On team structure for subscription products
This blog contains notes from Joshua Seiden’s book – Outcomes over Outputs.
Most Internet products are omnichannel, i.e., they operate websites, iOS app, Android app, publish on social media, etc.
Yet, often teams are organized based on skill, channel, or sub-products. So, for example, the team that builds Android apps is separate from the iOS app team and website team. All three have no direct connection with the editorial team. Similarly, the social media team might be separate from the push notifications team. Finally, everyone is responsible for a little different part of the business. Then there are product managers and editors who don’t have teams of their own but run mandates. They lobby to gain resources from various teams to move their individual mandates.
Is this the most effective way to structure the team? This post argues not and proposes an alternative.
But first some terms
Output is the stuff teams make to deliver value to customers; for example, the iOS team builds features in the iOS app, and editorial teams publish stories.
Value is defined by how does an output help customers achieve what they want to do.
An outcome is a change in human customer behavior that drives business results. There are outcomes that you seek for your business; for example, users should log in, share an article, up or downvote a post, etc. Then, you seek outcomes for the customer, such as reading an article, saving their time, and reducing inconvenience.
Finally, business results are net promoter score, retention, increased revenue from existing customers, launch a new product, decreased cost, etc.
Why we structure teams by skill, channel, and sub-product
There are reasons why we prefer such an organizational structure.
First, it gives a sense of order. Suppose one were to draw out a block diagram of the business. In that case, each of those logical blocks — iOS, Android, Editorial, Website, Push Notifications — have a lead and a team. Additionally, people with similar skills sit together. For example, all iOS engineers sit together, separately from all editorial staff.
Secondly, operationally, it gives a sense of certainty. Each team produces output that they have specialized in. The daily edit meets focus only on stories that will get published, disconnected from everything else.
Finally, leads write the entire roadmap or calendar in outputs (features or stories). Weekly, there is a sense of progress since these teams ship outputs (features or stories).
Problems on this organization structure
Managers with different mandates vie for common resources. For example, each product manager or editor is responsible for a different part of the product. Hence each one has to compete for the same developers, designers, writers, social media staff, and space on the website. This structure kickstarts a zero-sum game amongst peers.
Gatekeepers. With no means of unblocking the jam, gatekeepers get introduced into the system to bring order to the process.
Negative feedback loops kick in. In a resource-crunched environment, product managers and editors have to wait long for their requests to make it to the front of the queue. As a result, they sometimes load up their work requests, getting everything they need into each proposal. This results in other teams ending up having to wait longer.
Roadmaps become bets. Outputs require real execution by people. But the availability of people becomes uncertain. Hence, most long-enough roadmaps become wild guesses.
Outputs are not outcomes. Writing stories or shipping features isn’t progress. An author may write a brilliant piece on a topic that your audience is not expecting from your publication and hence does nothing to move the subscriptions or retention.
No systems-level outlook. In a bid to increase the number of page views per session, a product manager might follow a spray and pray approach, i.e., flood the page with many stories.
While it might increase page views per session from casual readers, it might spoil the user experience for loyal readers, who tend to subscribe, there by impacting the KPIs of another product lead.
Finally, leaders are left planning at the business result level. Business heads are left stranded without connecting outputs and roadmaps to business results (revenue, profits, retention, etc.).
An alternative way to structure teams for subscription products
Organize everyone into two teams. Each team owns and drives one business result. The first team is responsible for acquiring new users, and the second team is responsible for retaining them.
The most obvious advantage of this restructuring is that engineers, designers, and writers can now connect their daily work directly with business results.
This structure forces each product manager and editor to look at only one business result metric and lobby how their skill, part of the product, or channel will move this metric.
The roadmap is no more a backlog of outputs (stories and features) in the hope of business results. Instead, each output (story or feature) is an intervention or hypothesis of change to achieve a milestone in the annual operating plan.
Let’s look at an example.
It would start with the business results — an increase in acquisition or retention.
Mapping business results to outcomes
Let’s say we either know or hypothesize that if we personally one-on-one engage people, they are more likely to buy a subscription or continue the subscription.
From an analytics point of view, this human behavior (users attending events) is observable and measurable. So is the correlation between attendees subscribing or renewing.
Mapping outcomes to customer value
The next obvious question is what kind of events and what would we cover in such events. The answer to this question will vary for the acquisition and retention teams because the value that leads and customers want varies.
The acquisition team would approach such events as a book launch where the event itself gets you hooked, but you buy the book for more. If we reveal everything from the book, then there is no need to buy the book.
Similarly, if the subscription news product has deep coverage on a certain topic, then an event by this team would cover a primer on the topic. Finally, the event would end with a clear call to action to subscribe to read/listen to 50 more articles on the topic.
In comparison, the retention team would use events (an output) very differently. Their outcome would be to make the subscriber rely even more on the brand and product to renew eventually.
Hence, the event would give these subscribers exclusive access that they wouldn’t get anywhere else. For example, reveal how an investigation was conducted or let them observe the newsroom on election counting day and provide Q&A access to star columnists.
Alternatively, the event could be a listening session. Editors could listen to what subscribers would want them to cover more or understand their queries about a nuanced topic like the Farm Bills in India.
Mapping customer value to outputs
Finally, based on the value, the outputs for each of the teams — editorial, iOS/Android/Website, marketing, sales, operations — would vary.
In conclusion, this restructuring can transform the zero-sum game for resources into a team that observes and argues at the systems level.