Ideate-Explore-Experiment is the three-step framework that PhonePe uses to build its product that has been downloaded by more than 300 million users. Vishal Gupta, the Head of Products from the Indian fintech unicorn, talks to us about how PhonePe sets up their product organization in pods to be agile, the key metrics they track, their framework to prioritize ideas and the characteristics of a good product manager.
Q. How is the PhonePe product organisation set up?
Vishal: We have around thirty product managers, and the number is almost doubling. The idea is to make sure that there are enough thought leaders in every business area where we think about the customer.
We are as agile as we can be. We believe in continuous deployment and continuous integration. So when it comes to the backend, we’re deploying almost daily. And when it comes to the front end, we have a fortnightly cycle where we release our app version every 15 days.
Q. How do you set up your product teams?
Vishal: We operate in pods which are self-sufficient units. Once the org strategy has been defined, it translates to pod strategy. We chose this pod design because we’re operating in a horizontal space that keeps spawning new business lines, which has multiple startups with multiple team sizes that are in different life stages for each product.
Because of this, it’s crucial to create a structure that can be heterogeneous in terms of the way it operates. Another reason to have this structure is that people work cohesively when there is no information asymmetry. When you have many people sitting in a room irrespective of roles and functions, everybody knows what decision has to be taken.
Q. What is PhonePe’s prioritisation framework when it comes to new ideas and features?
Vishal: We are a thoughtful organisation. We don’t work on FOMO or pressure from peers or competition. We spend a considerable amount of time defining the top-down strategy of the organisation. The core leadership meets every year. And we put down what we’re trying to do this year, we also spend a considerable amount of time deciding what we will not do this year. When you work in such a horizontal space the number of opportunities that come your way are phenomenal and it is easy to get distracted. We follow a three-step process of ideation-exploration-experimentation.
Once we decide the areas we want to solve for we look within the area whether we can follow an existing track or a new idea. We look to answer questions like How’s the market? What is the competition? What are the regulatory hurdles? Can we win just on the basis of distribution or reach? Is it a build, buy or partner? We spend a considerable amount of time bringing in information for every idea we have.
Once the information is available we move from ideation to exploratory. We assist the idea and figure out whether we are entering it to win it or not. Once we believe that an idea is pursuable, we enter the experimentation zone where we want to learn fast and fail quick.
You can have lots of understanding about the market and lots of instinct but the reality is only known when the rubber hits the road. Once you’ve done that- learnt fast and failed fast then you go into the amplification zone where you stabilize and accelerate the journey. This playbook has repeated years over years and idea over the idea and business line over the business line for us.
Q. How do you leverage product-led growth?
Vishal: User experience is the first critical piece. Design is vital, and you have to think about keeping it simple, what problem you’re addressing and for whom. Rather than being bogged down by established frameworks and what has been done before. Our interface is simple because we cater to such a broad heterogeneous audience.
The second part is to think about your customer journey and how they onboard with your system. Think about what is the experience you offer them when they’re in trouble. For example, we are solving how people spend, spend, manage, and grow money. When people are facing problems related to this they face a lot of anxiety and we need to give them an experience where they feel confident and today one of the reasons we have such a huge market share is because we have been able to do that confidently.
The third part is how you solve for the adoption of your product. You can always incentivise users. Incentivised session led growth will never be sustainable. Focus on converting adoption into habits. You have to think about this right from the early days because you will not be able to contain linear costs later. You also need to offer people seamless experiences and not perverse incentives. For example, we make sure that all offers are auto-applied so that the consumer build trust with us rather than making them do transactions by offering them various hidden incentives. We make sure that consumers transact with us for the experience and not for incentives.
Q. What are some of the metrics that you track at PhonePe?
Vishal: Metrics will depend on the pod and in which life stage their in. Each pod will also have a different north star metric in terms of what they’re solving for. There has to be a clear understanding of numbers to care about and numbers that are important for your business life.
From zero to one, you will focus on delighting the early adopters over business numbers, and once you solve for the early adopters, then you can look at growth. Once you solve for growth and you’re getting more and more people on board then you can look at solving for pure business numbers in terms of customers as well as revenue.
Another important point is that you have to be data-aware, and you need to have sensitivity to data. You need to be able to understand data, but at the same time, you cannot be drawn to analysis paralysis. Analysis paralysis is the last thing you should be doing when you’re early-stage. The cost of not making a decision is greater than the cost of making the wrong decision. Data helps us validate the hypothesis or the gut instincts that you have but you need to be able to strike the right balance between data and intuition.
Q. What do you look for in a product manager?
Vishal: We do prefer people with an engineering background. We do make exceptions. It is important to be a generalist and domain knowledge can be acquired but having a background in engineering helps in the way you are able to think of systems and platforms and we are a tech product company at the end of the day.
It is also essential to be strong on first principles, be a structured thinker and be a good problem solver. Problem-solving is what you do in product management day-in and day-out, and you need to learn on the fly and solve problems. A company like ours has no precedence to it, and there are things we’re doing a lot of things for the first time in the industry and in the ecosystem and there’s no formula which you can borrow from.
We also look for problem-solvers who can think through different dimensions when solving a problem. A product manager will hit a plateau if they cannot solve a problem across multiple dimensions. You have to be able to think about design, customer experience. Relate with data, technology, business operations. If you’re not able to think around these dimensions your product will be limited.