Be Kaler Pilgrim - Where Does Product Go Wrong in PE-Backed Firms?

Speaker A: But I think this is a conversation about intent more than anything else. And I think a really interesting point to make here is if the CPO is buried too far down the organization, it can suggest that business sees product as a function rather than a strategic lever. And I think that's where it's challenging. I don't think reporting lines are the whole story, but it can absolutely point to how seriously product is taken in that organisation.

Speaker B: Hello and welcome to One Night in Product, the show where I chat to some of the brightest minds in and around product from across the globe to help you see product management in a whole new light. If that sounds up your street, don't forget to dive into the back catalog on your favorite podcast app or on YouTube and of course follow, share or drop me a comment or review. It all helps keep the lights on. On this episode, I'm speaking to be Kayla Pilgrim. Bea's a recruiter, but we won't hold that against her. And the founder of Future Head Recruitment, who says that everyone thinks that she's a hard nosed businesswoman, but she's a teddy bear really, and cares just as much about people as profit. That'll never catch on. Um, she's since started a new venture, Smithfield search, helping founders, CEOs and investors hire transformational tech and product leaders, and has recently worked on and published a deep dive CPO report, helping us understand what's going on out there in the real world. She's here tonight to speak about some of the findings and hopefully leave us all with some food for thought along the way. Bea, thanks for coming and welcome to the show.

Speaker A: Thanks for having me. I don't hold it against me for being a recruitment consultant. We have a brand issue in our industry, don't we? But hopefully you will see that I also share value with the industry.

Speaker B: But talk to me about that, uh, kind of almost branding problem then, because, you know, I mean, obviously it's all fair and for a little joke when we're doing the intro and stuff, but as you say, there is some kind of, sometimes a bit of a, maybe some almost a bad feeling towards the recruitment industry. Um, what do you think drives that? Like, is it kind of fair enough to some extent or with some recruiters? Or is it just a kind of misrepresentation of recruitment and the kind of the value and the work that they do?

Speaker A: Well, to be honest, I think that their bar to entry to recruitment traditionally, historically has been very low. So you don't have to have a qualification necessarily. Lots of people try it you know, if you talk to recruiters they often say I fell into recruitment, um, that's

Speaker B: just like product managers and often it

Speaker A: can be seen as a really transactional role. Um, I think that you know one of the reasons I set up futurehead 17 years ago actually was really because I wanted to raise the bar of recruitment standards and um, show the industry that um, it wasn't just about the pursuit of finance. So we're a women founded business. I wanted to be a great place to work which we achieved and we're a B corporation as well so we're not all bad. You know, essentially I've helped, um, I spent the last 30 years helping businesses grow technology and creative teams and I launched this report to look at what product leadership really looks like in investor backed businesses. I think it's appropriate for other businesses as well. But that was the focus of it and it was basically a way um, to pull together loads of conversations I've been having and I wanted it to be something really useful, practical and perhaps it's turned into something a little confronting.

Speaker B: But that's interesting because I mean, we'll talk about the report in a minute. But as you say, you did set out feature Heads recruitment. You were there for a long time. I think you've now started your new venture, Smithfield Search. So you know, on the one hand, yeah, another recruitment firm. But like what was it then that uh, made you start up a new thing before we talk about the report that you then kind um, of you know, sponsored and created as part of that, like why a new firm and I guess to some extent also how's it going to be different to what you were doing before?

Speaker A: Good question. So Futures Recruitment, you're right, set up 17 years ago. We also have a scale up business called Synced, which is an embedded recruitment service. Um, Smithfield Search was uh, set up a while ago really because the market was really, really changing. Um, lots of businesses that I was speaking to a couple of years ago were saying, hold on a minute, we don't know what our business looks like um, in the face of AI and we don't know that we've got the right leaders in place. Um, so really Smithfield Search was set up to have a more confidential conversation with clients where often we were recruiting for the teams as well. Usually people recruit search businesses, hire search businesses if there is something internally sensitive going on or perhaps they want to go externally to market with a product and a team. So that's where I can be really helpful. I still get access to future Heads and Sink database and all the historical work we've done. Nobody's under the patio. I'm still very much a shareholder and work in that business. Um, but Smithfield Search allows me to use my board experience, you know, I've been sitting on a board at Future heads for 17 years to really entangle some of those issues with CEO investment businesses and help them understand what leadership changes they might need to make in this marketplace. Some people say to me, isn't SERPS just posh recruitment? And that makes me laugh actually. Um, you know the way that I would describe things is I spend 90% of my time in a more of a consultancy role really, sort of uncovering business objectives, what businesses are trying to do, listening, trend spotting and then the 10% is actually, okay, let's, let's do the recruitment bit.

Speaker B: Interesting. But that's an interesting point you raised about like leaders coming to you saying that they're quite, they weren't quite sure whether they had the right leaders or I guess to some extent if they were trying to get a new one, didn't kind of know what they really needed to get. And you've obviously already mentioned AI, so I guess we can bring that into it as well. How are you seeing in general recruitment of leaders in product circles? Uh, and again I know that you're focusing a lot on sort of investor backed businesses, uh, pe bat businesses. How are you seeing the kind of the landscape out there, the kind of the changing requirements and the, maybe some of the uncertainty that's been driven by AI? Because obviously AI is being used in recruitment. Uh, for certainly people are complaining about sort of AI produced cvs and then AI produced CV scanning and stuff like that. And everyone's blaming AI for everything. And it's, it's obviously quite a tough landscape out there for, for product people. Like there's loads of people still to this day looking for jobs whilst also there's uh, you know, probably more and more demands from the people that are hiring them. So how are you seeing some of the, some of the things that you're seeing out there like the trends, the kind of the expectations, the uh, the pros and cons of different sort of uh, types of role. What, what kind of big trends are you seeing out there?

Speaker A: Yeah, so the market is in a real change, isn't it? State the obvious. And 2023, running a tech recruitment business wasn't an awful lot of fun. There was hundreds and hundreds of thousands of redundancies being reported in the states and that followed Suit here. The market just, I've just never seen such stubborn conditions. Actually it was a really tough marketplace. Um, and very interestingly in 2023 I introduced um, walk and talks because there were so many people that wanted some of my time at the time. We had an office in Smithfield, um, and my step count went through the roof because I spent 30 minutes with everybody. I was walking them to an interview or to their meeting or to see their mate or to the next tube station. At some point, if you work in tech in London, you pass through Barrington. And those meetings really helped me provide a patchwork of what was going on out there. I could see that, I could see a few real trends really. So we really lent into offering value to those senior leaders like what can you do to try and get yourself the job at the moment in a market where people don't want to pay recruitment fees? Um, the thought out there is that it's a very talent rich market. So we shared some of our value and secrets and helped them lean into that process. But the real thing I noticed was that actually leaders thought this was just happening to them. They weren't really talking to each other very much. So there was a lot of experience, lot of experience. We shared and got people talking to each other. We set up small groups and communities and things like that. That was two things we did. The third thing I noticed, um, was that um, people just didn't know how to get themselves a job right because they'd always been taken with them by a previous client, a previous, um, employee, maybe an ex client, a recruiter. And suddenly they were all saying the same thing. The phone didn't ring so we had to really pivot and just be really, really helpful during that time. And, but on the flip side of that, we have clients, as I said earlier saying, we don't really know what our business looks like. We don't know what it's going to look like in 12 months. And we think we can get rid of all of our humans because we don't need humans anymore because we've got AI. And actually, interestingly, a year and a half, two years later, I think what we're seeing is much more thought through conversations about where AI can and cannot help business. I'm very grateful to say that humans are back in fashion. Um, but of course we are using AI much more, hopefully to help efficiency and speed, um, and you know, kind of repeatable functions. But actually that isn't going to get you to the other side. I think you still have to Be better. So now I think we're getting into the really juicy bit where people know how to use AI they realizing some of the strengths but also realizing it's just not, it's not just a thing to allow us to be a bit more lazy or go, oh, I've saved 25% of the time. What are you going to do with that 25% time and with all this power you've now got, how do you use it? And that's, that's the transformation that we are currently in.

Speaker B: I think it's good to see that uh, the people are back in fashion. You know, I'm a big fan of people, but as you said, you then went out and spoke to a bunch of those people to produce this CPO report which we're going to talk about now. Some of the themes from within that. But before we dig into the themes, I'd be really curious. I mean I can imagine for example that you've kind of produced this report for. For probably two reasons, one of which because it's interesting and you kind of want to get so, you know, get a sense of what's going on out there. But also at the same time, I'm assuming it could also be considered pretty good lead gen for your search agency as well because people can read it, know that you understand their business and so forth. So uh, I guess, you know, unless you can give me a third reason that kind of makes sense to me. But like you've gone out and spoken to a bunch of people. I think you spoke something like 18 people, is that right?

Speaker A: 18? Yeah, 18 CPOs. Yeah.

Speaker B: Now 18 people is a pretty small sample set in a way, but obviously I'm sure very valuable and in depth conversations. Were you worried a little bit around sort of selection bias, like you know, maybe finding just a certain type of CPO or maybe that they wouldn't be representative across industries. Like how we. Or how did you try to kind of make sure that the people that you spoke to could be considered broadly representative rather, uh, than maybe a narrow slice?

Speaker A: Yeah, I think that's, you know, really, really clear to make that point that this isn't uh, you know, this is, this is about lived experiences and I wanted to add real color. The intention was to surface patterns and language intentions. I actually went out to the market via some people, people that had worked in private equity that recommended people that would be suitable. So everybody that was interviewed had experience of working in private equity. M actually most people exclusively. But I was really keen to counter that also with people that could compare their experience maybe to VC or other worlds like founder, uh, led businesses. Um, and I wanted um, um, I wanted it to be real so I could have done a more statistical study. You're absolutely right and gone much, much broader. But I wasn't trying to produce something sort of a perfect academic study. I was trying to create conversations. Um, it's a directional report so it's very much about deep conversations. And um, the reason why nobody's named is because then they could speak much more candidly to me. So far I think it's has, you know, it's had an effect on the marketplace and people have, I've had lots of people say that you really nailed it or actually I haven't been able to put that into words. So that's been really helpful. Um, so yeah, I thought that would be more, I thought that would be more valuable to the market now. And to be honest with you, like you said, I want to make friends in the um, investment backed businesses and investors and so I wanted to get something out which would share some of those language intentions um, with those businesses.

Speaker B: So that makes a lot of sense. Obviously you know, having sort of in detail kind of depth conversations with people, uh, trying to work out whether any kind of commonalities and stuff. And like you say there's so many different ways to do research that there's no one right way. And like just again starting the conversation, were there any. I know we're going to go through the takeaways in a minute but were there any kind of big areas of contention or do you, did you feel that most people gave a kind of fairly consistent and similar story?

Speaker A: I don't think they were similar but I think they were really interesting people. Every CPO I spoke to was very interesting. You know, AI was a big thing but there were definitely some rich themes and I know we're going to talk about those a bit later. Um, but I think your question about bias is a really fair one. You know, in the end I looked at people that came recommended that had done the job for a good amount of time and I wanted to illuminate the issues. Right. So if they were interesting and they were happy to share issues then, then that was going to be a really interesting report and create some conversation amongst the community that I'm sharing it in.

Speaker B: Absolutely. Well, let's talk about. You just mentioned some of the takeaways and that you very helpfully broke them down at the beginning of the report so I could go and cage off of that, but I think that the key takeaways are actually pretty interesting kind of framing for some of the questions that we should ask around them. So the first one that you put in the report, first key takeaway was to quote product is a commercial function but PE houses still classify it as IT and delivery. And across these conversations that misread came up as the strongest predictor of mandate failure. Uh, which sounds terrifying but uh, you also said that that was maybe something that you saw across all of the CPOs that you spoke to. This idea that. Well, in many of these organizations a CPO might even report not to the CEO but maybe to a CMO or cto. They kind of downstream, they're not necessarily at ah, the right table or always at the right table to start to have the conversations at the right time. And I kind of ended up kind of almost just delivering stuff instead. Like you say, uh, it's just a delivery function which is just given stuff prepackaged by other people. So based on your experience, how common is it that for example you'll see a CPO in a PE back business reporting not to the CEO but to the CTO or some other C suite member and kind of getting stuff secondhand?

Speaker A: Yeah, I mean honestly I don't have stats on that. But I think this is a conversation about intent more than anything else. And I think a really interesting point to make here is if the CPO is buried too far down the organization, it can suggest that business sees product as a function rather than a strategic leader, a strategic lever. Sorry, um, and I think that's um, where it's challenging. So I think um, I don't think reporting lines are the whole story, but it can absolutely point to how seriously product is taken in that organisation.

Speaker B: Like obviously as you say, it doesn't matter to some extent what or who reports who. Like this whole kind of idea about, you know, job titles don't matter or reporting lines don't matter and everyone's talking about flat organizations these days and everyone kind of just sort of rolling their sleeves up and getting into it. But I think you're right. This idea that, well if it is going into one place or another. I think I wrote some article years ago now sort of the pros and cons of reporting into like putting the CPO through the CTO or the head of, head of product or whatever through the, through the CTO or the CEO or the CMO or the CRO and like the different behaviors that that could sort of presuppose. But one thing that, that does come up in those types of conversations. And again especially in organizations where as you say, sort of product is maybe seen as a delivery function or kind of a technical function or kind of a subset of the technical function. Is this kind of newer uh, trend towards sort of CPTOs sort of where you kind of get two, two for one, you know, the double bang for your buck because you can get one C suite leader to kind of look after both functions. Do you think that's a good thing based on what you've seen from the companies that you've been speaking? Or do you think that that leads to the potential for that kind of same behavior? Just, you just mentioned this idea that maybe they're going to be kind of 2p or 2t to do both of the things very well.

Speaker A: Yeah, I mean I've always think, I always think this thing where if you see a good, if good, if you hire a good person, they're good and they're good at things, then it's you know, kind of fine. I'm really open minded about CPTOs. Um, so just to be really clear, we're talking about chief product and chief technology, um, but only if the role is really thought through and designed. Well, I think that's the thing. The risk is that it becomes a delivery label and that one person is expected to be brilliant at two different jobs and in some businesses it works and others it's a compromise and it really depends where the person um, skill set as well. I mean I've seen great, I interviewed a couple of really great CPTOs for this and I think if you can talk tech stack and you're commercially minded, why not get two for one? Um, but it's, but you've really got to kind of kick the tires of that I think a bit with the, with the person who's employing to understand why actually other than that as well. I also want to say it does remember it does um, depend on the maturity of the product and the tech stack. Right?

Speaker B: Well, yeah, I mean, because this is an interesting point when you consider some sort of m. More sort of classic PE backed companies where they've maybe gone into an organization, uh, that's maybe not sort of a tech first organization where everything was kind of set up in a very specific sort of tech first kind of classic sort of Silicon Valley VC way first. You know, maybe they've come into an organization which has a lot more complexity kind of baked in because it's been, you know, it's kind of gone down the been around For a few years, obviously loads of tech debt, potentially some kind of product service mix in the organization as well. I've certainly worked with and um, um, spoken to sort of financial service organizations where the product is important, but there's kind of almost a different type of product as well, which is the kind of the financial products that they're selling off the back of it. And um, it kind of makes you wonder whether in an organization like that, whether it's kind of almost fair enough that the CPO is kind of, kind of just looking after a certain point of it or the head of product or whatever they call it in that organization. I guess the simple question is whether you think that in an organization where maybe it is a bit of a product service mix and that's not going to go away, or it is a financial services organization and obviously the kind of dynamics of financial services are never going to change that much. You know, this idea of selling loans or bank accounts or whatever to people. Whether you even think it makes sense to have a CPO in an organization like that, or whether it should be all very much sort of subsumed into some other part of the organization.

Speaker A: I mean, I'm going to say that's a danger. If the role becomes too slanted towards engineering and delivery, then product can lose that commercial edge. And I do think we're going to see this blend more and more and it is going to be because we're trying to drive efficiency. And like we said earlier, it does matter where the tech stack is and where the commercial need is in terms of maturity and what's really needed in that uh, business. And I don't think you can do a catch all for that. And that's why I think it's really important to get that initial brief right. What problems are we trying to solve and who do we need to solve them? The business has to be really clear what it needs. And I think the title matters so much less than the design of the role unless it, it's very important to the person who's being hired.

Speaker B: But how often do you see, you know, quote unquote, the business being clear on what it needs? You know, so one of the things, for example that we, we spoke about and that uh, you've got in the report is this kind of, there's some sort of trigger points about when you should even get a CPO, because in some cases maybe it's not even 100% clear that they need one, but maybe they, they think they should have one just because the competitor has one or something like that. I don't know, like maybe that's oversimplified. But you kind of talked about a few different triggers that might be a good time to consider getting kind of CPO or some sort of top level product leader. One of you could talk a little bit about those triggers and the kind of the dangers of not actually having a purpose behind it.

Speaker A: Yeah, I mean product is pretty new in the world of tech. Still quite a new role. And I think, you know, the CPO role, the product role is quite trendy. Um, and businesses don't always come to you with an exact idea of what they need. They have an idea of what they need. Quite often they meet three people, they like one and they go, can you find more people like that for us? Because actually we realize that we need some more of that. So often you're working with the business throughout that process to help them refine what they're really looking for as they go along. Quite often it might be, you know, their first product, really serious product hire, particularly if they've been taken over, um, by an investment firm. Um, so uh, what I would say is the role has to be shaped around the actual challenge. Not, you know, nobody's going to, I don't think people are going to make a hire because it's trendier. But I do think you really got to ask the right questions and you've got to go through a process to help them really understand where a product you need to can help them.

Speaker B: So yeah, so you talking to a port about these three triggers, like transformation triggers, like it's time to transform post product market fit, pre scale. So they've kind of got to that point where they've, they've started to uh, sort of show some traction, but now they've got to scale it. Uh, and also then also when stagnation is product rooted right where they've got a product but it's, it's kind of stale and um, m, you know, struggling to make progress, I guess. But yeah, then it's that kind of the fourth one that you talk about, which is when there's no real problem to solve at all. And that's the point where I think you say like a CPO without a genuine product problem to solve is an expensive overhead and a source of organizational friction. How often does that happen in your experience?

Speaker A: I've never seen it happen and I've never met a product person who has taken a job. And actually that's probably one of the biggest reasons they leave an opportunity well you know what, we got the business to a place, got the product to a place where it was all the levers were heading in the right direction. I was doing all the best stuff and it was time for me to move on. Never met a product leader who kind of wants to babysit if you like.

Speaker B: Now I was going to say but sometimes they're hired to do that. They're hired almost, it feels like sometimes they're hired to babysit because no one quite know because you know product itself as you say relatively new certainly in certain sectors. Uh, maybe they don't have a strong understanding of what a product leader is even supposed to come in and do. I guess you can educate them on that. But yeah it's, it's more to, exactly to your point as well this idea that well maybe that's when they then you know just the product leader churns. Right. Because they realize that there's not, there's not actually anything for them to do.

Speaker A: Yeah, you know we're at the sharp end of tech. So most businesses that we ah, say all businesses that we are working with, you know they have an idea of where commercially they want to be in um, technically where they want to be. So we don't have um, many clients coming to us going we think we need a product person. It's like they've done some research and actually this is the problem we're trying to solve. We might help them on that journey but usually they've got a fairly strong idea of that already.

Speaker B: And um, what are some of the kind of top let's say traits of a PE firm ready CPO like we talk about obviously a lot of these books behind me and all the stuff we're talking about which kind of seems to come from Silicon Valley and the uh, kind of the VC world of product management, big tech worlds of product management and there's a lot of debate in, in and around product circles around you know, the, what product leaders need to do to be successful in maybe a more traditional industry or where product is maybe less of a mature function. Maybe if they're working in again as I say, sort of a sort of product service company or, or some other p sort of backed situation where maybe there's a five year exit plan and there's some very specific value creation plan stuff going on that they need to hit. Uh, and there's maybe not so much appetite to start trying to do this kind of go big or go home sort of 100x the company. I mean I'm sure they'll take the 100x but that's not, you know, they don't want the bunch of companies to fail. Right. They want all of the companies to give a good return and to give kind of stable growth. So when you're talking about then these kind of PE ready CPOs, uh, what do you see being good characteristics for those CPOs?

Speaker A: One of my favorite things that people who have worked in PE say is one of the reasons I like working in PE is because it's very binary. Everybody around the value creation table has the same goal. So there's absolute clarity. Um, you know, I think they want clarity pace and, and commercial impact. Right. Um, no P.E. business wants to own a business passively. They're creating value, which means they're helping portfolio companies make the right decisions, build the right capability and um, unlock better performance over time. So I think that's the thing to be really, really clear about. It's not somebody with a lifestyle business or somebody trying to create a good culture. The PE firm are there for a really clear reason to create value.

Speaker B: Fair enough. But you talk about three. This is another key finding. Three failure modes that can kind of kill as you know, uh, as you put it in the report, they can kill exits and uh, the you know, kind of basically make it more difficult to almost create that value or to you know, to basically be successful in that role. And you also say that none of these reliably surface in standard financial uh, diligence which is done as part of the deal process. And the three that you call out of the feature factory, the land, uh, of lost toys and the tech debt hangover, you say that they're all preventable, but again that financial diligence doesn't really catch them. Now that sounds like a problem, right? Because when organizations or when investors are doing due diligence on organizations, you'd like to think that they want to tease these out in advance so that they could actually then potentially either pass on the company if there's some sort of systemic problems or make sure that they're kind of, their expectations are correct. Right. So how do you see these failure modes kind of failing?

Speaker A: I must say um, that remember that the um, CPO report is know, driven by CPOs who have worked in private equity businesses. So those three uh, failure modes, let's just go through what they are. So the feature factory is where product is busy shipping. They're not really creating commercial value. So they're kind of doing a process. They're going through the sort of product life Cycle, but they're not really seeing the upside. Um, the land of lost toys, um, where you know, the product has too many half finished ideas, abandoned initiatives, priorities. And then the tech, uh, debt hangover where the business is really slowed by accumulated technical debt and a lack of team foundations, all of which are very relevant for businesses right now. Um, and I thought, actually lots of people have said to me that that's been their favorite bit of the report because it's really resonated with them. Um, and so I think it's important to say that not all PE businesses don't know this, you know, are doing this, but there has been definitely some shared experiences where people haven't been on, on top of this. And I think there have been lots of different reasons. You know, the tech hangover one is the easiest one to explain because you know, we're in such a, uh, you know, kind of fast moving technology environment at the moment. The land of lost toys is often where a client or a salesperson has come in and they want a button or a feature, uh, um, added and they get added, but they're not always prioritized and finished and tracked properly. And then the, the feature factory is where you're doing lots and lots of work but not tracking it properly. Um, and you know that I think now we're in a position where we're getting to do this really much quicker than we have been um, able to do it before. So I think there is a bit of um, gambling and you know, trying stuff, but making sure that you try stuff, track it, move away from it if it's not working or you know, back it properly if it is. And I think, you know, we're seeing lots more of that, um, in the product role in general is you've got to try stuff, but you also have to keep a handle on what you're trying and what's working. And you know, the data sort of tells you quite quickly whether or not it's a, uh, successful initiative or not.

Speaker B: But do you think though back to that point about due diligence, and again you mentioned of course that a lot of that due diligence is very financially focused and trying to make sure that the numbers make sense and kind of then making um, their investment decision based off of that, do you feel that there's more work needs to be done on the PE firm side to make sure that they're kind of including some of the, maybe even looking out for these three different failure modes as part of their due diligence or do you think it's more that this is for the operators within the companies to just understand and try to make the best deal of once they're, you know, once they're in or once they get taken over, whatever. Like how much of this needs to be kind of investigated and flagged and surfaced up front versus it's just kind of part of the game and they just have to work out the best way to work with it once, you know, once things are moving.

Speaker A: I think having a lens on this is really important and the earlier the better. So p. When they're looking at an asset, they will usually, um, have a CEO and a CFO walked in quite quickly. Um, but I would recommend also having a CPO lens on this stuff because private equity businesses won't always be able to spot this. They're not obviously as technically mature as a CPO would be. So even if that's. And in an advisory capacity, I would absolutely recommend, um, and that's why we really wanted to, you know, give um, sort of lists and points that people could then, you know, if they weren't going to execute it themselves, they actually had something to um, to look out for, some red flags to look for. And that's why we named them.

Speaker B: Fair enough. We can give, you know, give everyone a bingo card and they can start to uh, start crossing stuff off as

Speaker A: they go successful and exit so much, don't they? They reduce confidence, they slow execution. Like you can't put a uh, product program together if you haven't got a lens on those things.

Speaker B: Well, yeah, and it's obviously also tough, you know, if the company's got a certain, if the investors have got a certain whole period in mind and things aren't, you know, value isn't being created quickly enough or you know, things change and they struggle to react and yeah, you end up getting to the end of your whole period and it's like, well, yeah, we're, I don't think we can sell this for uh, uh, uh, anything other than a loss. No PE firm wants to do that. Right. So it's just about, as you say, kind of keeping your finger on the pulse.

Speaker A: Yeah. Um, but it's not just PE firms M Is it? This happens in all kinds of businesses. They particularly matter in PE because there is a time horizon, extra pressure on that value creation. The expectations are much sharper. But I really hope that the learnings from this report, you know, can be transferred into lots of business owners that are on a growth, you know, on a high growth journey. Um, and that's all businesses. Right. All businesses want to be on a, on a good growth path.

Speaker B: Yeah. And I think it's fair to say that there'll be many people listening to this, whatever type of firm that they're in or whoever owns them. As you say, kind of founder led or VC backed or PE backed. I don't think that uh, feature factories and tech debt are going to be surprises to most people. But like you say, it's how that impacts the results and the timeframes and the windows that they're trying to get those results in as well. But talking of timeframes and you kind of mentioned it a little bit earlier, this idea about kind of speeding stuff up. We, you talked about AI in the report as well. And uh, one your key takeaway around AI was that judgment is what AI can't touch and financial fluency is what gets you in the room. Pure administrators are already being replaced. This kind of then makes me think of the, the, the general narrative on business social media around like all the middle managers getting kicked out and all of the sort of executives getting back onto the tools almost and starting to try and build stuff themselves. And you have these very excited CEOs talking about how they've submitted code to the code base and stuff like that. Uh, but you know, this is a big trend just in general, right. This idea of like, well let's try and AI. All of the things you kind of talked already about what kind of humans are back in fashion. So that's a good thing. But one of the things that I always kind of reflect on when I'm looking at organizations is obviously, I mean I started out as an engineer before moving into product over the years. So I've always been keen to sort of automate stuff and make things fast and efficient because that's fun and it's much better than doing stuff manually. But one of the things I reflect on is when I look at organizations in general, it doesn't really seem to me that like too much leadership is the problem. It feels like not good enough leadership is often the problem versus like oh they if they just didn't have as many leaders then they'd be okay. So do we really need sort of less leadership in this AI age and everyone can just kind of be in super individual contributor again or do we need to kind of focus down on getting these, this better leadership into organizations?

Speaker A: I mean I'm a big believer the leadership in any business is really, really important. And I love that people are being asked to sort of be IC's individual contributors at the moment because I think they're really getting back into the weeds and are able to lead better and they're able to have better conversations with their um, colleagues. And the structure of a business is becoming flatter in product teams because of it. I think it's really raising the bar um, in leadership AI. I don't, I don't think you should be looking at getting rid of leaders. I think what you should be looking at is what does the leadership in our business need to look at and um, which areas of the business require more or less leadership. And sometimes that doesn't come from people at the top of um, you know, a kind of org chart, does it? Sometimes people are leading now because they're tech whizzes and, or digital natives and I think we just need to be open minded about that. Um, because fluency of a product and AI and judgment becoming more and more important. But that doesn't mean that traditionally the CEO or the you know, kind of board are going to lead on that. That might be somebody else within the business and we've got to really empower them to be able to do that.

Speaker B: Are you sensing though again, if we consider maybe some of the, what we might call less tech first, more traditional uh, businesses out there, maybe uh, you know, again bit longer lived maybe as you know, maybe they got tech debt or maybe they've whatever, you know, different sort of potential problems that we mentioned earlier. But uh, are you finding that there's a lot of panic out there in PE land about how AI could potentially disrupt their businesses? Disrupt uh, their obviously how they do stuff but also how their potential customers do stuff, how their competitors are doing stuff. Because one thing that I see, and again I'm assuming this isn't just down in P land but there is that kind of fear that you know, maybe people are being left behind or people are going to get overtaken or that uh, I guess in PE land specifically that you know the numbers, you know they can either they can AI all the things and therefore they can get their operating costs down. Uh, or you know, maybe on the flip side now everyone's putting the cost of their tokens up on all their different tools that maybe the costs are going to start to skyrocket. Are you seeing panic or excitement or some kind of combination like how, how's the kind of the landscape and how's the reaction been from the sort of the PE organizations or the P backed organizations that you've uh, that you've been

Speaker A: working With, I mean, I can share with you as a founder as well on that. Uh, like the fear is real, right? There's a lot of change going on and then you go on holiday for a years, couple of, of weeks if you're lucky enough and you come back and it's all changed again. Like you say, token prices have gone up. The, the, you know, the capability of these tools has really changed. So I think the fear is real in all commercial settings at the moment. But my goodness me, when I was talking to people in 2022, I was seeing two types of people. I was seeing people that were professing to be experts and running fast towards that gunfire. And then I was seeing the other half of people who were just, you know, kind of putting their head down, hoping they'd get to the other side of their career without it really affecting them too much. And I think what we see now is less fear, less panic, more people learning that they need to try stuff. Um, what I find astounding when I, um, heard a stat um, a couple of months ago which is that only 6% of people in organizations feel that they're supported on their AI journey. So I think businesses at time where perhaps they're still trying to keep the lights on, um, you know, having to invest in training and adoption. We all know that the training is the easy part. The adoption and taking everybody with you is where you need absolutely brilliant leadership skills. And um, so I'd see less fear, less, um, less fear, less panic. But it's real because we are all trying, I mean I describe it in my business as I'm trying to change the wheels on the bus while the bus is moving.

Speaker B: Yeah, no, the number of times I've heard the, the wheels on the bus analogy. Uh, but, uh, but it's obviously that the, the pain is real and just trying to kind of keep up and, and it's obviously really hard to, to make change sometimes whilst also keeping the lights on. You can't just turn the lights off. Uh, most people don't have that, uh, that luxury. But one of the things that you talked about as well in the report, like another key takeaway was that GTM go to market misalignment is the failure mode. The boards can't see the roadmap delivers, but net revenue retention does not move. Now obviously, you know, that maybe touches on what you talked about with regards to the kind of the feature factory. And again, it's not necessarily just a PE focused thing. That's something that can happen in a number of organizations. But that is a big problem, right? Like uh, you'd imagine that again management leadership would be kind of looking at this stuff like a hawk. And in fact in many ways I've seen in more kind of traditional uh, companies that there's this big, big focus on like making sure that you're hitting the numbers and the product team are kind of building stuff now to help you hit the numbers. But on the, on the other hand you're saying that the net revenue retention isn't, you know, it's staying wherever it was. So what are you seeing? Is that like a cpo? Is that a product problem? Is that a sales problem? Is it both? Is it something else? Like what's driving that?

Speaker A: I think to some degree this is about learning that you know, your product team, when you're about um, to go through a high growth journey needs to be super aligned. So net retained revenue I think is something that the whole business needs to care about. I don't know which business you work for, big or small. You, everybody's got to care about that because that's why everybody's salaries are getting paid. So I don't think it can be laid just with sales, but I don't think product can own it alone either. Retention expansion has to be shaped by sales and that customer success team. But the real flex I think is when somebody's properly on top of it, tracking it, measuring it, using the data to improve things and that you know, what gets measured gets fixed. But the, but the, yeah, right on, in every, in every product, whether it's digital or not. But I, um, I think the sales and product team, product such a commercial role, they've got to be really, really aligned.

Speaker B: But of course what we were saying earlier is that in um, many organizations it's not a commercial role or it hasn't manifested itself as a commercial role. So, and this is again something I've seen in organizations where it does feel that the kind of the product team are there to build the stuff which then the sales team and of course the CS team can sell or renew. And to some extent some product teams don't even really have a strong understanding of what happens after their product gets out the door. Like they, that's just a sales problem. That's just a CS problem. I agree with what you're saying around this idea of well, everyone should have a stake in, you know, revenue effectively because of course they should. Sales teams naturally have that because of course they're getting very specifically paid and, and bonused and quoted off of that, uh, in obviously many organizations, maybe you'll have CS teams that have that kind of, uh, arrangement as well. Whereas obviously product teams, traditionally they, they consider revenue a lagging indicator. Uh, there's other metrics that they'll try and track beforehand. Maybe they do, maybe they don't connect the two together. I guess the ultimate question though is, I mean you kind of half answered it with this idea of, well, okay, product need to be interested, sales need to be interested, cs. But who should own nr? Uh, like you said that someone needs to be on it. And yeah, if. Isn't there a danger that like, if three different teams all have a stake in it, that they can kind of just sort of hand the hot potato back and forward?

Speaker A: Yeah.

Speaker B: How do you see like nrr, uh, ownership?

Speaker A: Well, that's a really tough question. I mean I still, I still maintain. I don't think product can own it alone. But One of the CPOs I spoke to, I was really passionate about this. He said the first thing he does when he takes a CPO role is before he gets into the product roadmap, he tries to do some, um, training and make sure that everybody has a standard around him of that financial fluency. What does a successful business look like? What does our business look like, look like when it's in success? And so I think they should be a really key driver of, and, and perhaps own some responsibility around it. But that's where the alignment is really, really important. Like products can't do it on its own if sales is not aligned with that and if people around them are not financially fluent and don't understand, like you can only get the whole business to travel in the direction if they all know what they're traveling towards. Um, so you know, I don't, I don't know if it can be owned by one person in my, in my experience, from the people that I've spoken to.

Speaker B: But definitely lots of people should be interested in it. But yeah.

Speaker A: Do you have a view on that?

Speaker B: Well, I'm just from my perspective, it's like that kind of the one nectar ring, right? Like that someone has to own it. I, uh, would say depending. So for example, if you're in a product, like a product led growth kind of the product's kind of selling itself almost like I think it makes a lot of sense for productivate specifically own net revenue retention and you know, upsells and such because they're doing it all effectively themselves through the product. If there is a sales team and uh, a CS team that are the primary touch points for obviously getting the work in in the first place as well as obviously then kind of keeping the big accounts happy and making sure they renew and upsell. It kind of feels like they're like if you make product responsible for nrr, uh, in that situation, if you have a bad sales team or a bad CS team, then that could mean that the product team could be great and doing loads of good work, but that the other teams aren't, you know, seeing it through.

Speaker A: Yeah.

Speaker B: On the other hand you sit there and say, well, you know, we're all in the same boat so therefore we should all care about that together. But you know, fundamentally different people are doing different parts of the work. I definitely think 1000% that even in that latter situation that product teams and sales teams and product teams and CS teams should be working incredibly closely together. And one of the failure modes I see when I walk into organizations often is that they just ain't talking, uh, the product team aren't talking to the sales team, the product team aren't talking to the CS team and, or they are, but they're only talking to them when there's some uh, emergency or last minute thing or a big feature request they're not having or they don't have this kind of ongoing conversation and touch points to make sure that you know, ultimately if there are things coming up, if there are things that need to be done that, that they have a chance of doing them or they can prioritize them. So yeah, I still think that in a very sales driven, like whoever's driving the sales, whoever's driving the renewals, like whoever's actually specifically responsible for that should probably be on the hook for uh, nrr. But they need to be working incredibly closely with the teams that enable them, for example, like the product team. But if it's a product led growth.

Speaker A: I was going to say that personally speaking, if I was going to be made responsible for the net retained revenue of a business, I would also want to be responsible for reporting lines and to make sure we have the right people to deliver that.

Speaker B: Yeah. So we get sales to report to product. Let's do it.

Speaker A: That'll go down well.

Speaker B: Yeah, couldn't possibly go wrong. But now I often say that uh, product teams and sales teams are kind of like the, the furthest apart in, in kind of mindset in you know, kind of this idea of like, you know, product teams are uh, very often sort of sitting there in a little bubble, uh, you know, desperately trying to focus on certain set of metrics, uh, you know, easy for them to track to, uh, these kind of leading metrics that they like to look at. And yeah. Uh, then they kind of just throw it over the wall. But then of course then when whenever anything comes in like last minute or there's a big deal or something like that, the sales team will, they don't care about the roadmap or the vision or the, the, the uh, the, the strategy or anything. They just want this thing done to get the deal across the line. And neither of those are wrong. And I, in, in a sense and I think, you know, they're both kind of doing their jobs right. And uh, I think that from my perspective, if I uh, again often say that if you were to uh, bonus and incentivize a product person the same way that you did a salesperson, then they would behave exactly the same as a salesperson.

Speaker A: Yeah.

Speaker B: So let's not, let's not pretend that these people aren't doing their jobs. But in the best organizations I've worked with, there's a, there's a really strong relationship between the, the sales, the customer success, the kind of the account management and the product team versus everything just being kind of a last minute escalation. Because you know, if you just talking to each other when you're in a panic, then you know you're going to get probably suboptimal results.

Speaker A: Yeah, I think I really agree with that. You know, it's got to be, it can't be an afterthought. Right. Uh, you've got to know from the outset what you're both working towards and that communication and alignment is really important. And communication, I think, you know, that is one of the really negative things that has happened post Covid. People are just around less.

Speaker B: Yeah.

Speaker A: Um, so you've really got to make time to make sure that you're having those conversations. Because we all know that when we get on meetings with people, sometimes we are going, you know, we've got to nail a few things in that meeting. And actually sometimes you just have to make sure that you're spending time together so that chewy stuff that's not necessarily on your agenda gets discussed and um, you know that you're both pointing in the right direction.

Speaker B: No, absolutely. Communication is key. Right. But yeah, I mean there's, there's this kind of idea of like you, you kind of want to be communicating just enough. Like, you know, don't communicate too little because then people, no one knows what's going on. Don't communicate too Much because otherwise you're spending too much time communicating to actually do your job. So trying to find that balancing point. Yeah, but talking of, well, kind of talking about communication, uh, your final takeaway is that you have a CPO Readiness Index that you can use to score the question, not just to read the analysis. So you've got an index that you've created, uh, either off the back of the report or alongside the report that looks at commercial mandate, operational integrity, personal capability, GTM coherence, timing fit and AI durability. So lots of impressive sounding words. But what is the Smithfield CPO Readiness Index and who should be using it and what should they expect to do with the results?

Speaker A: I mean that's a quick and dirty outline definitely created from some of the data that we uncovered in the report. And that is by and large a sort of launch point. Um, and it's for investors, CEOs and product leaders who want a sharper way to think about the role of product and value creation. I expect to use it as a conversation starter. I don't think that is enough to go away and find that person or to, you know, it's an additional thing when you're looking, um, through a hiring lens or a way to test whether a business is set up properly. Um, I had a few people, um, say, say it's a real launch point for them to look and assess at where their skills are at or where their business is at and find ways to navigate what needs to be fixed. So it's, you know, it's not um, lengthy. It is just a kind of launch point, a starting point if you like.

Speaker B: Is it mainly focusing on assessing, for example the qualities of a candidate to be a cpo? Or does it also touch on the kind of the capabilities and the maturity of the organization, all of the above other stuff. Like what, what, what are you trying to assess effectively? Like what comes out the back of this?

Speaker A: I mean I think it can be used in both lenses. Quite, and it's quite, you know, sort of self explanatory to be conscious of that. Uh, um, I, it was a conversation starter, to be honest, and something to be really helpful to tie up the rapport and allow businesses to go away and like now what do I do with it? You know, it's all very well producing a lovely glossy report and you've got a data visualization expert who's helped you present it really well. The business like, okay, now I know all this stuff, I know all these problems, how do I get about fixing them? And this is actually a really helpful launch point for that I hope. And uh, that's the feedback I've had is that it's a really good sort of reflective launch point for both businesses and individuals.

Speaker B: Well, you're talking about launch points then. I guess just to close, it'd be good to understand if you were to be speaking to a product leader who had just kind of gone through your report and done um, you know, maybe even done the readiness index, what one thing would you want that product leader to do after doing that?

Speaker A: So I think they've got to ask themselves whether they're really operating as a transformation information leader in the right position for them. Are they pushing the right button to get alignment in their organization? Hopefully it helps them map what changes they may be working towards. Um, you know, I also have to say product lot. I know lots of product people are reading this because I, lots of product, um, people who have commented and shared it on LinkedIn. Somebody very even kindly did a TD TLDR for me and posted that up there. Loads of people have been asking questions. I haven't done the job. Um, so I'm really up for scrutiny. Um, I'm really up for points of view conversations. I really hope it gets shared and discussed. But ultimately I just want it to help both product leaders and businesses. Um, for me I hope that I can share that care and credibility. I want to be known in this market for. But ultimately, um, you know I, I thought this rich information, you know, it wasn't something decided from the outset that there was going to be a diagnostic. It's just there was so much stuff that came out of this. And yet I wanted to ensure that businesses who spoke product, businesses who didn't speak product but perhaps spoke those other languages around productivity, go to market alignment. They could really use this to help them, um, with the value creation plan ultimately.

Speaker B: Nice. Well, fingers crossed that we can uh, start to, you know, create some value and start chipping away at people's problems or at least inspiring people to uh, to do the same.

Speaker A: Yeah, well, I think it, I hope it really, I want to say that I hope it really raises the profile of product in these types of organizations. Because I think if you're buying an AI, if you're buying a SaaS, um, a technology business, a services business in the technology space, you really do need to have a lens on this now. Um, and if you, even if you are not going to execute this work yourself, you need somebody to help you and that, that is the, potentially the CPO or A technology advisor.

Speaker B: But are you seeing based on feedback so far that it is having that effect that, uh, maybe is starting to drive the awareness in organizations that maybe were traditionally less aware? Is that something that you're getting feedback has happened that, uh, you know, someone's come up to you and be like, oh yeah, you know, thanks a lot. That's actually helped me think about things in a different way. Like, is that feedback you've got already?

Speaker A: Think it's a bit soon, if I'm going to be really honest for that feedback. I've shared it with contributors and uh, what they've all said is I want to put this under the noses of several people that I've worked for, I'm getting to work for, that I would like to work with. So I think it is gaining genuine, uh, authority. But I think it's going to take a little bit more time to get it out in the marketplace. I think we popped it on LinkedIn on the 7th of of June, um, since when we've had a heat wave and several launches, so people are a little distracted. Um, I've been really happy with sort of general analytics that I'm looking at, you know, kind of a lot across LinkedIn and all the website, but I think it's a bit early to share that. Maybe, maybe I'll come back and share that with you, um, privately another time and tell you how it's going. But I think it needs a bit more time to bed into the market place. I have to say I feel really confident that it's helpful, um, from the short amount of time that it's been out there.

Speaker B: So you need to get it into more PE companies hands. Right? That's the most important thing.

Speaker A: Well, I can tell you a funny story about that. I'm sending this to 50, um, investment businesses over the next week and I have, I've done a handwritten note, there's some chocolate, there's some individual lovely tea bags. However, I've had to put it on pause because if I send chocolate to people's offices in 36 degrees, they're likely to come back to a puddle. So everything's been sort of slowed down a little bit. But, um, yeah, I want to get it right and I think that it will create good conversation and hopefully really shine a light on the importance of product in our current environment.

Speaker B: Uh, hear, hear. And long may that continue. Well, if people want to come and speak to you after this, either to find out more about your search business or dig into some of the themes from the report. Or maybe if they want to get a bar of chocolate that you've got left over, where can they come and find you after this?

Speaker A: Yeah, if the chocolate's not melted, I'm happy to give up the chocolate. Um, probably the easiest place is LinkedIn, because I don't think there, uh, are any other known BKLA pilgrims. I'm a real people person. I have a really good, strong social batteries. I'm always really up for a chat, and I genuinely, I'm really, you know, I hope this is one of many reports to come. I really enjoyed putting it together. I think the people that I worked with were brilliant and really generous contributors. And so I'd like it to, you know, I'd like it to be a living and breathing document. So I'm really up for a chat with anybody or to hear, um, people's view on it.

Speaker B: Nice. Well, hopefully once, uh, we link it all into the show notes and share it around and all my adoring listeners come and, uh, take a look, then, uh, you'll be getting a few more steps in as well. Well, B, that's been a fantastic chat, obviously digging into some of the key themes from the report, which I very much enjoyed reading as well. So, uh, definitely some things for me to think about as well. Uh, obviously you and me will stay in touch, but as for now, thanks for taking the time.

Speaker A: Jason, thanks so much for taking the time to interview me. It's been really interesting and I've really enjoyed myself. You've made me feel very comfortable, though.

Speaker B: That's what I do. That's what I do.