How Companies Grow
In the previous article we discussed Who is a Data Engineer | Data Engineer. Let's now discuss at what stage of the company's life cycle he appears in the team/company.
In this article, you will learn how companies can develop and what roles there are in it, and how they influence its development.
I would like to start with a short definition of the word “product“, let's figure out a little bit what it is, because the word “product” will sound more than once.
A product is a certain entity that satisfies some human need.
For example, a product is a bank, it helps people save money, the same bank may have additional products: loans, deposits, insurance, etc.
I would also add to this definition an understanding of what it is “value“If we take any product, then for each person the value of this product will be different in every sense.
For example:
There is Vasya and he is a student, the university made him a card on which he receives a scholarship. For him, the value of the bank is to receive everything for free and, if possible, to receive some income from the remainder.
And there is Petya, who works in a company and he has several different cards:
He gets his salary from one. The value here is that it is his main card and it is convenient.
He pays for purchases through another one because there is a higher cashback. The value is that he gets additional funds for purchases and thus saves money.
And he puts money aside for travel on the third card, because it has a good rate on the balance. The value here is that it is a separate card, with which he does not spend money and it helps him make systematic savings.
Even from these examples we see that the value of the bank for Vasya and Petya is different.
You may recognize yourself in these examples. And if you think about it for a while, you will be able to understand why this or that bank is valuable to you.
Product appearance options
We have understood what a “product” and “value” are, now let’s talk about how these products actually appear.
Startup
A startup is a project that wants to improve an industry or create a new one in order to become a leader there. Often startups try to solve some personal or general “pain“.
A startup is a project that grows from an idea and becomes a full-fledged product. There are several approaches to creating a startup:
A startup wants to improve some industry and/or solve some “pain“. Example:
The ability to buy a phone remotely, without leaving home. Now these services are already familiar to us, but once there was not a single company on the market that could give us such a “value“
A startup can also aim to create a new industry. Example:
There are actually many examples here, because everything started from scratch. But one of the less obvious ones is The Boring Company, which creates high-speed tunnels. There was no such product before, and it was created from scratch.
Let's look at how startups can emerge.
Startup from scratch
Initially, a person has an idea.
He works it out to understand whether it will work or not. The work can be done in different ways: desk research, focus groups, analysis of current solutions, etc.
Then he goes alone or gets together with friends/a team and creates a prototype or so-called MVP0.
Releases it to the market, collects feedback, corrects it and makes a new version.
And thus the product is iteratively improved. It is worth noting here that usually in startups there is a small team and the creators of the product occupy all the roles at once: developer, tester, analyst, etc.
Investments
When a startup is created, it needs resources to exist. There are different formats of investment in startups:
Business angels – these are individuals who give money for the development of a product, receiving in return a percentage of future profits.
IPO – the company goes public with its shares, which anyone can buy. The company receives money for future product development, and shareholders receive income from the company's profits and more, depending on the number of shares on hand and the company's terms.
Some organization can sponsor a startup in exchange for the fact that they will receive the product for free or at some discount in the future. In general, there are many formats of interaction between a startup and a company. A company can give not money, but computing resources or provide premises for organizing the product and other formats of mutual benefit.
Startup within the company
In general, this is not a “standard” track; there are a lot of other options for product development.
It may be that some product is growing within the company.
The creation of a new product within a company is generally the same as in a startup, but with some minor changes:
An idea emerges at the management level or at the individual level.
The idea is tested within the team and clarified with related departments; perhaps someone is already working on creating a new product.
A study is being conducted. The format of the research can be the same as that of a “regular” startup, or it can be conducted on the company's current data.
A person responsible for the product launch (Product Owner) is allocated, who determines the format in which the MVP0 launch will take place. He assembles a team if there is none yet and development begins, and the criteria for success are also determined.
Launched into testing.
Since this may be an additional product for the company, they have the opportunity to conduct tests on selected categories of people to test the product on a minimal sample.
After testing the hypothesis on a small sample, the product is returned for revision.
All critical issues in the product are fixed and a new launch is made on a specific sample to collect more feedback.
There may be several such iterations until the Product Owner is satisfied with the result and says that the product can be rolled out to everyone.
All further steps, as with any product, are iterative improvements.
Difficulties:
Hierarchy – The more complex the hierarchy within a company, the more difficult it can be to launch a product.
No resources (time, money, skills) – everything is generally obvious here, if the company does not have resources, then the product is put on the shelf until better times.
Hackathons
To find new solutions, companies can organize hackathons. Hackathons can be organized both within the company and with the involvement of developers from outside.
There are different types of hackathons according to the conditions. It can be organized for teams, for individuals, for individuals who can gather in teams. To have or not to have a prize fund in the form of money, and so on.
Hackathons come in a variety of formats:
Solving current problems in the company. For example: a hackathon begins and each team is given different problems: problems with logistics, problems with leftovers, etc.
Solving one identified problem in the company. One pressing problem is taken and given to all teams. Each team looks for the best solution in their opinion.
Improving the current solution. Teams can be given source code or an existing product and need to implement it as part of the hackathon. Implementation includes building the architecture, writing code, etc.
Assistance in developing the current solution. Sometimes at a hackathon an MVP0 may be presented and it needs to be worked on/reworked/improved.
Hackathons allow you to solve many problems for a small amount of money that usually require many man-hours. Because a team is assembled and in a short time, without the burden of other tasks, it is engaged in brainstorming one selected problem.
Hackathons are often held by companies. This is rare in startups, because startups have different goals.
Finding new niches or logical development
Sometimes there are cases when new products are born because the company has already “grew up“. If we look at examples, the company “OOO Roga i Kopyta” from the previous article worked on one product, found its niche, the path of development that gives the maximum profit for it.
And thanks to this, the company has free resources that it can spend on development in other areas: logistics, expanding the range, entering the international market, etc.
Each product will also have a Product Owner responsible for it.
Systematic business development
There are companies that have a multi-year strategy that does not change from year to year.
Yes, the company may be reacting to market changes, but they have a mission;home” the goal they are striving for.
Therefore, such companies have a clear development plan, there is a so-called “road map“, on the basis of which they improve their product. It contains all the directions, all the main focuses, goals and other points that allow for the systematic development of the product, bringing it closer to the designated goal.
General information
Roles in the product
So, we have discussed how companies develop, and now let's discuss a little about who creates products and how:
Initially, there is a Product Owner who determines the vector of product development and the criteria for its success.
The Product Owner creates a pool of tasks that are needed to improve the product.
When the product grows, one Product Owner is no longer enough and Product Managers appear, they partially perform the tasks of the Product Owner, but the Product Owner still remains the leader in the project and determines the vector of development.
As the product continues to grow, Product analysts appear who help the Product Owner and Product Manager to properly analyze products, look for insights in the data and improve the product.
Product analysts begin to take over some of the Product Manager's analytical tasks. In turn, Product Managers are freed up and can devote their resources to higher-quality market research and the development of their hypotheses.
At the same time as the Product analyst, Data Engineers appear, who help collect information for future analytical tasks.
Collaboration within a product team
As I said earlier, the Product Owner determines the development vector. This vector is decomposed into tasks.
Each task is assigned to a Product Manager. They work on them and create value for the client.
A product analyst helps in creating value, searching for information and analyzing it.
But for the Product analyst to be able to analyze the information, data is needed. It is at this stage that the Data Engineer appears, who collects and provides information in a convenient form for the Product analyst.
Key (Basic) Metrics for Business
When a product is created, developed and maintained, metrics (KPI) are identified, by which the success of the product is assessed. The metrics are generated by the Product Owner/Product Manager, their visualization and analysis is taken over by the Product analyst, and the Data Engineer helps to form the final showcases (dashboards).
It is not possible to single out some key indicators (KPI) for each product, because they will be different for everyone. Let's look at a few that you may encounter in your practice:
DAU (Daily Active Users) is the number of unique users per day.
WAU (Weekly Active Users) is the number of users per week.
MAU (Monthly Active Users) is the number of unique users per month.
It is worth noting here that if we sum up DAU for a month, it is not the same as MAU. Because MAU counts unique users for a month, and in DAU users can be duplicated.
Retention is a ratio that reflects a company’s ability to build strong relationships with customers.
Revenue is the entire volume of funds that a company or entrepreneur receives from their main activity. This includes all forms of cash and non-cash payments.
Expenses are, accordingly, expenses for organizing the product’s activities.
EBITDA (Earnings before interest, taxes, depreciation and amortization) is a company's profit before deducting depreciation costs, paying interest on debt and paying direct taxes.
LTV (LifeTime Value) is a metric that shows how much money a client will bring in over the entire period of interaction with the company: from the first purchase to the last.
etc
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