Episode 167: How to Use More Than 10% of Your Company's Brain with Aaron Smith, Chief Product Officer
In this episode of Product Thinking, Aaron Smith joins Melissa Perri. Together, they discuss Aaron’s best practices he learned from his time at Amazon, key leadership principles, creating a culture of accountability, and the destiny creator mindset.
You’ll hear them talk about:
1:23 - Amazon is one of the biggest companies in the world, second only to Apple. Aaron shares his experience working at Amazon and what he’s taken with him to other leadership roles. They are customer obsession, use data to drive decision making and are expert planners. Amazon eliminates bureaucracy at the high level. They prioritize flexibility and provide autonomy to its planners. Aaron noticed that being overly committed to one plan can be destructive for companies. Amazon combated this with a result focused approach that’s backed with data: “if you’ve found a more advantageous way, and the data shows it too, then do it. Don’t ask, just do and get the results.”
14:50 - Coming from such a high-performing company such as Amazon comes with an adaptation period. There’s an element of culture shock shared by ex-Amazonians who have switched companies. Although their data-driven and direct leadership approach is effective, Aaron reveals it doesn't always seamlessly fit with other companies' cultures. Coming into another culture and simply trying to make it another version of Amazon quickly descends into plain arrogance. Aaron teaches humility in leadership to his team and instead takes the best of his current and previous work cultures to find the best of both worlds.
19:37 - Aaron’s leadership principle of “pain-point alchemy” prioritizes taking a step back after extracting the pain points and exposing the out-of-the-box opportunities present. It's important to truly understand the customer's pain points and what will make their lives better. This requires listening and understanding what the customer really needs, even when the customer doesn’t know themselves.
38:53 - Curating a truly innovative culture is about consistency. To foster innovation, leaders need to be open to new ideas from their people and not critiquing them for their lack of focus on the current projects. Aaron shares an example of how Amazon successfully embeds innovation into their working cycle, and gives employees a chance to pitch their ideas to the higher ups, called operational planning. If you’re not giving people the opportunity to bring their best ideas to the table, then you’re using 10% of your company's brain.
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Intro - 00:00:01: Creating great products isn't just about product managers and their day-to-day interactions with developers. It's about how an organization supports products as a whole. The systems, the processes, and cultures in place that help companies deliver value to their customers. With the help of some boundary-pushing guests and inspiration from your most pressing product questions, we'll dive into this system from every angle and help you think like a great product leader. This is the Product Thinking Podcast. Here's your host, Melissa Perri.
Melissa - 00:00:37: Have you ever wondered what makes product management so special at Amazon? Today, we're going to dive into that with Aaron Smith. Aaron was previously the Head of Scheduled Delivery at Amazon. Since then, he has been a Product Leader at Nordstrom, Grubhub, TrueCar, and now he's a Chief Product Officer at Pattern. Aaron and I dive into the lessons he learned at Amazon in both leadership and strategy and how he's applied that to his work going forward. But before we get into it with Aaron, it's time for Dear Melissa. This is our segment where you can ask me all of your burning product management questions, and I answer them every single week. Let's look at this week's question.
Dear Melissa. I work at a small 30-employee company that went through an organizational change a year ago. At first, we had no product team, so the features developed were chosen by either the founders or the developers. A year ago, we got a separate product team that made the decisions about what features to build. Now we have three separate development teams and one product team, which is a mixture of product people and designers. Unfortunately, this separation led to a us versus them mentality with the development teams blaming the product team for everything and not trusting that the product team knows the product as good as the developers and thus are capable of taking the right product decisions. What do we do?
All right. Sounds like a really classic case of not having cross-functional teams. So in this case, you basically brought in people, product managers, to take away the decision rights from developers. Now, if they aren't even trying to collaborate with the developers, of course, they're going to get a little bit upset. Does that mean the developers should be calling all the shots? No. But it does mean that your product team should be working with developers as a team to help figure out what we should be doing. Now, there might be some resistance there, but you do want your product managers to have an eagerness to learn what the developers know and to ask their opinions. That doesn't mean that you have to listen to everything the developers say. It does mean, though, that they should be included in decision making and you should be seeking their help. So to me, it sounds like you took all the decision rights away from developers, you gave them to this team, and now nobody's collaborating with each other. That is a recipe for disaster. So in this case, this is why we actually do like agile methodologies where we have cross-functional teams. Your product managers and designers should be embedded on each one of those development teams so that it feels like a team and not just like, hey, this is a separate product management department. We need it to actually feel like we're all working together. And we should be all working together. It's not even just a feeling. It's what you should be doing. So what I would do is actually encourage you to dedicate product managers to each one of those teams and then go through things like brainstorming, idea development, triaging, figuring out what we're going to build, like feature development, all that stuff together. Do it together, involve the developers, ask their opinions, but also anchor in data.
So the product management team should go back to the development team and say, here's our goals. This is what we're trying to achieve. This is where we want to go after. And then asking, what can we do to get there? They should be looking to them to help with, can we do this? Is it possible? What kind of timelines are we looking at for this? Is this a really big lift or a small lift? These are the problems we want to solve. Do you have any creative ways to actually solve it? Developers are great at that. I think we need to stop treating developers like, hey, let me just throw a bunch of features your way and let you build it. That was waterfall. We don't want to do that. Even in companies that say they are agile, I still see them working in a waterfall way with their developers. Does that mean all the developers should own all the decisions and can veto everything? Absolutely not. We're here to work in service of the company, and we all have to agree on that. But putting a divide between these teams and not seeing each other as one team coming together to be one cross-functional team is what's going to cause this friction. So that's where I would really start. And I think you're going to see some positive change. All right, that's it for Dear Melissa this week. And if you have any questions for me, go to dearmelissa.com and drop me a line. Now, let's go talk to Aaron.
Advertisement - 00:04:29: Are you eager to dive into the world of angel investing? I was too, but I wasn't sure how to get started. I knew I could evaluate the early stage companies from a product standpoint, but I didn't know much about the financial side. This is why I joined Hustle Fund's Angel Squad. They don't just bring you opportunities to invest in early stage companies, they provide an entire education on how professional investors think about which companies to fund. Product leaders make fantastic angel investors. And if you're interested in joining me at Angel Squad, you can learn more at hustlefund.vc/np. Find the link in our show notes. Hi, Aaron, welcome to the podcast.
Aaron - 00:05:07: I'm Melissa. Thanks for the invite.
Melissa - 00:05:09: So you have had a long, illustrious product management career. Can you tell us a little bit about how you got into product management and what has been your journey to being chief product officer of Pattern?
Aaron - 00:05:21: Sure. Initially, a lot of my work was in consulting and building apps from scratch for companies. It seems like that was what I did for the first decade of my career, which was great. I got to go into a variety of companies every few months. Eventually, I was running a couple of dev centers and working on six, seven, eight apps at a time across all of these teams. And learned a lot about similarities of what works and what doesn't with software. And at that point, joined Amazon. And Amazon was kind of a complete change in my career to working for a large company directly. And from there, I've spent, I focused mostly in e-commerce in product management.
Melissa - 00:06:07: So Amazon is one of those companies that a lot of people consider the epitome of product management. And a lot of companies also try to copy everything that they do. What was your experience working there? And what have you taken with you moving into other roles and working at other product places?
Aaron - 00:06:25: Well, the biggest thing is that they're super focused on the customer. Really, you can look at their leadership principles and everything really rolls-up to customer obsessed. Any leadership principle, really, that's where it leads to. Everything you're doing is trying to make life better for your customer. And they really have no time for vanity metrics or for celebrating things that don't really help the customer. And they are laser focused on knowing what the right metrics are and to actually prove that you did it. To say, hey, we had 30,000 people use this feature today. They must love it. That's just a vanity metric. They don't care about that. They know if a customer loves it, if they do the action, if they buy the product, if they leave the positive review. There are so many metrics that do show if you're winning or not. And they're just laser focused on that. And I think another big one is they take the time to do it right, and then they execute. So they're famous for their six-page documents. And those things I can tell you, having written many of them and read many of them, a lot of blood, sweat, and tears goes into them. I would say that feels like 50% of the work is just coming up with a rock-solid plan. Because they know the data inside and out. They know what they're trying to achieve. And then you get in a room with the leadership of Amazon to have them, as you sweat bullets, they might spend 30, 40 minutes reading it and marking it up.
And then you talk for another 40 or 50 minutes. And it can be disconcerting to have all of these high-powered people in a room picking your work apart. And yet, it just felt like you had the brains of e-commerce in that room, giving you perspective and insight and pushing you to think even bigger. I think those are some of the things that really were difference makers for Amazon. To contrast, I've been in companies before and since then where you can bring a simple one-pager into the room, hoping they'll just read the one page and understand why you're trying to do what you do. And people literally cannot get past the first sentence or two before they start asking. They're impatient. They want to ask questions. Things that would have been answered if they read the doc. But they just want to start having a discussion that's very uninformed. And that's honestly how most companies operate. And Amazon just doesn't. They want to be informed. And these leaders have very good longevity at the company. And so they're not coming in fresh. They know a lot. And so you can't just pull one over on them. So when you write a big document like that, and you have these people reviewing it. The scrutiny before you start acting and implementing is pretty awesome.
Melissa - 00:09:16: When you're thinking about the leadership reviewing these things, are we talking about they're reviewing all the little features? Are these like bigger product vision ideas? Like what kind of level are we talking about here with these docs?
Aaron - 00:09:28: It's really at an overall initiative level. It might be launching a brand new business for Amazon or a big new solution. And really, it's rarely only the tech. It's usually the business and the tech and the operations combined. You've cross-functionally worked together on a plan. These are the things we're going to do in lockstep to make this business or this effort successful. So it's pretty comprehensive when you go in. They're not reviewing every tiny little feature or thing. Really, they're looking for a result, and this is your plan to get it.
Melissa - 00:10:06: And when we talk about the plan there too, what level are we talking about there? Because I've seen a lot of leaders lately, especially Q1 right now, asking for the entire roadmap for the next year or the entire Q1, Q2, Q3 roadmap, even if we don't get to Q4. In minute detail from product managers working on teams, what's enough information to really get the feedback that you need at that place? And what's the right level of plan?
Aaron - 00:10:32: That's a really great question because so many companies struggle with that. They want to see the whole year and have it locked in and know exactly what's going to happen. But do you want results or do you want stuff? And for me, I feel like having a rough idea of where you're going for sure. Like I want a bridge. I want to know how am I going to get from here to here? And the whole six-pager thing at Amazon was about what's your best guess right now and how you're going to get there. And you might get input and be able to tweak the plan. But as you go, you need to be nimble. As you learn new things, you may hit a seam when you're digging in underground that you find like, oh, but this seems way bigger. I think we're going to get way more gold if we go here. And you need to be able to pivot. And if everybody's so tied to like a plan of stuff, that's destructive.
Melissa - 00:11:28: What do you do in the case where you are going out, you find out that's not the right direction, the plan changes, you need to go back and communicate it? I feel like there's also a ton of places out there that struggle with embracing those changes, right? Or embracing that people, I don't even call that failure, but like that failure, right? Because we did not hit it on the first guess. What did Amazon do differently to help make it safe to do that? And what was the experience like going back and having to change things?
Aaron - 00:11:58: They kind of made it not safe to not do it. If you didn't get the results, then it didn't matter what you delivered. It was a fail. And so you have to pivot. And the thing is, data wins. So if you can go and show, like, if you found a seam that's bigger, the data should show it. And customer anecdotes go a long way, too, because they really give a flavor that's very insightful. So I think you need to be able to go back and make the case and help them understand. But honestly, Amazon doesn't even want you to beg for their approval. They just want you to get the results. So, like, we might review the document back in the day when I was there with Jeff Wilke and his whole team. And if we then a month later found something that was better, we just did it. Like, you didn't go back and beg, can we change our plan? Like, they didn't care about the plan. They would say, why are you asking? Just do the right thing and make it happen. If you deprioritize something that we believe would have succeeded and you do something else and you fail, that's on you. But, like, don't wait for us. Like, just go do it. So that, I think, gave this level of autonomy that was really refreshing. Like, I'd been in a lot of big companies as a consultant and see how it worked. And it was very bureaucratic. And at least when I was there, I feel like I was there in a golden age, 2010 to kind of late 2014. When I started, Amazon was still, they were the most shorted stock on the stock market because people still didn't know if they would ever become profitable. A lot of people thought they would eventually fall over. Could see that wasn't true. But there was a lot of autonomy to just get results. And you had to work cross-functionally. It wasn't easy.
You had to herd cats to get all the different dev teams to build what you needed to build and get the operations organized to change their processes in many ways. You had to work with the retail teams to work with a lot of our vendors to change how they did their things. But it felt like everybody was pulling towards results. They were all held accountable. And I felt like, one of the other things that was great about Amazon is like, everybody would claim victory for every good thing that happened. And sometimes people try to be super protective in many companies like, oh, this was my win. But like, I tried to tell my team, look, everything we do is cross-functional. If we have eight people telling their orgs that they themselves made this whole thing happen, that's a win. Like, the more people you have claiming that success, that means you brought everybody along, and that they did a big part of it and they helped it succeed. So I think Amazon holding people accountable to metrics and everybody being motivated that way and like, joining the efforts that they could see were going to make a difference. That was, I think, part of their magic.
Melissa - 00:14:51: I think giving that credit out there makes people stronger as a team too, right? It brings everybody together in a way where they want to win.
Aaron - 00:14:59: It does. I think that's one of the more destructive things for companies if the politics are such that everybody's just trying to clamor for pointing to themselves only. And, you know, lots of times the people on my team were kind of leading cross-functional efforts, but we should never believe we could have done this ourselves.
Melissa - 00:15:18: One fear that some people have along that lines of giving credit is that historically in maybe not so great orgs or with not so great leaders, people are overlooked, right? If they give credit to everybody else and it's really them leading the push. How did you deal with that too, you know, at Amazon or afterwards? And how do you as a leader make sure that you're recognizing who are doing a great job, even if they might be humble about it or they might be giving credit to others to lift them up as well?
Aaron - 00:15:44: I think it's a leap of faith, but when you do it, I've just noticed that karma is a real thing. You can give all the credit to everybody else and literally say you did nothing, and then people will jump to your defense and say, I never did have a boss that just didn't see what was happening. And again, I couldn't possibly get everything done by myself. But also, sometimes I would say, look, I was thinking about this idea. It looked like it'd be really good, but this other group said they're going to go do it. So maybe I won't jump in. I don't want to duplicate efforts. And he said, first of all, people say stuff all the time, and then it never gets done. This particular problem you're talking about, Aaron, this is my VP that I reported to, and he'd been there like 19 years at that point. He said, people talked about this for years. It never gets done. So he suggested, just go do it. And what I realized was that's true. But also, I just approached the group and said, hey, I'd like to help. And we have a lot of ideas of things we could do. And I represented a pretty big part of the organization. And they were like, totally, yes, come on board, help us out. So it doesn't mean doing it on your own. It shouldn't be like competing efforts, like join forces. And we were able to accomplish something really huge. So I think getting ego out of the way is an important thing. But taking the help where you can, and just not feeling like you have to say, hey, I'm in charge of this one. You guys just need to do what I say. But just like, hey, I'll help you out. That makes a huge difference.
Melissa - 00:17:22: When you look back to your time at Amazon, what did you feel like you wanted to change going to the next place? Or what do you feel like maybe people don't understand from the outside about the context of the certain things that we hear about and why they work and how it might not work somewhere else too?
Aaron - 00:17:40: I learned a couple of things pretty quickly. When I got to Amazon, sometimes the candor and the data focus and the customer focus was so refreshing that I often just in my own mind would tell myself, I feel like a fish who's been out of water for a long time and now I'm in water. And when I left Amazon, it was a shock to the system. And I think almost every Amazonian I've ever spoken to who went to another company that first year is just a shock. If you spent any significant time at Amazon, because everywhere else is so different, trying to get someone to focus on the data is very difficult. Trying to get them to read a document that you put a lot of time into the research and coming up with a plan, extremely difficult. Everybody at so many companies seems to work just off of gut feel and anecdotes instead of marrying that with hard, real data. Also, people at Amazon were just direct. When you do annual reviews, you get, here are your strengths, here are your opportunities with quotes from a lot of your peers and leaders around you and people report to you. And you have to develop a pretty thick skin. But sometimes you forget that other people haven't really ever been through that. And so you put one opportunity out there and they cry because they're used to getting like only hugs and praise. And they've never heard anyone said they have an opportunity for improvement.
And I think too many people leave and think that Amazon is right. And I'm just going to do it exactly like I did it at Amazon. And then I'll just whip everybody into shape. And it's got to be more of a journey. Yeah, there are a lot of good things that happen there and good approaches. But you can't just take a culture with one person and think you're going to transform your whole culture overnight. And so many people I've seen, including myself, alienated people because we just came in, with this arrogance that we know the better way. Just do what I say. That I think is the biggest downside of coming out of Amazon and trying to fit into a new culture is you're just so convinced what you're doing is right and what they're doing is terrible. And people sense that immediately. And there's already a sense a lot of times, oh, this person's coming in from Amazon. Before you even get there, they're just like feeling threatened and upset. We're all going to lose our jobs to Amazon people. There are a lot of companies that have been kind of overtaken with more and more Amazon people, and they feel like the culture that they had before was dying. But a lot of that just comes from instead of taking the best of both going straight to just like the arrogance.
Melissa - 00:20:22: That's a really interesting point. And I've seen that not just at Amazon, but with other types of companies or people coming from very good schools and things like that. A lot of people walk in thinking they know everything and you burn a lot of bridges that way.
Aaron - 00:20:35: And that's one of the principles I've taught my team. And I came up with a list of leadership principles. And one is humble owner. I feel like I really want people to feel ownership. Like I need to make this succeed. I shouldn't be like the middleman, like, oh, they didn't do their part. Or I don't want to push too hard. I want people to feel like I'm the owner. I have this optimistic belief I can help drive this thing and get it done. And that I'm not going to let the quality suffer or I'm not going to let it fall through the cracks and say, like, my hands were tied or anything. But at the same time, I want people to be humble. They don't just like to keep it for themselves. Like, be super protective. Like, no, this is my space. I make all the decisions. Leave me alone. I want people to be humble and like want to learn and be inclusive. Because I think that's kind of the best of both worlds.
Melissa - 00:21:23: We were talking a little bit about the principles before we hit record here. You said that you developed a list of principles for your team. You really liked the idea of the Amazon principles. Can you tell us a little bit more about what are those other principles and how you came up with them?
Aaron - 00:21:38: Yeah, I read this book. Adam Horowitz, I think, was his name.
Melissa - 00:21:43: Yeah. It was The Hard Thing About Hard Things. Ben, I think it's Ben Horowitz.
Aaron - 00:21:47: And he had this section in there about good PM, bad PM. It's just a few pages, but it's principles they came up with that kind of helped the team realize what are hallmarks of good product managers and what are hallmarks of bad product managers. And I really loved it because a lot of people misunderstand certain principles. Like when you say, for example, customer obsessed, there's a bad way of being customer obsessed in a good way. A bad way is to listen to customers and just do whatever they say. They might be willing pixel by pixel to tell you what to change in the product, but it's usually incremental. It's usually based on just their viewpoint and they haven't considered all of the use cases. And sometimes people just say, yeah, I designed it that way or I built it that way because that's exactly what the customer wanted and we're customer obsessed. But really the good, PM side of that is listening, understanding what's their role, the user, what's their use case, what do they have to try to accomplish every day? And then what are their pain points? What slows them down? What do they run into? And I tell my team, it's like Henry Ford when he shared his example of, hey, if I listened to what the customer said, I would have just tried to build a faster horse. But that's kind of disingenuous. He's basically saying no, hey, I didn't want to just take the prescriptive feedback of, hey, maybe if you could do a lighter weight saddle or something.
The horse could go a little bit faster or whatever. But what he did do was listen. And what he heard was not, I want a faster horse. What he heard was, I want to go a lot faster. My life would be so much better if I could get from town to town and get there faster and not have to wait four hours for my horse to recover or stay overnight or whatever. I just would want to keep going. And that's where he thought bigger. And he came up with the horseless carriage, the car. And I think extracting those pain points and then stepping back and thinking innovative, that's where I came up with this separate leadership principle of pain point alchemy. That you can listen to the pain points and then step back and you can create gold out of those. Those kind of expose the big opportunities that now all of a sudden you realize, whoa. And then you step back from saying, I want a faster horse to just saying, I want to go faster. Now you're not just focused on the horse. You're focused on, let's put all the options on the table. And that's just when I think the magic happens.
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Melissa - 00:24:41: I think when it comes to pain point alchemy, a lot of people know they should be doing it. Some things that I hear are, I'm never allowed to have space to think big, right? These are team level product managers or directors of product, let's say not executives. And that's the number one complaint I hear, or my executives don't want me to think big. I've heard that before too, which I think is wrong because all executives tell me they want everybody to think bigger. But I'm wondering how that's manifesting to the teams of, you know, it's probably more like, cool, you can think big, but you're not allowed to take any time to do it or tell me what's on the next sprint. You know, how do you help encourage your team to think big? And how do you flex that muscle in your product managers? How do you get them to do pain point alchemy better?
Aaron - 00:25:24: Yeah, do it better. What are the options that could help us achieve this goal? Like, hey, I move too slowly. I want to go a lot faster. How can we achieve that? So one is just to understand that good PM, bad PM difference for how you approach customer obsession. But then from there, I hear that same complaint a lot. And that's also in good PM, bad PM. I call it destiny creator because I believe that if you take that optimistic approach that your destiny is in your hands, you just have a totally different mindset versus if it's like a martyr approach. Oh, if only devs can move faster or if only the business didn't dictate so much or hold me accountable to dumb things that I know aren't going to give us the real acceleration that we're after. It's like focusing on the negative because you have roadblocks at every turn. I think a great example that I heard about and I tried it myself was somebody I heard once. You often hear about like, I just can't get management approval. Like it takes so long and they'll cancel a meeting. And it was two weeks out. And now we have to wait another couple of weeks. It just takes forever. Like I heard about someone who just sat outside their boss's office until the executive, until they showed up and then got their answer. And they might have sat out there for three hours, but that's way better than three weeks. And I tried that myself with Dave Clark at Amazon where he was great. He was really responsive, but he was super, super busy. And one day, I just, you know, I talked with his EA and she said, he wouldn't, she didn't know when he'd be back for sure. And he didn't have any open slots right on his menu. So I literally just sat at his office waiting until he got back. And I caught him. I asked him the question and kind of laid out the reasoning, got the decision, was able to move on.
And I just think there's so many examples like that where if you believe you can achieve it, there are ways to go around or through or over the roadblocks. So that whole destiny creator mindset, I think makes a huge difference in people no longer saying things like, management doesn't want me to innovate. They just want me to execute. Like I see it all the time. Sometimes if you're talking with leaders, it feels that way for sure. But then it's super eye opening with these destiny creators. When you've been in the space enough that you have a hypothesis and you look at the data and you talk with customers and you realize there's something big here and you put together a proposal. And then you take that to a decision maker. And it is very interesting how often they're like blown away. And sometimes they just say, no, we're not going to do that. But it's amazing how often they love people going above and beyond, coming up with great ideas, making sure it gets in front of them. So I think that's one thing. I think the other side of that coin though is that leadership in a company needs to have that kind of welcome. Like, if people come to you with a proposal, it may be like just not feasible, but to just dismiss it outright, plus you may think it's not feasible, but then if you actually give them time and review with them, all of a sudden it may open your mind to new things. So there are probably some organizations where they're just not open and they're really dismissive about ideas coming from anywhere. But I think that's part of what leadership is about. And if you really do try that, you try to be a destiny creator repeatedly and bring your proposals and everybody just always shoots them down. Either you need to reflect on, are my ideas any good? Or you need to get out of there and go somewhere that's going to be more appreciative.
One of the things we do though, that I did at Grubhub, that we've done at Pattern, is I feel like most companies, you know, you hear this anecdotally that humans only use like 10% of their brains. And I think that's been kind of disproven. You see like the color photos of where your brain has activity and that's kind of been disproven. But I do believe most companies only use 10% of their brains. That most decisions at least are made at a high level and that the ideas often come from within that group of people. They're the kind of main ones who get to have their ideas heard. But like, you know, I don't know if you saw that movie Ratatouille, but where, you know, the whole idea is like anyone can cook. And it's like, no, anyone can't cook. A lot of people are terrible cooks, but the whole idea is, but anyone can cook. You can learn how to cook and be great at it. And I feel like if you're going to succeed, you need to use way more than 10% of your company's brains. You have to figure out how to give people that opportunity to bring ideas to the table. And we have this thing at Pattern, that we used to have something like it at Grubhub, but I feel like we made some really cool enhancements to it. We call it Innovation Cup. Anyone from any part of the company can come up with proposals, not just for tech, but for anything that makes the company in a game-changing way better. I launched this thing last year, and the executive team was completely behind it. Our whole executive team was behind it. And we had 56 different teams in our small company present ideas to the executive teams. We kind of did this rapid-fire, almost speed-dating approach where they'd come in for like 15 minutes and do their pitch, and we'd have Q&A, and then they'd go out.
And it was fantastic for executives getting to know people and realizing, man, these people have amazing ideas. Sometimes certain execs might have not been excited about the idea of a person in their org, but when they come in front of the whole executive team, there are plenty of other people who are like, that is a great idea. Like, we came out of these sessions just buzzing. And then everybody started to realize, man, we've got a lot of really sharp people who are in the trenches. They see what's going on. They have the data. And we gave them like four months to, you know, we picked some finalists, but we just like tried to support anyone who wanted to keep moving with our effort. But we picked finalists to support for about four months, and then we had a final presentation where they showed this is what we achieved. And it was just, I mean, one of the ideas in particular is just, it could become bigger than our core business if it goes right within the next five years or so. That's just craziness. So it was so inspiring. But like that buzz that happens when people, you know, people came up to me and said like, man, I'd never got to sit in front of the executive team and have people listen to me before. And, you know, it felt like people liked my idea. And I was sitting on that thing for two or three years trying to figure out who do I even share this with? And now we have this platform. So I'm not saying that's the best way or the only way, but companies have to figure out how they give people a platform. Because if you can tap into that 100% of the brain, your company can become unstoppable.
Melissa - 00:32:26: I love that. And I love that story. When you do the Innovation Cups, I feel like a lot of people try to repeat this. There's a lot of companies who try to do it. How long do you give people to work on their projects? Do you let them just pick whatever team they want? Do they stay in their teams? How do you organize that so that you get the best results out of it?
Aaron - 00:32:43: At other companies, sometimes we give people like half day on Friday to work on it for a while or something. But the thing I like better about this than a hackathon is I feel like people come up with cool stuff. People buzz about it for a couple of days. And then rarely does that stuff ever actually see the light of day in production, bringing results to customers. With Grubhub, we did a contest where you had to implement an A/B test and we would see the results. And the winners would just be whoever got the best results, which I really liked. But at Pattern, I think it's pretty amazing because we try to give them even more time. We give them about four months from the time we do the rapid fire pitches until we have the finalists that then come to the final event and present. So they have time to implement it and see the results. And some of them iterate it a few times to go from okay to better to really good. And so sharing that journey with a company too. I think, basically, everybody still had to do their normal day jobs. And most of the time, things that at least some of them were working on were in their space. But if someone in customer service pulls in someone from data science and maybe from UX design or whatever, I find that when people are doing passion projects, it doesn't even feel like work. And for some of them, it's just part of their daily work. And for others, it's just like dessert. Like on top of their normal work, they get to work on this really cool project that they came up with. And they're working together with cross-functional peers that they maybe don't work with every day otherwise. So we found that we didn't really need to carve out extra time for it. People just really love to do that.
Melissa - 00:34:24: When do you take an idea and decide to completely fund it? Like, let's say I've had this issue in larger organizations specifically. I feel like smaller organizations, maybe you get a little bit more wiggle room here. In larger organizations, I think because of the planning issues we talked about earlier, you have a lot of these hackathons or these innovation days and they find something that works and it's like, we're going to fund you for a month and go do it. And you're getting really good preliminary data and then they just get killed. And part of the time I do see that because it didn't align with the company's strategy. It was like a cool project. Everybody was like, yeah, fantastic. Right. But it wasn't there wasn't enough direction, I think, for the teams about what to think about or goals from that perspective. On the other hand, though, I've seen great ideas just get canceled because they're like, oh, well, we can't move around. We'll be already committed to start taking this on. How do you flex your roadmap or your strategies to embrace those types of things?
Aaron - 00:35:21: I think it's case by case. So when people did their pitches, I would then circle back with the two co-founders and they would largely make the decision on who would become the finalists. And there were some where we felt like, slam dunk, move ahead. These ones, we don't need to provide them any help. They can just do a manual approach and prove it out. Some of the ones that got to the finals last year were only this year funding automation and building them into our tech. They were able to do a lot of it manually to prove it out. But there were some ideas where we immediately wanted to execute on. And so we just put resources behind them. And then there were others where it's like, that sounds like a really good opportunity, but we can't see a clear path to achieve it. And we don't want to send them on a wild goose chase and give them like a few resources, but will it really work out? And so some of those, we had them do what we call a POV, which is like an Amazon six pager, except it's usually, just like a page or two where they just do a proposal. Here's the problem space. Here's our proposed solution. Here's the resources that we would need so that we could get them, make them flesh it out a little bit more and get a feel for like, do we believe that this has legs, that it can succeed? And you just make bets. You're not always going to win. You will probably not end up completely implementing some, but you've done enough due diligence that you just make smarter decisions.
Melissa - 00:36:46: And it sounds like you do need that one person or leadership team, right, to just make a call there. Where you're like, we're going to pursue that bet. Like, it's not going to work if nobody's willing to make a call.
Aaron - 00:36:56: And that was part of the magic, I think, that this whole thing was supported at the highest level. Our co-founders were 100% behind it. Really, the minute the pitches all happened, it was game over. Everybody knew, we've got to do this every year. In fact, our CEO was like, we should do this every three months or something. I'm like, it's a lot of work. I don't know if I have the stamina to do it over and over and over again. We try to do this in our daily work, but soliciting ideas from every corner of the company, it's a whole production, but it's totally worth it to do it once a year. We just kicked it off for this year. It's funny, too, because we bought this big trophy. It was like the size of the Stanley Cup. And it cost like, I don't know, $1,200 or something. Our CEO decided, you know what? I want something even more substantial. Just spend $10,000. I don't care, but I want it to be solid. Because it looked solid to me. I lifted it. It was quite heavy, but he thought the cup looked a little bit too much like plastic.
So the point is, having the top of the company be 100% minus... I mean, he threw hundreds of thousands of dollars of RSUs into the pot. The finalists, everybody who made the finals got RSUs to share amongst the team. And I think this is the point for company culture, period, is if you try to come in and change the culture, but the top level isn't on board, it's just not going to succeed. Even if you successfully show it could work until they're on board, it's going to peter out. But when they're on board and they rent out a whole theater and the whole company comes in and we have this big event to celebrate these finalists. And I think when people see that we're serious about this and the CEO, the co-founders will sit there for hours listening to these pitches and they're all in, then the whole company gets behind it. So the leadership just needs to decide, are we going to listen to people? Are we going to encourage this? And how do we best do that? And then I think the right things will happen.
Melissa - 00:38:56: What would be your advice for leadership to help bake in some of that encouragement on a daily basis to listen to people? Like, let's pretend that you're not seeing the innovation that you want in your company. You really want it as a leader. What can you do on a daily basis or a weekly basis besides like running an innovation cup to just at least start encouraging people to be innovative?
Aaron - 00:39:18: That's another good question, because if it's only the Innovation Cup and never at any other time, you really haven't created that innovative culture. Something that any manager can do is just be aware of it. I think a lot of people say, oh, I'm totally open to it. But when they day-to-day think back critically about their behavior, when someone comes to them with a really good idea, a lot of times leaders critique them as being not focused or their head's in the clouds. Now, if they're just not getting their work done, that's one thing. But sometimes people just really don't pay attention to and encourage those kind of bets. And sometimes for me, it's just helpful to try to make it a more active part of our culture. So, for example, I just started putting a calendar invite on the calendar with our CEO for my leadership team to come in with innovative ideas every quarter. Then we can talk to them through and kind of get a temperature check with the CEO of how excited they are about the ideas so that we're always thinking about these so that they're motivated with their teams to solicit these ideas and support them. If they're on the hook to kind of sit in front of the CEO and share ideas, they're naturally going to be soliciting that instead of quashing it. I think Amazon really did a great job of that that brought this into my mind because they have this whole process, which is onerous, but it's called Operational Planning.
And they have OP 1 in the fall. I don't know if they've changed the timing, but when I was there, it was OP 1 in the fall. OP2 is when you solidified the plan at the start of the year in January after peak was over. And it was a bubble-up affair where people would write their proposals, and then the manager would review, take the best to the next level, and then they would make it up to Jeff Bezos and his S Team, and they would review. And they would select big ones to be S Team goals that then they would assign back down through their SVPs to have someone on the team drive those. But those ideas would essentially bubble up from the bottom. And I really do believe they did a great job. And you know what? A lot of the ideas that they didn't choose as S Team goals, teams still did. They maybe didn't have the blessing at the top level that kind of like if you had an S Team goal that all of the teams that you needed to help, all you had to do was say this is an S Team goal, and they had to do it. So it kind of cleared the path. But a lot of the ideas a team could still do during the year. So just even though like an Innovation Cup idea or any other idea that my team comes up with during the year may not become a finalist or be funded at a company level, a lot of these things can still get done. I think just starting with your organization and letting those ideas bubble up can really create that year-round culture.
Melissa - 00:42:12: And when you're thinking about bubbling up these ideas too, I've seen in some people will mistake this in organizations, right? And think about I, as a leader don't have to give you any direction whatsoever. You guys just come up with a bunch of ideas of what we're going to be building. And then we see everything all over the sun. Some might be drastically innovative. Some might just be little tiny changes, right? What comes down before you bubble it back up? Let's put it that way.
Aaron - 00:42:35: Well, I think one thing that becomes really clear the first time somebody goes to one of those bubble up sessions with their leader at Amazon, for example, is like numbers matter. And it doesn't have to be dollars. It could be how you believe. Like if you can show that like 32% of all comments in the NPS surveys are related to this particular problem and you solve this thing and your NPS will be disproportionately improved. Whatever it is, you notice right away leaders like how they're vetting them right on the fly. It's like you're coming to me with like $500,000 idea and this person that's proposing right after you, right before you, it's like 20 million or 100 million. Or pretty soon you realize, oh, okay, that's what matters. I need to get impactful things, not just like kind of passion projects that I think would be kind of cool. And so if you apply openly in front of people, here's I'm evaluating these things to bring them up. If you tell them that in advance, but then that's actually what you're using. It's not just, oh, you're my friend and that's kind of a cool idea.
Let's do it. But instead, it's like you're just ruthless. Like, here's what I told you guys. This is what I'm using to measure these things because this is what leadership going to get behind or not. I'm just helping you know what's going to win because it helps our customers win. I think being really clear with communicating that up front, but then actually holding to those standards when you judge those, I think sends a message that people need to hear. And then if people have other ideas that they still want to do, like one of the Innovation Cup ideas was we want a relaxation room so that we can kind of have a power nap for 15 minutes and come back stronger. The metrics behind that aren't going to be great, but it doesn't mean you can't just go get that done. Go to HR, figure it out, and do it. You may not win the Innovation Cup award for it, but that doesn't mean it wasn't a good idea and that you shouldn't just go do it. So we call those just do-its. Like, you may not be the finalist, but don't drop it just because we don't all think it's the greatest idea ever.
Melissa - 00:44:43: Well, thank you so much, Aaron, for being on the podcast. If people want to learn more about you, where can they go?
Aaron - 00:44:48: Yeah, if people want to learn more about me, they can go to linkedin.com/in/aaronhsmith, Aaron H. Smith. I have some of my blogs and things there that I think kind of give more insights on some of the things we discussed today.
Melissa - 00:45:04: And we will definitely put all those links in the show notes for you. So if you go to productthinkingpodcast.com and find Aaron's episode, you can find all the links to his profile to check out more of his writing. Thanks again, Aaron, for being on here. And thank you to our listeners for listening to the Product Thinking Podcast. If you have a question for me, remember that you can write in to dearmelissa.com and I answer them on every episode. We'll be back next Wednesday with another guest. So make sure that you like this and subscribe so you never miss an episode.