5 Ways Product Leaders Can Champion Their Teams Through a Recession

Ben Foster December 15 2022
5 Ways Product Leaders Can Champion Their Teams Through a Recession

Market analysts, business leaders, and venture capitalists agree a recession is looming. Today, startups are forced to reevaluate their business investments. A shift toward profitability and away from growth means product leaders must go into a “wartime” product management mindset for the foreseeable future. Here are five ways product leaders can be the champion their teams need during this time:

  1. Understand your CEO’s mindset
  2. Explain the new game to your team
  3. Focus your leadership style to inspire your team
  4. Prioritize work that impacts the bottom line
  5. Learn from experienced product leaders who have been there before

Let’s take a closer look at each.

1. Understand Your CEO’s Mindset

A CEO’s job is to make sure a company is successful over the long-term and reaches its fullest potential. Constraints like the external business environment add friction and force hard decisions for CEOs leading their companies through a recession.

CEOs of earlier stage not-yet-profitable companies have two major levers they can pull to stabilize the company during a recession: 

  • Lever 1: Reduce unnecessary costs
  • Lever 2: Extending runway by infusing capital

In either case, they need to reconsider the investments they make so they reduce cost where they can without inadvertently cutting the engines that drive improved unit economics. Product is often the best of all possible investments in improving unit economics, but only certain product investments fit the bill and only certain ones will have the kind of impact the CEO needs to see when seeing a potential recession on the horizon.

As a product leader, regardless of the path CEOs choose between acquiring more capital or becoming less dependent on it, you can help your CEO now by being highly focused on more measurable, lower-risk, shorter-term improvements resulting in better unit economics. Once you understand your CEO’s mindset, you must then relay and translate this message to your teams so product investments make a noticeable business impact.

2. Explain The New Game To Your Team

The old game of growth-at-all-costs has changed. And so have the rules. That means you’ll need to change how you keep score.

Company-wide budgets will likely be cut, so it will be harder to get investments in product as well for other department leaders. Furthermore, product investments should be business or user-facing, and have an impact in a relatively short amount of time. You will need to change the work your team focuses on to have the greatest amount of business impact, and maximize the value of the product team to the CEO. You’ll also need to explain how decisions are made outside of the world of product. 

Measure Success In Business Financial Outcomes

Your team’s work should focus on outcomes that are measurable and directly attached to business finances. Ease of use, customer sentiment, adoption of new features, etc. are all good investments when future product investments are a given, but the business benefits are harder to demonstrate in the short run. Just as CEOs need to respond to the changing expectations of investors, heads of product need to respond to the changing expectations of CEOs, which means a greater focus on product enhancements that have direct, measurable, and immediate impact on business metrics.

During peacetime, product teams can afford to take risks on longer-term product developments valuable to the overall customer experience. But these types of investments are often hard to attribute to improved business outcomes, or they may not affect business metrics for a long time. Now, investments need to be more focused by prioritizing ruthlessly based on demonstrable ROI for the business in a more immediate time frame. Otherwise, you risk having the rug pulled out.

Compare Product Investments Against Other Business Needs

Consider that if the company has to reduce overall spend, then to maintain the current investment in product, it must disproportionately reduce spend elsewhere. If that’s the case, suddenly, executives have to make hard tradeoffs. 

It’s important to note that the goal here isn’t to try to maximize budget for product development at the expense of other departments. Consider carefully whether money should in fact move out of product to other areas. Maybe it should. But if you determine that budget is best spent in product because you honestly believe the ROI is greater, then you’ll need to prove it to people outside of product.

Necessarily, product investments will be compared to investments in other areas like marketing or sales, which tend to be extremely measurable and more immediate. You’ll need to re-focus attention on investments that are also highly measurable, or find a new way to measure outcomes. Otherwise, you risk winning the battle, but losing the war. 

For example, let’s say you make a product investment that’s hard to measure but has a positive impact on overall customer experience. But the CFO doesn’t see the short-term business impact, and nudges the CEO to eliminate the position of the team working on it. The investment would have been successful if seen to its conclusion, but never has a chance to get there. There’s already enough risk in these types of investments, and this added “investment risk” may tilt the scales. Instead, your team should focus on work that is highly visible, valuable, and measurable in business terms so that the ROI of worthwhile product investments is as clear as other investments, like in sales or marketing.

3. Focus Your Leadership Style to Inspire Your Team

A product leader’s job is to demonstrate how significant of an impact the product team can have on the business. Great product leaders are calm, focused, and transparent with their team about what they know and what they don’t know. They keep their team grounded and prevent panic from creeping in—a steady hand on the wheel. So how can you become a great product leader?

Know the Real Enemy

Moments like these can be used to rally against a common enemy. But don’t let that enemy be the marketing team, operations, or any other internal group. It’s not. The real enemy is the economic environment and a limited cash balance. As a product leader, control what you can and focus on the work that matters most.

Connect the Dots With Your Team

It can be easy for team members to become fearful after seeing large amounts of layoffs in other companies. But it’s your job as a product leader to explain the company’s situation and the direction it’s headed. For instance, maybe you’re a product leader in a painful executive meeting talking about the implications of significant budget cuts. It’s your job to inspire your team, and in my experience, this starts by being real with them. Communicate how the game is changing and how we’re keeping score, and how that impacts the product team directly. Show them how their impact on metrics can influence the overall success of the business and encourage them to be creative in finding ways to do more with less. 

Enlist Team Support 

Solve problems together. Collaborate with the team to help them navigate new work constraints and unknown variables. For example, how long the market conditions will last, the revenue impact of what’s going on with other departments. Involving product team members creates a deeper connection, establishes buy-in to focus on work that matters, and provides an opportunity for product contributors to get leadership experience.

4. Prioritize Work That Impacts The Bottom Line

As a business shifts its mindset from growth to profitability, product leaders will need to adjust the criteria they use to prioritize product investments. There are three primary criteria you should use:

  • Relation to financial outcome — will we be able to directly tie this investment to a direct financial outcome?
  • Measurability of impact — how easily can we demonstrate the success or failure of this investment?
  • Immediacy of impact — how quickly will this investment have an impact?

Product management teams sometimes tend to work on things that are measurable, but not directly attached to the finances of the business. 

Suppose there’s a company that could invest in either onboarding or in a product experience that saved a fraction of members from churning at the end of their first year. If this company had plenty of runway, they may invest in onboarding because all new users would benefit, it increases actual customer value, and it’s better to make someone not want to churn in the first place. That would likely be the right place to invest.

Now, let’s instead say the company only has 6 months of runway and investors are concerned about the company’s churn rates. It would be better to invest in the churn reduction initiative showcased to customers right before they were up for renewal, providing a more immediate business impact. Onboarding would have no measurable business impact until new users had a first opportunity to churn 12 months from now—and 6 months after runway runs out.

Product Management Teams Will Have to Make Tradeoffs

Under a new organizational focus on unit economics over growth, your team will need to make tradeoffs in the work they focus on. For example, let’s say you make a product improvement that drives your NPS score from 30 to 40. Everybody should be excited. That would be a monolithic improvement. But in this environment, a CFO will likely still raise questions such as, “How much incremental revenue will the 10 point improvement drive?” 

On the other hand, you could have spent your product resources on an investment that would have had a 2% immediate measurable increase in retention, which would have more clear ROI at a time when investments are under heavy scrutiny.

Prioritizing work that has an impact on the bottom line makes it easy for the CFO, the CEO, and the board of directors to see how those investments pay dividends right away. Once you establish this level of trust, your teams will be in a better position to make longer-term product investments that are more focused on perhaps more important but certainly less urgent foundations of long-term success.

5. Learn From Experienced Product Leaders

A product mentor can be valuable both for product managers and for the company that he/she works for. For the employer, a product management mentor can help to grow individuals and in turn the product and the business. The best way to ensure quality coaching and advice is by properly vetting the coaches in the first place. There are three attributes of strong product mentor:

  1. They have the experience you are lacking because they are farther along in their product career or have already faced the challenges you are facing.
  2. They have gone through the necessary diligence to convert their product management experience into true expertise.
  3. They have the skill sets of a strong mentor, not just as a strong product manager/leader.

I know from personal experience as both a mentee and mentor that a strong product mentor can be a true game-changer for both careers and companies. But not all mentor relationships are set up for success. Take the time to find the right product mentor for you by asking the right questions up front. Look for a combination of experience, expertise, and coaching mindset that will ensure you have the right fit. Seek to work with them through tangible resources, such as frameworks and toolkits that help transfer their expertise to you.

Prodify makes product management easier for entrepreneurs and product executives with our coaching services. Gain confidence in your product skills and keep the most important business outcomes in mind. Request a call with a team member today.

Written by Ben Foster

Ben is a co-founder of Prodify and Principal Product Advisor / Coach. In his career, he has been the Chief Product Officer at WHOOP and GoCanvas, the VP of Product & Design at Opower (which went public in 2014) and previously worked for Marty Cagan at eBay.

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