CPO Series: Portfolio Management for Maximizing Outcomes

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The following transcript has been altered for readability. 

Becky Flint: So excited to have you here as a part of the CPO Series, Wyatt, and would love to talk more about portfolio management and how it would drive strategic decision making and maximizing outcomes. So without further ado… Well, before I start, it is super interesting to hear your background. So how does it come to product management or portfolio management?

Wyatt Jenkins: Yeah, the question I most get asked is, how did you get from a DJ to where you are today? And it’s a long story, but I have a short version, which is just that when I was a musician and a DJ, largely in the ’90s, and touring around, I was always tech-forward. And so I would be always dabbling in the latest software and figuring out how to write music with the latest technology I could get my hands on. And I would be the one taking apart keyboards and rewiring them to make weird sounds as an electronic musician. And so I was just very tech-forward.

And then also, we had a problem. I was carrying records around, all right? I was flying to Ibiza and South Africa and Brazil with these giant records crates, they would be like 80 pounds each sometimes, full of like 110 records, and they’d always get stuck in customs and it was a mess. And MP3s were coming out, and my friends and I were trying to figure out how to DJ with MP3s in the late ’90s, and that was really a hard technology problem. And so we were early beta users of this software out of Berlin that let you DJ with a laptop. And then there’s like these boxes, you would plug the laptop into this janky box, and then into another sound card box, and then into the turntables that had time-coded vinyl on them and they would let you DJ with MP3s from your laptop. And that was the original founders who went on to do Final Scratch.

But as a beta user of that software, we looked at our record collections. At the time I had 10,000 records, physical vinyl, and I was like, “How on earth am I going to get all these records into MP3?” And that was part of the reason why beatport.com exists. And so we built a website and we started calling labels and asking if they would allow us to sell MP3s on the internet. And this was like 2001, so they told us, “No,” like everyone said, “No,” for two years. And then finally the technology started to catch up and people started to say, “Yes.” And next thing you know, I was running a tech company that was beatport.com from a DJ. So that’s sort of how I made that transition.

Becky Flint: That is so cool. So I think later in your career, you also run a company related to music and FinTech, right? So it’s like a carrier experience from one to the other. Now, you’ve gone through multiple companies’ different slices. Our CPO Series topic is about portfolio management, so when do you think a company and a Chief Product Officer starts to need portfolio management? And we can start from there.

Wyatt Jenkins: Yeah, there’s a couple things. I think a portfolio mindset, Chief Product Officers can use very, very young in a company, even when you maybe just have two or three teams. And what I mean by that is, even within a single product team, you probably have swim lanes of work. And those swim lanes are bets that you’re making. I bet if we do this, it’ll have this outcome. I bet if we do that, it’ll have that outcome. And so I think even when a company’s pretty small, some of the thinking behind portfolio management is useful because you need to have a balanced portfolio of bets. Bets that are going to pay off in short, medium, long-term, bets that are going to grow revenue, bets that are going to make your foundation more stable, you need to have all those class of bets. So I think the thinking behind it can be leveraged pretty early.

I remember there’s this breaking point for a head of product. Right around seven or eight teams, you just can’t remember what everybody’s doing. You can’t keep it all in your head. And so when you get to seven or eight teams, I feel like you’re going to need to change your processes and you’re going to need to think more in terms of… You’re going to have to elevate and not be in the details of what everybody’s doing. You have to start thinking about them like a portfolio. And a lot of product leaders I’ve met, they break, they stop being effective in that seven to 10 team range. And then it happens again around 20, 25 teams in my experience.

And then if you’re lucky enough to be at a high growth company, where you go seven teams, 25 teams, 50 teams, I find it happens again sort of in that 40 to 50 range, where, “Wow, now I have to redo all the processes, all the systems. Because as the head of product, I’m truly managing a portfolio.” And so I feel like there’s these break points in scale as a leader. And obviously the higher up you go, the more you need to be a good portfolio manager and the less opportunity you have to be in the details of how you build products. So I think a tool would be really useful even at seven teams though. I think even right then you probably need to be using your portfolio hat to some extent.

Becky Flint: Right, right. It’s very, very interesting you mentioned the company has inflection point at certain size, same thing for product. It’s interesting to hear the seven to eight and then you can almost triple that size, and almost triple. It’s similar to a company. Every time you triple in size, it needs to be rewired or reevaluate how things going to be organized and decision made. It’s super cool.

So you kind of, at different size, as part of the portfolio management is always a portfolio planning cycle. Sometimes people call it portfolio workflow, sometimes… So how does a planning cycle look like for you at different stages, and what works, what doesn’t work?

Wyatt Jenkins: Yeah. You know what I was thinking, is maybe even I can define what I mean by portfolio management and then talk about some of the ways that I manage those planning cycles? Because portfolio management’s a pretty deep topic. It’s part of the reason why I love using a tool like this, because I can look at my roadmap through many different lenses.

At the most basic, if I were to define a portfolio management, it is a set of categories to identify the types of bets you’re making. So I would tell a product leader, at the very least, you should think about this. Here’s my most basic portfolio management framework. Explore. These are products where you are going into white space. You don’t know… It’s high risk. Explore is one category, so here’s all my bets that are exploration.

Grow. Grow is category two. And for me, grow would mean like, “Here’s products we have and we need to push them into a new market.” Maybe you take something that’s mid-market and you go enterprise, maybe you have something that’s US only and you go into Canada and the UK or something, that would be under the category of grow.

Sustain is sustaining innovation, where you would have something that’s mature but that you need to optimize and continue to make incrementally better.

And then sunset. Sunset, I think good, healthy, especially larger product organizations. If you’re past 30, 40 teams, or like five or six SKUs and SaaS, you need to start to have a sunset backlog of things that need to go away for various reasons. Maybe they have lower usage, maybe you set a bar of, “Hey, if less than 10% of our customer base uses this thing, why are we still supporting it? It just creates extra complexity for us as a company.” So I feel like good, mature product organizations have a sunset culture.

So that’s my most basic version of portfolio management for everybody here, and it’s explore, grow, sustain, and sunset. So I think you should at least look at all the bets you’re making from that lens. And I think if you do, you should ask yourself, how much do I have in each? And what’s the right… I can tell you from experience, like at Shutterstock, I had about 10% in my sunset backlog. And that’s like, “Oh, here’s all the things that are going to go away at some point.” And the sunset backlog is a type of thing, you asked about workflow, I would put that in an annual planning type thing because I don’t need to be iterating on the sunset backlog every month, or every quarter even. It really is a thing I see to do that’s like a discipline that I do either twice a year or once a year, so that’s my workflow for the sunset backlog.

Explore. So remember, explore? I should write that in the chat, explore, grow, sustain, sunset. Here, I’ll do it. Explore, grow, sustain, sunset. Explore, I would also say you need to put 10%, 15% into explore. Sometimes it feels painful because you’re like, “Oh, I could grow my business so much faster. I have all these growth ideas.” But if you don’t plant seeds for the future and you don’t constantly push with some small percentage, it will bite you later. And so I had this lesson too. When we went public at Shutterstock, we had growth for two and a half years. We were set, beat, set, beat. We were like a coin-operated machine. We could buy traffic, convert it really well, but then we started to hit the roof of our TAM in certain markets and we didn’t have that big, next new business ready to go because I hadn’t been investing 15% of my time in explore.

Becky Flint: All right.

Wyatt Jenkins: So that’s one way to think about portfolio management, is explore, growth, sustain, and sunset. Another way you could think about it, and I won’t go deep in this, is McKinsey’s kind of three-year horizon model, which I personally really like as long as you remove the concept of time, because when they try to make it time-based, I think that’s a false narrative.

Becky Flint: Right.

Wyatt Jenkins: But you can go Google McKinsey’s three-horizon model. I really like that one too. Horizon one is basically things in your core business that you want to improve, like sustained innovation in your core. Horizon two is much like grow, like place bets in new markets or new customer segments. And horizon three are like wild, new, disruptive ideas that could completely change your company and also might fail badly.

Becky Flint: Right.

Wyatt Jenkins: And I think that’s another way to think about bets that I find really useful.

Becky Flint: Right.

Wyatt Jenkins: I have a bulldog who needs my immediate attention.

Becky Flint: Welcome to work from home life. You always have a office mate.

Wyatt Jenkins: Yeah.

Becky Flint: So when you have these different categories, you kind of mentioned either in the sunset backlog or in the sort of innovation growth sort of category, you’d probably do it on an annual, at most, twice a year, and then you were doing quarterly planning as well. How does it look like, especially across multiple teams? Do you do bottoms up, do you do top down, how does the cross-team work? What are some of the common challenges that you face and some tips to solve them?

Wyatt Jenkins: Yeah, well, a couple ways. Some of the things we do on a more quarterly basis are more pragmatic. So for example, I have audience-based roadmaps and audience-based portfolio planning. So at Procore, for example, we serve general contractors in SMB, mid-market, and enterprise; and we serve owners, people who buy and pay for the construction of buildings, and we serve them in the SMB, mid-market, and enterprise; and we serve a third audience, specialty contractors, the trades people, the folks who come in and your concrete and your mechanical, electrical.

Becky Flint: Right.

Wyatt Jenkins: So we actually have three different audiences we serve. We’re a large, mature company, we’re 20 years old, so we’ve grown into this. And when I think about portfolio management for those audiences, I might tag all of our initiatives with the audience, and then I can go build an audience-based portfolio.

Becky Flint: Right.

Wyatt Jenkins: And I can say like, “For general contractors, this audience is…” I now have a crying four-year-old that’s coming to the door. I’m not going to let her in though. She’s stuck outside. Sorry, just a second. Baby, I’m in the middle of something. I’ll be out in a little bit, okay? So sorry.

Becky Flint: No, that’s the type of work we do these days, work.

Wyatt Jenkins: Yeah, this is how it goes. I have a bulldog and a crying four-year- old that will also want to attend this meeting.

Becky Flint: Right.

Wyatt Jenkins: No. Yeah, it’s pretty real, some real life here on the chat.

Becky Flint: Yeah.

Wyatt Jenkins: So that’s kind of how I think about on a quarterly basis. I look at audience roadmaps, I look at audience portfolios, then I also do OKR-based, right? So at the corporate level for the company we do OKRs.

Becky Flint: Right. Right.

Wyatt Jenkins: And the OKRs have to do with all our departments. Sometimes it’s HR are OKRs, sometimes it’s OKRs have that have to do with our go-to-market org, sometimes it’s product, and sometimes it’s a combination of all three. And so what I’ll do is I’ll look at the portfolio bets for a particular OKR, and so then I’ll tag all the initiatives with the OKR ,and then quarterly I’ll look at the portfolio of, where are we placing our bets within that swim lane or that OKR?

Becky Flint: Right.

Right, right. That’s the way we call the multidimensional portfolio, but exactly, you have different lenses to look at us, so cool.

Wyatt Jenkins: Right.

Becky Flint: So you kind of mentioned a little bit about OKRs outcome focus. You also kind of talk a little bit about how OKRs could go to different department. We talked to a lot of product teams and we realized sometimes it was a struggle for a product team to figure out, how do I take the OKR at the, quote, unquote, “company and business number level” to something relevant to a product manager at different level, right? The closer you at executive, you probably closer to the measurement up there. How do you, not cascade down, but correlate the work you have? So would love to hear a little bit more of your outcome focus, how does it tie from product to various outcome? And what’s your definition as a outcome-focused?

Wyatt Jenkins: Yeah, I’ll paint the ideal scenario. I think it’s important to note that, gosh, I don’t have all the teams working in the ideal scenario. I wish we were, but it’s always a journey. I feel like. So in the ideal scenario, you’ve got really clear outcome metrics at the corporate level. We want to penetrate this new market by 10%, or we want to increase conversion rates with mid-market general contractors by 15%. Those are really nice outcome metrics, but you have to think about the world in terms of leading and lagging indicators; and oftentimes, revenue is the slowest thing to measure, and so you need leading indicators that build your confidence that you’re doing the right thing.

Becky Flint: Right.

Wyatt Jenkins: And so my expectation… We sort of have different hierarchies at Procore and anywhere I’ve worked. At the opportunity level, let’s say you and I are building an opportunity assessment.

Becky Flint: Right.

Wyatt Jenkins: And at that level, we can say big words like, “We believe we’re going to penetrate the general contractor market in France over the next three years by 15%. And that the capture rate of that will be X, and therefore the revenue generation will be $120 million.” That’s at the opportunity hierarchy.

Now, opportunities have multiple product briefs in my experience. So if you drop down elevation out of the opportunity, I think now you’re talking about a product brief. And a product brief might be like, “In order to have product market fit in that country, we need to build this thing. And this thing needs to get some level of adoption amongst a core set of customers.” So you might start with, “Let’s start a couple reference customers who actually think the thing we built does have high product market fit,” and then our second leading indicator will be that we start to drive adoption amongst a broader group of those reference customers.

So now you’ve got… You started with the opportunity, which I identified the market and the customer segment and the space for you to go play, and now you need to ask a smart product team, in the ideal scenario, a very thoughtful, empowered product team, to come in there and tear it apart and dissect it into the parts that are going to make it product market fit. And then they can build their product briefs with those leading indicators of adoption, and reference customers, and things like that.

Becky Flint: Right. That makes a ton of the sense, especially around how you taking the bigger bets and bigger direction and break down iteratively across the team and across the level. And that’s actually leading to the next question really nicely about how you balance the integrated and autonomous teams. I think sometimes there’s the team just say, “Hey, we want to be on our own and we want to be empowered and let us do our thing.” And then they’re also sort of a little bit, not struggle, but a little bit to say, “Hey, how do we make sure we’re rolling the same direction?” How do we make sure we work across the team and that we don’t have duplications or, quote, unquote… What do you call that? “Org chart” all over the product, right? So what is your experience in things that companies or teams done well versus the others?

Wyatt Jenkins: Yeah, we’ve been very acquisitive the last few years, so I have a lot of fresh war wounds. And acquisitions, they don’t all work; some do, some don’t. One of them we did, the HB acquisition in 2019, was an owners’ financials product, and it’s one where we’re so excited to enter the owners space, because Procore was just general contractors and subs at that point so we entered owners with that acquisition. I’m giving this example to answer that question more specifically, but that was a team that was highly autonomous and was doing really good work, but the overlap of the product and what was in Procore’s core product was 70% in functionality from that acquisition.

And so at that point, now, look, every company’s got their own take on this. I’m personally… The acquisition pace and model we use is if we can’t integrate it deeply, then we’re probably not going to do the acquisition. I’m not a big fan… At least in our space currently, I think you win and you get economies of scale by being a single unified platform over time, and so I’m less a fan in general. Now, there are exceptions to acquisitions where you have like 100% overlap or 90% overlap in functionality and you just let those products coexist. I think that always leads to a lot of costs in the future. It’s like a credit card that you just took out a giant loan on, and at some point in time you’re going to have to go pay that loan down.

And so for us, we’re actually sun setting the original product we bought and those product people and those engineers, we’ve challenged them to finish rebuilding what’s in Procore to be as good as it was in theirs. And so in that particular instance, we’re taking an autonomous team and we’re asking them to be deeply integrated. That’s largely a people problem. I mean, you have to get them excited about that opportunity. You have to get them to understand how much bigger our opportunity is together as two companies if it’s all one integrated technology platform. And yeah, there’s going to be frustration because there’s going to be an engineer who says, “I built that in a week in my old code base, and now I got to deal with your shitty old tech debt-riddled thing that’s 20 years old that takes me six months to build the same thing I built in three weeks.” And it’s like, “Yep, welcome to the party.”

But I think when you do acquisitions, you really got to measure the amount of time it takes to get the acquisition to feel like we have shared problems and it’s not like an us and them. And so I think that’s why some work and some don’t, and largely it has to do with culture, culture and trust and your ability to help them understand our shared challenges.

Becky Flint: That is such interesting. I mean, totally makes sense, that. Thinking back some of the acquisition that we did at PayPal as well, so how much is the capability extension that we don’t have at all versus the capability sort of overlap and then we can expand it to? So the thesis of the acquisition need to play out to make this successful, and adjusting obviously, so super cool.

So I think we kind of chatted a little bit earlier about, as a product organization become more well-known and expanded, that we start to see more roles coming into play. And what are some of the cure-alls you see, and what kind of responsibility or impact they’re making to your product org?

Wyatt Jenkins: Yeah, I’ll tell you about the product org. Maybe… I’ve done this… This is my sixth time, and so some of the critical… Some things you need to be great at product, outside of good product managers, I think there’s a couple things to think about. I feel like there’s not enough writing and thinking around product manager personas. And if you really want a great world class product org at scale, you’re going to need different personas of product people. I’ve been meaning… Some people have tried to write this post. I haven’t seen anything great, but I can rattle off a few major personas.

You’re going to need technical product managers, and some people even make that a separate work track or a separate job type. I don’t personally; I prefer it to be just a product manager who happens to be a former engineer who’s very technical, but you will need this skill set, hands down. You will need the technical product manager who can see the whole system and define a roadmap for a platform or component team that unlocks large amounts of value for the rest of your organization. You will fail if you don’t have that role.

Another type of role you’re going to need is some type of growth product manager, someone who’s hardwired for acquisition activation. Yeah, a technical product manager or platform product manager, you’ll need that category of product management. You will need growth product managers, because growth is oxygen for a company. If you’re not growing on the internet, you’re dying; there is no middle ground. And so you need a cohort in your product that are effectively like growers. And then there’s optimizers or design thinker type product managers, right? Because if you have a large enough product surface area, somebody needs to care deeply about how all of this plays together in a holistic picture, so that’s a category of product management.

And these are so different from each other. It’s amazing that they’re all called product managers because it’s almost like chess and volleyball. The skills you need to do these things are like 90% different, other than the parts of like evangelism or stakeholder management. But other than that, the job is completely different. And working with engineers, of course. So I always feel like there’s not enough thought put into that. But I have seven personas I manage too. I’m not going to go through them all here based on time, but you need all those personas of product managers.

The other thing you need, I’m a big proponent of product ops. I feel like there is a process and a system for discovering new products, and for discovering how to incrementally add value, and placing big long-term bets, and I think product ops plays a critical role in that. Back to our portfolio management, anybody who manages a scaled product organization realizes pretty quickly there is no one process for this. And so if you think you’re going to roll out a process that everybody has to follow, I think you’re going to learn pretty quick that you’re going to stifle some types of product work while you might be helping others. And so I feel like the bigger orgs I’ve managed, like right now there’s about 100 product teams at Procore, the bigger orgs you manage, the more you realize you have to create a system that is flexible enough to allow for different types of work.

For example, if you’re a deep platform technology team, you need a pretty crisp roadmap for multiple quarters, and the reason why is because others depend on you. And so you can’t just be like, “Ah, I’m just going to iterate. I know what’s happening next sprint and I don’t know anything else.” Sorry, that’s not going to work. You’re going to need to deeply articulate what you’re doing over multiple quarters so that others can build on top of your platform component. Vice and on the flip side of that, if you’re at a zero to one product, where you have no idea, there’s high risk, there’s high uncertainty, there’s not a lot of competitors out there for you to study, you’re like opening white space, well, gosh, I sure hope you don’t ask them to do four-quarter planning because that’s stupid.

Becky Flint: Right.

Wyatt Jenkins: They should literally only plan like a week at a time because there’s so much unknown.

Becky Flint: Right.

Wyatt Jenkins: And so ahead of product, how are you going to create a system for managing different types of bets, and having accountability and empowering folks? And that’s why isn’t one system, there’s multiple systems, and there needs to be a flexibility there for different types of bets.

So when you ask about key roles, product ops helps do that. Product ops helps systematize and identify bets, and then apply different processes and different thinking to those bets, and I think that’s so important in a growing, innovative company.

Becky Flint: Right.

I think it was there’s so much insight, you only highlight a couple of the personas. I would’ve love to hear all seven of them and the more roles as well. So we’ll follow up with you, then hopefully you can have those insights to sharing with our audience. I wanted just to take one minute to touch upon the… You touch a lot of that, but if you would just have one minute to highlight, in your mind, what is the difference between a good versus a great head of the product?

Wyatt Jenkins: Well, there are four things a head of product has to do, and there’s good and great in each. But number one, you need to have a product vision and you need to sell that vision to every single person on the planet, sales team, the board, the CEO, like it is your job to get everybody aligned around the vision and the strategy for achieving that vision, period, whole stop. And if you can’t do that, you probably shouldn’t be a head of product. The great ones can craft a vision that has enough space in it for people to see themselves and feel like their voice is in that vision and that they play a role and that the work that they’re doing, whatever it is, is connected to that vision. That’s greatness in that. I think the challenging… There are leaders who get too far into the weeds with that vision and strategy and they suffocate innovation by trying to detail out exactly what we’re going to do for every step of the way, and I feel like there’s a good versus great on product vision and strategy.

Team development’s probably number two, my job. My job is to attract and retain world class talent and then get them to work together well, and it’s hard. You’ve got brilliant engineers and designers and product people, and identifying what’s great in those tripods and how they work together well, I think there’s a good and there’s a great to that. And then execution and product culture, so there’s a good and great on those vectors too, but you asked me for the one-minute answer, so I’ll stop there. Yeah.

Becky Flint: It’s so amazing. There’s so much insight for a Chief Product Officer and we learned a lot. Thank you so much, Wyatt. And I hope to have another session with you deep diving to more of these topics.