Why great product leaders should stop obsessing over the roadmap | Diya Jolly (CPO & CTO of Xero)

Well, let's do it. Thanks for joining. Thanks for having me here. So maybe a place to start is just your definition of what an excellent chief product officer does and what's the impact they're having on the business. Yeah, I think a lot of people think a good chief product or an excellent chief product officer actually helps ship stuff, but that's, from my experience, far from the truth. The key job of a great chief product officer is essentially setting the direction, not worrying about every single feature, not worrying about even big, even reasonably reasonable-sized products down to every feature level, but setting the vision and the direction for the product, but which then aligns with the vision and direction for the company, and then building a team around it that can execute down into the details. Because if you have a chief product, most people think a chief product officer is someone that decides the roadmap, someone that decides how each feature ships, how it's designed, et cetera. And I don't think you get really good products based on that. So that's one. I think the other thing for an excellent chief product officer is just like understanding your customers deeply so that you can decide what bets to make because you can't make every bet. And so if you don't truly understand your customers deeply, what ends up happening is you make bets that don't really add value. And then the third thing I would say is resource allocation, right? Where do you actually, let's say you made four bets. They're not all equally important and they're not all equally complex. So how do you design your org, design your resources, or allocate your resources in a way that you can move those forward? And people think resource allocation or org design is a one-time thing, but it's not. The world around us these days changes every quarter. So these are decisions you have to revisit almost every quarter. Do you think that definition that you outlined is the same for all great companies? Or do you think the chief product officer role is quite context and maybe CEO or founder dependent that you're working with? So I think that the basics of being able to explain to your team the direction of the product, understanding your customers and resource allocation, bets and resource allocation is the same. I think the process of getting to it is very different in different companies. So if you have a founder as a CEO, the founder has had a vision for a while. So really is, you can't go off into a room with your team and co-create a vision. That's usually hard because I've worked for a founder. I was at Okta before Xero and I worked for a founder. You have to co-create the vision with the founder and to a very large extent, actually influence the founder because at the end of the day, they've been thinking, dreaming of this for 10 years. What you can often get to the table is the depth of understanding of the customer. That's where you can come from because very often a founder starts with the deep understanding and intuition of the customer, but then they're running a company at the end of the day. And so it becomes old, that understanding. And that's where you can help co-create the vision. So that's one. I think if you are working with more of a, I'd say an executive CEO, you still co-create the vision, but you co-create the company vision almost because product is such an important part of the company vision. And then once the company vision is co-created, you then have room to actually genuinely create the product vision. The operational CEOs are not in the, why does this button on this UI look different? But a founder will be in that much of detail. Do you think it takes a certain type of chief product officer to be successful in a founder-run company that is different than a hired CEO-run company or not really? I think definitely. Talk more about why that is. The difference is you have to be willing to give up some level of autonomy when thinking about the product. In a founder-led company. In a founder-led company. And you have to be willing to, you have to know how to influence really well. And you have to be able to understand what influences the other person. Because often for operational executives or executive CEO, it is metrics are clear. Business growth, customer happiness. For a founder, often they're what makes them a founder. And I tried to start a company and I kind of got a taste of it, which is the reason they become successful is the whole world says they're going to fail. Nobody likes their idea about them. So their gut instinct made them or whatever insight they had is what made them succeed. So more often than not, they will go by their instinct. Whereas I think an executive CEO more often goes by repeat pattern of things that are known or data. And so how do you influence in either case is very different. Being with a founder CEO, a CPO with a founder CEO requires probably more EQ and understanding into what the founder values in addition to just the business growth. What's that dynamic of sort of like navigating that feel like? Particularly because I would assume to your point, one of the things that are special about founder run companies, not always different than externally hired CEOs, but they have this feel and to your point, gut instinct for the business and the customer. And so it seems, you know, you join and it seems in one way, you can be overly deferential and then in the other way, not push back enough. Like there seems like a very specific tension that you have to navigate. Look, at the end of the day, founders want the company to succeed, right? So that's one thing. So if you put the best of the company before and you are recognized, and I think this is true for anyone. If you have a team player in any company that puts the company before themselves, then people know where you're coming from, right? You're coming in the best interests of the company. You define the outcomes and you debate the outcomes, right? So I think that is the way to neither become deferential and to not be able to have an open debate. So I think always take it back to what you're trying to achieve. That's important. And that works across the board. How you drive to or how you convince someone may be different ways. One is more like, well, this is the world we could build if we did this. And the other is, these are the customers we can go target and this is the revenue we'll get. Or this is the value we give the customer and they become more sticky or the lifetime value or whatever you want to go. So I think those are different, but at the end of the day, if you are aligned on the outcome, I want to build a great company. I want to build a great product for my customers. And I don't care where the idea comes from, right? The other thing everybody thinks is like PMs or CPOs are supposed to come up with the vision. Like, honestly, like a vision is a collection of people coming together and understanding customers deeply enough and stitch. And then, yes, usually a CPO will stitch it together. But honestly, unless your job is, there are very few people running around that like just sit in a room all day and can like be like end-to-end, this is the perfect thing to do. Do you think about it value to the customer or value to the business? I am a firm believer that if you add value to the customer, you will find a way to capture the value eventually. And yes, I almost think of it as if you cannot capture value, then you are fooling yourself that you added value to the customer. Right. Or enough value to the customer. So I think, I almost think of those two as interlinked. And if you go with I am adding, if you focus on adding value to the customer, you will figure out a monetization model eventually or how to monetize it. So that's one framework. There are other frameworks that are hard, that are easier to do. Like when you do large scale planning, so like annual planning, you always want to make sure there are rules of thumbs all over the place. I'm a very Google PM in some ways, 30 to 40% on existing customers, 30 to 40% on new TAM, 20 to 30% on things that are really big moonshots, right? And so you use those interchangeably, right? You go by the rule of thumb, but really rule of thumb by itself does not work in all situations. So right now for most people, you better be taking a lot of risk in your roadmap, right? On things that will work or not work. And these rules of thumbs don't really work right now with everything that's happening with technology change. Share more about that. Well, I mean, I think right now where things are at, we all know, yes, AI will automate things. We all know AI will give you more insights, but what will it change in the product in the workflows? Will apps become headless, right? What does it mean in terms of for us in accounting? Do we take risk on the accuracy? Should we? In which cases? These are all like risks. Do we like, does our workflow change now from a workflow that drove action, now agents are driving actions to a workflow that does reviews and proves it took the right action? These are all unknown, right? So we built automatic bank reconciliation. What this means is your transactions in an accounting system are matched to your cash in your bank. Our customers are like, no, no, no, no, no, no, no. You can't do this. You can't do this with a machine. There's so much nuance to it. What do you mean AI will do it? And we're like, okay, but like, it seems silly not to do this. And so we're still like, we'll do it. But in the process of doing it, Top top of an app has changed. So your ability to think about a customer's entire day and life is just like, you can no longer think my customer wants to do this in an app. You think, you have to think, my customer wants to get paid by their customer. What is the best way for me to get them paid versus I'm going to put a button that resends an email, right? Resends an email to ask their customer to pay. Now it's like, can I ping them on WhatsApp? Can I remind my customer to ask them if they're visiting that customer? Like, it's so many other, like, can I send them a text message? How often should I do it? When should I remind? What's the best way to get paid? All of these things are a lot more possible. So you're designing software and not with, I'm helping humans conduct work, but I'm actually trying to get to an outcome. Do you think you're flying at a lower altitude on average, more in the details or the same? Here is why you're flying at a lower altitude because you're trying to change the way people work. You're trying to change people because you, as one of, as you as the senior product and engineering leader are the catalyst for change right now, right? Because otherwise people will just keep doing what they're doing. So I think the way things look is sometimes you're having deeper discussions on, you're more in the initial sausage making. You are having deeper discussions on, how does the technical architecture need to change to be able to support, right? Like usually technical architectures are reasonably well understood, but now it's like, should we do this so we have more flexibility? Should we be model agnostic? How quickly should we be able to change models? What can be probabilistic? What cannot be probabilistic? What has to be deterministic? Do we need a UI here? Will the UI be chat-based or will it be, will it look like it's traditional? Should Chat be a sidecar? Should Chat be the UI, right? Like, so you get into this, all these levels of detail because you're fundamentally changing the app. Three years ago, we would have said, oh, I'll give you a very basic example. Let's build for the mid-market segment, right? Like we don't just want to be small business. You'd go and say, okay, can you guys figure out how to build for the mid-market segment? And let's go figure it out. And you'd do a bunch of customer calls and you'd be like, okay, here are the list of features we need to build. And then your team's been through the process of like building the UX, trusting the work, like building the workflows so they could go work autonomously and then come back. Here, every decision starts becoming very strategic and fundamental to the direction of the product, the way it evolves and the tech stack, the way it evolves for the future. What's your definition of politics or a political company or executive team? Whenever there are more than two people in the room, there's politics. This is at home. This is in home less because you've lived with each other. Like, but this is everywhere, right? Like it's three people, which means any two can have an opinion that the other person doesn't have. And so the weight is changed on the, on that one person that's left out. So to me, like if you have a company of three people, there's politics. I think to me, politics means at its core form, two things. People are not rowing in the same direction, which means there's friction in the system to achieving an outcome. And people are carrying more burden of convincing, influencing, aligning than they have to. And then I think that politics at the surface level, if you touch the why, it is incentives are not aligned for some reason. What about when you think about the, the different businesses that you've worked at and you think about the most political environments and the least political environments. What's going on? Like what is a CEO doing that's different? What is an executive team, you know? So I think one is, so when I talk about incentives, the incentive system has to be set well, right? But, but by the CEO and then subsequently by the executives. When a leader jumps in and solves problems across their teams, there is a lot of reason for the teams to lobby for their self-interest, right? Which then creates a me versus them. When a leader rewards collaboration, even if the collaboration resulted in an imperfect situation, as much as they reward impact or enough, like impact is important, but like enough, then I think that sets the behavior of collaboration because it is an outcome that is, again, it goes back to incentives. If you're, if you're recognized for it, you will do it. If you reward putting the company first versus the best answer always, okay? That's a system where that's another thing a CEO can do, right? It's, and when you say reward the company first, it could be, you may have the right answer, but in executing this, you are going to actually make a hundred people demotivated, right? So is that ultimately the right thing for the company? If you think like that and you reward that, I think that is, that is what leads to lack of politics. And then I think, look, I think the other things are how safe do, like what culture, like, do you create a culture of, how do you support your people? How safe do you feel? Because when you feel safe, you generally tend to act in the best interest of the environment that's staying the same. When you feel unsafe, then you either want something for the environment or you want to change the environment. When you go back to the, the comment about the incentive structure, can you make that more tangible? Like what, if incentives are important for a whole host of reasons, but one is to get people to do what's best for the company is maybe one simple way to think about it. Talk about like the different levers. If somebody's project did not go well, but they went out of their way, project product launch did not go well, but they went out of their way to make another team better. Do you increase their comp? Does that go into their performance? Is that recognized in all hands? Do you think that is more important, less important, or the same importance versus comp? There is a balance. Autonomy, sense of purpose, growth, and comp, they all need to be in balance. I don't, I don't think most people for long periods of time can just be coin operated. It's just really hard. Human beings are not made like this. It's just really like, imagine working in an environment that gives you a ton of money, but you do it again and again and again and again. And you're doing the same job again. I just don't think it works long-term. You tend to have a ton of attrition. So you talked a little bit about the importance of creating a safer or, or supportive environment. What are your thoughts on when you're leading a function, the role of being demanding and having high expectations and like how those fit together? I think you have to do both, right? So if you demand, you have to demand a lot to get results, especially in this day and age, right? But if you demand without giving people the support to succeed and letting them know that taking risk is okay and failure is okay, you're going to have a culture where nobody takes risks. Nobody tries to grow and everybody is, it's a fear-based culture. There's no innovation. There's no growth. Everybody's doing the easiest things. Your roadmaps are sandbagged. Your revenue numbers are sandbagged, right? Like nobody's willing to take risks. So I think what I tell my team is like, look, we can't know the future. We can only try. You can't be wrong a hundred percent. You, you can't fail a hundred percent of the times, but I don't expect a success. I don't expect a batting average of a hundred percent. I expect a batting average of, depending on level, 70, 80, 70% et cetera. This is like, if you, if you go back to OKRs, right? Your OKR should be that your average should be 0.7 in the score of the OKR. If it's always 1, you haven't stretched yourself. And it should be okay to be 0.7. So that's what I mean, right? By creating an environment that's supportive and, and allows you to stretch. So that's one. I think the second thing is when a person is fitting in to, let's say somebody gets promoted and is trying to do a new role. Can you make sure that not you personally, but you've created a culture where there's enough support around them? How do I do X? What does it mean to do Y? Can you give people enough time to grow into their roles is another example, right? If somebody takes a huge bet, can you go? So for example, we took a bet where we said, and I, and I did this. I'm like, I don't want to wake up in two years and find out that the entire app is agents and a chat. So we're going to go off and build our own app on the side. That is where you're going to do accounting from a chat. Okay. And it's all agents. And the effort failed mainly because customers are not there. Like they're not ready. And, and maybe accounting will never become purely chat just because of the amount of data. But the team we had there, can you like celebrate their failures, right? Can you celebrate failures you learn from? The question isn't, shouldn't be, did you fail or did you not achieve an outcome? The question is, what is your batting average? Is it an acceptable batting average? And then when you fail things that go wrong, and even more time spent on the things that like are just ambiguous. You just don't know the answer. How much of a given week or month goes into those big, ambiguous? Right now, 50%. That's impressive. I feel, I feel like great executives would want to do that and then the day to day just gets in the way of the, you know. So I'd, I have a trick, right? I do two things. You never respond to an email. It saves you a lot of time. The more you, if you respond very quickly, what happens? You get more email. Exactly. Exactly. So, I like, I'll eyeball an email and if it's truly breaking and in many ways, it is bad because I forget, like I, I don't get to urgent emails sometimes, but people know that they can find me on the phone if it's truly urgent, right? But yes, I am notorious at being awful at email and Slack, like awful. My, my trick is the following. So I actually will carve out one full day where I will not do meetings every week. It doesn't matter. I will not do meetings. And you really protect it. I really protect it. And again, like people will tell me I have more flexibility to do that than others, but, but I will try really hard. The second thing is it is harder in this job, but I also protected at least two hours a day, usually at the end of the day. My brain, I'm, I'm a night person, so like I, most of my creative ideas happen like unfortunately between nine and 12. It's harder in this job because of the global nature, but I would do that, but that's another thing I do. So I, I, and then it's not only about thinking yourself, then it's like, you have to bring people into a room. So I, most of my years last because I am militant about my calendar. Like I'm literally militant about what meetings get, get on my calendar. And I'd say you don't always need 50%, right? Like, but right now, if you are not spending 50% of your time thinking about what your product will look like, what value it will deliver, it's just going to be hard to compete. And you have to be blessed with a great team. I, I, in the last three years, I think I'm at a place where like I can close my eyes and my team can do a ton of the heavy lifting on day to day. So when you have this, step one is creating the time for it. What do you actually, let, let's say on tomorrow, Friday, you have the whole day clear. What are you actually doing to work on these really important, ambiguous problems that at least in your mind are, are kind of your core job? I, I won't say I'll make progress on all of it. So at any given time, I think you can go very deep on one. So let's say a new problem because I've been talking about how the Apple changed for a while. Let's say I want to figure out how SaaS business models are changing. So tomorrow, tomorrow I would go close all the tabs that are open. Basically actually switch my browser from Chrome to Safari so that I can't actually get into my work browser. And literally go and see like, what are people saying about it? Has anybody else done it? What feedback have they gotten? Can I try a product like that? If I were to write down what it would take us to move in that direction, what would I be worried about? What would I not be worried about? What are the risks? So it's really is like just exploring the world outside. It's exploring the world outside, gathering information, coming in, thinking about it, building a structure from where you can have a debate, right? Teeing the debate up, okay? And maybe you could likely for something like this, you can't tee a debate up in one time, right? You probably do this for like, let's say two, three, four weeks and then you can tee a debate up. And then it becomes, okay, if we've debated it, then you go, okay, now that I've debated it with everyone, it's big enough where like I need to give it more structure. So then for the next two, three, four weeks after that, I'll be, I'll be giving it structure trying to write either a document or build a prototype. Now it's very easy to build a prototype. And then it would be, okay, bring it back either at that point, you hand it off to someone or if it's still too big, then you take feedback once again, socialize it. So that's what you would do. And then, then when it comes to execution, you're very clear on what has to execute. When you think about the last few years in this category of very big, ambiguous problems that, that you have to solve, what's, what's the one that is like, you really nailed? What's the story behind it? An old world example is how does a company like Xero compete in the U.S.? Right? This was our head of M&A, right? How do we compete in the U.S.? Like, it's very clear if you just do it organically, it will take too long. But what is the right bet to make? Is it if you do something inorganically, is it to acquire another bookkeeping provider here? Is it to acquire a tax provider here? Is it to acquire, like what, what should we do? And I think we bet on, we bet on Melio, which everyone knows we've, we've acquired Melio. And the, and the decision we made, which since has proved out to be in retrospect, proved out to be an amazing decision. For small businesses, the most important thing is their cash flow. They don't think about accounting. They don't think about, like, yes, they think about paying people as a, as a requirement. If you could own controlling their cash flow or making that them have better cash flow, that would, in a way that is world-class, that would probably be a great way to attract attention and get entry. Invoicing there are about a hundred, like AR, there are hundreds and thousands of companies like doing AR. So it's probably not the best place to go to. Bills, interestingly enough, even before you incorporate a company or you invoice someone, you do, you pay legal fees. You, in tech, you might pay to do a prototype. Somewhere else, you may pay for supplies. Bills is actually, interestingly enough, the first thing a small business does. So a payments company that is early in the flow of a relationship with a small business, and then trying to find a company that had the right tech stack, right, the right founders, had the right culture, right, had the right product. Do you find most of the time that's the case? I think most of the time it's the case. It is just, it's not glaringly obvious. Only in retrospect. Yeah. I think the big decisions are not glaringly obvious. And I honestly think like batting averages on big decisions. If every one of the big decisions you take turns out correct, you're doing something very wrong. Like you're not taking enough risk. Something's very wrong. So the batting average again, like I say this, like on big decisions is like, if your batting average is two-thirds, you're probably doing a good job. What was the AI example you were going to share? Everyone around us in our category was doing, was staying away from, they were doing agentic actions. The bet we took was agentic actions are important. The ability to chat with your app to get financial insights is really important as well. And insights are going to turn quote-unquote agentic as well. In accounting, people were really worried that what if the thing hallucinates and you return wrong information? We made a bet early on. We call this our FinSight product. So financial insights, where you literally can go to our chatbot Jax, our chat Jax, and you can basically do a whole scenario planning. And when we were making the decision, we're like, can you do this at accuracy? What if we make mistakes? What if we misguide people? And I think in retrospect, just going and saying, we're going to do it. We're going to do it at accuracy. And then pushing the teams to do it at accuracy and putting in this scaffolding that was needed for the accuracy. It completely just, one is like, we're ahead in the market. Nobody else does it. Second, and we're at like 95% accuracy or something, like in the answers returned. And you can do pretty complicated things, like you can go, should I add another shift? Should I buy, get a loan? Should I buy a car? Like you could do pretty, like, it's literally like talking to your advisor. But it also helped us just up our AI infrastructure. What I mean by that is, how do we do evals? How do, what do we use for ground truth? Right? Like it just, because the problem was so hard, it just completely changed the game. Do you find that often, that, that if, if the, if you sort of raise the bar on what you're willing to do, it forces a lot of the enabling pieces to come into place? Yes. This is why, as often as I'm called irrational, I'm like, no, you give human beings something to do and you motivate them to do it. It'll get done. We've done way bigger things. We've learned how to fly. Right? Like, so. We've got rockets in space. Yeah, we've got rockets in space. Like we've like, we've done a lot, a bunch of bigger things. At a business of your scale, how far in the future When I was a director, I literally would call in sick to get my thinking time once in a while. cause I'm like, I just like, there’s like, and I would tell my manager, I'm doing this because you will respect the fact that I'm, I need to get stuff done and I need time to think. But like I can't convince the hundred other people so to them I'm sick. Maybe lastly, you mentioned this at the very beginning of our con or maybe it was towards the middle when we're talking about politics at companies. What is it that you want your reputation to be? Multifaceted, but honestly known for actually being able to build products that change industry is one. And second, build businesses that help, like that last for a long time. Good place to end. Thanks so much for doing this. Yeah, thank you. We really appreciate it. Of course. It was great.