The Diseases of a Devolving Product Company
Four diagnosable diseases that turn a great product company into a feature factory
- Difficulty
- Advanced
- Time to result
- ~ongoing to results
- Steps
- 4
- Confidence
- 90%
Cagan combines Steve Jobs's 1995 diagnosis with his own observations into a diagnostic for companies losing their product mojo. The diseases: sales/marketing/finance leaders inherit the company once product stops driving growth; managers believe an idea is 90% of the work; process is chosen over leaders as the way to scale; and, post-founder, fear replaces discovery because nobody knows what is essential versus incidental. Each has an observable symptom, and each is treatable only by naming it.
Origin
Steve Jobs's theory from the 1995 'Lost Interview' (rentable on Amazon Prime), which Cagan says is better than his own theory from EMPOWERED. The value creation vs. value capture and post-founder-fear observations are Cagan's own (see his article 'devolving from good to bad').
Core principles
- 01Growth via sales, marketing, and cost-cutting is what a company reaches for when it stops innovating — and those people then become the leaders.
- 02Once product people are no longer valued, they leave for companies that value product, and the decline compounds.
- 03An idea is the sparkle in the eye, not 90% of the work; the craftsmanship of turning it into a product is the work.
- 04There are two ways to scale — with process or with leaders. Only scaling with leaders leads to good outcomes.
- 05Optimization is value capture; discovery is value creation. Both are good, but only discovery innovates.
How to run it
- 1
Check who gets promoted
Look at who runs the company. If the celebrated leaders are marketing, sales and finance people — the engines of growth and cost-cutting once innovation stops — the first disease is present, and good product people will start leaving.
Watch out This one is self-reinforcing: as product people leave, the remaining leadership becomes even less product-centric.
- 2
Check whether executives think the idea is the work
Listen for stakeholders and executives who believe having the idea is 90% of the job and the team just implements it. Jobs named this the disease of the managers. The counter-evidence is blunt: only about 20% of executive-prioritised features generate any positive return.
Pro tip Quote the 20% figure back to the room — it is the cheapest available antidote to executive idea-arrogance.
Watch out Every executive believes their ideas are the better ones, which is why the evidence rarely changes minds on its own.
- 3
Check how the company is scaling
Ask whether growth is being handled by adding process or by developing leaders. Heavy process frameworks (Cagan singles out SAFe as 'repackaged waterfall') are the appealing, easy answer and the wrong one. Jobs: beware the disease of process people — they will destroy your company.
Watch out Process frameworks sell themselves to executives who don't understand software; the label 'agile' on the box means nothing.
- 4
Check the risk profile of your roadmap
Look at what the teams are actually doing. If it is all low-risk A/B tests tweaking main flows, growth, and retention, the company is doing pure value capture. Optimization is fine, but it will never produce major improvements. When real discovery stops, Cagan calls it the beginning of the end.
Pro tip Post-founder fear is the usual root cause — teams don't know what is essential versus incidental, so they touch nothing important.
Watch out This disease disguises itself as data-driven discipline, which makes it the hardest of the four to argue against.
In the wild
Jobs argued that as a company grows and product becomes less central, the people celebrated are marketing, sales and finance — because those are the engines of growth and cost-cutting once innovation stops. Over time they become the leaders, and good product people leave for companies that value product.
→ Cagan says Jobs's theory is better than his own explanation from EMPOWERED and 'still more relevant' — and was prescient about companies the decline had not yet reached.
After founders leave, executives and product teams are afraid of damaging the thing that fuels the business, because only the founders held the institutional knowledge of what is essential versus incidental. The tell: everything on the roadmap is a small, low-risk A/B test tweaking existing flows.
→ The company keeps optimising and stops innovating — 'once they stop doing real discovery, to me it's just the beginning of the end.'
Common mistakes
Mistaking optimization for product work
A/B tests on main flows, growth, and retention are genuine value-capture work — but they will not innovate and will not cause major improvements. A roadmap made entirely of them means discovery has quietly stopped.
Answering scaling pain with a process framework
Process is the attractive answer to a hard problem, which is why frameworks like SAFe spread. Cagan calls it repackaged waterfall marketed as agile; the only scaling path with good outcomes is scaling with leaders.
Is it for you?
Best for
Founders, execs, and product leaders auditing whether a currently-successful company is quietly devolving into a feature factory
Not ideal for
Early-stage startups still searching for product-market fit, where none of the four diseases has had time to set in
From the transcript
“the people in a company that would be that would be celebrated were marketing people sales people finance people”
“good product people don't want to work there anymore and they leave and they go to a company that values product”
“he called it the disease of uh of the stakeholders of the managers where they think that an idea is 90 of the work”
“only about 20 percent of those things will generate any kind of positive return”
“and the reason they're scared is because they don't know what is essential and what is incidental”
“i can tell because all they're doing is little low risk optimizely a b tests you know they're just doing these little baby tests”
“and so once they stop doing real discovery to me it's just the beginning of the end”
“hard does anybody know anybody who doesn't think it's hard you know it's hard and fundamentally there's two ways to scale you can scale with…”
“saying it in the video be careful of the disease of processed people they will destroy your company”
From the episode
The nature of product
Marty Cagan, Silicon Valley Product Group