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Late last year, Tyler Hogge fired off a series of tweets that caught our eye. In his thread, Hogge outlined how he’s “doing things a little differently” as VP of Product and Strategy at Divvy.

The bedrock of his philosophy is that PMs are the GMs of their product. Now, that’s not a new concept in product circles. But for Hogge, it’s an important starting point. “The main goal for a product manager is not simply to ship software — it’s to deliver business outcomes. Other people might agree with that statement, but very few actually put it into practice,” he says. “We’ve chosen to do many things to reinforce it across every facet of the role, and that’s what prompted the tweets I shared last year. It’s not that controversial of an idea — but the way we’ve implemented it at Divvy might be.”

Here’s how Hogge lays it out:

It’s certainly not how every product team is run — which is why it prompted all sorts of “But how does this actually work?” follow-up questions in Hogge’s replies on Twitter. We wanted to dig in more to learn how this approach came about, how it has worked in practice and ways other product leaders could think about leveraging these same ideas within their own product orgs.

Since joining Divvy in early 2019, Hogge has had the opportunity to experiment with making PMs more like GMs, something that he’s been toying with for a long time. “I was a product lead at Wealthfront for three years before I joined Divvy. We didn’t structure the PM role in quite the same way at Wealthfront, although there were definitely some areas that were tilting toward the PM-as-GM model. I always thought, ‘Man, we could really exploit this opportunity even more.’ Then when I joined Divvy, they really gave me the chance to set up the product org in the way I wanted to. Although there are some risks and things we are watching, so far it really seems to be working,” says Hogge.

Since he joined Divvy, the team has tripled in size. Hogge now leads a team of roughly 35 — including nine product managers and seven designers, and even a 15-person risk management team — a marked departure from his early days in tech. “I actually started off in sales. I’m sure there’s some of us, but I think it’s fair to say that most VPs of Product do not start their careers as sales managers. In some ways, I’m still a sales leader at heart and I firmly believe product folks stand to learn a lot from the world of sales,” says Hogge.

In this exclusive interview, Hogge shares a peek into his tactical guide for how product teams can become more outcome-driven, align more closely with sales, and avoid some potential potholes on the road to this different approach to product org management. From his impressions of the early-days implementation to his observations on how this experiment has panned out now that it’s been in place for more than a year, read on to learn why Divvy is doubling down on this approach. You may not be able to port every piece of his framework over to your own product org — but we’re certain it will get you thinking.

BUILDING AN OUTCOME-OBSESSED PRODUCT ORG FROM THE GROUND UP

Whether or not you take anything else from our approach, the most crucial point is that you need to shift your mindset from PMs acting as project managers to becoming outcome-driven if you haven’t already. Explicitly re-align your product team to owning outcomes — get them hyper-focused on delivering results to the customers and to the business. Everything else is secondary,” says Hogge.

He knows all too well that this pivot requires some trial and error along the way. The current system at Divvy that Hogge outlined on Twitter didn’t come together on his first day at the company — it’s been an evolution. “It happened gradually, then suddenly,” as Hogge likes to say.

Divvy VP of Product and Strategy, Tyler Hogge

Right-sizing the role of the PM: GM, CEO, or scrum master?

In fact, they took a completely different tack at the outset. “When I first joined Divvy we had this idea that a GM would partner with a PM, with the GM representing the business and the PM representing the product. But we found it was inefficient. It created a class of GMs that was separate from the customer and didn’t have the respect of the engineers. They can’t actually put into practice what they think should be built because they’re not the PM. On the flip side, the PM sort of reports to the GM, and that disempowers the PM into more of a project manager,” he says.

Here’s an example from Hogge’s early days at Divvy that demonstrates this clash: “We were launching a new way for companies to pay their bills outside of a credit card. It caused this friction where the PM for bill pay wasn’t really thinking as much about the amount of spend or volume the bill pay product would produce. He was only thinking about when it would ship and what the deliverables were — not the outcomes attached to it. All of a sudden, the GM was on the hook for the business outcomes without the power to really drive toward them,” says Hogge.

To jumpstart that transformation toward connecting outcomes and deliverables, Hogge melded the previously separate GM and PM roles into one. “When we made the transition to PM-as-GM, then that same PM built dashboards for spend volume and bill pay, and he started to align his roadmap to what would drive the most spend volume. He started to meet with our finance team to build into the model how much revenue he was going to sign up for. The PM said, ‘This is what I’m going to deliver, and I’ll own this number.’ It was such a shift to empower our PMs to think that way,” he says.

Delivering on milestones should be table-stakes for PMs at any company. The real question PMs should be focused on is: Does this software create the outcomes you wanted for the business while also delighting customers?

That’s not to say that shipping is an unimportant aspect of the PM role — successful execution and predictable delivery are critical to powering a steady up-and-to-the-right trajectory while keeping customers happy. Hogge was focused on empowering his PMs to see their work through a set of bifocals, with one lens firmly positioned on advocating for the customer, and another lens focused on the results for the business.

“The customer always has to be the first and most important stakeholder, but there’s also a crucial secondary stakeholder, and that’s the business. I always come back to a quote from Flexport CEO Ryan Petersen: ‘PMs love to optimize for one thing, but great PMs don’t just optimize for one thing.’ If you only calibrate to making the customer happy, you’ll end up making everything free. If you make everything free, you have less of a hurdle to build value. But if you step back and ask, ‘How do I build a viable business out of this?’ Well, that means we might have to ask for something from customers, and if we ask for something like paying for the product, then we better build an amazing product. They feed off each other — you can’t have one without the other,” says Hogge.

“To me, this comes back to the importance of action over words. The product world has let ‘PMs are CEOs’ become something of a rallying cry, without actually weaving that ethos into their everyday operations. PMs aren’t usually empowered to act that way. If your PMs aren’t responsible for hitting revenue goals and their own P&L, calling them the product’s CEO is nothing more than a bumper-sticker slogan,” says Hogge.

If you don’t make radical changes to how the product org operates, don’t expect radically different results. Take it a step further by asking this question: What have you done as a product leader to create the conditions that empower your PMs to truly focus on outcomes?

Calling your shot: How to help PMs pick the right outcomes

While revenue might be the most straightforward outcome to optimize and incentivize PMs toward, that doesn’t mean it’s the best choice for every product. “I tweeted that Divvy’s PMs own actual revenue numbers for new products — and they hit them,” says Hogge.

I got some detractors who said, ‘Well, not every product directly ties to revenue.’ That’s definitely true — and there are ways you can use this same outcome-driven model to peg to other metrics. We currently have two PMs that are in charge of lowering CAC and three that are dedicated to increasing contribution margin. They align their entire roadmaps around delivering on those outcomes,” he says. You can apply this ethos in a few different ways. “We are signing up hundreds of new customers a month, but we want our experts in customer success to focus their efforts on onboarding the larger customers, by ramping their spending on our corporate credit card. To free up our customer success team, we’ve asked two product squads to exclusively own the onboarding of all companies with 0-20 employees. This means product is building onboarding tutorials, Divvy University videos, and even hosting weekly webinars to train smaller clients.”

To further illustrate his point, Hogge poses this hypothetical: “It’s all about picking the right outcome and the metric that best points to success. Let’s say a PM at Pinterest is looking to deliver a phenomenal pinning experience, even if no one is explicitly paying for it. So what’s the business outcome? They might be looking to increase the number of daily active pinners,” he says. “But tying the PM’s comp to an X% increase in that behavior and calling it a day would likely be a mistake. Dig deeper. Why do you want to increase daily active pinners? Because that increases the LTV of a user. So even if a PM’s responsibility seems attenuated from revenue, if you dive into the whys you eventually can trace it back to an outcome you want to deliver to the business, while still keeping the customer experience in mind.”

Identify the root outcome you’re after — don’t pick the metric first. Drive towards outcomes in a way that also delights a customer — don’t lose sight of that.

Hogge unpacks the perils of starting with product metrics first: “To continue with the Pinterest example, what you really want — the outcome or vision you’re pursuing — is to create a product so sticky that you retain users for a long time, maintaining a great experience. Only then do you pick the metric that determines whether that outcome is hit,” he says.

“The problem with starting with the product metric is there are a lot of ways to increase daily active pinners that don’t lead to great outcomes. You risk creating perverse incentives that don’t drive to a root outcome. Hacky product choices might improve pinning behavior in the short-term, but they won’t ultimately improve LTV. Instead, point the team to the business outcome and let them determine metrics that indicate progress. If the metrics move, but the overall outcome doesn't, you screwed up.”

Sustaining the change

Product teams at Divvy embed this results-driven mindset throughout every stage of the product journey, returning to those goals again and again. “In our product reviews, we're very particular about articulating the outcomes we want to deliver with each product or feature — whether that’s increasing revenue, retention, adoption, or CAC. Every initiative is contextualized against the outcome. Are we making progress against the outcome? Shipping software is not an outcome. Anyone can ship,” he says.

This can’t be a “set it and forget it” situation where you list your goals at the beginning planning stages, and follow up once the product is launched to see how you did. Keep an eagle eye on the desired result every step of the way.

JOINED WITH SALES AT THE HIP: PRODUCT, MEET YOUR NEW BFF

But product can’t push for outcomes in a vacuum — it takes tight alignment with sales throughout every step of the process, from ideation to prospecting to closing, to make “PMs own outcomes” more than just a company motto. Selling is always a team sport, but Hogge’s product team at Divvy takes that idea one step further. PMs aren’t just jumping in to help sales with a particularly tricky prospect as a favor — it’s a core part of their role and responsibilities.

At Divvy, our PMs sell — that’s really the key to the whole system. They join sales calls, they do sales demos and — when we’re not in a pandemic — they go on the road with salespeople to help close deals with larger prospects. We’re all in the same boat rowing in the same direction,” says Hogge.

It may seem like there are a couple stumbling blocks here — either the risk for territorialism when product gets overly involved in sales’ day-to-day role, or perhaps a concern that PMs will spend too much time selling and not enough time shipping. From Hogge’s perspective, neither of these fears are warranted.

“I can’t think of an example where a salesperson has felt any bitterness that product is coming in and potentially stepping on their toes, and the reason is this: First, as a salesperson, it’s always one of the trickiest conversations to have with a prospect when they start to bring up product concerns or product requests. You can’t actually promise anything, because you don’t know for sure when something’s going to ship,” he says.

“Secondly, even if the salesperson says, ‘Yes, we will build that for you,’ the prospect isn’t likely to believe they have the power to make that happen. But when a product person is in the room and they say, ‘Those are really interesting requests, we know of other customers who need that, and I’m actually in charge of the product roadmap. It’s scheduled to ship next month, and we should work together on how that looks so that what we build is delightful to you’ — it shifts the whole dynamic of the conversation. I have countless examples of Slack messages with sales reps saying that having a product manager join these sales calls is an absolute game changer,” says Hogge.

An example Slack message from an appreciative Divvy sales rep. Image provided by Hogge.

It’s clear that sales folks benefit from having product managers on hand to share the load and speak the customers language, from getting deals closed faster to getting closer to hitting their quota. But are PMs getting the short end of the stick in this deal? Hogge firmly believes that’s not the case.

“One of the biggest challenges for product managers is prioritization. There's a tendency, when you leave a PM to their own devices, to over-intellectualize product management. The questions really should simply be: Does this sell? Does the customer actually want this? Is the market pulling this out of us? Is this going to deliver the outcome we want? When product is working in lockstep with sales, the answers to these questions become apparent much faster, and there’s clarity around prioritization,” says Hogge. “It also jumpstarts creativity. Any interaction with a customer helps shape a better product. When our PMs join sales calls they use it for discovery — they test ideas while also developing sales opportunities.”

Hogge expects his product teams to block time on their calendar to tag-team with sales — with a focus on prospects who are at the most critical junctures. “Whenever I start talking about this model, some folks immediately think that PMs are spending all their time selling or doing outreach calls, but that’s not it at all. If the PM is getting included, they’re jumping in toward the bottom of the funnel.”

ADDING ON COMP: HOW TO RETHINK INCENTIVES FOR PMs

Aligning both revenue and product teams to shared goals and business outcomes for a particular product, and backing up that commitment throughout the building and selling process, can go a long way in knocking down the barriers that typically separate sales and product. But if you’re finding that this outcome-driven approach isn’t quite sticking, it may be time to rethink incentives to include variable comp.

Hogge reminds us that, while it may be what most people find the most striking pillar in his plan, the variable compensation structure is firmly anchored in the same outcome-driven ethos he’s injected throughout Divvy’s product org. “It starts with identifying a business outcome for each product the PM is working on, and articulating the metric most closely aligned to that outcome. You then build an incentive structure that rewards PMs for hitting it,” he says.

“My two cents is that while a cash component could work, it should lean heavily towards equity. Many younger companies neglect to really think through the power of follow-on grants, but stellar employees want a path to double their equity (or more) if they do well over a multi-year period."

Great PMs are builders, and builders want a chance to have equity in what they build.

Hogge often finds himself borrowing from the sales playbook as he molds his product org. “We’re all quite familiar with quotas for salespeople, but compensation incentives for PMs are certainly less widespread, which could explain why so many product leaders say they are outcome-focused, but so few actually are in practice," he says.

"At Divvy, sales is driving toward their quota, but they are working in lockstep with product. Product is doing everything they can to help sales hit that number, because the PMs are typically aligned to that same number."

I want us to be the most tightly aligned revenue and product teams in the world, and this structure is putting us on the path toward that.

Hogge provides an example here of what that looks like in practice: “We have a PM who is dedicated to the customer’s first couple months after signing up with Divvy to get them spending. His metric is the spend targets of customers who are in that ramp part of the customer cycle, with meaningful equity attached to hitting those targets,” he says.

As with any evolving program, honing in on the right outcomes to reward has taken some tinkering along the way. “As a corporate card and expense management platform, at Divvy we’re constantly looking for opportunities to lower declines when our customers swipe their credit card. Originally we had a PM working on software to help move the needle on decreasing the number of declined transitions, with an equity increase if they met that goal,” says Hogge.

“What we realized is that the declines metric wasn’t precisely aligned to the outcome we wanted to achieve, which is a better experience for our customers. In fact, some declines are good — like in an instance of fraud. We’ve since pivoted away from aligning to that particular outcome.”

Over the course of his tenure at Divvy, Hogge has seen how this approach has pushed PMs to leveling up — and the company is moving faster as a result.

“Recently, I had a post-mortem with one of my PMs who had pushed really hard to get a first version of a product out — he ended up delivering it two months earlier than expected, because he was really motivated to produce that outcome for the business. I asked him, ‘If you didn’t have this kind of variable comp plan in place, would you have pushed this hard?’ He said, ‘I would love to say yes, but I probably would not have been driven to push as hard to get this out sooner.’ I really appreciated his honesty in his answer. We’re able to move much faster as a business with that mentality,” says Hogge.

To be crystal clear, it wasn’t ahead of schedule just because the team ‘pushed harder.’ Projects don’t magically ship faster with an extra dollop of motivation. Rather, it forced him to look at scope even more closely, and as a result of that it was determined the scope could be trimmed and a first version could ship more quickly,” he says. “Absent incentives, I’ve found that PMs often don’t move with enough urgency or engage in the often awkward conversations about scoping that need to happen with key stakeholders.”

The variable comp is more of a forcing function to centralize PMs around agreed-upon outcomes with a narrower scope. “Any time a product manager is shipping something, they’re trying to figure out what's the minimum viable product that would delight customers. But PMs tend to let perfect be the enemy of good. Focusing on outcomes with aligned incentives keeps the scope from getting bloated, so they don’t make long-term investments on projects and features that are nice-to-haves, but don’t ultimately tie back to a larger goal in a meaningful way.”

Every day you choose to work on something is an expensive choice. You want PMs to feel that gravity.

POTENTIAL PRODUCT ORG PITFALLS — AND HOW TO AVOID THEM

Hogge certainly recognizes that this approach invites skeptics and follow-up questions. We’ve gathered several of them here, and Hogge takes us through them, outlining some of the risks and his thoughts on how to sidestep them.

Won't variable comp for PMs shift their focus to the short term instead of long term?

“The critique I’ve heard is that you’re incentivizing product managers to be thinking too short-term. That they shouldn’t be incentivized to close deals right now, they should be thinking about how to build products for a year or two down the road. To spell that risk out more plainly, let’s return to our previous Pinterest example. You could end up over-engineering the product for pinning behavior or take a hacky approach to increasing daily active users, which loses user trust. I agree that it’s a valid concern — but there’s a way to mitigate it,” he says.

Choose short and long-term outcomes. You can align your PMs to a near-term goal to boost daily active users, while also incentivizing them with a larger goal to build the business by 10x. There’s ways to counterbalance these things so that they don’t become too short-term. And returning to my earlier point, paying variable comp to PMs in the form of equity rather than cash can help keep their eyes fixed on the long-term horizon.”

Like any set of business goals, there are short-term results and long-term OKRs. Having one doesn’t negate the other — and great leaders know how to motivate people to keep pushing toward both.

Whether or not you consider adjusting PM compensation structure, every VP of Product has to come up with creative ways to get their teams to balance short and long term goals. For Hogge, it’s about pushing toward a sweeping, innovative product vision, while making incremental changes along the way that gets you just a bit closer to those goals. “I borrowed this from my mentor, Andy Rachleff, CEO of Wealthfront. He said, ‘Product teams have to be ambidextrous — they have to both exploit and explore.’ You exploit by making the product that you already have better. But if you only focus on making the existing product better, you’ll never really find the global maximum of what your company could offer. So product teams are charged with expanding the existing product and exploring other possibilities at the same time. Most product orgs aren’t even that great at one of those two, let alone both,” says Hogge.

Does this limit the profile of who can succeed as a PM?

“When you rethink the PM role, it actually shifts who you recruit. You have to recruit more of the GM type — people who think like a business person, while also understanding how to build beautiful software experiences. That means you’re probably less likely to hire only deeply technical PMs,” says Hogge.

“Someone responded to my original thread on Twitter and asked, ‘Doesn’t that self-select for the really outgoing, charismatic, extrovert-type PMs?’ While that’s a reasonable concern, I actually don’t think it does. We have multiple people on our team who are acting as GMs right now who are not what you would call a stereotypical, outgoing, rah-rah type. They are very introverted, very thoughtful, quieter, more likely to listen than speak. But they are phenomenal at their job because they drive outcomes. There’s a lot of different personality types that can achieve that,” he says.

When it comes to hiring PMs, we wanted the inside scoop on the interview questions that Hogge uses to mine for this outcome-driven approach. Here’s a trio of questions and follow-ups he keeps in his back pocket:

“If you have to keep pushing a candidate to think about the business results beyond sticking to a timeline of deliverables, then they will likely struggle to meet the needs of the type of product manager you’re looking for,” says Hogge.

Great candidates can rattle off the results of each product they’ve helped ship.

Does rewarding outcomes stifle experimentation?

Whether your product is still in stealth mode or well-established, experimentation and fast failure is key to adapting and staying nimble. “One of the biggest questions I get about this model is whether it makes PMs more hesitant to try new things and test new features. I actually think it’s the opposite,” says Hogge.

“In an outcomes-focused culture at a VC-funded startup, you are, by definition, focused on big outcomes. If you believe that big outcomes often come from big experiments, the outcomes-focused PM is actually more likely to take big swings. In some ways, product management is like picking a company as an investor: You care more about the magnitude of success than the probability of success. Meaning, you want your team to sometimes take big swings with high upside, even if it’s risky. If you are a baseball fan, think slugging percentage, not batting average. In this sense, an obsession with outcomes actually encourages experimentation.”

To continue the baseball metaphor, not every single product or feature can be a home run — leaving space to swing and miss unlocks those aha moments. “At Divvy, we’re still able to test out different ideas and experiment without PMs worrying about their compensation,” he says. “It’s about knowing when’s the right time to tie a product to a business result. You need to think about how fully-baked the products are that people are being asked to deliver outcomes for.”

But how do you know when a product is ready for roll out and to be tied to a business result that the PM is on the hook for, such as revenue, CAC, or adoption? We were delighted to learn that Hogge’s solution leans on advice from another Review article: Superhuman CEO Rahul Vohra’s framework for finding product/market fit. If you haven’t read it, the essential element is that Vohra’s approach expands on a test first proposed by growth guru Sean Ellis: When a company asked their customers “How would you feel if you could no longer use the product?” if 40% or more users responded “very disappointed,” the startup likely had strong traction. Less than 40%, and the company had almost always struggled to find growth.

Hogge has adopted this 40% rule to pinpoint when it’s fair game to tie a product or feature to an outcome. Here’s an example: “Our reimbursements product was in beta, and we polled customers and asked how disappointed they would be if we got rid of it. Once we hit 40% of customers who said they would be disappointed, we knew we were ready to start planning for the general rollout, including putting together the compensation incentives plan for the PM. In this case, the outcome that we were driving toward was annual recurring revenue driven by the reimbursements product.”

Does core product infrastructure work suffer?

Big swings are important — but so is dependability. To make sure quality isn’t sacrificed and core product work is still at the center, here’s Hogge’s advice: “Product teams need to define their principles which help them make these infrastructure and tech debt tradeoffs. For example, at Divvy, our number one product principle is that quality is our North Star," he says. "And we go even further to define one leg of quality as performance — it loads fast. This makes tradeoff discussions easier. If quality is fixed, and we define quality as it must load within 500 milliseconds, if there is infra work to enable that, we must prioritize it.”

You don’t want your product org to get so hell bent on hitting their numbers that they gain a reputation for short-term thinking and lose the confidence of engineers. Building a quality product is a business outcome in and of itself.

Won’t cross-functional partners stand in your way?

Sales, finance, engineering, marketing — product managers are truly the connective tissue between all of these major organs. And if you want to give PMs a fair shake at hitting (and exceeding) their goals, it’s also necessary to shore up your partnerships across these key stakeholders.

“Building a successful product relies on so many things coming together — it can’t be accomplished through sheer force of will by the PM alone. That’s where product review meetings play a critical role. While typically aimed at getting all involved parties on the same page, product reviews often fall into the trap of putting the PM on the defensive, fending off questions about timeline delays, customer complaints, and scope creep,” he says.

When product reviews devolve into PMs only reporting on the latest deliverables, they aren’t owning outcomes, they’re just shipping software. At Divvy, we think of product reviews as mini board meetings, with the product manager acting as the product’s CEO,” says Hogge.

Of course, these meetings are outcome-oriented. “Every product squad — of which there are nine — has product reviews every two weeks. These are led by the PM, with assists from the designer and engineering lead, with invites to executives and other key stakeholders, including our CEO, head of revenue, customer success and engineering. Within these product reviews we remain hyper-focused on the outcomes we’re looking for with each product or feature, not just the deliverables for shipping software. We show progress toward the outcome to each of these leaders and align on the narrative, the results we’re going after, or new insights that we’ve learned from customers in the last two weeks. It gives people, whether it’s the CEO or our head of revenue or someone else, a chance to guide that outcome and give input as well. We really value what they think,” says Hogge.

Product reviews are also the meetings where the negotiations happen. “Product may say, ‘This is when I know this product will be sellable and able to generate the outcome we want.’ Finance might reply, ‘Sorry, that’s not soon enough.’ This back-and-forth is key. If you want to incentivize your PMs to hit outcomes, you have to align them with the other pieces of the organization that have influence on the final results,” he says.

“If you asked our CEO, he would say it’s one of the most valuable things we’ve implemented because it’s just a half an hour meeting every two weeks, but it’s boosted our alignment as an organization by multitudes.” To get more tactical, Hogge shares the principles that he trains his team on — what he calls the 10 Commandments of Perfect Product Reviews:

Hogge's 10 Commandments of Perfect Product Reviews

TYING IT ALL TOGETHER:

Returning back to the thread that started it all — the piece of Hogge’s approach that generated the most follow-up questions was the pillar regarding variable compensation based on hitting defined goals. But it’s only one component of his approach.

“We’ve adopted this framework at Divvy with some success so far. But regardless of how you roll it out, or whether you do variable comp, every PM team needs to shift to owning outcomes — that’s the meta-outcome you want, after all,” says Hogge.

“Your product managers are capable of so much more than just keeping engineering on track. Give them the opportunity to think beyond shipping software and just watch them blow through the roof.”

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