Liability/Disclaimer of Warranty: While the publisher and author have used their best efforts in preparing this book, they make no representations or warranties with respect to the accuracy or completeness of the contents of this book and specifically disclaim any implied warranties of merchantability or fitness for a particular purpose. No warranty may be created or extended by sales representatives or written sales materials. The advice and strategies contained herein may not be suitable for your situation. You should consult with a professional where appropriate. Neither the publisher nor the author shall be liable for damages arising herefrom.

  For general information about our other products and services, please contact our Customer Care Department within the United States at (800) 762-2974, outside the United States at (317) 572-3993 or fax (317) 572-4002.

  Wiley publishes in a variety of print and electronic formats and by print-on-demand. Some material included with standard print versions of this book may not be included in e-books or in print-on-demand. If this book refers to media such as a CD or DVD that is not included in the version you purchased, you may download this material at http://booksupport.wiley.com. For more information about Wiley products, visit www.wiley.com.

  Library of Congress Cataloging-in-Publication Data is Available:

  ISBN 9781119387503 (Hardcover)

  ISBN 9781119387541 (ePDF)

  ISBN 9781119387565 (ePub)

  Cover Design: Wiley

  Cover Image: © John Lawson/Getty Images

  This book is dedicated to my father, Carl Cagan. In 1969, he received the first PhD in computer science in the United States (prior to that computer science was part of electrical engineering programs), and he authored the first book on databases (Data Management Systems, in 1973, also by John Wiley & Sons).

  In addition to being a terrific father, he taught me to program a computer when I was nine years old—decades before this became a thing—and he instilled in me a love of technology when so many of the technologies we depend on today were just being conceived.

  Preface to the Second Edition

  When I first considered publishing an update to the first edition of my book INSPIRED, I estimated that maybe I would modify something like 10–20 percent of the content. That's because there was very little of the first edition that I wished I could change.

  However, once I got started, I quickly realized that this second edition would require a complete rewrite. Not because I regretted what I had written, but because I believe I have much better ways of explaining these topics now.

  I had no idea that the first edition would be as successful as it has been. Thanks to the book, I have made friends all over the globe. The book has been translated into several languages, and despite being nearly 10 years old as of this writing, sales continues to grow, all by word of mouth and reviews.

  So, if you have read the first edition, I thank you, and hope you enjoy the second edition even more. If you are new to INSPIRED, I am hoping this new edition accomplishes its objective even better.

  When I wrote the first edition, it was before Agile was well established in product companies, and before Customer Development and Lean Startup nomenclature became popularized. Today, most teams have been using these techniques for several years and are more interested in what's beyond Lean and Agile, which is what I focus on here.

  I have kept the basic structure of the book intact, but the techniques I describe have improved significantly over the past decade.

  Beyond changing how I explain the topics and updating the techniques, the other major change to the book is that I now go into detail on what I refer to here as Product @ Scale.

  In the first edition, I focused more on startups. In this edition, however, I wanted to expand the scope to look at the challenges of growth‐stage companies and how product can be done well at large, enterprise companies.

  There's no question that scale introduces serious challenges, and over the past decade, much of my time has been spent coaching companies through rapid growth. Sometimes we call that surviving success, if that gives you an indication of how hard it can be.

  I've received a lot of great feedback from readers of the first edition, and there are a couple of important things I've learned that I would like to address here.

  First, there really is a critical need to focus on the specific job of the product manager. In the first edition, I talked a lot about product management, but I tried to speak to product teams more broadly. Today, there are many excellent resources for product designers and engineers, but precious little available specifically for product managers who are responsible for technology‐powered products. So, in this edition I decided to concentrate on the job of the technology product manager. If you are a product manager at a technology company, or if you aspire to be one, I am hoping this will become your go‐to resource.

  Second, there are many people looking for a recipe for product success—a prescriptive guide or framework to how to create products customers love. While I understand the desire, and I know I'd likely sell many more copies if I positioned this book that way, the unfortunate truth is that's just not how great products are created. It is much more about creating the right product culture for success, and understanding the array of product discovery and delivery techniques so that you can use the right tool for the specific issue you are facing. And, yes, this means that the job of the product manager is not in any sense easy, and truth be told, not everyone is equipped to succeed in this job.

  All that said, the tech product management job is today one of the most desired jobs in our industry, and is the leading source—the proving ground—of startup CEOs. So, if you've got the desire and are willing to put in the effort, I'd like nothing better than to help you succeed.

  PART I

  Lessons from Top Tech Companies

  In the mid‐1980s, I was a young software engineer working for Hewlett Packard on a high‐profile product. It was a time (the first time) when artificial intelligence was all the rage, and I was fortunate enough to be working at what was then one of the industry's best technology companies, as part of a very strong software engineering team (several members of that team went on to substantial success in companies across the industry).

  Our assignment was a difficult one: to deliver AI‐enabling technology on a low‐cost, general‐purpose workstation that, until then, required a special‐purpose hardware/software combination that cost more than $100,000 per user—a price few could afford.

  We worked long and hard for well over a year, sacrificing countless nights and weekends. Along the way, we added several patents to HP's portfolio. We developed the software to meet HP's exacting quality standards. We internationalized the product and localized it for several languages. We trained the sales force. We previewed our technology with the press and received excellent reviews. We were ready. We released. We celebrated the releas
e.

  Just one problem: No one bought it.

  The product was a complete failure in the marketplace. Yes, it was technically impressive, and the reviewers loved it, but it wasn't something people wanted or needed.

  The team was of course extremely frustrated with this outcome. But soon we began to ask ourselves some very important questions: Who decides what products we should build? How do they decide? How do they know that what we build will be useful?

  Our young team learned something very profound—something many teams have discovered the hard way: It doesn't matter how good your engineering team is if they are not given something worthwhile to build.

  When trying to track down the root cause of our failure, I learned that the decisions about what to build came from a product manager—someone who generally resided in the marketing organization and who was responsible for defining the products we built. But I also learned that product management wasn't something HP was particularly good at. I later learned that most companies weren't good at this either, and, in fact, most still aren't.

  I promised myself that never again would I work so hard on a product unless I knew the product would be something that users and customers wanted.

  Over the next 30 years, I have had the very good fortune to work on some of the most successful high‐tech products of our time—first at HP during the rise of personal computers; then at Netscape Communications during the rise of the Internet, where I worked as vice president of platform and tools; later at eBay during the rise of e‐commerce and marketplaces, where I served as the senior vice president of product and design; and then as an adviser to startups working with many of what have become today's most successful technology product companies.

  Not every product effort has been as successful as others, but I am happy to say that none were failures, and several became loved and used by millions of people around the world.

  Soon after I left eBay, I started getting calls from product organizations wanting to improve how they produced products. As I began working with these companies, I discovered that there was a tremendous difference between how the best companies produced products and how most companies produced them.

  I discovered that there was a tremendous difference between how the best companies produced products and how most companies produced them.

  I realized that the state of the art was very different from the state of the practice.

  Most companies were still using old and inefficient ways to discover and deliver products. I also learned that there was precious little help available, either from academia, including the best business school programs, or from industry organizations, which seemed hopelessly stuck in the failed models of the past—just like the one I worked in at HP.

  I have had some great rides, and I am especially thankful that I have had the chance to work for and with some of the best product minds in the industry. The best ideas in this book are from these people. You will find a list of many of them in the acknowledgments. I have learned from them all, and I am grateful to each one of them.

  I chose this career because I wanted to work on products that customers love—products that inspire and provide real value. I find that most product leaders also want to create inspiring and successful products. But most products are not inspiring, and life is too short for bad products.

  My hope in writing this book is that it will help share the best practices of the most successful product companies and that the result will be truly inspiring products—products that customers love.

  CHAPTER 1

  Behind Every Great Product

  It is my strong belief, and the central concept driving this book, that behind every great product there is someone—usually someone behind the scenes, working tirelessly—who led the product team to combine technology and design to solve real customer problems in a way that met the needs of the business.

  These people usually have the title product manager, but they might be a startup co‐founder or CEO, or they might be someone in another role on the team who stepped up because they saw the need.

  Further, this product management role is very distinct from the design, engineering, marketing, or project manager roles.

  This book is intended for these people.

  Within modern technology product teams, the product manager has some very specific and very challenging responsibilities. It's a tremendously difficult job, and anyone who tries to tell you otherwise is not doing you any favors.

  It is my strong belief, and the central concept driving this book, that behind every great product there is someone—usually someone behind the scenes, working tirelessly—who led the product team to combine technology and design to solve real customer problems in a way that met the needs of the business.

  The product manager role is usually very much a full‐time assignment. I don't personally know many who are able to do what they need to do in less than 60 hours a week.

  It's great if you're a designer or an engineer who also wants to serve as a product manager—there are some real advantages to that. But you'll find out pretty quickly that you're taking on an immense amount of work. If you're up for that, however, the results can be impressive.

  A product team is comprised of at least a product manager and usually somewhere between 2 and 10 engineers. If you're creating a user‐facing product, you would expect to have a product designer on your team as well.

  In this book, we explore the situation wherein you might have to use engineers or designers in a different location or from an agency or outsourcing firm. But regardless of how you assemble your team, this job and this book assume you have a team assigned to work with you to design, to build, and to deliver a product.

  CHAPTER 2

  Technology‐Powered Products and Services

  There are many kinds of products out there, but in this book, I concentrate exclusively on products that are powered by technology.

  Some of what we explore in this book may help you if you're building non‐tech products, but there are no guarantees in that case. Frankly, there are already a wide variety of readily accessible resources for non‐tech products such as most consumer packaged goods, and for product managers of these non‐tech products.

  My focus is on the unique issues and challenges associated with building technology‐powered products, services, and experiences.

  Some good examples of the sweet spot that we explore are consumer‐service products, such as e‐commerce sites or marketplaces (e.g., Netflix, Airbnb, or Etsy), social media (e.g., Facebook, LinkedIn, or Twitter), business services (e.g., Salesforce.com, Workday, or Workiva), consumer devices (e.g., Apple, Sonos, or Tesla), and mobile applications (e.g., Uber, Audible, or Instagram).

  My focus is on the unique issues and challenges associated with building technology‐powered products, services, and experiences.

  Technology‐powered products do not need to be purely digital. Many of the best examples today are blends of online and offline experiences—like finding a ride or a room for the night, getting a home loan, or sending an overnight package.

  It's my belief that most products today are transforming into technology‐powered products, and the companies that don't realize this are rapidly being disrupted. But, again, I'm only focused here on technology‐powered products, and those companies that believe they must embrace technology and consistently innovate on behalf of their customers.

  CHAPTER 3

  Startups: Getting to Product/Marketing Fit

  In the technology world, we generally have three stages of companies: startups, growth‐stage, and enterprise companies. Let's briefly consider how we characterize each one of these stages, and the challenges you are likely to face in each.

  I loosely define startup as a new product company that has yet to achieve product/market fit. Product/market fit is an extremely important concept that I'll define in the pages that follow, but for now, let's just say that the startup is still trying to come up wit
h a product that can power a viable business.

  In a startup, the product manager role is usually covered by one of the co‐founders. Typically, there are fewer than 25 engineers, covering a range of from one product team up to maybe four or five.

  The reality of startup life is that you're in a race to achieve product/market fit before you run out of money. Nothing else much matters until you can come up with a strong product that meets the needs of an initial market, so most of the focus of the young company is necessarily on the product.

  Startups usually have a limited amount of early funding, intended to determine if the company can discover and deliver the necessary product. The closer you come to running out of money, the more frantic the pace and the more desperate the team and the leadership becomes.

  While money and time are typically tight, good startups are optimized to learn and move quickly, and there's normally very little bureaucracy to slow them down. Yet the very high failure rate of technology startups is no secret. The few that succeed are usually those that are really good at product discovery, which is a major topic of this book.

  Nothing else much matters until you can come up with a strong product that meets the needs of an initial market.

  Working at a startup—racing toward product/market fit—is usually stressful, exhausting, and risky. But it can also be an amazingly positive experience, and if things go well, a financially rewarding one too.

  CHAPTER 4

  Growth‐Stage Companies: Scaling to Success