Full Transcript for Solving Product Gaps to Ignite Growth, with Author Étienne Garbugli

but it can still be used in various different contexts. So I wanted to push that further and make a book that is viewed as a bunch of different entry points where each chapter through testing and through evolution and through working with early readers, became this really problem-solving, where you enter a specific timeframe within your organization, where at this point we're struggling with X, Y, or Z. And then I get a completely different experience from the book. I kind of look at it as you're following the sequence of products, even if you're working in an organization that has multiple products, they will follow a certain evolution that might be different depending on the type of organization, but that forces you to go through different challenges; that forces you to go through different sequences of events. So, the book is about making progress with a product. And the structure that I put in place is no matter where you are, you can find an entry point that helps you push your business forward. Laurier: Yeah, and It follows a logical progression from the ideation stage to all those different stages people are at with their product. And yet, most of us are not starting a book right at that very point when we're thinking of starting a business. So wherever you are, there's a relevant part to that in the book. And you can go back and understand maybe things that you could have done better or how to mitigate the problems you've created by not doing things as well as you might have. Most of our listeners are naturally from the product world and are involved in creating and marketing either a physical or a digital product. There are some distinct features of working with a product compared to a service business. One of them is that you need to create a singular solution you can replicate for many people. And the efficiency that results has led a lot of service-based businesses to "productize" their offerings. I find it interesting that many times in the book, you tell readers to imagine their product as a service business.  Why do you do that? Étienne: So this came...  I interviewed a lot of really interesting people in product. One of these people being Samuel Hulick from UserOnboard, and that's something he's been doing for a few years where he positions it as a service, as a way to explain the mechanics of product businesses, which as I was thinking about it throughout the book, the more and more I was thinking about it, the more it felt like that was a compelling way to explain the mechanics of a product business. One book that I really love is "Defensive Design for the Web,” which is an old book from the team at 37 Signals, now Basecamp, and they used to do these references where they would compare UX challenges or product challenges to real-world challenges. And I always thought that was a great way to help people just crystallize their understanding of what the author is really talking about. And I felt that was a great opportunity to explain that. Laurier: The reason I asked this question is that we very often think of a product as being something that's static and don't recognize that it is providing services, so I like when you have people think about their product differently, because when you do consider your product as if it's providing a service to the people using it, it forces you to think about what it is doing in a different way. That it's delivering certain specific things based on individual needs. People's lives are not productized. People's lives and the applications for the tools they use are very unique. Just like, if I go to a restaurant and I'm ordering something very specific, if you will not let me alter an ingredient on that food, sometimes it may not serve my need.  That doesn't mean the product needs to be different for every person who is using it. But it really needs to address the needs as if they're individuals and not just a group of many people with all the same need. Étienne: I do think that definitely, It's something you can't avoid if you're in consulting, or if you're providing services to people like there is that human-to-human connection or interaction, that's always part of it. And that tends to be something that a lot of entrepreneurs or product people sometimes forget when you're in  the action of building a product, you're talking about the product, you're talking about the ideas it features, but sometimes they get completely disconnected from the reality of people accomplishing their job or accomplishing their tasks that they need to accomplish. And I do think that definitely hints at that. Also, it helps simplify the understanding of what a product business is. Cause I do think if you look at the literature out there, and I'm trying not to complexify what a product is, but there's a lot of things that are kind of making it more complex than it really is, the mechanics of the business, whereas simply providing services or providing value to customers and delivering that in the most efficient way. It tends to get complexified. And I think service businesses tend to be simpler in terms of mechanics. And that just helps tie that to that reality a little better, I think. Laurier: Yes. And the book is very much about validating needs. Both met and unmet needs. How would you describe when a prospective customer really needs a product, as opposed to being someone who might possibly entertain using it one day? What makes a true need for a product that I might be developing? Étienne: The greatest predictor of a need is definitely pain. And the fact that something that's currently trying to be addressed by an organization. so if people are trying to solve the problem in some other way, or trying to find workarounds to get the job done, or trying to find ways to get the benefit from that, that tends to align with the current need. And if there's currently pain and It's a current focus area. Those tend to be a great mix of

things that help you predict whether people will be able to use or desire to use a new product.  I think it's that combination. I go back and forth in terms of what the balance is of how do you combine these inputs to make it as compelling as possible, because there's different schools of thought in terms of, how you can predict or how I can figure out who will use a product and when they will use it. That's still very much a fascination of mine, to try and understand that a little better. Laurier: And that's something that really is a determining factor though in developing a product, something that a lot of innovators don't recognize: just how hard it is to get people to change their habits. What's required when somebody is looking at trying and using a new product in order to change the existing habits, to convert them into a user and a subscriber? Étienne: Yeah. So in my first book, in "Lean B2B," I talk about the idea of the "status quo coefficient." So basically, the idea that you need to provide significantly more value to get people to change their habits. I think that there's ways to understand that momentum. So how much of an impact what you're putting in place will have towards meeting their jobs? There's a great framework by (Bob) Muesta's team about the progress-making forces, which kind of looks at, what are you replacing? What are you changing?  What are the habits that are in place and much of the "pull" of the new product? So how much value you're adding in relation to that? I think there is, I think that's a little bit the framework that has a lot of value, but is not used enough or understood enough.  I think there's that general idea of comparing what people are leaving behind with the product that they are leaving behind, or the task or the process that they're using right now versus what they can gain. So that kind of transition helps you understand a little bit how likely people are to adopt the new product. Laurier: You actually say in the book the product needs to be 10 times as good as what people are using. And that really resonated with me because very often innovators think they've got to create something that's a little bit better or, you know, maybe twice as good. Where does that 10x come from, and why is that significant? Étienne: There's research about, people tend to over value to solutions that they have by three times, a factor of three. And there's also the reverse where creators of products will overvalue the feature set that they have in place by a factor of three as well. So that idea is basically, the 10 times is just an idea of that specifically being more than what this gap is. It's really more about being able to truly home in on: what is the element of distinct value? And whether that is enough to get people to either adopt an extra product, or to get people to switch over products. In that case, the game is a little bit different. So, if you're creating a new product, maybe you just need to be better on a specific aspect that's valued by customers by a significant margin, versus if you're trying to replace a solution completely. In that case, it might be the overall product and the overall benefits that are given to organizations, are given to consumers, that needs to be better. So it's really understanding what will cause people to switch over to your solution and whether that added value is valued by customers. Laurier: I've seen that so many times, that's why that resonated so much with me, is that very often we tend to underestimate the resistance factors: how loyal people are to their existing solution. If I like using Slack with my colleagues, I've got to not only convert myself to using a different tool, but I have to get them all to use that different tool as well. There are so many different kinds of friction from the loyalty to that if I'm the influencer in my group, that's going to influence or make that decision, I've got to actually get other people to buy in to new solution.  And get them through the learning curve, get them to adopt the new product, and get them to not just try it, but like it and fully adopt it. So there's all of that. Plus, the product has to be much better than whatever Slack is doing for me to make all that worthwhile, that I'm going to dismantle what I have and rebuild it around something new. But the innovators creating a new product often don't even think about that. They don't recognize that they've got to do more than just come up with something that's marginally better than whatever people are currently using. Étienne: Yeah. Yeah. And the whole game is like, how do you define "better," and better is completely subjective. And it's going to be also a shifting definition a little bit, like we mentioned before how the market is always changing. So the definition of a better will depend on what is valued by the people that you target, at the time that you target them. So, you really need to dig into that understanding, from really from the ground up, where you understand how people perceive the product that you replace. Cause you're really competing against not doing anything. If they already have a solution, or they already have in place something, that's the easiest path for them. Like not doing anything, keeping the solution as-is.  So there really needs to be that motivation to change. Laurier: To change and then to pay for the new solution too. Because we all have so many subscriptions and If business owners are your audience, if you're selling a B to B product, you're trying to get them to commit not just to using your product, but to using it and paying for it every single month and adding 12 times that monthly cost to their yearly overhead. Very often, they're looking at ways to cut, not necessarily to add new subscriptions. And, I've found myself at a certain point as a business owner too, looking at it like, okay, now Microsoft wants me to pay them every month. And every app

that I try, every little mini thing that I add to what I use is now another monthly cost that's going onto my credit card bill. There's that resistance you need to overcome as well. Étienne: So, the product needs to deliver that value or at least communicate that value in a frequent manner enough that you're willing to keep paying for the product. And that's a big thing. So I had the discussion with an entrepreneur recently, and we're talking about, it's often easier to get just that one-off payment than to get that recurring payment because you're not just trying to get them to switch over once. You're trying to get them to switch over consistently, and fully replace their solution, and adopt what you put in place. So that's a significant ask and that I find, like you're pointing out, that there's a growing trend of people being tired of subscriptions. Where most products, even products that probably shouldn't be subscriptions, are becoming subscriptions. And it's significantly harder to get a consistent, recurring value delivery  that takes an important part of people's attention and budget and workflows, but it's also much more difficult to get to that point as a product maker. Laurier: Welcome back to Product: Knowledge, the podcast about creating and marketing products that improve people's lives. I'm talking to Étienne Garbugli, the author of "Lean B2B" and "Solving Product." Going back to that question of need, I think you have to have a true need to be a subscription -based business now. Because you're going to be evaluated on a regular basis by the people using the product. And when they look at that item on their credit card bill, they have to be able to say, "no, this is something I can't live without. So, let's eliminate these other items, but I've got to keep this one," in order to be able to survive and to be able to stay subscribed to on an ongoing basis, and to continue growing while you're adding new customers. Étienne: Yeah, because there's ultimately going to be more events that will cause companies to cut costs, a little bit like right now with COVID, where people are actually looking specifically at the things they're spending on and they're making these ROI decisions in their head, especially if you're targeting businesses, you need to prove the value and sometimes more and more, the decision makers making those decisions are not necessarily the people using the product. There's a growing trend of software that is tracking subscriptions within organizations like Spendesk, to be able to make those assessments or maybe the purchasing departments have responsibilities to oversee this. So these people are making decisions about what is valuable that may be different than the end users. There is this challenge as well, where your product needs to be valuable enough or useful enough or impactful enough in the organization that other people that may not even be in the usage cycle of the product realize that it can't be taken

off the payroll, I guess. Laurier: Exactly. So that, yeah, when businesses are looking for example at, can we cut Zoom or can we cut Slack, where immediately people are going to scream if you suggest it, because you no longer can conduct your business without those tools. But you may have a dozen other tools you hardly ever utilize, or you have replacements for that are readily available. Zoom is a good example. Maybe you're finding that you're using Google more than Zoom for meetings. So now it's really easy to make that conversion over to Google Meet and stop paying for Zoom. So, if more and more businesses are having that discussion, Zoom has to find ways to add more value or get more deeply embedded and be less replaceable in order to be able to keep their customers subscribed. Étienne: Yeah, that's definitely that's the box I'm trying to wrap my head around is how do you approach, customer development or do you approach business to business customer development, or do you bring new products to organizations in this new world where the entry point is not necessarily always how you predict it. And there's also that internal organization adoption model that's required in order to make your product a must-have in businesses, because we're in a mode where now more and more businesses are trying to be product-led, but also, more and more purchasing processes and organization are a little bit, less linear where different people would try products and then might test multiple products, and then decide on one specific product. So, in this world where products are pitted against each other and in a way that they're being shopped differently, how do you adapt the way you build something that's valuable? And that actually takes off in the organization and becomes an integral part of their workflows in organizations. Laurier: To be successful and even to be product-led, you need to know what your customers are thinking and what they need. You mention in "Solving Product" that a majority of businesses do either very little customer research or none at all, which is surprising but not, because I know how businesses operate and they either think they know what the customers are thinking, or they don't want to make the effort, or they don't know how to approach customers without being annoying. If understanding customer needs and validating a product are so incredibly critical to success, what stops most businesses, in your eyes, from doing that important work? Étienne: Looking at specifically since the publication of, "Solving Product" is, many new organizations are more looking at user needs or their markets from a top-down perspective where they define, they have an understanding of the strategy that they'll use to go to the market. And there are much fewer organizations that do it from the bottom up, where they try to understand really at the granular level, the needs, what people are doing and this thing.  I think there needs to be a bit of a mix of both. And especially for organizations that have started with a top-down approach, it's tricky to get to that level for a lot of reasons, including the fact that sometimes people just don't have the experience of doing this; it challenges their assumptions. It challenges the way they think, their decision-making process internally. They might not have the right people on the team to execute against that. It might be an idea that they don't know what the actual output of that process is. They don't want to have surprises. So there's a lot of reasons why people see challenges in opening this funnel of input or feedback,  or ideas that are coming from the customer up to the organization. I would think it tends to probably be boiled down to company culture. So, if the management or the CEO, the upper management is very much into this, that organization tends to follow suit. So if you look at companies like Drift, for example, where the CEO kind of pushes that mindset down to the organization and everyone adopts it within the organization, that tends to be the way to make it as successful as possible. But many organizations are not in that mindset, which I think will ultimately be very problematic as products become more and more similar in a way, that markets become more and more competitive. Because it will be much more difficult for organizations to find the right way to differentiate against the competition. Laurier: Yeah, I think differentiating is so tied to those other skills of being able to see, to listen, to understand what it is that people need. And I get a sense from even the way that the book is put together, that you are very good at listening, analyzing, aggregating.  There must be hundreds of great quotations in "Solving Product." And you've personally done a lot of interviews in putting the book together so that listeners can do better at conducting their own market research. How do you go about setting up prospective buyer interviews? Étienne: I'm actually doing it right now. I'm working on a bit of a companion book for "Lean B2B."  So, I'm trying to figure out where... it always starts with an hypothesis and depending where you are, you might have more insights into what that hypothesis hould be. So in this case, I'm writing a new book on specifically helping product or tech-first organizations reposition their product to find the right market. So I've taken various different inputs to figure out what types of people might need this, might want this. So I've locked in on four different segments, and I've recruited people randomly in these segments. And what I'm trying to understand is what the did, what they're doing, what's their basic process that they've laid out and that they've used before. And trying to see where things didn't go as well as they were expecting; where things went better than they were expecting. So trying to understand how the basic ideas that are coming out from the market worked out, and what

gaps are there, what issues are there. And I'm trying to find where the biggest value-add would be based on that. So that's specifically for a book, but looking at that specifically for a technology product, for example,  it can be very similar where you're trying to understand how people approach a specific task or approach a specific process. And you're trying to understand what's the baseline. So what are people doing right now to solve their problem? And what are the outliers? What situations made it work better? What situations made it work less? And get a sense of where the pains are, where the ability is to get more value, less value, and try to understand, try to map that to just to understand that process. And then from there you get a sense of whether there is a valuable solution that can be put in place, because if you can't get a 10x value on specific improvements that you intend on making or that you try to bring to market, it will be very difficult to get people to buy, get people to subscribe, engage, and use your product. Laurier: All of that is so important. You mention in the book, even really big companies: Google, Facebook, Apple, Amazon can't successfully introduce new products every single time. They have their failures with the fantastic teams they have, with the research they do, with the budgets and the engaged user bases that they've got. They still can't pull it off every single time. What do you think startups need to know, or how do they need to mentally position themselves in order to be able to create something that's going to defeat the odds and take them out of that default position of failure? Étienne: I think one thing that people don't do enough is focus on your unique advantages.  So focusing on what you specifically know that other people do not know, or look specifically at how you would build an advantage based on what you've learned.  So, there's this model that I have in "Lean B2B" looking at failure rates based on whether you have specific expertise in the type of product that you're putting in place. And whether you actually have the will to learn that specific industry. So by understanding where you would add the most value, where you would be most effective, you're giving yourself the best odds of succeeding. Then I definitely think the other biggest thing is setting yourself up for success. Recently one of my friends sold their B2B business, and it took them seven years. But had they not set themselves up in a way to be able to reach product-market fit, which took a long time, and find the right customers, find the right people in the industry, they would not have been able to reach that. Setting yourself up to not go under, so to have a way to be able to sustain your quest and be able to not give up and keep going in the right direction.  What I tried to push forward is that relationship, and that concept of time to product-market fit. So it's understanding where you are in relation to what

you're trying to achieve, and how much time that could actually take, because if you're not thinking about that, you might not be able to reach the next step. I think what I try to push forward in books like "Solving Product" and "Lean B2B" is ideas that help you shorten those cycles. So you have more chances of getting to the promised land where you're trying to reach. So if you focus on what you know that other people do not know, you give yourself the best odds, and you set yourself up in a way to constantly and quickly be able to reach the phases where there's a little less risk, you will put yourself in the best position to succeed. Laurier: Many businesses really misunderstand what that means, where product-market fit comes in developing their product. To me, it should be something that you have a clear vision to, before you even start, and your validation helps you to understand that, yes, you're probably right. Then it becomes more a matter of fine-tuning once the product is launched, compared to starting off with building something based on your presumptions and then spending a lot of time and money trying to find people you believed and hoped existed out there, and getting them to align with the product. The sooner you can get to that point where you have that real product-market fit, meaning you have not only the people identified, but they're buying the product and succeeding with it. The sooner you get there, the more likely you are to be successful in the long run. Étienne: Yeah, I don't think we position it enough as R and D.  The idea of building something new, creating a new product, when that's exactly what it is. Like, if you're for example, from a product or a tech background, you know that R and D doesn't always yield the results that you're expecting. But if you were to do that long enough, you would probably eventually come up with the light bulb, or whatever invention you’re thinking of. Laurier: Yeah. too often product ideas come from either someone realizing or feeling they've got a better way of approaching something that's already done, like Google, trying to create its own Facebook and the reason it doesn't work is the users that you're trying to reach are either satisfied or not dissatisfied enough with what they've got, or you're trying to solve something that's already solved. Or, doing it from this arrogant point of view, where you're trying to create something for yourself and not something for the people out there that you want to help with the product. Étienne: Yeah. Yeah. I think some of the most predictable, some of the biggest certainties are that your idea will always be at least somewhat wrong. And your implementation of the idea will always be at least somewhat wrong.   No one actually just thinks of a product that fits perfectly on the first try, and that allows them to scale their business. That just doesn't happen. But there's a lot of messaging that causes people to maybe assume that's a reality, right? That's a possibility. Laurier: That's it for this episode of Product: Knowledge and my conversation with Étienne Garbugli, the author of "Lean B2B" and "Solving Product." You can find out more about Étienne and his work in the show notes or at solvingproduct.com. Be sure to visit graphosproduct.com where you can listen to all the episodes, read the transcripts and get insights from our blog. Reach out to us on twitter @graphosproduct or email us through the form at graphosproduct.com. Thanks for listening. I'm Laurier Mandin.