Innovation holds the key to brilliant products and successful business outcomes. Yet, it’s critical to understand what product innovation looks like across various company stages. Pete Schlampp, EVP of Product at Workday, explains how to prepare your product strategy at every phase of growth and learnings from Workday’s growth to $10 billion in annual recurring SaaS revenue.
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The Four Stages of Success
A SaaS company undergoes four main milestones of growth throughout its journey:
- Startup Phase: This is when you have a breakthrough idea and you are focused solely on survival. Typically startups have a small team grinding out product improvements based on early customer feedback.
- Growth Phase: At this stage, you have achieved product-market fit, you are generating consistent income, you’ve attracted more customers and you are building your workforce.
- Expansion: Now comes profitability and maximizing revenue. As Schlampp says, “You’re optimizing your existing products for every little bit that you possibly can. You’re squeezing out all the revenue.”
- Maturity Phase: When your business reaches maturity, you will need to make bold strategic moves to continue growth. Don’t get complacent here; keep pushing for more.
Your product team’s goals, work and strategy will shift as your company moves through these phases. Based on his own experience, Schlampp explains in detail how product strategy, org structure and innovation models will transform over time.
“In the product world, there are two key facets of our jobs: You have to do the right projects and you do the projects right.” Schlampp elaborates further, pointing out that when it comes to strategy, you must dedicate your complete focus to the desired outcome and work from there.
- Startup Phase: Survival. The ultimate goal in the startup phase is survival. So you are leaning into whatever is attracting those early customers.
- Growth Phase: Profit. You are finding more customers and hoping to put more revenue back into the business.
- Expansion Phase: Maximize Growth. You are wringing out revenue from your existing product and trying to increase your revenue.
- Maturity Phase: ROI. This is the time to think bigger. You are looking for new ways to pull in the highest return on your investment possible. Says Schlampp, “How do you go beyond expansion and get to a return on your investments? That requires bringing discipline to your innovation and your product strategy. You need to expand your portfolio in a meaningful way and it has to bring ROI.”
While org structure might seem less glamourous than other aspects of product development, it plays a vital role in your success. “The right org structure at the right time is essential to innovation,” Schlampp says.
Earlier on in the life of your business, specifically during the startup and growth phases, the org structure may be less important as your focus is simply on surviving another day. Typically, there is a simplified supervisor structure in the beginning, which then moves to functional leadership of specific teams like developers, sales, product, etc.
However, as your company enters the expansion phase, the org structure is critical to the quality of your innovation and product development. You may have multiple product lines, and you have moved into a GM or divisional model. While this breeds excellent single pillar product innovation, you will likely begin to face collaboration challenges if you let your product teams become too siloed. As you lean into maturity, there is often a significant shift in org strategy to promote cross-functional innovation that will take your business to the next level.
Innovation is constant throughout each phase of success. But that doesn’t mean it’s always the same. Schlampp says, “How you apply innovation, where you apply it, and the resources you have at your disposal are going to change. The reasons to innovate will change as well.”
- Startup Phase: Make or Break. This is a time fueled by an intense push to sink or swim. You’re innovating to keep the lights on.
- Growth Phase: Build Out. You now have a little more time to breathe as you grow, so you innovate to add more functionality and features to your product.
- Expansion Phase: Maximize. Here is the point where you no longer have to innovate across your entire product line, only in the places where it helps you grow the most.
Maturity Phase: Adjacency. Now that you have comfortable resources, the trick is to figure out where to dedicate them to get the highest return. You can go beyond current product sets: What adjacency and other markets can you invest in to grow even further?
- Keep an eye on ROI.
- Org structure is always a balance.
- Don’t snuff out innovation.