Fractional Leadership: Maximizing Success in your SAAS Business

Introduction

Today, we’ll be talking about fractional leadership and how you can maximize the success of your organization and fuel SaaS growth. The biggest challenge in SaaS today is doing more with less. For most bootstrapped SaaS companies and startups, this often means finding ways to quickly build and launch faster, like leveraging no-code tools and manual MVPs and hiring offshore talent. Fractional leadership is allowing businesses today to leverage the experience of C-level executives without breaking the bank.

In order to truly understand their value, we will examine the various leadership roles in most startups and software businesses today and what these key individuals bring to the table.

Understanding the Key Roles in Tech Leadership

First, let’s examine the key roles and responsibilities in tech leadership. At most startups, there is always some confusion about leadership names. 

So let’s call the highest person in a startup or SaaS who is in charge of technology the Tech Lead, whether it’s a CTO or whatever.

Next, let’s call the highest person in a startup or SaaS who is in charge of all things product the Product Lead, whether that is the CPO, Product Manager, Project Manager, Scrum Owner, and so on.

Now, the most important thing to understand here is this:

The tech lead decides how things are done and who is the best person to do them – So what technology do we use, what security measures do we have to have in place and what is the best person to implement all this in terms of skill.

The product lead, on the other hand, decides what is being done and in which oder – So we are, for example, going to build this feature and after that this feature and so on.

The Biggest Mistake in Tech Leadership

The biggest mistake that most companies make in tech leadership is forcing the tech lead or CTO to manage the development team, a function that best lies with product.

Most CTOs who are software engineers are passionate about technology and learning more and more about tech. In most cases, they are not good at managing developers, and you might be putting too much on their plate by asking them to.

The Unicorn CPTO

If you have the great advantage of having a CPTO on your team, then great! You can have them work both on the technology side and the product side, where they get to manage developers.

The only issue here is that great CTOs are rare, great CPOs are rare, and great CPTOs are rare even more, hence, we like to say they are like unicorns. 

For tech founders, distinguishing between the tech lead and product lead could be the difference between having a product development process that lacks clarity and direction and a high-performing development team. 

The Role of the Product Manager

The product manager plays a crucial role in bridging the gap between technical implementation and business strategy.

We sat down with Miguel Augustin, the COO and Fractional CPO at Trustshoring to talk about how to coach and upskill your product manager, especially in cases where you’ve just hired or promoted a new product manager.

In the first episode of a multi-part series, we examined the role of a product manager and, specifically, the traits of successful product managers.

Three key Traits of Successful Product Managers

1. Communication and storytelling: Product managers are also good storytellers. They understand the story of the product. They understand the needs of it.
2. Curiosity: Product managers tend to be very, very curious. They usually want to know why we’re doing things, what the right reason is, and what the motivation is.
3. Balanced approach: You want to be able to understand the emergencies of the situations of the business and the customers as much as you want to understand the complexities and challenges of the development team.

Understanding the key personality types and working styles is also crucial for effective product management. PMs are always in constant communication with the development team, design, marketing, sales, and upper-level management.

As you assess what type of product manager you need, its important to understand how they learn, how they communicate and how their work in oder to know what areas they need to improve in.

The Most Common Challenges in Product Management

Product managers have to contend with the following key challenges in their roles.

1. Prioritization: One of the main or overarching tasks of a product person is to prioritize. Product managers have to be able to master prioritization, whether you do it at the roadmap level with big initiatives or you do it at a lower level with epics or stories, even bugs. A product team without a set of priorities to work on now and how they then progress to the next level of tasks and priorities is a product team without a rudder and is doomed to fail.
2. Resource allocation: Next, every product manager has to learn how to allocate resources. Planning the best he or she can with the people in the company or the resources that they have available.
3. Process adherence: Another challenge is learning to implement and ensure that the team adheres to the set process and principles. Sometimes, a process that’s not very well laid out impacts the team from one side, or sales might be making commitments that cannot be upheld by the development team. It is the product managers job to streamline all of this and bring clarity to the product development process.
4. Stakeholder management: Last but certainly not least is managing stakeholders. Balancing the needs of various stakeholders, from customers to internal teams, is an ongoing challenge for product managers. What does the business need? What goals does it have, and how can you match this with what the team is able to deliver and achieve? That is a challenge that the product manager has to overcome.

The Rise of Fractional Advisory and Leadership

Over the last few years, one of the biggest changes in SaaS has been the rise of fractional advisory and leadership. For most SaaS businesses, especially bootstrapped ones, access to C-level executives in the form of Chief Technology Officers (CTOs) and Chief Product Officers (CPOs) is just not feasible.

In the US, hiring a top CTO or CPO costs between $200,000 and $500,000 per year.

Enter the Fractional CTO/CPO. Companies can leverage the experience of C-suite executives for a fraction of the cost.

Fractional leadership offers a lot of advantages, including:

1. Cost-effectiveness: These experienced executives come in for a fraction of the time, usually a couple of hours per week, meaning that you save on huge fees as opposed to hiring a full-time CTO or CPO.
2. Focused expertise: The job of a fractional advisor is to come in and solve one particular problem that you have at the time. They laser focus on one issue or challenge that the team has and work with you to make it better.
3. Minimal disruption: Unlike a full-time hire who will sometimes be distracted by long-term goals or other company-wide issues or even have to involve themselves in the management of your business, the Fractional CTO/CPO does not really affect the management of your business. You are delegating tasks, or they are supporting the owner or the team in specific areas and parts.

The Role of the Fractional CTO

So, what exactly does a fractional CTO do? Similar to the full-time CTO, he or she is in charge of how things are done (technology) and who you need to do it (hiring developers).

1. Defining the development standards.
2. Setting up DevOps infrastructure.
3. Conducting code reviews and audits.
4. Vetting and interviewing developers.

As Miguel explained, the Fractional CTO will normally help with anything that has to do with the development standards and the quality of code.

Another advantage of fractional advisory is that he or she can help coach or train up your current team as you prepare to hire a full-time CTO later. 

The fractional CTO can work with the senior developer on your team.

The Role of the Fractional CPO

What does the fractional CPO do? Similar to the full-time CPO, he or she is in charge of all thins product. How will do things, and in which order.

1. Improving product development processes.
2. Roadmapping and implementing Agile methodologies.
3. Stakeholder management.
4. Long-term strategic planning.

Similar to the Fractional CTO, the Fractional CPO can work with the designers to help them to understand their influence on the overall product, work with all the key stakeholders, and even work with a product manager or project manager if there’s one in the company to plan the next iteration.

This can help you fill that gap even if he or she is only coming in a couple of hours a week and help you fill that gap until you decide to hire a full-time CPO later.

How to Set up an Effective Leadership Structure Within Your SAAS

In order to make sure that you make the most out of your tech and product leads, you need to implement the following steps:

Assess your company’s needs thoroughly. As we mentioned earlier, most bootstrapped SaaS cannot afford full-time CTO or CPO, so you might need to go the fractional route, however, that still depends on your team. 

You may have an experienced senior developer who can take up some of the roles of the CTO or a senor designer who can take up the role fo the CPO all with the right training. 

This brings us to the next point, which is the gradual skill build-up. This goes for all aspects of the software and product development process. There has to be some improvement and gradual skill build up especially if you do not have that c-suite experience.

If you are a technical founder, then you might need to pair that with a Fractional CPO to supplement your team with the product needs. If you have a decent product background and knowledge, then you might need to bring in a fractional CTO to supplement that much-needed tech knowledge and make sure you are making the right decisions when it comes to technology and security. 

As Miguel mentioned earlier – “One call with a CPO to do a status update on something could result in the rest of the team having just enough time to know exactly what they have to do for the next few days. So they don’t have to sit on top of people all the time.”

So, it’s important to have the efficiency of a fractional leader in mind as well.

Conclusion

Good leadership could be the difference between you growing and scaling your saas or launching, gaining a bit of traction and not being able to sustain that.

Today, it’s all about managing your resources and hiring the right people to help you scale your saas.

While in years passed, you had to have a good revenue base to be able to hire a seasoned CTO and CPO for your startup or saas especially if you are bootstrapped.

However, with the rise of fractional advisory services, founders can now rest easy with the knowledge that they don’t have to work on a lot of product stuff and development stuff. You can now hire a fractional CTO or CPO for a couple of hours weekly and reap huge benefits. 

The fractional consultants can also coach your current team leads be it a lead engineer or a senior designer and help you bridge the gap and not feel like your teams lack that startup leadership that guides the technology decisions, security and everything product. 

FAQ: How do I establish leadership and structure in my SaaS or Startup?

1. Know the tech leadership roles: Differentiate between the Tech Lead (e.g. CTO) who decides how and who does it and the Product Lead (e.g. CPO, Product Manager) who decides what and in what order.
2. Don’t overburden your CTO: Don’t force your Tech Lead or CTO to manage the development team, that’s a product function. Most CTOs are tech-passionate and not great at managing developers.
3. The unicorn CPTO: If you have a CPTO who can handle both tech and product side, including developer management, that’s ideal. You can have him or her handle both the product function and managing your development team while still making crucial decisions when it comes to technology. However, remember that good CTOs are rare, good CPOs are rare, and good CTPOs are even rarer.
4. Upskill the Product Manager: Understand the Product Manager plays a key role in bridging the gap between technical implementation and business strategy. If you’ve just hired a new product manager or promoted someone to that role its important that you give them all the tools they need to get better. Look for strong communication, curiosity, and ability to prioritize well and manage both the needs of the business and the resources and skills available within the team.
5. Prepare for product management challenges: Prepare your Product Manager to handle key challenges like prioritization, resource allocation, process adherence, and stakeholder management.
6. Fractional leadership: If full time C-level executives are not feasible for your business, explore the option of fractional CTOs and CPOs. This can provide cost effective, focused expertise with minimal disruption to your existing structure.
7. Use a Fractional CTO effectively: Engage a Fractional CTO to define development standards, set up DevOps infrastructure, do code reviews and audits, and vet developers.
8. Leverage a Fractional CPO: Use a Fractional CPO to improve product development processes, handle roadmapping and Agile methodologies implementation, manage stakeholders, and assist with long-term planning.
9. Assess your company needs: Decide if you need full time or fractional leadership based on your current team composition and financial situation.
10. Gradual skill build up: Focus on improving and building up skills across all aspects of software and product development especially if you don’t have C-suite experience.
11. Technical and product expertise: If you’re a technical founder, consider pairing with a Fractional CPO. If you have a strong product background, bring in a Fractional CTO to supplement your tech knowledge.
12. Optimize for efficiency: Even limited time with fractional leadership can make a big difference to your team direction and productivity. A single status update call with a CPO can give direction to your team for days.