Nathan/ Twenty-five and more years ago, in order to start a company or even a major new initiative in an existing one, you needed an 80-page business plan. That was the expectation. Not even 10 years later, it was down to a 14-slide deck, at least if you’re in the tech world. What would you say the requirement is today?

Sara/ From the people I speak with, it seems like what investors and leaders really focus on, now, is some version of Alexander Osterwalder’s business model canvas as the executive summary of what used to be a business plan. However, I firmly believe that storytelling also needs to be a part of an entrepreneur’s—or a product manager’s—pitch as well. Storytelling helps you not only get clear about what problem you are solving for whom, the essence of how you are solving it, and how you are solving it differently than other options your customers and users have, but it allows you to create an emotional connection between your listener and your customers, users and/or stakeholders.

I spend a lot of time with product managers through our Product Management Programs at UC Berkeley and observe a widespread problem: They struggle to get to the essence of the story that captures the experience they are creating for their customers or users. These challenges show up in several ways. Sometimes the person has trouble getting to the heart of what the product does and starts listing myriad features of their offering instead. Other times they struggle to get to the core of the problems they are tackling, instead providing a laundry list of the challenges customers might be facing. Overall, they struggle to articulate a coherent story arc: We are helping this person, who really wants to achieve these outcomes, but cannot do so because of some conflict, with our value proposition (that resolves the conflict, thus facilitating the outcomes). Our offering works in the following ways (e.g., it collects data, analyzes data, and provides personalized reports), unlike other ways the customer has to solve the problem.

In short, very often product managers and entrepreneurs are challenged to communicate – in a short amount of time – the essence of their business. As our local storytelling expert, David Riemer, likes to say, “you can’t tell a good story if you don’t have a good story to tell.” Capturing that story and then delivering it well is critical to making a case for a new offering or business. Constructing a coherent narrative, of course, requires sufficient background research to deeply understand customers and users and their interest in a potential offering, and to evaluate the viability of associated business models.

Nathan/ That’s interesting. There’s an example of people that have done the work, that have the data, but just don’t know how to parse it for insights vs. the stereotypic startup that has an idea but hasn’t done the research (or know how to). They just have this idea to configure to tell the story they want to.

Sara/ We see both issues happening. Product managers ((PMs) are often so immersed in their work – feeding the agile “feature mill” in many cases – that they have a hard time seeing the bigger picture. What are the outcomes their customers or users wish to achieve by using the feature or product the PM is working on? PMs also are frequently assigned a small part of an overall customer or user experience, and don’t have a sense of the bigger picture of what is being created. That makes it hard for them to tell the bigger story and thus to understand where what they are doing fits.

Entrepreneurs, on the other hand, often start with a “great idea” and have a hard time hearing feedback – if they seek it – that contradicts their view of the world. They have cool new technology that they are just sure will help people exercise more, sleep better, lose weight, or spend less time folding laundry. Unsurprisingly, they find people in the world who do want to exercise more, sleep better, etc. But they don’t take the time to more deeply understand the underlying dynamics associated with changing sleep, exercise and eating habits, or where people might store that great clothes-folding device.

To your question, there are many ways to lack clarity about a what problem you are solving, for whom and how. Understanding the big picture provides helpful context and guidance for making day-to-day decisions.

A few years ago, we spoke with Nobel Prize winners to understand how they engage in creative work. One of the discoveries we made was that Nobel Prize winners often have a big question that guides their lives and work. UC Berkeley’s Saul Perlmutter, for example, asks “what is the fate of the universe?”. That leads to asking whether it is expanding or contracting, and in turn to asking how one might go about measuring whether it is expanding or contracting, and then to what technologies will be needed to make those measurements. Day-to-day, Perlmutter works in a lab of physicists and engineers who are designing and deploying equipment to make those measurements. When an experiment fails, however, he has a place to go: Are there other ways to make these measurements? Is the universe contracting instead? Now that he has shown that the universe is expanding, he can return to his big question – what is the fate of the universe?

Product managers would be well served by knowing, even as they metaphorically are working on the technology to measure phenomena in outer space, that they are doing so in service of learning about the fate of the universe. How does the micro customer journey map associated with a specific product feature scaffold up into the bigger picture journey map of the customer’s entire experience with the organization? Entrepreneurs would be well served by asking themselves what outcomes their potential customers aim to achieve by using their offerings and why they want to achieve those outcomes. If they have the answers to those questions, they have someplace to go when their current product idea fails. And they are better prepared to answer investors’ questions about the context of their offerings.

Nathan/ I imagine it changes a lot based on whatever the culture is within the organization.

Sara/ Yes. Culture, organizational design, reward systems all make a difference in the extent to which an organization can work in a customer-centric fashion. Data from thousands of product managers across a wide range of industries, for example, unsurprisingly shows that sharing of information across functional silos in their organizations is a significant impediment to actively innovating customer and user experiences. Years ago, Jay Galbraith wrote a book about organizational design as an information processing model, meaning that we structure organizations to optimize flow of information. As information flow has been simplified, obviating the need for hierarchy to manage it, we are now arguably faced with a new challenge of creating meaningful and targeted information sharing.

Nathan/ Some would say that it’s just data, not information.

Sara/ Absolutely. That’s an important distinction. We have mountains of data now, so we must be smarter about asking well-considered questions of that data, employing “backward market research” as it were to thoughtfully query the data available to us. How do we get meaningful insights from that data? How do we move beyond focusing on functional performance of our offerings to see their emotional or meaning-based effects on customers and users? (Hint: the Net Promoter Score is not the answer.) How do we remember to take a step back and ask “why?” when we find interesting and unexpected correlations in data? How do we exploit both qualitative and quantitative research to discover meaningful opportunities? Who should be doing this exploration?

And, upon having identified new insights or possibilities, how do we bring those possibilities alive for the broader organization? Several years ago, I worked with the Mergers and Acquisitions group of a large consulting firm. The team played with various metaphors to bring alive the experience of a CEO going through an M&A transaction. One of my favorites was that the CEO was like Philippe Petit walking the high wire between the World Trade Center buildings. The metaphor allowed the M&A team to ask what their role was in supporting the CEO. Did they simply paint a beautiful image of the building on the other side of the journey? Did they install the wire? Did they train the CEO to walk the wire? Were they out on the wire with the CEO? Were they a safety net under the wire? Having the metaphor allowed the group to create shared understanding of the experience they offered in the present a well as of the opportunities they had to improve their clients’ experiences of mergers and acquisitions in the future.

Turning data into understanding might look like creating a shared repository of data about customers and users (which some product portfolio management software is starting to feature). It might look like data arrayed into customer experience maps, one for customers’ lived experience today and one for a future experience. There are many ways to represent data in frames that create deeper and ultimately shared understanding across an organization. (I like Vijay Kumar’s 101 Design Methods if you are looking for alternatives.) It is easy to say that you work in a customer-focused organization, but much harder to do. Aligning the organization around a shared understanding of customers and users, making day-to-day decisions with customers and users in mind and using metrics that relate to the customers’ experiences are difficult changes to make in the processes, behaviors, and structures of the organization.

The embeddedness of existing mindsets is apparent in comments a product manager recently made to me. She admitted that she realized that she had been so busy executing the development and launch of a new product for the past six months that she realized she hadn’t even thought about the customer in that time. Her experience is not uncommon. Changing it will require micro-level behavioral changes in the organization.

Nathan/ I remember when it was a big thing to help businesspeople move from solution-finding to problem-finding. That was really difficult for a lot of people, especially coming from a traditional business background.

Sara/ It is much more common today for people to ask, “what problem are we solving for our customers?”, so at least that behavior is more ingrained in some organizations. Unfortunately, the answer is often something along the lines of “we give our customers these features”, so we still have some distance to go in embedding problem-focused mindsets in organizations. Organizations remain overly focused on keeping the “feature mill” fed and regularly lose track of the outcomes those features will facilitate for customers.

Nathan/ Well, I have a problem with all the outcome-driven innovation material, too, because while it focuses on outcomes, those are almost always, still, framed as features, not about customer value, brand, meaning, emotion, etc. The challenge is to keep everyone out of a purely quantitative mindset. If your culture is only about the quant, like if you’re the classic quantitative optimizer, then it really doesn’t matter what tools you use because you only ever put quant into them. As you point out, none of these tools restrict quant but if it doesn’t exist for you why would you ever think about putting it in?

Sara/ Right. If you aren’t careful to comprehensively examine the jobs-to-be-done or customer outcomes to be achieved, you might overly focus on functional jobs which are often the easiest to quantify and measure. How quickly, for example, can you find the song you want to listen to? If you keep probing, however, you learn about social and emotional, or what you’ve identified as meaning-based, needs. A useful tool for finding meaning-based outcomes is to use the “five why’s”. Why do you want to find a song? So that I can listen to something that matches my current vibe. Why listen to something matching your current vibe? Because it will improve my mood. Why improve my mood? So, I can be better company for my friends. Doing this kind of exploration not only helps you to connect desired functional outcomes to more meaning-based outcomes, but it may open the space for more innovation.

Of course, there is always someone in class who suggests that this mindset doesn’t apply to B2B businesses. My question in return is “Do you not have any feelings at work? Do you not care about the social dynamics of your workplace?” I had a great example in class a few years ago from a product manager who worked for an anesthesiology equipment company. He shared that his team had done interviews with anesthesiologists and heard regularly that they the equipment to be “more modern.” In trying to understand what that really meant, they had to ask more questions. It turned out that the anesthesiologists felt that they played second fiddle to surgeons in the operating room. What they really wanted was to have the surgeon be a little jealous—for the surgeon to look over and say, “Hey, what have you got over there?” Of course, the equipment still had to fulfill its functional requirements. But, if it also considered status and creating jealousy, anesthesiologists would select that equipment and convince the procurement people to pay just a little bit more for it. There are more than just desired functional outcomes, even in the B2B world.

Nathan/ And, even on the functional side, often the real requirements aren’t uncovered, even when researched. I love your story about test equipment design from an engineer from a large medical equipment supplier company.

Sara/ That was a great story. We were talking about doing customer research using observation and interviewing in the customer context. One of the engineers in the class raised his hand and said that, after 15 years with the company, he had been allowed to visit a customer site in person for the first time. (Cultural and organizational norms often precluded engineers from making such visits.) For years, he said, the product managers had included a bullet point in their description of the labs stating that they were really crowded. These words didn’t mean much to him until he visited and saw that they had the instrument he had designed on a rolling chair because there was no space for it on the tables. Further exploration revealed that this instrument was chosen to be on the chair as it was widely shared across the lab and rolling it from user to user was convenient. The engineers thus learned that in addition to the basic functionality of the instrument, if they designed a version on wheels, it also could be easily shared. Moments after this conversation with the engineer, he raised his hand again to ask if it might be possible for him to make another customer visit as he had more questions he would like to ask!

Nathan/ Is strategy taught the same in MBA programs these days?

Sara/ As far as I know, it is mostly the same. Courses classically start with Michael Porter’s 1996 (!) article that argues that strategy is performing activities differently than rivals do. Thankfully, it acknowledges that positioning may be based upon customer needs…and on serving those needs differently than competitors do. The resource-based view of the firm similarly focuses on gaining sustained competitive advantage based on having valuable, rare, inimitable, and non-substitutable resources. Much of this work focuses on traditional measurements of business success – revenue, profit, growth – and is limited in how it considers the outcomes it might help customers, users and other stakeholders achieve. Blue ocean strategy thinking at least asks us to think beyond the bounds of a specific industry to innovate.

As you know, in the design world we think about finding the sweet spot at the intersection of business viability, technical feasibility and customer or user desirability. Ideally, business viability would consider the integrated bottom line, including social and environmental outcomes along with economics. Technical feasibility could consider not only whether a technology works, but also the potential unintended consequences of that technology. We don’t need to bring any more Black Mirror episodes into reality. And desirability would bring human voices to the decision-making table with deep understanding of the outcomes – functional, social, and emotional – we want to help people achieve.

A group of former students designed simulation software that would allow a surgeon to practice a procedure before performing it on the patient. But, to train the software, the team needed access to a considerable amount of data from surgeries performed at hospitals. Hospitals, of course, were (more than) reluctant to relinquish that data. When the team showed that they could reduce malpractice suits and deaths using the simulations, they hoped that hospitals would be more willing to find ways to safely share the needed data. Aligning desired outcomes increased the feasibility of the solution.

Nathan/ Right now, there’s also another challenge: “How does AI impact, your strategy or your business?” Most people see that as a technological issue. But what I hear you saying is that we can’t forget that it’s really a human issue.

Sara/ We’re creating Black Mirror episodes today because we aren’t looking at the human implications of the technologies we are using and building. Here’s where we desperately need systems thinking to help us integrate ethical and moral considerations that go far beyond individual use of a product or service itself. Artefact Group has created a great systems map that illustrates the use of systems thinking to understand the dynamics of using social media. It considers not only individual use of social media, but its effects on community and more broadly on society. Upon examining the wide-ranging impacts of social media use, Artefact identifies root causes of the challenges and thus possibilities for change. Thinking in systems doesn’t come naturally to our more linear minds. We need help to develop appreciation for the effects our technology choices today will make on the climate, democracy, and generally on the ways we live, learn and work.

Broadly, this implies we must develop cultures of ongoing learning. At the individual, team, and organizational level, how are we taking in information, observing, and noticing what’s happening in the world. How are we taking those inputs and using them to frame and reframe the challenges we are tackling? How do we generate and bring alive the alternative futures we may create? How do we experiment to learn about implications of the changes we will generate? Our skills today are sorely underdeveloped at all three levels. We must better understand the mindsets, skillsets and toolsets associated with learning, whether from critical thinking, systems thinking, creative problem solving, scientific method, or more likely a combination. 

Nathan/ We have a much larger integrative reality, now, that the traditional tools don’t address. And, really they were always there. We just never made room for them. And like you say, it has to be done continuously. The COVID pandemic and ChatGPT caught everyone off-guard. The world changed in an instant and no one’s strategy worked any longer.

Sara/ The good news is that we now have both the data and the technology to do a better job. As you suggest, our reality has become increasingly complex. We can’t think in the linear ways that used to bring success, e.g., to increase revenues, we must have more targeted ads, and have better targeted ads we need more data, so let’s get more users and get those users to give up more data…by whatever means necessary. We need tools that support identification and exploration of the many variables that we must consider in establishing strategy and allocating resources to innovation.

Suppose we could simulate the dynamics of an entire market or industry. What if we could capture the dynamics of a space as Artefact did for social media? We could then tweak elements of that system and watch the repercussions of the change ripple throughout the system, seeing unexpected effects of our tweak. With “big data” and AI, we surely can build the sophisticated models we need to redirect business to accomplishing not only economic outcomes, but social and environmental ones as well. And we can more thoughtfully account for the systems implications of our choices. I bet that the current strategy tools don’t allow that.


This interview is from A Whole New Strategy: Everything You Need To Think And Act More Strategically