How to Merge Startup Agility with Corporate Stability within your Product Team

Harry Parkes at UXDX EMEA. Video: https://youtu.be/Rkrnd-1olhs

Readable transcript: edited from the recording's captions for readability (fillers and false starts removed, punctuation and section headings added). Wording is the speaker's own. Timestamps are positions in the video. Names marked [?] could not be verified against the audio.

Small companies want to be big, big companies want to act small

[00:00:08] Thanks AJ, thanks everyone. Small companies want to be big and big companies want to act small. I used to work for HSBC in their global digital team, and every month we would have a curated set of fintech startups who would come along and pitch to us what they have, and there were two conversations that used to come out of that. We at HSBC, with our 25, 30-year-old mainframe systems, they were built to maybe do a release four times a year, that was what their original purpose was, and there was us trying to get them to release six times a day. A few years on, we'd be looking at these guys going, God, they're quick, why can't we have their tech, why can't our stuff look really shiny like their stuff did? They built it in months. And of course they'd be coming out of it, the startups, going, oh my God, they've got 30 million customers, they've got billions of pounds, they've got all of the security that we want. So they wanted to become us and we wanted to become a bit of them.

[00:01:06] I want to talk to you about some of the challenges that I've noticed as you go through that, whether you're in a small company now or you're in a bigger organization and you're trying to look at how you create that startup agility within it. As AJ said, I'm Harry, I'm VP Products at OVO. We are a Great British, that's England, Scotland and Wales, energy retailer. That means we buy energy from the wholesale market, we don't produce it, and we sell it to about 4 million customers within the UK. Product at OVO is part of our technology organization, and within that remit we look after product management, UX, UX research, product design, content design and customer experience across the team.

[00:01:49] Staying agile at scale is tricky. It's tricky, as I said earlier. There's a constant pull as you get bigger to standardize process as well. If you imagine the days of when Monzo launched within the UK, they launched a prepaid card. There was no debt on it, there's no possibility of customers losing money, they only had one product, one card, they could release really quickly, and the financial authorities didn't really see them as a risk. So if Monzo's login system worked, everyone was probably pretty much all right. At HSBC, if login broke for more than about 500 milliseconds we had to report ourselves to the financial regulator, because we had one in four customers, one in four adults within the UK roughly banked with our systems. It's a different scale and it brings different challenges as you get bigger, and different processes that you have to adapt for.

[00:02:47] Energy is a long game. At a system level it's a pretty slow-moving industry. The National Grid runs to a five nines reliability, so that's 99.999 uptime. Anyone else got that in their metrics in this room? Hands up if you're running to five nines. Good, excellent. If you think about what we've been through recently, I think you'll recognize actually it held up pretty well. There was lots of talk of blackouts, potentially having to prepare, and actually the grid held up really well. It's a very well-managed system, but it's also a relatively slow system. Smart meters were launched in 2011 and there's still really only about 60% adoption. So things don't move very fast at a system level.

OVO's story: from a barn to 4 million customers through a tumultuous few years

[00:03:36] OVO was launched in 2009 with a clear mission of making energy better for people and for the planet, and as AJ said, today we have around 4 million customers who trust us with a range of services that we provide to them, everything from home energy management, energy flexibility, EV charging, green energy efficiency, air source heat pumps, and then it's underpinned by our Plan Zero, which sets us out to be a fully net zero business by 2035. 1 million pastries a year, very nice fact there as well.

[00:04:13] If you look at a bit of the timeline, we're 15 years old now, we just celebrated our 15th birthday. Back in 2009, OVO's born in a barn. Our founder Stephen Fitzpatrick had a barn in the Cotswolds and that's the company's first office. It was really set out then, there was a very limited range of suppliers within the market at the moment, and OVO was setting out to be the disruptor, to be the Monzo to the energy sector. By 2017 we've got 1 million customers, pretty rapid growth through that place, and obviously that brings a lot of pressures within the organization, and obviously energy is a regulated business. By January 20 we've got 4 million customers.

[00:05:02] And then my slides are going to break, but then we have lockdown, March 20. In January 20 I hadn't joined OVO, I was still with HSBC, and I was sitting in our Mexico office having some chats with some colleagues from our Hong Kong office, and they were going, I think you need to pay attention to this virus thing. And we were going, it'll be all right, it'll be like the last time, it'll probably stay over there, won't it? Anyway, of course we know what happens. We go straight into lockdown. We're at peak, pre-COVID things, straight into lockdown. I join. I leave a nice solid 150-year-old global bank that pretty much prints money no matter what's going on in it. My mom was calling me because this happens, and Ukraine happens, and she's going, what have you done? And I was, it's going to be okay, it's going to be okay, we'll see what happens to this.

[00:05:51] Then by August of the next year we see the gas price rise, and I'm sure most of you who are energy bill payers know what happens. The gas price per therm, that's the wholesale unit, having had a very, very stable 10 or 15 years, very small blips, literally it went like that. And that created huge consequences. Between that one year, 31 energy suppliers go bust. At the time the barriers to entry to be an energy supplier in the market were relatively low. The regulators changed things around this to try and introduce a bit more stability, but effectively at the time you could buy and bet against the price of energy not going up, and effectively there were a lot of companies that were buying at five and selling at two, and I'm sure you all realize that's not a sustainable strategy.

[00:06:45] So we go through all of this, we go through lockdown, we go through the impact that the Ukraine war had, and it was very difficult for us, it was very difficult for our customers, it was very difficult for our advisors. They also had to pay energy bills, they're having to deal with the debt that's mounting up, they've got customers on the phone every day. And we managed to launch what was also then a thing called Charge Anytime a year later, which is what I think is one of the best EV charging tariffs within the UK. It was different because what it allows us to do is to actually look at exactly how much energy you're putting on your EV and charge you a different rate for charging your car than you would for running electricity into your home. So you can run your car for about 2 and a half to 3p a mile if we control the charge. And that for us is key, because for us the digitization of the energy sector is about driving flexibility, about creating interconnected systems that allow us to move power around the system. So a pretty tumultuous year.

How's it going? The gritty reality and the decarbonization success story

[00:07:47] So how's it going? Well, I'd say it's going, would be my answer to this. I think sometimes when you're doing presentations like this they're a bit like our LinkedIn profiles, they're very shiny, we're only going to show the good stuff. Within the limit of our media team, who've crossed out most of my slides, I am going to try and give you a little bit more about the gritty reality of what's going on. It's a journey, and like most journeys in life it's not a straight line. Going through and navigating through those, I think one of the key things is, particularly when you get bigger, you get more complexity, you get more systems, you get more people, you get more, as you heard yesterday if you listened to Kelly, you get more politics, and you get a bit more of what I would call we all find a face.

[00:08:31] There was a lot of identification and laughter yesterday, if any of you were here for Andrew's shoe telephone. It was funny, wasn't it? It was funny, and we're laughing at it in our profession because it's true, but it's also not great. Yeah, it's got to go live tomorrow, I say fine, okay. So it's tricky, but I just want to come back to this: there's a lot of good happening. There's a lot of good happening if you look at the data.

[00:08:59] The decarbonization of the UK energy industry is actually a phenomenal success story. We've just turned off the last coal-fired power station. In these stats that shows a 98.5% reduction in the use of coal; we're now down to 100% reduction in coal. Gas has had to come up to compensate that, but at the same time that gas has come up, we've seen wind three and a half times scale over 12 years, and we've seen solar 10x come up to meet that. As you can see from this, wind is now producing more than gas, and for the first time we're now seeing carbon-free power around 60% in the grid, which is huge. So the direction of travel is really, really positive. Now, I'm not talking about where we are in terms of weather systems, climate and heating, but if you look at the metrics and unit economics in the system there's a lot to feel really good about.

Digitization, smart meters and half-hourly settlement

[00:09:59] At the heart of all of this is digitization. Smartphones and smart meters allow us to connect to our energy, and the key for the decarbonization of the grid and the system and our homes is about actually connecting to energy. Those of you who've maybe got the traditional meter, where you have to phone in or you give a read every month, there isn't a lot to get from that, you just have to do that read, et cetera. But what we really have the opportunity for with smart meters, and the shift towards decarbonization of our transport, generating and storing power within our home, is to move to this thing called half-hourly settlement, which is one of the biggest shifts we've seen coming within the industry.

[00:10:40] Historically what we would do is we'd buy a bunch of energy from the wholesale market. That would be based on our forecast of how much our customers are going to use, and then we would sell that energy on to our customers and we'd hope we got the forecast right. So it's quite a slow cycle time. What half-hourly settlement allows us to do is, within a half-hourly period, so 48 times a day, to buy and sell energy straight through. That also creates 48 price points within the day. The interesting thing, if you look at the way the energy flows, is the peak energy demand is between 4:00 and 7:00 p.m. That's pretty obvious: we all come home, we want to heat our dinners, heat the homes, have a shower, et cetera. But that's also peak cost and it's peak carbon production.

[00:11:24] So as we decarbonize, what we're trying to do is help our customers connect with our energy, make their homes more efficient, and shift the load into a more balanced profile across the day, because that gives us the carbon reduction we need. So introducing flexibility, connectedness, at a really significant scale within the system. What we're doing within product, within design, is how do we tell this story? How do we tell the story of what a connected home looks like, how do we connect the home to the grid and to the wider environmental challenges we have?

[00:11:56] The reason why I think we find that challenging is really the reality is most of our customers want their energy to work, their relationship with their energy supplier to work, like the relationship they have with their light switch. They don't really think about it. Is the light switch going to go on? If you come back to that five nines reliability, it's just going to work. So the big challenge that we have is to wake up our customers, connect them to their energy, and connect them to a value proposition that resonates with them. Inevitably it's going to be grounded in price, but we know that although price is a primary driver for our customers, they're also really concerned about climate. They see what's happening, they read the news, they want to understand what can they do, and sometimes they feel really powerless. I know probably people in this room do: what can we actually do about what's going on?

Have a plan: the vision type

[00:12:42] So I want to share with you a few tips, a few things of what we do and my experience of this, and how you manage through that process and how you manage it at scale, because we're not a small startup with one product. We have a lot of customers, and you start to have a lot of variability in your customer type coming in. So you need to have a plan. You need to have a plan, and we do, we have the plan. One of the things we built is effectively a vision type of what we want our future experience to look like for our customers, and we talk about that a lot within the organization.

[00:13:19] I'm sure you'll all realize this, but humans are reality-making machines. Our reality is largely subjective; there's very little objectivity in how we perceive what's going on around us. So the reality is people listen to what they want to listen to. I know those of you who are in the design profession know this all too well, particularly the researchers among you. They see what they want to see and they hear what they want to hear, and you have to keep telling them where you're trying to go. So we use this internally to really try and drive the conversation as much as we can about where are we going within the organization, where are we going in terms of our proposition, how do we want it to mature, this is where we're going. Any opportunity we get within the wider company is to say this is where we are now, remember this is where we're trying to get to, and this is where it will go forward.

[00:14:05] Now the actual reality of this, in terms of what we produced, is it will never look like this. I hope it never looks like this. Bits of it I quite like, but this was never meant to be a finished prototype. This is a vision type, and that gives us a lot of flexibility. It also gives us a lot of efficiency, because we don't have to test this, we don't have to see how it works. As you can see with things like the house in here, that's not a typical customer's home, but it's a very lightweight and relatively inexpensive way of creating a shared understanding about what's going on within the organization, what do we think is going on for our customers, and where are we trying to move our teams and our investment.

Invest in your systems: a design system with a P&L

[00:14:46] The other thing we've learned to do is invest in our systems. We have a design system because it saves us money and it saves us time. That's it. That's why it gets investment. What we've learned to do is not to rely on a design system as being a pet project, 20% time, someone's baby. It is run like a product and it has a P&L. That means we understand how much it saves us and we understand how much it costs, and it saves us more than it costs, and that warrants the investment and ring-fenced capacity around it. We use the same principles with other systems, because if we don't treat them like products, we don't get the efficiency we have.

[00:15:29] Again, when you're small and you've got maybe two, three, four, five teams, it's fine. When you start having 50 teams running, those efficiency gains start to add up to a lot, and you have to work very hard to, one, get adoption of your systems, but also to actually then keep the systems working at scale to drive the efficiencies within it. It also looks really pretty, so we like that as well. But when we come out and we talk about systems and we talk about the value of them, again the lead is always within the commercial context primarily. We get the knock-on effect as well, we also get the aspect of things like accessibility, and what we're trying to do overall is reduce the cost of front-end code deployment. Because the cheaper it is to deploy, the more often we can, the more we can test, the more we can learn. I'm sure you all understand this: if it costs 10 to release something, then that's going to be a big investment, that's probably going to be your one-shot object. What we're trying to do is get it down to costing two to release something, so we can try five versions and throw away the four that don't work without worrying about it.

Speed and scale have to come together: modularize, data model, API, UI

[00:16:37] The other thing as well is speed and scale have to come together. You can't have one or the other. You can, but you won't find it gets you where you need to be. So we've had to work a lot on understanding how you break down some of the paradigms that you might hear within your business. That you can't be at scale and move fast is a common one. In order to do this, I'd say the three things that we probably focus hardest on are modularization, componentizing our system.

[00:17:09] I used to work for a food tech delivery business in the UK, and when I got there we were looking at how we could optimize the flow, conversion rate optimization, checkout optimization, and the basket that they'd put in was awful. I was like, wow, this is really easy, look, I've just started, quick win here, I'm going to get loads of brownie points. They said, you can't touch the basket. I said, why not? Well, it's pretty much stapled to the back end, we've got it built externally, the team who built it don't work here anymore, no one knows how it works, and if it goes down we're screwed. So there was I thinking I'm going to be looking like a real hero really quickly, look at all the money we're going to make.

[00:17:51] Again, it's a good example of when you're starting small and you're moving fast, you've often got to cut corners, you're going to create technical debt, and you're not going to think about the architecture of your system. Unfortunately, what I found is when you start to scale, those architectural shortcuts, the lack of thinking about the separation of concerns within your system, be it within your design systems, within your front end, your relationship in terms of your intermediate, your API layer and your back-end systems, they really start to bite. So invest in those. Invest the time in thinking through that.

[00:18:24] One of the biggest changes that I've seen us go through, taking forward from my previous work in my previous organization, is a lot of teams work UI, UX, then they think about the API they need, and then they wonder where the data is going to come from. You've got to do it the other way around, and we teach our product managers to think data model, API, UI. Data model, API, UI. The reason being is if you don't understand the data model, and most software is just moving data around, and you don't understand the services, then what you will build is a service that is constrained to the user experience, the flow that you've got. Then what happens when someone comes along and wants to plug it into AI, for example, is they realize it doesn't work. If you're not careful about how you manage that, and you have your service catalog internally that shows it all out, what do they do? They build another one, and it pretty much does the same as the first one, but now they've duplicated it.

[00:19:23] At HSBC we did a whole program around this. If you want to think about a banking app, one of the things you need to do is get a list of the customer's cards. Well, guess how many APIs we had in the UK for getting a list of customer's cards? We had 14. 14 APIs doing exactly the same thing, so we had to rationalize that all down.

Start small, create feedback loops, and speak the language of metrics

[00:19:43] Start small, create your feedback loops, and then foster more of an iterative development model, agile as it is, because it reduces risk. You don't know if software is going to work until you put it live, therefore you want to put it live in small chunks. Again, it's a risk reduction. Waterfall is great if you know what you're doing. If you're going through a repeated known process, you can really standardize every step of it, but most of the software I think probably most of us work on, we're trying to see what's going to work and look for the wins.

[00:20:12] The hardest thing I found is throwing away the stuff that doesn't. You've probably all heard the cliche, fall in love with the problem, not the product. I think it's hard. You've got to fall in love with the product a little bit, but actually taking the time to pare things down. So we think about our portfolio. We think about what are we doing in terms of exploratory work, what are we doing in terms of scaling, try to get it up, see how it works at scale, what are we doing sustaining, and what are we doing in demise. If we don't see an investment in the demise side, that's a red flag for us. We go, hold on, if we're not taking stuff out, we're not going to create the funding to put stuff in at the beginning.

[00:20:48] Kelly yesterday talked about learning the language of business. I think the lingua franca, the common language of business, is metrics. You need to understand your KPIs, and they're not just about the development metrics. We use a common set of metrics across all of our teams. It's about understanding how the business works and how you can take that within your organization. One of the things we did within our plan at OVO is we have a very simple algorithm that shows how we make money as a business, because a business that doesn't make money, and you go back to the timeline I showed, is not a sustainable business if you can't understand how that works. So we understand we make money in terms of the energy we sell, the debt we hold against it, the cost to serve the customer, et cetera, and we use that a lot in our conversations with all parts of the organization. We try and break down the idea that there is a bunch of folks called the business who are the only people who can talk about that. I don't know if I see smiles, has anyone else got the business as a term within your organization, and they're separate from everyone else? Try and break those barriers down as much as you can.

Watch out for the traps: biomass versus wind

[00:21:55] This is the last thing I'll talk about: watch out for the traps as you scale. I'm going to try and explain this concept within the renewable energy vibe, the metaphor. Biomass has emerged a lot, and one of those things in that chart along the bottom was biomass, that's gone up. If you think about fossil fuels, pretty much most of the energy we have on our planet comes from the sun. Sun's energy comes into our planet, the sun creates heat, heat is not evenly balanced, that creates different air pressure, that creates wind. So most of it is about moving photons around within the system. Fossil fuel, coal, oil, gas, is biomass that's taken from putting a photon through a leaf. Leaf converts it, turns it into carbon, builds a tree, tree dies, 500 million years, we pull it out of the ground and we burn it. Biomass is the same thing but with trees we cut down yesterday.

[00:22:51] Now biomass looks like a really good idea, because oil and gas are dirty, we don't want those, trees are green and lovely, let's burn them instead. But it makes a lot of sense if your business is burning stuff to produce electricity: you want more of that. Just the same as people who say that hydrogen works in cars and home heating tend to be the same people who like piping combustible stuff down pipes into something, a car or a boiler, and burning it. It's a delusion. It doesn't work. It's the most grossly inefficient system when you compare it to taking a wind turbine at 40% efficiency that takes sun, heat, air moves, take the air, put it through a turbine, create an electron.

[00:23:34] What we're trying to do within OVO always is to understand, are we going through a biomass process? Somebody over here has an idea, goes through 15 different hops, gets filtered out. Or are we trying to reduce the cycle time and the hops and start to have a wind model? The thing I think you will find within business is, rather like there are people who like burning stuff to produce electrons and they get a bit defensive when people say you could just have a wind farm, there are definitely, I found, points within organizations where you will meet that resistance. You will meet people who say you need to be biomass, and you have to constantly challenge, which means that often what you're doing is you're changing the status quo within an organization, and you will meet resistance along the way.

[00:24:17] The thing I'll finish on, though, just to go through that, is just remember that when you're meeting that challenge, when you're challenging the status quo, pessimists always sound smart in the short term, but in the long term it's the optimists who win. This narrative around renewables called blackout. Has anyone here got an EV, electric vehicle? Put your hand up. Great. Has it blown up recently? Just spontaneously caught fire? Has it collapsed the car park? Anything else like that, just caused general global collapse from it? No. They don't blow up. In fact they explode less than internal combustion engine cars. They don't collapse car parks, and the reality we're now seeing is the battery pack on your EV will outlast the chassis. But the fear, uncertainty and doubt industry will tell you they're just going to be awful.

[00:25:05] So I'll just finish on this. Have a plan. Invest in your systems. Think about speed and scale. Measure the same things. If you can't measure the same things, you can't talk commonly across the business. Watch out for the traps, they're coming, you need to see them and you need to counter against it. And above all, stay optimistic. Thank you.

Q&A

[00:25:34] Host: Everyone loved it. Do you know what, a brilliant systematic way of looking through things. So many good sound bites in there. I was making notes, I was like, humans create their own reality. I love the one at the end though: pessimists will always seem confident in the short term. That's absolutely true. My EV hasn't exploded because it's a hybrid, so it's actually the internal combustion engine stopping my EV from exploding, I've been told. So there we go.

[00:26:00] Harry: Yeah, exactly. Taking a battery and dragging an internal combustion engine around and reducing efficiency.

[00:26:06] Host: Yeah, it's a terrible thing. I make no mistakes of it. Harry, some questions from the audience. Can you give some examples of how you make a profit and loss of a design system?

[00:26:18] Harry: One of the things we look at is the cost of code deployment. Even a very simple thing: if you take a button or take a form element, and you think about how many variations you've got going on throughout the system and how many variants you've got of that, as we know buttons aren't just buttons, they've got numbers of states within it. Multiply it by the number of teams you've got going through it and start working out what would be the actual cost if everyone was designing their own. What we're really looking at is reduction in time. The other thing as well is we use it to reduce the cycle time to production. So if you're launching something that's new and it entirely uses the design system, we know it's accessible, you don't have to go through an accessibility loop, we don't have to go through extra things.

[00:26:59] Harry: So we introduce incentives. Teams who want to get stuff live fast and meet deadlines use the design system. If you go outside the design system, we're going to put a brake on it and we're going to make sure you hit a certain amount of hops. Sometimes we let you go live without hitting all those accessibility checks, but it'll be like, you can only go live to 500 customers. So again the team that wants to launch it will say, well, that isn't going to give me the return on investment I want, I want to go live to 4 million customers. Then we'll say, about to use a design system? And if there isn't a component within it, we go and build one and contribute to it, make it better, and then move it forward.

[00:27:33] Host: Fantastic. I guess on that then, making the design system so integral to aspects going through, does your design system have a PM in your product?

[00:27:40] Harry: Yeah, but no. It doesn't. There is a PM that looks over a number of global components and frameworks and systems. They're not dedicated to the design system. We largely leave it to engineering and UX, a UX practitioner and two engineers, to develop it on their own, and they can do it, they're pretty good at that. So it's fairly light-touch PM, but yes, there is a PM ultimately over the top of it, but it's very, very lightweight.

[00:28:09] Host: Fantastic. All right. How do you find investors for a startup to launch and scale up? This is slightly off-topic.

[00:28:20] Harry: I think, talk to a lot of people. The one thing I would say, if anyone is thinking about launching an idea and the first thing you want to do is go and pay for an NDA, is don't bother. It's a complete waste of your money and everyone's time. The biggest problem I found, having been launching a startup, is not people stealing your idea, it's people giving a damn about your idea. So don't put any barriers into it. Don't spend money on lawyers, go out and talk to a lot of people. But generally I find, ask for help. Most people want to help you.

[00:28:50] Host: Fantastic. A bit of a challenge to your data or API comes first, which actually I think is the right way to go.

[00:28:59] Harry: I totally love it. I love it, I love it. If you think about it as Lego, if you have a really robust, well-documented service catalog of all of your services within the system, you can move so fast, because often what you're saying is, oh, I can take that from there, that from there, pull it together, put it into this, and I can test this with my customers. Versus, that doesn't exist, I've got to go and write the compute, put it over there, put it into that. So actually I think it speeds up our time to production, it reduces the cycle time, reduces the cost, and when the cost comes down it allows us to try more things. But you have to understand the data that sits underneath it.

[00:29:37] Harry: I think in today's world, particularly with the changes we've seen around AI and large language models, it becomes ever more important for us to do that. Customers, it's don't make me think, a fairly standard principle within design. The amount of things that we can reduce customers having to think about has exponentially grown, but it really does rely on you having a good solid data foundation. The nice thing about APIs, if anyone is thinking, I don't know anything about APIs, how do I do them, isn't that an engineering thing, is go and have a conversation with ChatGPT and say, I'd like to build a RESTful API that will do X, Y and Z, can you help me design it? It will pretty much build the entire thing for you, and then you can sit there and ask it loads of awkward questions, what about this, what about that, how do I do this, and it will just keep going for you. Also there's systems like Gravitee, which is an API management platform that has really simple drag and drop interfaces, so you can effectively say this is the data I need in this system for it to work, and it will pretty much build the whole thing for you.

[00:30:37] Host: Amazing. Data, API first, it will build it for you. That is all the time we have for Q&A, so have another massive round of applause for Harry Parkes, everyone.