Obsessing over customer friction
Would companies work better if we obsessed over our customers more than our businesses?
Scholes & the art of passing
Zinedine Zidane once said of Paul Scholes, “he's almost untouchable in what he does. I never tire of watching him play. You rarely come across the complete footballer, but Scholes is as close to it as you can get. "
Growing up a soccer player in the Scholes/Zidane era, I watched both constantly in an effort to study & emulate their games. One lesson Scholes imparted was the idea that the best midfielders pass the ball to their teammates in ways that improve the play of the teammate receiving the pass. What Scholes became better at than almost anyone else in the world was passing the ball to the precise point on the field that would give his teammate a better chance of making the needed play — whether that be scoring, assisting, or escaping pressure.
A changing market
I haven’t written since March, so have missed about 4 months. During that time, the macro operating environment for software companies has experienced meaningful change, moving from a world incentivized to grow at all costs, to a world incentivized to preserve capital and achieve profitability.
There are multiple ways to frame the change, and I’ve appreciated the following two:
valuations are reverting to historical means, having been artificially inflated over the last decade by near zero interest rates.
companies that have to raise cash now to avoid bankruptcy will have a very high cost of capital, because the capital is intended to support a fundamentally fragile business model.
This change in operating conditions has led to layoffs across dozens, if not hundreds of SaaS companies, from high-flying private startups to mature public companies, and it’s required that company leaders and their investors change their strategies, their mindsets, and their behavior.
In trying to understand what explains the market’s movements, I’ve found value in the following articles/books/videos over the last few months:
Fabrice Grinda, The Great Unknown
Alex Clayton, 2022 SaaS Crash
Sebastian Mallaby, The Man Who Knew (life & times of Allan Greenspan)
David Sacks/Craft Ventures, Operating in a downturn
Tomas Tunguz, 4 startup states during a recession
All are illuminating to consume, covering the nitty gritty of human behavior under pressure, as well as zooming out across broad economic cycles and the incredibly dynamic relationships between central banks, the stock market, private companies, and national security interests.
Is there a hack to company building?
Reflecting on various lessons of company building I’ve had access to over the last 4 months, I’ve often ruminated on questions related to some notion of best practice.
What first principles, or rules, when followed have the highest probability of increasing odds of success?
What is operational excellence? How is it manufactured? Can it be manufactured predictably, or is the concoction always unique?
How are organizational blindspots spotted, given they are, well, blindspots?
When is it appropriate to focus on fixing processes? Culture? Organizational design?
How can company builders make decision making clearer and easier for all stakeholders?
Are there hacks for founders and executive teams that will always lead to more optimal outcomes?
On this last question, a more specific thought: Is it possible that there are two variables that are more important than all the rest for founders and executive teams to obsess over together: the customer’s pain and the customer’s experience with your company.
As I’ve rolled this question around, it’s often felt squishy; somehow not that useful. Maybe more of an idealistic, even over-used idea one would read about in a FastCompany listicle. But despite that, it’s kept returning.
If founders & executive teams were to index, during their key gatherings (e.g. standups, offsites, all-hands, board meetings, etc), not on the forward march of the business’ traditional KPIs (e.g. new customers, new revenue, churned customers, product velocity, employee retention, employee hiring, etc), but on a continuous examination of the customer’s pain and the customer’s experience with the vendor…what would happen…?
Would alignment between founder, executives, middle-management, and ICs actualize faster? Would that alignment, create the conditions of strategic advantage with less effort? Would it be easier for employees to make better & more autonomous decisions? Would product value increase faster than competitors?
In imagining how this narrowing of obsession would impact companies, I’ve wondered whether the most tangible change would in the ordering of internal conversations.
Companies would lead not with growth & output conversations, but with conversations related to some measure of eliminated customer pain, or provided value.
In effect, operators would focus their attention on the value their business is providing, rather than metrics that may be second-order and/or disconnected from that value.
More relevant to early stage?
In response to this query, a couple of friends have replied similarly: that the idea seems obviously correct for the founder at early stage, but probably too difficult for larger businesses and expanded executive teams who have to operate based on abstractions (e.g. business metrics), as opposed to pure value. Their point is that since value occurs on an individual customer basis, executives need to aggregate or abstract this value into metrics like net and gross dollar retention, etc.
But what if our known forms of abstraction aren’t the best way for improving our systems, our cultures, our personnel; they’re just more familiar and so easier to standup and administer?
As my friend Ben Papillon pointed out, “100 or so customer cases is considered fairly sufficient sample for pretty large datasets, so unless you're a very large business perhaps companies could spend more of their gathering time observing 100 customers in various forms — talking to them, watching their sessions, listening to their support calls, inviting them to speak at company all hands, etc.”
Easier said than done
The value in obsessing over customer problems & friction isn’t an original thought. And yet, operating with this obsession at the center of company building dialogue is difficult to live by.
Consciously, or unconsciously, Paul Scholes viewed his passes as his product and his teammates as his customers. All of his wonderful goals and assists were the outputs, not the inputs, of a career focused on improving the % of his passes that were accurate, that led to assists & goals, that led to teammates escaping pressure and becoming better with each pass they received.
Perhaps, the hack has always been focusing on the customer. Preserving that notion at the front and center of corporate values, operating procedure, KPIs, and storytelling may grease the gears of company building. And perhaps it’s not as difficult as it might seem, especially for SaaS companies operating in a world of session replay and recorded sales & support calls.