We've been talking about how productivity pressure is rising among engineering teams. But connecting that productivity to business outcomes is essential to ensure engineering's output is creating company value. In this post, we hear from two business leaders about how they align engineering and revenue in very different, yet effective, ways.
Who we spoke with:
The pressure to ship new products has never been higher for engineering teams. Growth depends on sales, and sales require marketing. Marketing, of course, needs a steady stream of new products to promote.
Consistently creating product-market fit is the ultimate tech company goal. But it’s not enough to build a successful product, you have the added challenge of measuring that success. As Neeraj Gupta from Sift sums it up, “When we don't hit our target, then it becomes a question of, are we not hitting the target because sales didn't execute it right? Or the marketing message was not right? Or did the engineering not build it right?”
That’s where the essential connection between product development and business results comes in. But how do engineering teams achieve this alignment between their work and company growth? How do they connect innovation with go-to-market functions in a way everyone understands—from developers up to the CEO? While sales and marketing have clear metrics to report on how their work connects to business outcomes, engineering teams often only have the data to communicate progress but not necessarily value.
We spoke with two thriving companies with very different sales models to understand how they are achieving this alignment and their advice to companies like them. Greg Keller, CTO of Jumpcloud, and Steven Chung, president of field operations at Delphix, have both taken very different, yet successful, approaches to connecting products to revenue.
The Enterprise Model: “Fast Failure” in Innovation
Delphix has built a data operations platform to help companies with digital transformation, and the company distributes its technology through both a direct sales force and through partners. Chung is responsible for the company’s go-to-market strategy and believes that failing fast and building a culture of continuous learning are essential for long-term success.
It starts with setting revenue targets for products and R&D projects. “Sometimes enterprise software companies need to operate more like traditional product companies with financial metrics tied to them,” says Chung.
It’s a real waste when software development projects lack clear business outcomes, and the experiments are not gaining traction in the marketplace. To avoid this issue, it's really important that we manage every engineering project and product line with an ROI in mind.
Once software companies adjust their thinking around engineering, they then need to determine product success or failure as quickly as possible. “Coming from an enterprise sales background, if we can convert 25% or more of our pipeline, we're hitting the industry standard. Similarly, if we apply this kind of ‘portfolio model’ for software development, then for every ten projects that we launch, only one or two of them are going to be great, a few will be average, and the rest might fail.
We need to foster a culture where it's okay to try an experiment that doesn't work out. The key here is to fail quickly, learn from it, and then adjust until we get it right.
The first element of building that type of culture, Chung says, is ensuring people in technical roles have direct access to customers. “I would encourage all technical staff to learn as much as they can about their customers’ current and future needs and to build these requirements as part of the software development process.”
A strong, company-wide culture also needs to start at the top. “It has to come from the executive ranks so that people are not afraid of failure, not afraid to experiment."
We have to create this mentality that fast failure, in the context of thoughtful planning and experimentation, are essential factors of innovation.
Chung continues, "This is particularly true in the technology space, where even successful products require continuous upgrading in order to stay relevant over time, and where the threat of disruption remains omnipresent.”
Product Led Growth: The Ultimate Convergence of Engineering and Go-to-Market
Jumpcloud, a Colorado-based company that offers “Directory-as-a-Service” products, has built their entire company around tying new products to business growth. Jumpcloud uses a philosophy of product-led growth that puts engineering at the heart of the entire business. “It’s best explained this way: we've never made an outbound sales call in six years of operating this business,” says Keller.
“At the top of the funnel, you have all your leads and all the things you do to expose your brand. We spend money there. But that long stem of the funnel? That's our product. We bring people into the product, expose it, let them fall in love with it."
We close business in 47 days, not six or nine months. The whole business is predicated on the operational elegance and efficiency of engineering.
Within the product-led growth philosophy is something Keller refers to as “growth engineering.” It’s the ultimate fusion of engineering, marketing, and sales—and one of Jumpcloud’s key advantages. “You have data about what's going on in the product, you have marketing data, you have sales data and we meld these data streams. We've invested extremely heavily in this area using technologies to basically slurp our own data and learn from that data so we can make other informed near real-time business decisions. Rather than waking up six months from now and saying, "What happened to our operational costs and effectiveness?’”
The result is an environment that helps Jumpcloud consistently shrink the time between product inception and product revenue. Keller calls it the “value stream,” a critical metric for the company.
What this amounts to is vast and aggressive experimentation in the product. So that means within a week's timeframe or however long a test will go, we may change the whole user interface just to watch behavior changes so we can influence patterns.
Like Delphix, much of Jumpcloud’s success in adhering to their product-led philosophy starts with its culture. “The executive team has daily stand-ups, just like an engineering team would. So our marketing leader, the person who's running sales, ops, all these things, we're meeting daily. What problems are present? How do we solve them?”
And having one central source of data and truth about the success of products creates an efficient culture of transparency.
Every single engineer can see their progress and see what happens when we shift features. It's right there in front of them. Absolutely corroborated down to the feature.
Chung agrees that visibility and a strong connection between engineering and business outcomes leads to happier engineering teams. “It’s inspiring for the product and engineering teams that worked on a product to say, ‘Hey, we worked on this thing together from start to finish in partnership with sales with a lot of direct customer feedback as we developed the product. Both the salespeople and technical people are happy because we can see the positive impact in the marketplace.”