Introduction

Countless companies build technology products; but, there are differences in the way that technology companies operate. A combination of factors, including culture, means these companies consistently out-innovate others.

We’ll dive deeper into those differences in a minute, but one thing that isn’t often spoken about is the way that a company’s choice of partners also plays a large role in influencing their company culture and approach.

The old idiom of “you are the average of the five people you spend the most time with” applies to businesses too. If your goal is to operate as a top-performing technology company, then you need to be sure to choose your partners wisely.

So, what is a 'true' technology company?

A true technology company is a company that understands that technology is their key enabler to solve customer problems quickly and effectively. They understand that technology should serve their customers, rather than the business. Traditional non-technology companies operate by treating technology as a necessary cost to doing business, in the same way they think about their printers or office networks.

Creating technology that serves customers means putting technology teams in front of customers and empowering them to solve customer problems. Marty Cagan speaks in more detail on this in his essay ‘The Role of Technology’. In particular, he describes the wasted time and resources incurred by employers and businesses that don’t understand this:

"Rather than outsourcing hundreds or even thousands of mercenary engineers, and providing them roadmaps of features from their stakeholders which rarely generate the necessary business results, I explain to them that they will receive a much greater return from a significantly smaller number of the right employees, that are given business and customer problems to solve, and held accountable to the results."

Marty quite rightly calls out the fact that these companies often outsource their technology efforts to external digital product studios or contractors in an effort to cut costs or provide greater flexibility. Many of these third party vendors are happy to work off of feature-based roadmaps given to them by stakeholders, rather than intimately understanding customer problems and creating technology leveraging this knowledge.

In fairness, the former is absolutely a valid way to deliver software. Many digital product studios and agencies operate with this business model, and traditional companies are glad to partner with them to take technology salaries off the balance sheet.

But, if a company’s goal is to deliver the best possible products for its customers, and become a true technology company, working with these kinds of partners will be counterproductive. Those partners will ultimately influence the internal culture of the company over time and pull them away from being a true technology company.

All of this is to say that not every product development partner operates like this. There’s a subset of product development vendors who truly understand how empowered teams work, and can be a valuable partner for technology companies.

With the right partner, a true technology company can still have the advantages of flexible scaling and specialised expertise — without the risk of negatively impacting culture and ways of working.

How can I identify these digital product studios or agencies?

With experience, the differences become obvious. But, there are a few key areas to observe:

1. They have strong product engineering teams

Product engineers are software engineers who think holistically about the product they are building, and how a business’ customers will use the product. They aren’t just content to implement features from a backlog, they need to know the ‘why’ behind the features they are building.

This is important for two reasons:

Firstly, so that they can build the best possible solution with the least effort required. If they are simply being dictated solutions, an inefficient solution may be implemented without being questioned.

Secondly, so that they can react quickly to customer feedback. Without the direct context of customer feedback and data, they will have to rely on long feedback loops from other members of the team who have to distil this feedback into a backlog of work for engineers to tackle.

Some key signs that a team has a strong product engineering culture:

• They don’t use a rigid framework like Scrum. Engineering teams manage their own work using their own chosen techniques and focus on delivering value to customers rather than story points.
• Engineers have as much access to customers and clients as they want. They are not hidden away. This allows them to receive feedback from customers directly.
• They are led by experienced Engineering Managers, rather than people with a non-technical background. Having leaders with technical backgrounds avoids heavy reliance on delivery frameworks or other abstractions in order to understand the problems at hand.

2. They have product managers who focus on customer problems, rather than project managers who focus on delivering features

In empowered product teams, the Product Manager focuses primarily on understanding how the product will provide value to the customer. They do not lead the team, but help influence the team to create the best possible product by focusing on customer problems and data.

They don’t spend a lot of time managing backlogs or facilitation “rituals” with the team.

Some key signs of an empowered Product Management team are:

• Product Managers who are commercially-savvy, and understand the key KPIs of the business.
• Product Managers who are creative and enjoy problem solving.
• An absence of the Product Owner title, which is typically associated with Scrum.

3. Their designers are part of the core team

In an empowered product team, the product designer forms a core part of the team in the trio of engineering, product and design. The designer focuses on ensuring that alongside the solution being valuable to users, it will be a seamless and enjoyable experience for them as well.

Here’s what to be on the lookout for:

• Designers equally balance desirability (the visual side of design) with usability (user experience and how the UI actually works).
• Designers play an active role in customer interviews, often using tools like design sprints.
• Designers have a strong partnership with engineering, and iterate together to create optimal solutions.

I’ve found a partner that ticks the boxes, so I’m good now, right?

Almost! The last magic ingredient is that you’ll need to work with them in such a way that you become true partners. It’s important to align incentives and give teams the space to build the best possible product.

This includes things like:

• Focusing on solving customer and business problems, rather than taking requirements from your internal stakeholders. The people in your business can be a great source of surfacing customer pain points and feedback, especially those on the front line with customers. But, they shouldn’t be the only input into what the team is building, otherwise biases will be introduced and the product will be built with only the input from the loudest voices.
• Avoiding building a relationship on legal documents with overly prescriptive deliverables and milestones. The Statement of Work (SOW) should provide enough detail for both parties to be comfortable, but should allow for scope to change based on customer feedback. You want the focus to be on building the right product, not on arguing about the definition of deliverables. This requires trust to be built, but it’s key.
• Ensuring that financial incentives are aligned through the cost model of the engagement. Fixed price engagements create the incentive for the vendor to minimise scope and the client to maximise scope. An ongoing time and materials or retainer-based engagement that is built on trust, communication, and high performance creates the best outcomes.

Like any relationship, choosing the right partner takes careful selection and continual effort. If you build the right foundations, it can be a huge accelerator for your business, and a huge benefit to your company culture.