In that presentation (or in the adapted article) she first touched on the challenges of both incumbents and startups in the financial space, before shedding light on the technological advances that allow disruptors to get a foothold. It’s well worth the read (or watch).

My attention was piqued by what she mentioned afterwards: what the banking stack looks like, and how startups have started packaging parts of it and providing them as a service to other disruptors so that they, in turn, could freely innovate without as much overhead.

What are the different facets of a bank?

For a bank to operate, the first thing it needs is a License. The responsibility and risk involved in operating a financial institution means it’s a heavily regulated industry, so a license is non-negotiable. That being said, since getting a License is an onerous process that can take years, many companies effectively “borrow“ an existing License from a willing sponsor bank.

After obtaining a License, Core Systems are the next must-have. It’s useful to think of them as large databases that record who has how much money and where it’s going. And speaking of where it’s going, Payments are an important part of the equation, since without them the money can’t move around in the first place.

Data is quite an involved layer in the stack: it concerns all of the information about a bank’s customers, usually used when evaluating loan requests. This information comes from a country’s Regulatory agencies and complying with them can mean having a deep understanding of a multitude of subfields, from Know Your Customer (KYC) to Anti Money Laundering (AML).

All of that is before getting to Fraud, which requires specialized software, so by the time we get to the User Interface it’s easy to understand that there are many gears turning in unison behind the user’s screen of which they are blissfully unaware.

Fintech or, The Great Unbundling

Focusing on an a single area (or areas) of the banking stack allows startups to focus on innovating in the spaces they know best. It allows them to build on those that came before them, and provide the springboard for those that will follow.

Strange goes into examples in a better way than I ever could, so I encourage everyone to give her article a read (or her presentation a watch). While this is but a very shallow dip into the vast ocean of the financial services industry, I hope it’s as good a start for you as it was for me.

Three things I enjoyed this week

🎼 One song

Jack Jetson’s Wonderberry – Leaf Dog’s stellar production on the Nottingham rapper’s Adventures of Johnny Strange is on full display on this track, featuring his lyrical backflips filmed on a trippy Birmingham walk.

📹 One video

Marques Brownlee’s The Tesla Bot: Explained! – yet another great tech breakdown from MKBHD’s own. What I like most about Bronwlee’s explainer videos are the layers which he uncovers, hinting at more than just a cursory product understanding.

📖 One article

Harvard Business Review’s Many Strategies Fail Because They’re Not Actually Strategies – a nuanced understanding of strategy can take years to develop, and as an early career Product Manager I’m often reminded of the long road ahead. This article proved to be quite insightful for me.

One major reason for the lack of action is that “new strategies” are often not strategies at all. A real strategy involves a clear set of choices that define what the firm is going to do and what it’s not going to do. Many strategies fail to get implemented, despite the ample efforts of hard-working people, because they do not represent a set of clear choices.

Many so-called strategies are in fact goals. “We want to be the number one or number two in all the markets in which we operate” is one of those. It does not tell you what you are going to do; all it does is tell you what you hope the outcome will be. But you’ll still need a strategy to achieve it.

– Freek Vermeulen, writing for Harvard Business Review

Some of the most useful tools I’ve come across are the Business Model Canvas and the Value Proposition Canvas from Strategyzer: not only do they capture the essential things you should be considering when looking under a venture’s hood, but they also display these concepts in a visual medium that makes them easier to digest. Let’s dive in.

I. The Business Model Canvas

A successful business model depends on four key areas:

1. Desirability – do customers want it?

2. Feasibility – can we deliver it?

3. Viability – should we do it?

4. Adaptability – is the market timing right?

A Business Model Canvas can help us probe into those areas and get more granular into how they can feed off of each other.

Matching a desirable product to a relevant audience is the crux of desirability, and these two components correspond to the Value Proposition and Customer Segments buckets above. Tying them together are the (Distribution) Channels and the Customer Relationships.

Feasibility determines if something can be realistically achieved given current technologies and/or ecosystems. It’s three relevant buckets are the Key Activities, Key Resources, and Key Partners.

Viability evaluates whether a business makes financial sense, either now or in the future. This will depend on the ratio and cash flow of the Cost Structure and the Revenue Streams.

Finally, adaptability relates to how the business can survive and even thrive in the environment that surrounds it. Its buckets aren’t pictured above, but they consist of Industry Forces, Market Forces, Key Trends, and Macro Economic Forces.

Multiple items can be placed within each bucket to describe how a business model can work, and an iterative process can create a trail canvases that serve as a visual history of a shifting and adapting models.

Here’s a 2 minute primer video on it, and there’s an example below on a service based model that Michellin moved to in order to fight climate change (while making customers happier).

II. The Value Proposition Canvas

This canvas zooms in on the desirability area and focuses on the customer and the value proposition. On the customer side we’ve got their Jobs To Be Done (what goals do the users have?), their Pains (what are they trying to avoid?), and their Gains (what upsides are they looking for?). On the value proposition side we have the product being offered and how they relieve the customer’s pains and create their gains.

Here’s a 3 minute primer, and below you’ll find a partially completed example from the Michelin case.

III. Making Sense Of It All

When looking at a startup I like to start at the Value Proposition Canvas to make sure I understand the dynamics of the product and its customer. Then, zooming out and looking at the delivery channels and the customer relationship paints the rest of the desirability section, after which I cover the feasibility and viability (or path to it). These two canvases influence each other after every revision, so it’s worth keeping in mind that multiple iterations are often needed.

Another salient point is that while we often think of innovation happening in the desirability space (such as a new product being introduced), it can often happen through new business models. Think of Airbnb or Uber, for example: the concepts of renting rooms or paying for a car ride are far from new, but the offerings and channels put forward in their business models made them into very successful companies.

These canvases not only allow us to visualize how companies work, but also let us iterate and connect disparate pieces to bring new value into customers’ lives. I’ll tackle some more examples in the coming weeks.

Three things I enjoyed this week

🎼 One song

Andrew Bayer’s It’s Going To Be Fine – taking a break from trance after a personal loss sees Bayer dive into an experimental sound on the LP If It Were You, We’d Never Leave. The entire project is worth a listen, and this track samples from Sufjan Steven’s The Seer’s Tower for a slightly more engaging take on the original’s morose sound.

📹 One video

Drive Capital’s A Master Class In Venture Capital with Drive Capital's Chris Olsen – ever wonder how startups are funded? This master class covers the main beats: what venture capital is, how it works, and why it tends to focus on technology. At 45 minutes it isn’t a quick watch, but it’s chock full of great nuggets that’ll leave you feeling a bit smarter on how it all works.

📖 One article

The New York Times’ There’s a Name for the Blah You’re Feeling: It’s Called Languishing – while most of us are familiar with the concepts of burnout and depression – particularly during this pandemic – a pernicious sibling to those is languishing. Take care of yourselves, folks.

It wasn’t burnout — we still had energy. It wasn’t depression — we didn’t feel hopeless. We just felt somewhat joyless and aimless. It turns out there’s a name for that: languishing.

Languishing is a sense of stagnation and emptiness. It feels as if you’re muddling through your days, looking at your life through a foggy windshield. And it might be the dominant emotion of 2021.

– Adam Grant, published in the New York Times

A useful framework to describe a customer is the Decision Making Unit (DMU), also known as the Buying Center. This concept was first developed by Robinson, Faris, and Wind in 1967, and I first came across it on Disciplined Entrepreneurship by Bill Aulet.

Roles in the Decision Making Unit

1. The End User – This is the person who uses the product and gets value out of it. Hopefully, they're also the champion.

2. The Champion – This person wants the customer to purchase the product. They're typically also the end user, but not always.

3. The Economic Buyer – The one who foots the bill. They're usually the primary decision maker, and sometimes are also the end user and/or the champion.

4. The Influencer – Usually subject matter experts, they can influence the rest of the DMU, including the champion and the end user. They tend to be external sources of information and feedback, such as website publishers or friends and family. Sometimes they also have veto power, but they’re often trusted enough that their word acts as a de facto veto.

5. The Veto –The person with veto power can do one thing: reject a purchase. They usually outrank the champion and the end user, such as an IT department intervening on the acquisition of computer hardware or software.

6. The Purchaser –They handle the logistics of the purchase. Unlike the economic buyer, the purchaser often doesn't have the final say but adds friction through trying to drive prices down or make more convenient arrangements. They are a link in the chain that needs to be pacified, but not sold to directly.

Who’s Who?

Different products can have wildly different DMUs, ranging from a single person performing all of the roles to a complex web of people across an organization.

Let’s say I’d like to buy some Oreos. I’d be the champion, the end user, and the economic buyer. I’d also be the purchaser, since I would need to figure out how to drive to the store and where to park. If I was watching my diet, I might look up how many calories there are in a box of Oreos: the people behind the website would be influencers. And if someone in my house is pretty adamant that I eat healthier, then they’d have veto power.

A less intuitive example, however, would be Google search. As an end user and champion, I don’t actually pay to be able to search for the calories in an Oreo. There’s no one performing the role of the purchaser or veto, though an influencer might make the case for using DuckDuckGo instead. And yet, Google thrives. What gives?

Well, selling advertisements against user searches might make it seem like the economic purchasers are the businesses buying the ads, but they constitute a different DMU altogether: those businesses would also have champions, purchasers, and all of the other players, including end users. Their end users, however, would be the people buying the ads and adjusting the demographics of who sees them. Bringing those two customers together is what makes the ad-based business model work.

The Decision Making Unit is a powerful concept to understand what makes customers tick. It becomes especially important to businesses that sell to other businesses since there might be many people with a mandate to ensure certain protocols are followed. However, these concepts can still be insightful for simple types of products that sell to consumers. Understanding and catering to the entire DMU can mean the difference between a successful business and a flailing one.

How we think about the world around us has a deep impact in how well we understand it, and how good our decisions are. Most of our contributions towards the arts, sciences, and other fields come about from actions done in specific steps according to what conditions are in place. Navigating this complexity can make or break the tasks that we tackle.

As a general concept, a framework can be defined as a basic structure underlying a system or concept. Its etymology suggests the original word was coined sometime in the 1640s to mean "a [physical] structure for enclosing or supporting", and it would later take on the added definition above in the early 1800s. In short, a framework helps us make sense of what surrounds us.

I. A coffee

So, how can frameworks help us? Here's an example: suppose we'd like to make a cup of instant coffee. To do so, we need to know (1) what we need, (2) in what conditions, and (3) how to use them. Missing one of these three aspects would keep us from having a nice cup of joe: if we're missing the coffee, we're drinking hot water; if we use cold water, it won't taste very well; and if I don’t know how to use a spoon, then the coffee won’t find itself in the cup. None of these options would have me caffeinated and ready for the day.

Let's start by listing out all of the ingredients and items necessary for our kitchen alchemy:

• Coffee cup

• Coffee

• Kettle

• Water

• Spoon

• Extras (Sugar, Milk, ...)

Simple enough. You might notice that some of these items are interchangeable or otherwise optional: I could make my coffee in a bowl, or use a fork instead of a spoon. Those wouldn't be ideal, but they would get the job done.

Now we should consider how we'd like things to be.

• The utensils should be clean

• The perishable food should be well before it's best before date

• The water should be hot

Almost there. Let's talk about how everything will be used. There are two facets to this step: how each individual step should go and how they interact with each other. An example of the former is how to pour hot water from the kettle into the cup; an example of the latter is knowing that adding the water to the coffee before the milk allows the coffee to dissolve better. The steps could look something like this:

1. Take out all of the items

2. Pour water in the kettle to boil

3. Use the spoon to add the coffee and sugar to the mug

4. Once the water's boiled, fill half of the cup with it

5. Use the spoon to stir the coffee until everything is fully mixed

6. Add a bit of milk

7. Use the spoon to stir it again

Just like some items could be interchanged, there’s latitude in this step as well. We could have taken out the items as we needed, or skipped the milk entirely, for example. And therein lies a characteristic of most frameworks: they're often not the only way to structure a process or idea. Different frameworks have advantages and disadvantages depending on the issue being tackled.

II. Better frameworks

The variance in frameworks means that some of them might not be very useful. Good techniques to employ when making a framework are ensuring it's MECE and working from top to bottom. Let's take a look at each.

MECE

If you do your best to ensure that the framework you're using is Mutually Exclusive, Comprehensively Exhaustive then you save yourself from duplicate work and ensure that you don't miss any important areas. Having mutually exclusive segments means that there's no overlap between them and that you're not double counting or conflating their sub-items; comprehensively exhaustive means that you account for every single point that's relevant, leaving nothing out. You might notice that in the coffee example above the ingredients are discrete and are collectively exhaustive because of the "Extras" segment, therefore the structure is MECE. It's not always possible for every framework to be MECE, but it goes a long way if it's as MECE as possible.

Top down

While it's perfectly acceptable to work bottom up for many frameworks, getting used to working top-down and unpacking segments is a terrific muscle to build because it allows you to easily drill deeper whenever you need more clarity in an area. For the coffee example, it means that instead of thinking that all of the items and ingredients add up to a hot cup of coffee, we visualize the coffee being broken up into its component parts in a tree. This means that if we go down to coffee, for example, we can still unpack it into origin, quality, and other characteristics that might affect how good our coffee turns out.

III. Why it matters

No one needs an advanced degree in chemistry to make a cup of coffee, but the beauty of understanding this example becomes apparent once you think of more complex situations.

Let's say we're trying to understand how the coffee bean market works. In the simplest terms, it's a balance between two segments: supply and demand. The former deals with how much coffee is provided to the market, and the latter describes how it's purchased. Studying supply and demand gives us a lot of insights into how prices change given how likely the actors are willing to buy or sell, seeing as supply is driven by the companies and demand is pursued by the customers. Looking at it a bit more closely means we can further segment the companies to consider their characteristics and sub-divide customers into the different types of buyers. At each level we gather new insights that help us understand the bigger picture a bit better.

Frameworks like supply and demand have been battle tested and their effects thoroughly studied. Other famous frameworks include Porter's Five Forces and the 3 C's, and even equations can be considered frameworks since they describe the relationship between different elements.

We all structure, segment, and prioritize in our day to day lives, and being more intentional about refining our structures can ensure we don't miss anything and are the most efficient possible. Just like making a cup of coffee, there are many right answers, but some hold advantages when it comes to ease of use and sturdiness. In the coming weeks I'll be sharing a few frameworks that I've found helpful in my day to day working in product.

Three things I enjoyed this week

🎼 One song

Tim Henson's Blood Moon – at just under 50 seconds, this tune blends virtuoso guitar licks with a simple EDM backing track. It was made to be put on repeat.

📹 One video

CNBC's How The West Coast Drought Could Cause More ‘Water Wars’ – great synopsis of the challenges the US West Coast is facing in terms of water shortage. Having lived through Cape Town's own water crisis has made me more aware of how challenging water shortages can be, and this report helps pain an insightful picture into where it’s headed.

📖 One article

Julian Shapiro's Starting Principles – a simple framework on how to act on advice. We routinely come across principles but rarely work towards cementing them into routine behaviors: this article provides a straightforward plan on how to practice them and grow.

Glance around the web and you might find a lot of articles on product management (PM). Product roles seem to be on more people's radar in recent years, so unpacking it seems like an evergreen topic.

I've gotten my fair share of questions about it since landing a PM role so I thought I'd write a primer. I'll be linking resources along the way for those that want to dive a bit deeper.

I. What It Is

Product Management is a lot of things. On a high level, I like to think of it as the strategy and execution of a product for the benefit of the customer. The customer should be the driving force for the choices made on how to improve the product, since they are the ones using it: there's no use in building something that won't be used. The strategy encompasses deciding what to build and why, while the execution involves the how.

Another way of thinking about PM is as the intersection of User Experience, Technology, and Business:

• User Experience (UX) deals with how the customer interacts with the product. Not just how it looks, but how natural it feels to use.

• Technology is often the enabler for great products. Not just in software, but sometimes in hardware or services.

• There are a lot of other duties for a PM, from ideating and testing to marketing and sales. Safe to say that the Business bucket is quite large.

With a lot of ways to describe the role of a PM, I thought I'd write an example scenario:

A PM has an idea for a new product, or a new feature within an existing product (let's just call it a product for simplicity's sake). Reaching out to users should be one of the first things they do so they can make sure this new product will be useful and used by the end users (these don't always overlap).

After talking to users and realizing that the product might be worthwhile, the PM can further investigate what exactly would be needed to implement it, and who could help make it. See, PMs rely on other specialists to bring a product to life: while they are generalists themselves and have a foundational understanding of what's needed, it's these specialists who make the product real. PMs coordinate them in a cross-functional team and ensure everyone's heading in the right direction.

There are a lot of roles that can be represented in a product team, as thoroughly explained by Will Lawrence. Here are a few I often interact with:

• User Research

• User Experience

• User Interface Design

• Development

• Quality Assurance

• Marketing

• Others (Sales, Legal,...)

I mentioned above that the PM noticed that a product might be worthwhile, but one can never be 100% sure until a fully fleshed out product is being used and paid for by a large number of people. The fact of the matter is that there are a lot of hypotheses and assumptions in making a product, and the journey of validating and refuting these is crucial to a successful product being launched. In that vein, it's always best to take small steps so that the least amount of resources are spent in testing these assumptions.

By this point, the PM would want to get stronger evidence in favor of the product. They might build anything from a proof of concept, which can be a small exercise, up to a minimum viable product, which is the leanest version of a product that tests the core of a concept with real users. The right one to build depends on the product development stage, the resources available, or the scope to be tested.

Afterwards, the PM should pay very close attention to the feedback coming from the end users. This can help the PM further refine the offering and make sure users are gaining value from the product. A lot of work happens in this feedback cycle, and the improvements made here can make a world of difference to the users.

I should mention that the scenario above is only a tiny window into the work of a PM. Since the product field isn't as regulated as others, there's a lot of latitude in what a PM can work on: the product type, its stage in the product lifecycle, or the type of company can heavily influence the work that a PM does.

For example, a fintech PM can have different priorities than an ecommerce PM. A PM working on a pre-launch product will be focused on different tasks than a PM working on a mature product. And different product cultures can place different emphasis on the user experience vs. the engineering prowess of the product, for example. What tends to remain constant is the PM bringing the voice of the customer into the product's planning and development.

In fact, PMs can have such broad responsibilities that sometimes it's safer to assume that they should do anything that doesn't fall under the purview of any other team member. Ken Norton put it beautifully as “bringing the donuts”, a read I couldn't recommend enough.

II. What It Isn't

That being said, PMs aren't the "CEO of the product". It's an analogy that proves itself useful to the uninitiated, but falls short once you take a closer look. PMs don't do a lot of things that fall under the purview of CEOs, like handling human resources or poring over financial statements.

PMs are also not the boss of their team. The interesting thing about cross-functional teams is that everyone reports to their functional supervisor (e.g. engineers to their engineering manager). This is where we get to one of the unique details about PMs: they have to lead by influence rather than authority. It's their job to convince everyone that their direction is the right one, or let themselves be convinced by the subject matter experts. At the end of the day, PMs are also individual contributors to the team.

On a different note, PMs are often confused with the following:

• Project Management

  • While the golden triangle of scope, cost, and time are usually on most PMs’ minds, PjM is more about managing the resources needed for a project to happen than driving the strategy and execution of said project.

• Program Management1

  • Managing multiple projects with a commgon thread. See above.

• Product Owner

  • Coordinating the execution of a digital project. It's a part of what a PM does, but it's definitely not all there is to it.

There’s a lot more to these comparisons, but suffice it to say that these other roles don't focus on directly bringing value to the customer in the same way a PM does.2

III. Why It Matters

Hopefully the importance of product management has made itself apparent by now. What I should also mention is that while the duties of a PM are non-negotiable for a successful product, teams can and do succeed without one. In those cases, these duties are taken up by different members of the team. This can work well in the beginning, but with enough scale and momentum the need for a dedicated PM can make itself known.

On a closing note, the job of a PM can be incredibly diverse and fulfilling, which is why there's been an increasing interest in knowing more about it. In this newsletter I'm hoping to bring more of it to light, so feel free to subscribe for more on this and other topics.