[On-demand]Product Management Webinar: Incentive System

Janna Bastow: [00:00:00] Hello everybody. Welcome. Come on in. Hey folks. So I can see people are just sitting down and settling in right now. Hello everybody. Good to see you here. Jump into the chat and say hi. Let us know where you’re coming in from. Hi Matt. I can see you’ve jumped into the chat right away.

Hi, Hamed. Nice to see you. Good. Welcome back. Where’s everybody coming in from? We’ve got Matt in Edinburgh. We’ve got myself right at the other end of the country and in the UK. I’m in Brighton. Ronnie, how about yourself?

Ronnie Varghese: I’m in the Dubai right now.

Janna Bastow: Ah, cool. There we go. Welcome.

Good to be here. So we’ve got folks from Egypt, somebody from Norway. Who else we got around? Everybody. Jump in, say hello and we’re gonna get started off very shortly. Somebody else in the UK Bedfordshire, welcome, welcome. All right. So I can see we’ve got a crowd turning up now.

Oh, we’ve got Adam and Brighton. Hey, I think I’m waving towards Brighton. I’m in Hove actually, so I don’t know. Jeff from Toronto. Welcome. I grew up in [00:01:00] Toronto, right? Grew up New York, Toronto, suburbs out.

Ronnie Varghese: I’m from Toronto too. It’s cool to see someone from Toronto, Canada in. That’s great.

Janna Bastow: All right, Jeff, any other Canadians represent? Alright, brilliant. So we’re probably just getting settled in, so we’re gonna start in just a moment, everybody. But welcome, glad to see you here.

Alright. Hello. Hello. Welcome everybody. And welcome to the ProdPad product expert fireside series that we run here. It’s a series of webinars that we’ve been running for years, and so you can go back in time on our site and find all these different interviews and presentations and fireside that we’ve done in the past.

And it’s always with a focus on the amazing experts that we have in our community who bring in their insights. It’s a focus on the content and the learning and sharing. So today is going to be recorded. It is gonna be shared. You will have a chance to ask questions as well, so make use of the Q and A section in Zoom and you’ll be able to add your [00:02:00] questions and add your up votes and all that sort of stuff.

We’d love to hear from you as we as we get going. Before we jump in and do an intro to Ronnie, I wanna tell you a little bit about what we’re doing here at ProdPad. So ProdPad is a tool that myself and my co-founder Simon built when we were product managers ourselves. You might know us as the co-founders behind mind, the product, the big community of product people.

I recognize this need for tools that actually helped us do our jobs better. We need something to keep us on track with all the experiments and all the feedback and all the stuff that we had on our plate, and provide it in a way that our stakeholders could understand, where we were now and where we’re trying to go.

And it gives you this sense of control and organization as well as transparency for the rest of the team to understand what’s being done and why, and how it connects that bigger picture so that they can all pitch in a sensible way and provide you as a single source of truth for all your product decisions, your entire product world.

So it’s now being used by thousands of teams around the world. It’s something that you can try for free. We’ve got a free trial as well as a [00:03:00] sandbox environment, which is preloaded with example data and things like lean roadmaps and OKRs. You can see how it all fits together, and our team is made up of product people, so you can give it a try and let us know what you think.

We’d love to get your feedback on that. Now I wanna jump into what we’re really here to talk about, which is product management in a broken incentive system. So this is a really juicy topic, and I’m not gonna say that we have all the answers because there are some really broken systems around us, the way that our organizations work and how we grapple with them, how we understand and even talk about them.

And we’re gonna talk to Ronnie Varghese about this. So everybody say hi to Ronnie. Ronnie has had one of those careers that gives you a proper wide angle view of how organizations actually work. He’s been a founding CEO, he’s been a CPO. He was a Chief Digital officer at Elmo Safer, where he helped scale the company.

He’s done the building, he’s done the scaling. He’s sat in the rooms where decisions get [00:04:00] made and then he became a leadership coach, which tells you something because you don’t walk away from that kind of track record unless you’ve seen something that really makes you think the real problems here aren’t technical.

So today through his coaching company, Mindful Leadership Coaching, he worked with leaders and teams on building high trust cultures, aligning around purpose and driving the kind of impact that actually sticks. What I love about talking to Ronnie is that he doesn’t do like fluffy advice. He names the system.

He sees the incentive structures, the fear, the power dynamics that shape how product decisions actually get made, and he is really honest about it. So today is that’s where we’re going. I’ve been really looking forward to this conversation for a while. So Ronnie, huge welcome. Thank you for joining us here today.

Ronnie Varghese: Oh, thank you so much, Janna. It’s such a pleasure to be here. And like I told you before our call this is not a topic that I think I would be all that comfortable speaking about in a lot of places, but I feel very comfortable speaking to you about it because I’ve had a great amount of respect for you and the work that you’ve done over the years.

You’ve been an inspiration to me. I think I still [00:05:00] remember when I was at Almosafer using your Now- Next- Later framework as a way of trying to transition from the old waterfall way of working. You’re someone I knew about and had such a huge impact on me way before I even got a chance to meet you.

So I’m just really grateful to be here and talking about this topic to you, and I hope it really does help some people who are here listening to me.

Janna Bastow: Ah, Ronnie, I’m absolutely honored, and I know I’ve told you about our audience here, how how brilliant they are and how keen they are to ask really good questions as well.

So folks, get your questions in as we start chatting because you’re in for a really good one here. Now, so we’re talking about these incentive systems. What do we mean about incentive systems in an organizational context? Because most people hear incentives and they think about bonuses or compensation, you’re talking about something broader.

Ronnie Varghese: Actually that’s a great starting question. Because I say to some degree that is where I am talking about it is and it’s interesting when we, I think originally picked the title for broken product management and broken incentive systems, I thought about that some more.

And I thought to myself, actually, you know what? Maybe broken incentive systems isn’t the way that I would put it now. Rather, I would [00:06:00] say mismatched incentive systems. Yeah, because actually the root systems that I wanna talk a little bit about, I’ve realized, and this is not this is more of an open question I wanna for, I don’t wanna formulate

a conclusion around it, but some could even argue, and I in some ways argue that actually those systems are operating exactly to design, right? And so that’s one way, so to begin with it’s interesting, right? And I’m sure this is a challenge that many product people face when we talk a lot about outcomes versus outputs and, using things like OKRs and setting objectives that are measurable objectives.

And a challenge that I remember when I was coaching my team and I was learning this myself, was often this idea of a product outcome being something that would be some sort of a behavioral shift, right? Is that we would start with that. It’s Hey, we see someone struggling. We see a group of people struggling with something or there’s an opportunity here to help them tap into something.

So what’s the behavior that we’re trying to change? And then oftentimes when we would be in the room with the decision makers that we were presenting the recommendations to it would be really interesting because it seemed like their eyes would glaze over sometimes, where I’m like, this is fairly [00:07:00] straightforward and obvious, so I’m not really sure why they’re not understanding.

And oftentimes the feedback I would get is we don’t understand how this connects to our business metrics, right? Get your point. We understand the friction, we understand, why conversion’s going down. We understand why people are dropping off here. We understand why there’s some kind of a struggle here, but we don’t understand how fixing this is actually gonna improve our numbers.

So then. I would step away and say, okay, you know what, then you know what? I really have to start thinking from our financial model. I have to really understand our businesses income statement. I have to understand our balance sheet. I have to understand all of that, and I have to really start working with my team to train them on understanding that language, because then going into the room with those stakeholders means that we should really be, yes, we should bring the language of our craft and the evidence of our craft, but in the end, what those stakeholders care most about is, okay, how is this gonna move the needle for me?

And how is it gonna move the needle for me in language that makes sense to me, which is, it’s going to be revenue, it’s going to be my gross margin. It’s going to [00:08:00] be my cost, it’s going to be my profit and these were all the things that they were really interested in. And so I thought to myself, okay, this is great.

And, but even then, sometimes what I noticed is that, okay, roadmaps are still getting overridden by stakeholders, right? Like they come in and there’s almost this like fear of okay, I get your point, but no, I want you to go and build this, right? And then I started, and of course I would leave very frustrated, as I’m sure many people here can relate, right?

It’s this idea of we’ve done all the hard work, right? We’ve done all of the discovery, we are giving great customer stories, we’ve really tapped into the insights. We know that by experimenting in this particular area of the problem, we are going to change behavior, make people feel value, and we know that’s gonna have an impact on our business.

And yet, sometimes the response is still, no, we don’t care. Go and do this. And so that made me start really, one, the classic, so this also to a degree, and I’m sure we’ll talk about this too, is I think oftentimes in the language, in our. Space comes back to this idea of agency, [00:09:00] right? It’s oh, you just need more agency.

You should do more of the discovery. You should do more. It’s almost like it’s positioned as if it’s some form of failure of product people. And I was one of those people that really believed in inside me of I’m not gonna be a victim, so I will take ownership of whatever.

I can take ownership. And you continue to do that and there’s this kind of almost like this internalized kind of self-blaming that goes on because of it, okay, it must be ’cause I suck at my job. That’s why this is not working. And all of that then got me to recognize that, wow, this is sometimes a very depressing system to work in because you can do all of that good work.

And that made me then dig deeper to really understand, and this is where as a CEO, it helped me understand a lot better. Much more so than being a CPO because when I was A CEO and then sitting in boardrooms with, to take a big step back and I am really sorry for the dumb economics lesson here.

But the fact is, when we think about startups to scale up to enterprises, all of these systems work in this one simple idea of like our capitalist economic system, right? And what does that really mean, [00:10:00] right? Which means that, there is a group of people that have put money into something that they need a return on that investment and that return on investment has some sort of a time horizon to it, right?

And that might be a year, that might be five years, and it’s usually a multiple X return that they’re looking for. So even if you think about the CEO in the room with a board going through a planning cycle, they have set targets for growth way before any of the discovery has even begun, right?

So at the end of the year coming into the new year, you’re gonna have a CEO show up. And I don’t know how many of you guys have experienced this, but when I’ve sat down, even today, some of the CEOs that I coach, when I ask them the simple question of, Hey, give me an idea of your vision and your strategy, the answer that comes back to me is not a vision or a strategy or a problem to solve or a market to go after.

It’s a target it’s a financial target, right? And they come with a number saying that this is our strategy. And I say that’s really a strategy, that’s a number, right? It’s like a strategy is defined as, like what problem are you solving and how do you plan on solving [00:11:00] that problem? And how do you plan on creating value by solving that problem?

Do you have an answer for that? And they usually don’t, right? And again, it’s not because they’re bad people, right? But, sorry, go ahead, Janna. 

Janna Bastow: And that’s really telling, right? The fact that they’re listing their number, right? Reach this number. That’s their strategy to keep their job, right?

Oftentimes the CEO or whatever sort of set of stakeholders you have up there, they’re holding on by a thread sometimes because they’re at the whims of the board. They’re the whims of external stakeholders who often have more power than they do, who are setting these. And actually that is their strategy is they just gotta hit that number and that way they get to hold onto their job.

Now, is it a strategy? Not for the company, and that’s the piece that they’re missing and ends up getting translated badly down these different chains. And that’s where you start seeing this this concept of this, whether we call it a misaligned or broken incentive system. But, ultimately everyone has different goals that they’re sometimes not saying themselves to get people around them, which means people are pulling in different directions.

Ronnie Varghese: Yes, absolutely. A very personal story is [00:12:00] that I used to remember sitting in quarterly I don’t wanna call ’em quarterly planning, but we used to have a cycle where before going into every new year, we would sit down and kind of plan for the next year, which is we would come with all of our problem statements, right?

That came from our discovery. And we would say, okay, if this is what our objective or this is what our target is, then these are the problems that I think we should go after. We don’t have a solution for them yet because we still have to go into the solution discovery, but we’re quite sure, based on the evidence that these are the problems we should prioritize.

Right? And oftentimes I would see my CEO pick apart, not the logic, but he would pick up the people, or he would pick apart the fact that it didn’t come with a solution that gave him a sense of clarity or a sense of it’s because I think there’s something about, again, roadmaps, right?

Roadmaps are there to really solve a comfort problem. At least in my perspective, right? It’s there to give confidence that we are clear on a direction to go. Yeah. So I think giving people a roadmap gives those individuals and remember this is really important. They might have a title of [00:13:00] CEO, C FO, COO, whatever you wanna call them, but they’re people too.

They’re people that have their own fears. They’re people, just to your point is that they have someone that they answer to as well that have put a particular expectation on them to deliver something for them to keep their job. And so they’ll come into the room and they don’t talk about that. They don’t share about their fears, they don’t share about their insecurities yet.

’cause they feel like they have to be the ones to show confidence or have the answers. And so when my CEO would have a go at members of my team, being angry or being upset or picking things apart, we would leave the room. And I would, I’d sit there with my team and they’d say I don’t understand.

Like, why did he pick that apart? Or why was he so upset? And I would tell them, listen guys, I’m not making excuses for his behavior. But I think what you guys don’t recognize sometimes is that he’s a person too, right? He’s a person with a heck of a lot of fears and we have to answer to him, but he has to answer to everybody.

He has to answer to us as his employees. He has to [00:14:00] answer to the market he has to answer to, and in this case, I say he, because it was specifically he, but it’s she or he, whoever is in the position of leadership in that, it’s a scary place to be. Yeah. That pressure where their compensation is tied to those targets where their you know, and it could be in the form of whatever their salary is, could be in the form of, whatever shares they own, oftentimes is very tied to short-term in incentives, right?

And that leads to this whole idea of okay if the financial plan is set before any kind of discovery is done and that’s done in a waterfall model, then the things we’re doing within that system are constantly competing against that.

Janna Bastow: And so give us some examples. You say that all of these incentives are based on like short term, a lot of these the, these these movements are based on short-term incentives.

What do you mean by these short term incentives? What does that look like for a real CEO?

Ronnie Varghese: So in principle, a lot of that operates in the form of some sort of a, so let’s say a scale up, right? Most scale ups that I’ve worked in are less concerned about profit, and they’re very much concerned with growth, right?

[00:15:00] And actually we can look at it in today’s world, right? If we look in the AI world that we live in today, and you look at all the buzz around it, most of what we’re seeing in terms of the metrics in the public sphere are all growth metrics. And that’s what these companies are competing on, right?

They’re competing in the market on whether it’s Open AI, whether it’s Anthropic, whether it’s Perplexity, any of these companies. The most important metric that these companies are displaying to evaluate themselves and how the market values them is based on the number of people, the percentage of the market, or the active users that they have.

You can imagine there is a C-level executive in there where their compensation is tied to both the continuous growth of that number. And also to have that number in their company is competing against the market. And that individual is directly tied to growing that. Now growing that does not imply that it’s necessarily creating the greatest value, right?

Because there’s a number of things that are done just to attract people to the [00:16:00] platform. And that, like you said, doesn’t necessarily trickle down well to the teams that are solving the problems, right? Yeah. And so that CEO then comes back and puts a lot of pressure on their teams, because that growth, especially in today’s world where that’s hyper accelerated, right?

They have to show like 10, 20 x growth in a quarter. Which is insane. Yeah. In the pre AI world, I used to think the kind of pressure we were under was immense. But I can’t I see it with some of the leaders that I coach today, the pressure that I’ve learned under is immense.

Janna Bastow: Yeah. And the reality of if they don’t hit those numbers is gonna hit them like a brick, right? You don’t, if you have a bad quarter as a CEO, maybe you make it through. If you have a few bad quarters, then you’re out. The board will often replace you with somebody who is willing to do growth at all costs.

And this is also why. This is why I often see companies who they had the chance to take a leap of faith on investing in R and D or investing in an acquisition that would’ve been transformative for them. But they don’t do so because they’re just so focused on getting those numbers, moving it up in the right direction, that they’re not actually [00:17:00] willing to take a look around and say, actually we could try to go for this thing.

This might take a bite out of us now, but could be impactful for us later on. Like examples like Kodak for example. Kodak held all the patents for digital photography, but they got eaten alive because they didn’t dare jump into it. They thought it was gonna slow them down, when in fact that was the direction they had to go.

Or things like Blockbuster, you hear this rumor that they apparently turned down an offered to buy Netflix when it was much, much smaller, right? Yeah. It’s they could have moved into that, but they stuck with their guns and just continued to grow what they were trying to do. Now, I wish I were fly on the wall in those rooms when those conversations are happening.

I didn’t get to see what they were making or how they were incentivized or anything like that. But it is a pattern that we see over and over again. 

Ronnie Varghese: Absolutely. And actually you touched on another thing, which is once an organization or a company has gotten to a certain size, there’s an added risk that the leaders in that company have, which is they cannot lose size.

And so they become a lot more risk averse to do [00:18:00] experimentation as well. So that’s why sometimes, and I’m sure many of us may have gone through being at a startup versus being at a scale up. It’s interesting ’cause I, I think startups still to a degree, have still a sense of all the things that we do talk about in our crop show up a lot more I think in startups because they’re a lot less tethered to

these external forces. But where I have seen that shift is, because startups oftentimes begin with that very I would say idealist kind of point of view of no, I really do wanna solve a problem. That’s truly existing and I’m really just trying to hone that as best as I can.

But at some point in time, because of the way that our incentive structures our market incentive structures are built there, then become measured on growth. And that growth, our system has created this concept that you need to get external investment, whether that’s from a VC or some other investor to come in.

And as soon as you get that external investor, what you recognize about a vc, for example, is a VC does not care about the problems that you solve. They care about the time horizon and they care about [00:19:00] getting a significant. Return in that short time span. And so you can imagine that now the entire internal incentive structure shifts accordingly as well, right?

And you’ll often see leaders who are quite good leaders in a startup. And you’ll see this sometimes where you’ll see the startup leader get shuffled out for a more mature leader. And that might be the case, but I actually think that often happens because the incentive changes the original CEO or the leadership of that team that really did wanna solve problems, their ideology doesn’t fit what this new company wants to do anymore.

Janna Bastow: And ultimately, that might be a win for the company. That’s the thing that unlock someone enables them to get to that 10 x growth is by taking in that funding and by switching out their leader for somebody else who’s able and willing to do but it’s not a win for the human who was in that role.

That’s right, and that’s what we’re up against is that the individual humans have these incentives and sometimes it is to get the salary and their bonus and whatever else. And sometimes it’s just to keep the job, because that can be on the line just as much as anything else.[00:20:00] 

Ronnie Varghese: Absolutely. Absolutely.

I was gonna say that, so I know what I could ‘ve, described this again it sounds like there’s this very behemoth system that, I like, I don’t want people to, I guess walk away with a sense of just doom and gloom either, right? It’s okay, I know that this is the wall that I’m up against.

And so what can I do? Because that sounds pretty depressing, it sounds then what’s the point of me doing anything whatsoever? I can do great work, so might as well just give up and go home and that’s not really what I want people to take away. I think it’s more about, like we talked about before, it is about naming the system for what it is and how it does operate, and being able to shift what is actually within your control and let go of the things that aren’t within your control.

And that’s kinda the mindset shift, right? Which is, okay, I can’t change this incentive structure, but I can try a few things. And I remember there was a few things where when I started seeing these leaders as human beings for one, and recognizing that they had their own fears, they had their own, let’s say pressures that were driving them, I did my best to, as a human being understand what those fears [00:21:00] were, what their objectives were. And try to do my best to also align the product work that we were doing to both achieve the types of problems that we wanted to solve, but as much as we could also achieve that individual person’s objectives as well. I’d say there’s the customer or market objectives that we’re trying to solve.

There’s the organizational target objectives that we’re trying to solve. But I think one thing as product people or product leaders is also solve the individual challenges of those leaders that you’re trying to support as well. Yeah, is that if we can really humanize those people and try and really help them in what they’re doing, you’d be surprised by how quickly they will start supporting working in a different way as well.

Janna Bastow: And this is what’s so unique about being in a product role, is that you are the one who is closest to all these different moving parts, right? You know that we often represent product management as being in the center of the business, the tech and the user. And we often under utilize our business reach as product people, right?

And so what we’re [00:22:00] talking about here is, how can we build up a shared vocabulary, so that we can talk about these problems? How can we learn which questions to ask? Or how can we just build our confidence so we can start talking to leaders about these tougher ends of the equation which all influence what we’re doing, right?

It’s not just about what the market needs, it’s about what the company needs from the product function as well. And I often remind people that like Ronnie says here, your CEO is a person, right? They’re people too. They are humans just like our customers are. And just like your customers they might be somewhat

difficult to understand and all that sort of stuff. We demystify them by doing discovery. We get out there and we talk to our customers and we set up ways of learning from them. You can do these same activities with your internal stakeholders, with your execs. You can ask questions around what problems they’re trying to solve or, what they’re trying to do instead, or how they’re thinking about things.

You can pull out this information in the same ways you pull out information from your customers. And there’s lots of unique ways of doing so. Sometimes it’s just a matter of [00:23:00] asking a series of questions. Or, asking them about why they’re going for certain things, right? Not just taking it face value, X number as a goal and trying to then create stuff to ladder up to it.

Ask them where they came up with that number and what happens if you miss it or how it was made up of what sort of numbers it was made up of. And that will start getting you closer to understanding what they’re trying to achieve. Now, the thing is that humans are also human, right? CEOs are as we say they’re humans.

And humans do have some of the same biases and things that customers will as well in that they won’t always wanna tell you the truth. They won’t always wanna tell you everything. They’ll hold something back. And so it’s a matter of trying to understand and gain trust and have these conversations in a way that allows you to work meaningfully with them to make sure that you are able to help achieve their goals and your goals in the same breath.

Ronnie Varghese: Yeah a hundred percent. I think this kind of ties into sort of a second point, right? Because I was trying to think about how to frame what I see as [00:24:00] let’s say the root of a lot of things that we talk very symptomatically, right?

I think, like I always go back to actually one of the things where I think it was Marty Cagan’s most recent book Transformed. He laid out about seven different reasons for why transformations fail. And, I’ve got a few of those written down here.

Like one of them is for example, weak product leadership in roles. Another one is lack of CEO and executive commitment. Failing to empower teams focusing on output over outcomes. And when I see these, they are true. And that’s been my experience of why transformations are really hard.

But once again, I think oftentimes the way that it gets framed is it’s a problem that product alone has to somehow solve. That it’s because we have to be better at our craft or we have to be better at talking to our customers, or we gotta take it all on. We do. Like I think product people take it all on.

And, what I’m going for in terms of the root of the problem is, there’s root one is understand the actual business incentive system that actually works. It quite contradictory to all of those things that we’re trying to do in building an organization that operates in [00:25:00] this model.

The second thing is also- there’s a clear thing that we need to understand that most leaders that end up as leaders have never been trained to be leaders. And this actually us as product and let’s say within product or engineering or design, most organizations, not all, just look at the growth structure that exists, right?

It’s usually you’re going from being an individual contributor who is a crafts person, right? You’re really great at product, you’ve learned all of these amazing skills and these competencies, and then at some point you hit this kind of wall. Where in most companies, the next stage for you to move to, in order to progress, which is part of your rewards system, in your compensation system, is you now have to become a manager, right?

There’s a few bigger companies out there that have, I think, clued into this a bit. And they do have two tracks, right? There’s an IC track and there’s also, let’s say people track but most companies actually only have the people track. But what most organizations don’t do is they just put you in that [00:26:00] position because you’re a great IC, right? It’s okay, here now we’re gonna give you a team, or we’re gonna give you a bunch of people, or we’re gonna give you a, a department or a division to now go and lead. And they leave them with zero support. Yeah. And so they might be exceptional at their craft, but they actually haven’t been given any sort of coaching or support in understanding that now what you’re leading is not the product.

And not necessarily you don’t have direct impact on the metric outcome, but who you are as you are, the person nurturing that environment and the group of people and taking care of them. And when they haven’t been coached to do that, what most of them jump into is just trying to scale themselves as individual contributors, right?

That’s one thing to point out. The second is that those other types of leaders. When we look at our senior finance leaders, our senior HR leaders, or our senior like our CFOs or our COOs or CMOs, oftentimes those people don’t end up in those roles because they’re people leaders either.

They end up there because [00:27:00] again they’ve successfully achieved sort of very high level financial targets. That becomes their credibility and they will move into other companies to do similar roles. And so what you have is you have a group of people that are leading that have not really been given emotional intelligence tools.

Like a lot of the human stuff that we’re talking about, which is how do we take care of our team members? How do we take care of our peers? How do we even take care of our customers? And ultimately when those skills have not been translated, the people abilities, the human abilities of just being a community of people that can take care of each other and re and so there was a shift that happened for me at a certain point in time where earlier is that, and I’ll tell you this is where I think it, it started giving me a lot of peace and made me feel much more connected with my role as a leader was, I gave up trying to achieve the targets as my primary job.

And I started focusing on the only thing within my control is I can try and create an environment for the people that are in my [00:28:00] team, where hopefully they are growing, they’re learning, they’re trying to do as much as they can to drive an impact. And that’s within my scope of control and influence.

And in being- and of course, trust me, I’m a person who really believes in therapy. I’m a person who believes in mental health. I’m a huge believer. I use all of these things for myself and they have given me a set of tools that allow me to connect with other people, including those senior leaders who struggle. So that’s definitely one other thing that I wanna talk about, that people should invest in themselves to do that for themselves, because most companies won’t.

Janna Bastow: Yeah. And this is, you’re talking about something there. This is why psychological safety goes both ways, right? So we have to remember that the people who are in these positions often rose up. It’s not because they’re necessarily better or smarter than the people that report to them,

it’s that they’ve been in that position longer and have moved up their career, but they don’t necessarily have the training or the know-how to do what it is that they’re doing now. Remember every business, every company is a [00:29:00] unique creature, right? Everyone is on a different journey. And so even if your execs act and look as if they know what they’re doing, they’ve never actually done this before, right?

Not this particular challenge. They are making it up and sometimes it’s more obvious and sometimes it’s less obvious, right? Some people are better at pulling it off. Other people, obviously we know there are companies out there and I’m sure there’s people in here are nodding along, going, yeah, my team, my execs are struggling.

It is more obvious. But, the reality is that they don’t necessarily know exactly what to do, right? No one possibly can know what to do. They can just go in more equipped. But it’s actually the companies where they’re willing to be a little bit more vulnerable and share what it is that they are trying to do, share their anxieties, share why they are aiming for particular things that allows other people in the team to get on board with it and to help reach those goals.

Otherwise, it becomes very much an us versus them. And that in companies all over the place. Execs versus everybody else. The big bad execs who are just coming up with numbers and barking orders as opposed to [00:30:00] working with the team to help build the best possible version of the company.

And so this is where you got these misalignments where, you know, one group is incentivized to just aim for. So one set of numbers. But isn’t actually incentivized to help bring the team along with that journey. And they don’t wanna show that they are the ones who don’t know what they’re doing.

And so that psychological safety plays both ways, I think.

Ronnie Varghese: A hundred percent. A hundred percent. And I think we should have an understanding of what healthy leadership could look like, but the truth is, most people who’ve never experienced it don’t know what that should look like.

And actually quite unhealthy behavior looks very normalized, right? Yes. ’cause that’s what everybody experiences. And I think having a better understanding of what actually is healthy and what’s not healthy then allows each of us within our roles to be able to make conscious decisions about, wait a second, okay, I can’t change this person, or I can’t change the way that this whole entity operates, like you said, but what can I [00:31:00] do within my

immediate sphere. My team, the people that I interact with, can I take a moment to actually stop and pause and look at these people as human beings that are just struggling with the stuff that they’re struggling with? And can I show up every day and put that first? And then I’m also a believer that if we do put that first, and this has been my experience, the natural byproduct is that we will actually have a better chance of building, hitting these financial targets too, right?

Or these metric targets because it’s just a safer environment for people to work. This takes me back to a story from when I was a baby product manager myself many years ago, and I joined a company that it was within the first couple months I realized that something wasn’t right with how they were operating, they were very much a sales driven type co company, but they were VC backed with this expectation that they were gonna grow like this any day now.

But I was looking at it and realized that, there wasn’t anything that they were doing to actually get to the point of growing. They were just taking orders from customers. Now, keep in mind that I was a baby product manager at this point in time. I lacked the [00:32:00] vocabulary

to know how to talk about this or know how to question it. And so I just went along with the ride thinking they know what they’re doing. And it was only years later. They went under, they didn’t make it. It was not surprising in hindsight. And it was only years later that I built up enough vocabulary that I wish I could have said to baby me going, this is what you should say, this is what you could do.

Maybe there were things that I could have said to raise the alarm or to point out that what product was doing was not gonna help them make it to the next year. And I hope that product managers today, because we get the chance to actually share and learn, this is before I knew all the product people. Product managers, when they get together, share and learn, and create this vocabulary, create this knowledge of how companies can be well run, how companies can be badly run, and what to do about them in these different situations, that it actually builds up our ability to pull the companies in the right direction.

To but to a point, it’s not always up to the product manager to pull the company in the right direction. Jenny’s got a question here around, what’s your view on stripping out bonuses and simply increasing salary [00:33:00] basis? Do you think it helps to drive better behavior? And I want you to answer that question, but also we gotta think about it because, us as product people, we don’t get a say on stripping out bonuses.

I wish I could sit above it all and just dictate how we might create these better incentive structures. But we’ve also gotta think about what we can do in our roles as product people. Is there any more context in the question or is it just as without? 

Janna Bastow: No, that was it.

That’s the question from Jenny, I would read that as, in theory, if we didn’t have these bonuses and we just had people working with salary bases, would that drive better behavior? And I’ve got some thoughts on this but I’d love to hear yours as well. 

Ronnie Varghese: Yeah, so I’ll give you my perspective on it and I’ll say this from the perspective, like how I built my product organization, right?

And anything that I did when I built my product organization was built on a few different inputs, right? One is that there’s a brilliant book, it’s called Trillion Dollar Coach. It’s about Bill Campbell, right? Who was actually one of the coaches, and the reason why it’s called Trillion [00:34:00] Dollar Coach was because he was one of the most senior people at Apple.

He coached Steve Jobs many of the senior people there. He himself was the CEO of I forget the name of the insurance company. It was a FinTech company that he was the CEO of. And then he went on to coach the Google founders, the meta founders, all of these things, right?

And he was in the background. And so a lot of his philosophy informed me, in terms of how to build an organization. There’s other sources there’s one called the Speed of Trust, which is by someone named Stephen MR Covey, who’s actually the son of Stephen Covey, who wrote The Seven Habits of Highly Effective People.

And this is, again, a brilliant book because his book really tangibly describes what trust actually means and how to build a trusting environment. And so based on all of these things that sort of informed my own experience, there was maybe four or five different things that I thought all have to be there to make it a place that can have a great culture, right?

Compensation, meaning financial compensation is just one part of it, but it’s actually subordinate [00:35:00] to a bunch of other things. One is that I think people have to be given challenging problems and given the resources to address those challenging problems. So it’s it’s kinda like you have to be put in a place where things aren’t so easy

they’re actually hard. But they’re not so hard that you can’t work together with a group of people to actually solve them, because that’s actually how we feel a sense of fulfillment and growth, right? Second is that it has to be an environment where people are incentivized to collaborate, not to compete.

And so that’s really important where it’s your reward system has to be based on collective rewarding, not on individual, because that leads to more competition internally. Hoarding of information, not wanting to support each other. Another is that it has to be a place where people are given resources to constantly be growing and learning.

Because, okay. You’re challenged with hard problems. You need to be given the resource to address those. You want to be working in safety with a group of [00:36:00] people, and then as you solve challenging problems and they become easy, you need to be given more learning and development and more coaching to address even harder problems.

So that feeling of constant challenge and growth is what I believe to be the foundation soil that makes it just an amazing place to work. Now together with that, now, as people contribute in that way to amazing outcomes in an organization, then you also have to recognize and reward them for it.

That’s the point at which I believe compensation reward progression. So for me that was the entire gamut of things where if you’re able to do them in some holistic way, you create an environment where people love being there, even if it’s hard and they love being together and they stay together for longer.

But any one of those things on its own, like for example, you can compensate people a lot of money. But [00:37:00] if it’s a miserable place to work, because it doesn’t have that opportunity for growth. And believe me I speak specifically about like product people, engineers, designers we’re people who like tough challenges.

We like to be challenged. You don’t give us challenging things to do and the opportunity to grow and learn. I’m pretty sure most of us would say, any amount of money in the world’s not gonna make me stay. So that’s the way that I think about that problem. But what’s your point of view on that?

Janna Bastow: Yeah you’re absolutely right. You’re talking about fixing some of the underlying pieces that then incentivize people. And when you talk about this idea of stripping out bonuses and letting just increasing the salary basis and having people incentivize by something flat like that, maybe I’m a bit jaded, but I see systems like this as like a stubbornly leaky faucet in that you patch up one thing and people will find ways of extracting value for themselves in other ways.

And so maybe they don’t call it bonuses, but maybe there’d be some other sort of system, whatever in place that that would compensate them. So it’s very difficult to slap on or just say that this is the solution, one versus the other. I [00:38:00] think it’s very nuanced with how companies work and how people work.

And, Ronnie, you’re right, to get the absolute best out of people working collaboratively have got to incentivize them to work collaboratively. And that’s a difficult challenge, and that’s why many of us, continue to grapple with it. There’s another question here from Maria.

And she says, I’ve heard from GTM leaders yeah, this looks like a great list of problems to solve, but we need concrete A RR impact estimations for each, right? As much as we can bring the insight from experiments and the metrics we have, it’s undoubtedly hard to commit to any concrete numbers that GTM wants.

How do you recommend solving this? 

Ronnie Varghese: I wanna take a step back for a little bit, right? Any answer that I share with you guys, I don’t want anyone to take any of that as a silver bullet. And I think one of the things is it’s really important that you can apply any of these things, but this is part of the conversation is sometimes the environment is going to be such that there’s really nothing you can do. And I wanna call that out for what it is.

Right? There’s no amount of things that you or your team could [00:39:00] apply. That said, it doesn’t mean that there aren’t things that we could attempt to do that might actually get us to a better place. And I think it goes back to understanding who’s on the other side with you.

And I would say let’s say sales and marketing and product are always seen as these sort of opposing forces, right? It’s oh, sales is constantly trying to achieve, these targets that they’re set on. And product is always seen as the one that are trying to like, hold them back some way.

It’s no, we’ve got, it’s gonna take us longer to do our discovery. And actually the I think the solution is simple, but not easy, which is the same, which is understanding, like working with our sales counterparts as if they’re members of our team. Recognizing that they’re human being they’re members because they’re right.

Yeah. And absolutely it’s but there’s always this thing of oh no they’re over there. And Yeah. And we’re competing with each other and like pulling ourselves apart. But I think the most important way that I’ve learned to work with them is to actually be in the room with them when they’re trying to make a sale.

[00:40:00] When you understand the pressure that a sales person is under. From their sales leader or from the customer. It changes the way that we as product people operate with them because it’s the same as what we talked about. If you can understand the pressure our CEO is under, it’ll change the way that we communicate with them.

And we frame things to our CEO, is that we have to see our sales partners or our team members as if we’re trying to solve their problem the same way that we do for our customer as well. Which is when we understand their psychology, when understand the pressure that they’re under, and we also bring them into our world, right?

And I also believe in this idea of seek first to understand before trying to be understood. Which is one thing that we as product people love to do, is we want other people to understand our craft. But the truth is actually it’s if we want any form of collaboration with others, it’s actually on us to take the first step and say, let me understand your craft.

Janna Bastow: And to reframe this in product management terminology this is doing discovery, right? So we’re talking about how you do discovery on [00:41:00] the execs within your business. Talking to the salespeople to understand, hey, what is it that they’ve asked you to do? And this is what they’ve asked us to do and this is what they’ve asked this team to do.

That gives you insight as to what the underlying goals of the business are and helps you course correct to make sure that you are putting together something as a collective team ’cause you are on the same team. That actually helps the business move forward in the right directions. It also gives you firepower in meetings with the execs where needed, where if you’re saying, Hey, look, you’ve asked them and you’re incentivizing them to do this, but you’ve asked me and my team and you’re incentivizing us to do this.

If they win, then our thing goes down. If we win, then their things go down. What is the goal for us here that allows us to work together? You can’t have two teams with. Opposite goals and only one team can actually do well in that because it forbades the other one from doing well in theirs.

You know the example being if sales is incentivized just to get short-term sales and close new deals and they’re allowed to sell [00:42:00] anything, it doesn’t even have to be on the roadmap yet. Then that’s going to slow the product team down from figuring out what it is that’s going to help the company do the big growth curve that they’ve been asked to do.

These few things are pulling against each other and that’s when you say if you’ve been asked this, and I’ve been asked this, we’re being played against each other. Let’s go talk to the top, and that gives you something to go talk about. 

Ronnie Varghese: I’ll give you a really funny example of this.

It’s not a sales and product example, but it’s actually a customer support and product example, right? Yes. And so we were given this very interesting product- and so one of my last companies was a travel company. So we used to get people that would call in about issues with their flights through their hotel bookings.

And for some reason we were seeing this challenge where we were getting very low NPS numbers after the customer service calls. And then, part of it was around they gave this problem to our product team to say, Hey, make the customer care team more efficient, give them more data, make it easier for them to serve the customer.

And we said, okay, great. And it’s interesting, oftentimes what we will do is we will go look at it as being like, okay, let’s go look at the interaction problem. Let’s go look at, customer [00:43:00] recordings for whatever reason. I got very curious and I said, I wanna understand what is the incentive system that works within customer care.

And what’s interesting is, so customer care in this company worked on commissions. So they had a base pay and they had a variable pay. And the variable pay and the variable pay was directly tied towards time on call with the customer. Which means the lower your average time on call with a customer, the higher your commission is going to be.

How do you think that’s gonna incentivize a customer? 

Janna Bastow: Who came up with this? I could have told that’d be bad. 

Ronnie Varghese: So it’s hilarious because now there’s a lot of things we could have spent our time looking at, quote unquote technological ways that we could have made this better for our customer care agent.

But when I took this incentive problem to the CEO and said, hello, there’s really very little headroom that we have to address this problem unless you solve this incentive problem. But that’s [00:44:00] just how customer care works. That was a response that I got, right? And that’s a situation where it’s like.

I’m not really sure what you would like me to do with that, but again, it didn’t stop us from trying to address the issues in the way that we could. It also just told us what was the reality of what we could address, right? It showed us what our limitations were, that, hey, here’s a hard limit that is systemic, that’s incentive based, that we’re not gonna change no matter how much we improve something on the other side.

So having that, otherwise, what we would’ve done is we’ve run like hundreds of experiments, maybe not have seen the needle move, and then thought that all the work that we were doing was actually leading to failure. Or just not useful outcomes. So I think understanding all of these different moving pieces actually makes us better at our jobs because we have a clear understanding of what, how to diagnose the problems.

And sometimes the problem isn’t just the problem with how we’re dealing with the customer or how we’re solving the customer problem, but it’s also just [00:45:00] our internal processes. And these incentive systems that we might not be able to change. 

Janna Bastow: Yeah, exactly. And speaking of things that we’re not necessarily able to change, Andrea’s asked a question here as well.

Can we do good product work without a clearly stated strategy? Or and only having those target numbers? Sometimes it feels like the problem is the time horizon. Needing to move the dial on those numbers requires sustained effort that’s just not invested into. 

Ronnie Varghese: And that’s a great question. And this ties to really, again, going back to the idea of what’s not within your control and what is within your control and what is the mindset with which you can operate, right?

I’ll be honest with you guys, I think when I took over this role, I think in my first year there was this constant trying to like, okay, we need to hit our timelines, we need to hit our roadmap. And we were delivering a lot, and none of it was creating much impact, right? And so honestly, I got to a point where I thought I was gonna get fired from my job, right?

Literally, I was like I think I’m not hitting any of the expectations here, but I’m also not doing the way product that I think would be [00:46:00] valuable product work. So we’re not doing product in an intelligent way, in an evidence-based way, in a discovery model way. And I’m trying to appease these stakeholders.

I seem to be failing at both. And so I got to this point in my career where I thought, okay, I think maybe in about a quarter or two I’m probably gonna get fired, which means if I’m going to get fired in about two quarters anyways, how do I wanna operate with the time that I have left? And the conscious decision I made is I went to my team, I said, guys, the way we’re doing this is not working.

We’re not gonna get their permission to try it this way. Let’s go start talking to customers. Let’s start identifying what their problems are. Let’s draw the insights. Let’s start running experiments. And I’m gonna take the heat as the leader. And I should say this in context

which is, I did operate from a place that’s it is better to ask for forgiveness than for permission. And I made this decision that if I’m get fired, I am gonna get fired for trying to do it [00:47:00] this way. Because at the end of the day, what I realized is, if I was gonna lose my job anyways, at least I wanted to be able to look myself in the mirror and say, I tried.

I tried in a way, and it wasn’t because I just did it in a way where I felt like my hands were tied, so to answer that question, what I would say is that when you do have targets, and when you don’t have a strategy, if you choose to take the risk and try to do this in this type of method of product, it can help you develop a strategy. It can help you then have something that is a real vision that you can take back to your leadership team and say, here’s something that makes sense.

And if you’re running, if you’re trying to release things and measuring the outcomes based on the insights that you’re finding, there’s a pretty good chance that you’re going to start driving impact. And the one thing I do know about those stakeholders is that when they do start seeing the needle move, they start believing in this.

And they [00:48:00] become more open and willing. But once again, not everybody because I do believe that it does require leaders that have some level of open-mindedness to being able to see that outcome and shift their mindset when they do. 

Janna Bastow: And Ronnie, that was a great story ’cause you were talking about basically this company wanted to, based on the way that it was set up, the way that it’s incentivized wanted to have you run things in a particular way, right?

Sales had sold this, or we’ve gotta do this thing. So now you’ve gotta deliver this thing by this deadline. And you tried to go at it. You knew that it wasn’t the right thing to do, but you tried your best at it and then realized it wasn’t gonna work and you might get fired. And there’s that moment when you thought that you could get fired, that you realized actually, you know what’s the worst that could happen?

That’s when you started then, frankly, organizing the team in a better way and asking the tougher questions. Now, we, in hindsight, hindsight’s brilliant because you now know that you probably could have started doing that from day one. And just gone pfft to their plan. I actually know a better way of doing this, but sometimes you’ve gotta go through it, you’ve gotta try it their way.

You’ve gotta try it, they just get a sense as to [00:49:00] what’s in there. But if there’s anybody out there who, I’m sure there’s people listening who are in a position where they’re going, something doesn’t feel right. I don’t think this is gonna help me hit the goals. I know I’m doing it how I’ve been told to do it, but I’m not sure if I can break outta this.

Actually, you probably can break out of it earlier than you think you do. You probably don’t need to get to the point where you think you’re gonna get fired to step up and start asking the tough questions and taking a few risks. And I recognize, and I say this from a place of privilege, it is a risk, right?

There is the chance that maybe Ronnie, you were about to get fired and by stepping out you could have been fired first day. We don’t know. But we do know that there are most likely better ways to build things and get the team on board with stuff by breaking the mold a bit, by asking for forgiveness rather than permission.

Ronnie Varghese: Absolutely. And I think, you mentioned something that is a really important caveat, right? Which is that it is a privilege to be able to make that choice. And there’s a lot of people who are going to be in organizations or in cultures or working under [00:50:00] leaders where you have a personal life context where it’s no, I need this job and I need the paycheck and I need to support my family and I can’t take this risk and I am actually in an environment where even if I tried, it would piss somebody off so badly that they would most likely fire me pretty quickly, right?

And that is something that a person has to be conscious of and make a very deliberate choice for themselves of “is this okay for me to accept and therefore I have to accept that maybe there’s not as much I can do here.” And that’s the type of awareness that I think people should have.

Hopefully also with the help of support. And that’s why sometimes we can’t be really objective for ourselves. That’s where a coach, a mentor, someone even who’s a peer at another organization who’s not in the middle of it with you, can often times be more objective and be realistic for you.

’cause I’ll also say that two things happened to me in that situation, ’cause I don’t wanna make it sound like I was some sort of a hero doing that, right? I wasn’t right. Like I, I’ll tell you like a part of it was, it’s like I had the privilege to be able to do that. I, I sure if I lost a [00:51:00] job, I knew I was gonna be okay, right?

Second is that I was in a place where the results did change the mind of the people who were there, because the people I was working with were egoless enough, right? That they were like, oh, you know what? At the end of the day, the result is all that matters to me. There’s some places where you’ll be working with people where even if you’re achieving that target, the politics of the place or the egos involved.

Just somebody’s ego is gonna get bruised and get hurt that, oh, somebody else seems to be doing the good work and they’re not gonna feel good about that. And that’s gonna lead to all kinds of things. This stuff is a lot more complicated than it looks, but it is important to have those conversations, whether other people to figure out what’s the right choice for each and every single person.

Janna Bastow: And remember, it’s not your job to be the hero, right? You can’t save every business. I look back at this story from when I was a very new product manager and I didn’t have the vocabulary to talk about it. And I think maybe, if I’d done some things, maybe things could have moved in the right direction.

But actually, realistically, the company was gonna go down anyways. It went down [00:52:00] six months after I left. And I look back and, what did I take from that? Yeah, I didn’t save the company, but that wasn’t also my job. What I did take from it was some really good lessons on how to run and how not to run a business that allows me to take that forward in my career.

I don’t wanna put on people going, oh, you, you have to go do this thing and step up and say these things and then it’ll all fall in line. Sometimes it will, and actually it’s definitely worth a try or oftentimes worth a try. And it’s with breaking that assumption that everybody above you knows what they’re doing or has told you exactly why they’re doing things in a certain way.

But actually sometimes just asking those right questions can unlock information that you can use to help shift the way that the company itself works. And Ronnie is coming from a place where it actually did shift the mindset. It is possible. That said absolutely agreed that this is something that is coming from a place of privilege.

It’s a place of saying, Hey, you know what, we can take this step outwards. That said Ronnie, you’re absolutely right in saying that a lot of people could benefit [00:53:00] from having coaching or guidance or additional help in that sort of sense. Ronnie, do you wanna tell us a little bit more about what you’re doing with Mindful?

Ronnie Varghese: Oh yeah, absolutely. For sure. You mentioned it a bit in the intro. It was probably about three or four years ago when I was in the middle of doing that CPO role. At some point along the way, what I came to realize is the part of the job that I actually loved the most was actually

seeing the people that I was working with grow. And because of some of the training that I’ve had and the work that I’ve done that, that I had amazing coaches who supported me, and my leadership style was very much a coach leader style. Which is I really believed in helping people grow into having the skills and the capability, but also the emotional intelligence to do this type of work.

And so when I came to the natural conclusion of that role, probably about a year before that I was thinking about what do I really want to do? And what I realized is actually I wanna help other people become that type of a leader. Like a leader [00:54:00] that fundamentally cares, someone who cares about creating the environment that makes it great for other people and other coach leaders in the world.

And so that’s where I went off and said, Hey, this is what I’d like to do for the rest of my career, and really help other leaders. What’s interesting though is i’ll give you an example. Either I’m really good at what I do or I’m really bad at what I do. Because in the last year there’s been at least three of the clients that I’ve worked with where what they came into coaching for was they came into coaching, which is, they were at the VP level and they wanted to break into the C-suite.

And their sort of objective for coaching was, I want to make it to the next level. And we worked together for about two months, and at the end of the time that we worked together, two out of those three actually decided to leave their job and go do something different. Because one of the first questions that we start off with in coaching is what do you think is truly gonna make you happy? What’s gonna make you feel fulfilled? And what do you think this promotion or this bigger scope of a role or this increment in your [00:55:00] job, what is it really trying to achieve for you?

And then in the work that we do together, we actually try and dissect is achieving that really going to help you achieve that? And with at least two of those people, what they came to realize is, “oh, this is what I think I need to do because I’m not very happy in what I’m doing right now. But I thought that by getting to that next level, I’m gonna get there”.

But they came to realize that actually no, that’s not what’s going to help me achieve what I wanna do for myself. Now, in other cases, yes, that is what people moved on to do, but I think that’s what coaching can really help people do is to really recognize who they are and what their values are and what’s important to them, and then bring that to the work so that you can really feel true to yourself and what you do.

Janna Bastow: Fantastic. Sounds like huge amount of impact that you’re having there, so really appreciate hearing about that. Thank you so much Ronnie for joining us. Just before we go, I want everyone to get this into their calendar. We’re gonna be back May 28th. We’re gonna be talking to David Pereira all about another hard truth.

AI made you faster, but it did it make you any [00:56:00] better as a product manager? So we’re gonna be diving into that same time, same place May 28th. So get that in your calendar and the invites for that go out soon. In the meantime, huge thank you Ronnie for chatting to us today and sharing these absolute ground truths that we see in these companies.

Really good to to bend your ear on that. And thank you everybody for all your questions and jumping in on the chat. Good to see you all here and we’ll see you again next time. 

Ronnie Varghese: Thank you so much Janna, for having me. Really appreciate It was great to be here. 

Janna Bastow: Of course. Fantastic. All right. Thank you everybody. And we’ll see you here next time. Bye for now.