Managing Products in “Lagging” Industries
Up to this point, I’ve spent most of my career in industries deemed “lagging” with technology implementation - i.e. sectors such as construction, healthcare, agriculture, and government. The “lagging” descriptor may sound unfair because these are industries where previous innovation has changed the course of history. For example, with the Haber-Bosch process, an early 20th-century invention to enrich fertilizer with nitrogen from the air, it’s estimated that the size of the population today is double what it would have been without this innovation (1). These are industries with the power to change this world, but these industries have not adopted digital technology at the same rate as others. If you think about the three main components of these industries - assets, usage, and labor, there has previously been no to very low investment in digitization in these industries (see below (2)). I can attest to this firsthand.
Early in my first product role at NowPow (Social Services Database for Health Systems), I sat in a hospital shadowing social workers, observing them struggle to use Electronic Health Record systems with interfaces that hadn’t changed since the 90s. I quickly learned the effects of poor technology in this industry have direct effects on the health of vulnerable patients in these spaces.
At my next company PlanGrid (Construction Productivity Tools), whenever I sat in or presented a pitch, I repeatedly referenced a simplified version of the chart above. The main point for our potential customers was that it's critical for construction companies to invest in technology applications to improve their productivity, at a rate closer to other industries. Construction as an industry is one of the oldest on this list, and one of the industries that has the biggest effect on this earth - buildings & construction account for 40% of all greenhouse gasses (3). At the end of the day I didn’t understand. Why hadn’t there been more investment in technology for those saving lives or in technology to help us build safer and more sustainably?
What these industries have in common:
Size & Complexity: These highly fragmented industries are made up of many players & labor dynamics that make technology pushes difficult. For example, in construction alone, a person can be dealing with owners, architects, engineers, general contractors, numerous subcontractors, and even unions all within the same project.
Government Regulations: These industries are closely tied in with government regulations. Companies will deal with regulations vastly more complex due to legacy legislation that takes longer to update than the progress of technology. With every RFP (Request for Proposal) that we submitted at my healthcare startup, the sales team had to outline how our product would help the healthcare organization save money by adhering to the Affordable Care Act of 2010. Not to mention all of the other legislation such as HIPAA or HITECH in HealthCare that creates a barrier towards harmonious healthcare and tech marriage.
Low Margins & Money Leaking: There is a lot of money involved and it’s not always being spent efficiently. A surprising number of construction projects in the US will end with some type of lawsuit, mostly around payments. Because the gross margins are so tight (i.e. ~8.5% in construction (4) compared to ~70% for tech companies (5)), companies end up being very risk-averse, and then aggressive at the end of a project if they haven’t been paid out correctly.
Legacy Systems: These companies have legacy systems that companies in these industries are required to use, making transitions to technology complex. At the health systems where my company conducted research, almost all used PHI (Protected Health Information) systems that have been around since the 80s or 90s. Desktop systems with yearly releases that just keep these systems alive - with no modern alternative or way to port over years of patient health data.
Lack of “Sexiness” Factor: These industries, though some of the most impactful in our modern history, were not attracting the same technology talent as some of the more modern companies. If you were interested in working on digital technology, the first application that comes to your mind is not agriculture (unless you’re maybe thinking of farmersonly.com). Usually, you think of large tech corporations - media, ads, search optimization, shipping. Those companies can attract talent with money and power, though I notably see the interest declining in that talent pool today.
From my experience in these industries, researching competitors and knowing the amount of money companies are starting to spend on digital technology, these industries are overdue for attention. Working within these spaces enticed me because changes in these industries will change this earth. And even more, the users themselves are loudly crying out for better experiences. Users have the latest technology available to them in their personal lives, but in their day to day jobs, important tasks are executed with pen, paper, and comically bad technology.
The product considerations:
The Business Side
Sales Cycle: These industries are sedate, meaning that the sales cycles are sometimes painfully slow. PlanGrid did a fantastic job with starting to prove its value with ad hoc individual sales at SMB general contractors. They waited to grow towards enterprise sales, which are larger complex deals. At the healthcare startup, we quickly focused on large enterprise, B2B specific sales and ended up making sacrifices to our product to meet the needs of the few large customers we acquired at the beginning. Be innovative and get around the traditional sales cycle in the early days, because it will only get more difficult as you approach larger and more complex customers.
Knowing & Timing the Industry: It’s important as a product manager to know the industry like the back of your hand. Subscribe to newsletters that summarize happenings in the industry, make sure you’ve had user interviews with each persona your product touches, and know how to segment your customers and their needs. This is true with any area of product management, but especially for these complex systems. If you don’t understand the nuances of the industry - you will never be able to time it. I love the story of the founding of PlanGrid. PlanGrid timed the construction industry because the founders understood the current needs in the space and jumped on using new technology (the iPad) to begin to solve some critical problems - making floor plans easily available to workers in the field.
Product Strategy: This is a continuation of the above. When you’re at a point where you generally understand the complexities of the industry that you’re in (I’ve seen this usually take around 6 months if you’re fully investing your time), that’s when you’re able to generate a product strategy. Strategies should look 3-5 years ahead for your product and align with company targets. Ask yourself, what do I want from sharing this strategy? Is it internal alignment? More resourcing? That will help you make versions for the right audiences. At Autodesk we knew we needed to double our team to meet our product strategy, so we made that happen. Know what you want from a strategy presentation and share it with many people to learn if their interpretation aligns with the message you’re conveying.
The Design Side
Adoption: Adoption in these industries is slower. The main users aren’t early adopters, most are Late Adopters or Laggards - especially older users. Interfaces must be as simple as possible and should align in concept with existing processes (even if the application is different). I met superintendents that still didn’t own smartphones in their personal life, but were being asked to view and navigate 3D models on an iPad Pro in the field. We had to make the experience so simple or these users would never open a model again.
Personas & Company Types: There are many personas, but their roles are generally well defined and I’ve found it easy to segment companies into boxes based on their work, size, location, and revenue. Once you have an idea of your customer companies and users - make sure that you’re capitalizing on your champion users! These are users that are interacting with your product every day, who love their jobs, and who want to make a better experience for their coworkers. I can’t tell you the amount of times product champions in this space created material and ran workshops to get all their employees on board with new technology. Users would reach out to me - unprompted - to give suggestions and share a desire to give feedback. This is what I mean when I say there are (mostly younger) users in these industries that are willing to sacrifice additional time on top of their jobs to make these products better for everyone like them.
Beyond Digifying Paper Processes: It’s easy in some of these industries to just pat yourself on the back for taking a process that was previously done on paper and allowing someone to do that on their computer. Now don’t get me wrong, there are advantages to this (digital records, data insights, and actions), but if this is all you are thinking about, you have not done enough. If these industries were to ever reach the development speed of others, dignifying paper processes is not enough. Another key example - when my old manager was pitching the idea of PlanGrid beginning to work on products in other construction processes, he identified a process called “Submittals” as a potential new venture. Let’s say that today users were spending up to 2 full work days reading through a PDF of building requirements and inputting them into an excel spreadsheet for tracking. If my manager had thought, let’s just create an interface for users to input these values, we would have missed out on the innovation that came next - utilizing ML to read through an uploaded PDF and automatically tagging and storing the data in our product. No joke, this reduced the time that someone spent on this process from 16 hours to 10 minutes (including verifying the ML). That is a 9600% reduction in time spent on this process. That’s starting to look a little more like the innovation speed in other technology industries.
The Technology side
Integration with the Real World is Key: It’s not just software, it’s how software interacts with the built world - consideration of real-world technology like sensors is key, IOT & other existing machinery. In construction we talked a lot about how our products should interact with the built world - tracking parts, being able to scan a QR code within the application to identify a specific piece of machinery, or even storing small widgets around a construction site to measure temperature or air quality.
Integration with Other Software is Key: It’s also about how software interacts with other software. There's going to have to be a time where whatever product you’re building will have to play nice with whatever software is existing at the time. At the healthcare startup, we spent about 30% of our R&D resources just trying to figure out how to get relevant PHI out of the existing systems so that we could automate a little bit of our user’s jobs. In addition, I never saw a construction company that was all in on one piece of software. At a minimum, they were all using 5 different systems. It was important these systems were able to talk to one another if our customers wanted them to - and some of these construction companies hired software engineers whose main job was to connect their software systems. Difficult to do if you don’t have an API first mentality, right?
Setting a Vision & Getting a Team Excited: You can’t build anything without a solid team that’s excited to build what you’re pitching. I like to think of this as sexifying these industries a little. By telling stories we can all relate to, focusing beyond digifying paper processes, and ensuring the engineering team is educated enough on the problem to contribute their own ideas, a team can all begin to get on the same page.
So what’s next? I want to start by saying building technology in lagging technology industries is no longer “lagging”. These industries are catching up - and they’re doing so rapidly. Workers are becoming more socially driven, and the industries where there is the most opportunity to make a difference are these industries that are just starting to catch up. Utilizing Analytics, Machine Learning, and AI are all being done in any new startup in these spaces. This is the new minimum. I’m excited to see where we go from here.
1 Gates, B. (2021). How to avoid a climate disaster. Allen Lane.
2 https://hbr.org/2016/04/a-chart-that-shows-which-industries-are-the-most-digital-and-why
3 https://www.wbcsd.org/contentwbc/download/5778/76990/1
5 https://akfpartners.com/growth-blog/Why-tech-and-product-leaders-need-to-think-about-gross-margins