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David Obershaw

Lecturer

Electrical Engineering
353 Serra Mall, Gates 279
Stanford University
Stanford, CA 94305- 9025

David Obershaw
EE292i Insanely Great Products: How do they get built?
June 2, 2014
email: david@obershaw.com
Final Discussion Session Handout Materials
Below please find my summary notes on common attributes Ive seen in great
product companies, as well as individual attributes that will serve you well in
your career. Ive also included some information on what works best for
startups as those organizational development challenges are for more
complex with little margin for error.
Please share with me any thoughts any of you have on this material its
definitely a work in process.

Phone: 650-888-8905 E-mail: david@obershaw.com

Insanely Great Product Companies


Organizational Attributes for Sustained Leadership
While no organization exhibits all of these attributes, you generally find a
cocktail of many of these in organizations that are building great products
over the long-term. These attributes come from my 30+ years working in
information technology and my 7 years teaching at Stanford.
1. Managerial Leadership
a. It is almost impossible to become an insanely great products
company without outstanding managerial leadership.
b. Leaders ensure organizations FOCUS on solving a tractable set of
problems in an economically valid way. They develop the
corporate culture (core principles and practices) that drive great
product development over the long-term.
c. Everyones voice can be heard, but leaders make decisions about
what will and wont be done.
2. The Institutionalized Process of Creativity
a. Growing body of evidence that creativity isnt inspiration, but
rather Thomas Edisons classic quote Invention is 1% inspiration
and 99% perspiration!
b. Best current example of this is Pixar Animation Studios
i. By their own assessment, their early ideas are awful but
the team works diligently to make them great
1. Every film they have made has been a hit a feat not
achieved by any other movie studio in history
ii. In complex product development, creativity is not a single
decision, but thousands of decisions made over time by
every member of the product team
1. Often, achieving breakthrough results is the result of
an iterative process of trial, error, and occasional
success

Phone: 650-888-8905 E-mail: david@obershaw.com

3. Strategic
a. Great product organizations can only become great by through
exceptional discipline and focus. Deciding what NOT to do is
critical, and focusing ones scarce resources on opportunities that
are winnable for the organization is fundamental.
b. More startups die of indigestion than starvation.
4. Obsessed with advancing the state of the art
a. These groups are focused on building not just great products but
extraordinary products
b. The culture embraces this philosophy so completely that it makes
it painful to ever ship a product that doesnt meet our
standards
i. I experienced this during my time at HP in the 80s
c. These teams dont come to place, they come to build
something extraordinary
d. Note that extraordinary is often dominating in delivering a
great product or service at a very competitive price
i. In the US, think Southwest Airlines
5. Respect For teammates, customers, partners, and competitors
a. Individuals are empowered to do their jobs
6. A higher calling Mission
a. Companies that lead over the long-term, most often are on a
mission way beyond making money its improving the quality of
peoples lives or some other compelling goal
b. This higher calling results in people going above and beyond the
call of duty to deliver on the mission
7. Disciplined
a. This minimizes waste, and ensures everyone is efficiently
pursuing the goal

Phone: 650-888-8905 E-mail: david@obershaw.com

b. Bringing products to market consistently with high quality always


involves strategic use of deadlines to ensure the product actually
ships (Dont laugh many startups never get products to market,
and larger companies wind up canceling many projects due to
poor execution)
c. Individuals are empowered to manage their own domains
d. Great product organizations apply the same rigor to every aspect
of the business that impacts the customer
i. Apple probably the most obvious example of this with the
level of detail they go to delight the customer every time
e. As Jim Collins says: Fire Bullets, then Cannonballs
i. Execute small product and market experiments to
determine the scope of an opportunity before investing
heavily.
8. Honest
a. Within the company and with partners and customers
9. Flexible and Dynamic
a. Need to course correct when plans are proving invalid which
is frequently the case
10.Process management bias
a. Peter Drucker, father of management science, said: The Art of
Management is getting extraordinary results out of ordinary
people. This is the direct result of building a management
process that helps people achieve more.
b. Better every day Make each day your masterpiece John
Wooden, former head basketball coach, UCLA
11.Attention to Detail across all functions
a. Details make up the whole never underestimate the power of
detail focus

Phone: 650-888-8905 E-mail: david@obershaw.com

12.Market knowledge: Customer and Competitors


a. Obsession with learning more, and building a better product
every day
13.Urgency to get things done
a. Never put off getting things done a bias toward action
14.Ability to harness conflict
a. This is HUGE. All organizations have conflict; Great organizations
harness that conflict to build better products and services.
b. The focus is on building a better solution rather than making
conflicts personal.
15.Confidence A core belief in the teams ability to win
16.Paranoid and Obsessive (or Always-Vigilant)
a. Why is this important? The law of slight advantage
i. Often the winners in sports or in business win by a hair
b. Great organizations need to be constantly vigilant about new
threats, and about exploiting new opportunities
17.Introspective
a. Lack of introspection has ultimately led to the failure of most
technology companies.
b. People focus too much on success and not enough on weakness
and areas of opportunity
c. Particular tendency to underestimate new technology threats
18.Failure-embracing
a. More to be learned from failure than success.
b. Issues are often more process than people, hence why positively
approaching failure is critical.
c. Scientists understand this better than businesspeople

Phone: 650-888-8905 E-mail: david@obershaw.com

Individual Attributes
1. Passion for hard work disciplined with a continuous improvement
mindset
2. Positive attitude
a. Willingness to do what it takes for the team/organization to
prevail
3. Creativity
a. Always looking for a better way to get something done, and the
flexibility to adjust to new information
b. Leadership in any product area always involves a great deal of
creativity across the organization
4. Intelligent/ Quick
a. Need to bring something to the table that adds value
b. At its best, not book-smarts but ability to get the right things
done right smarts
5. Ability to collaborate
a. Respect others opinions and ability to synthesize divergent views
6. Honest with yourself and others if youll deal with reality, youre
five steps ahead of most people
7. Obsession with being the best you can possibly be
a. Manifests itself in your obsession with making the product, our
service, branding, the sales process whatever it might be, better
8. Commitment To the mission and to your team
a. Willingness to do what it takes, and help your teammates along
the way

Phone: 650-888-8905 E-mail: david@obershaw.com

9. Respect for others


a. Humility toward other functions is a good strategy. You probably
cant actually do their job, so before you judge too harshly, try
and walk a mile in their shoes
10.Curiosity
11.Always learning
a. Its what you learn after you know it all that matters most
12.Flexible/Dynamic
13.Celebrate your strengths work on your weaknesses
a. Leverage the team to compensate for key weaknesses we all
have em.
14.Positive Attitude A great addition to any team
a. An entrepreneur friend of mine has said you can only control
your work ethic and your attitude many fail to optimize on
both

Phone: 650-888-8905 E-mail: david@obershaw.com

What Works for startups:


1. The right product and market at the right time
a. A rich vein is worth a lot
b. An iterative approach to getting it right
i. Many early-stage companies test out many different
business/technology experiments on the path to finding
something that works
2. Domain Expertise or not
a. Often great innovations come from those with deep knowledge
of a problem space
b. However, sometimes the biggest innovations come from those
who approach a problem from a completely new perspective
3. Vision
a. Balanced with rational pragmatism
4. Luck
a. Market develops faster than you ever anticipated
b. Competitors make mistakes
5. Laser-focus
a. Need to focus on the smallest area of value for the customer
i. This is Rob Mees minimum viable product or MVP
ii. Trying to build a fully featured product on first release is
rarely achievable
iii. Drives a discipline to determine the minimal level of
functionality that can deliver value to the customer and
get it to market as quickly as possible
iv. Learn from deployment, iterate again continuously
improving the solution.

Phone: 650-888-8905 E-mail: david@obershaw.com

6. Aggressiveness
a. Seize opportunities, exaggerate strengths
b. Need to be larger than life even when youre five people in a
garage
7. A strategy that brilliantly balances an opportunity with the technological
and business assets of the company
a. Doesnt have to be perfect or complete in most cases
b. Huge advantage over existing players their products often have
to be complete, and work for many geographic and commercial
market segments on day 1 you can target a micro-niche market
and build from there
8. Great leadership
a. A Doable Strategy
b. Setting achievable but very challenging objectives
c. Holding the team accountable
d. Knowing when to say NO and NO and NO
i. More startups die of indigestion than starvation! True for
larger companies as well
ii. Look how Apple built the worlds most valuable company
on a very small product line? Great products, brilliantly
marketed, yield extraordinary profits
e. Flexibility when you need to course correct
f. Ability to recruit the best people and eliminate those who arent
a good fit quickly!
g. Keeping the team focused and inspired for the mission
h. Willingness to adjust based on team insight
i. This is a big one!
ii. Can your people tell Truth to Power ?
iii. A very fine line between a leader with dogged vision and
determination and one thats delusional
9. Great salesmanship
Phone: 650-888-8905 E-mail: david@obershaw.com

a. Big Company: B52 Bomber Pilots vs. Green berets in startups


b. Startups are hand-to-hand combat charisma and absolute
ability to execute at the personal level is paramount
c. Youre convincing people to rely on something new and risky
the pitch has to be absolutely captivating
10.Creativity
a. Willingness to think outside the box to solve the customers
problem
b. Is there a cheaper way to get something done? Can we disrupt
the status quo?
c. Should we source technology from elsewhere in order to buy
time-to-market?
i. LaserJet Story When HP first launched the LaserJet in 86,
it was built in a Canon factory in Japan and shipped in an
HP box. For a company steeped in not-invented-here
mentality, this was a major shift. The product had an HP
circuit board, and ran the HP Printer Command Language,
but the print engine was pure Canon. The rest, as they say,
is history in terms of the market franchise HP was able to
build
11.Process orientation
a. Those who survive, quickly develop disciplined approaches to
strategically critical pursuits
i. Product Development
ii. Marketing
iii. Sales
iv. Manufacturing/Supply Chain Management (Hardware cos.)
v. Financial Management
b. Apply discipline to everything that really matters
i. Avoid any and all that doesnt advance the product, team,
or your market position
Phone: 650-888-8905 E-mail: david@obershaw.com

ii. Working capital management is often huge for startups it


takes more time and more capital to achieve a viable
business
12.Focus on advancing the company not whos right or wrong
a. Great ideas come from unlikely sources
13.Obsession with the Mission
a. To win, it requires absolute dedication from every member of the
team
b. All forces are against you only your undying commitment to
succeeding enable you to win

Phone: 650-888-8905 E-mail: david@obershaw.com