Case Study: Tonies' mission-led team
How the company behind the Toniebox built an empowered product function to drive their strategy after finding product-market fit.
“First it is about demonstrating product-market fit. But afterwards, it's really important to understand the ambition and the mission. And then it's crucial to build the organisation in a way that perfectly caters to this mission,” says Christian Spinkmeyer, Chief Product Officer for Tonies.
Christian joined Tonies in 2020. It was a company with a delightful, innovative product that has phenomenal product-market fit.
But it was reliant on third parties to develop and maintain large parts of their technology. To move into new markets and continue to innovate, that would have to change.
“Because we were dependent on outside partners, there wasn’t an empowered product team,” says Christian, reflecting on Tonies product culture when he arrived.
“We built features. Or rather, our partners built them. And they also maintained a lot. And because different partners built different systems, they also weren't always perfectly in sync or build in the same way.”
This meant bringing their core IP in house and rebuilding large parts of it. “I knew we would have to change a lot,” he smiles. “Set up a whole new technology stack. But also advance the team and culture.”
Origins and product-market fit
Tonies was founded in 2013 in Germany to provide kids a fun and appropriate way to listen to audio content.
The founders, Patric Fassbender, a graphic designer and Marcus Stahl, an engineer, had met at a day care centre. Both had kids with scratched CDs scattered across their bedroom floor.
They talked about how Spotify was now providing music on demand for adults but they realised that there was nothing designed for kids. The two set out to explore the opportunity.
After a couple of years of development, they arrived at an internet connected speaker in a fun padded box. You place a character figurine on top and it plays a story.
“The kids are fully in control of the experience and what they want to play,” says Christian.
The Toniebox was born in time for Christmas 2016.
“They realised pretty soon that they had very strong product-market fit,” says Christian. “They were out of stock immediately after launch. They received new stock and it was immediately gone again. And so on… It quickly became clear that there was product-market fit and that there's lots more to explore.”
To date, Tonies have sold 6.8 million boxes, which are active in more than 100 countries.
In 2018, Tonies launched in the UK, again in time for Christmas. Plus, they had ambitions to grow into many more markets. The founders realised they needed to bring in new expertise and hired Christian along with several other roles to help them start to explore new markets.
“The overarching mission was to build the structures that the company needed to scale further,” he says, also adding a crucial prerequisite for transformation to work: “the founders Marcus and Patric fully supported this path and the direction.”
Hiring for the ambition and culture
When he arrived, he had nearly 20 people reporting directly to him. “My initial priority was to hire a leadership team that I could work together with on the journey,” he says.
“The good thing was the ambition and objectives were very clear. Expand into more markets initially. Then broaden the product portfolio. This really helped me to find the right profiles. What's important in those moments is not hire for the status quo, but hire for the ambition.”
He hired a Director of Product and a Director of Technology. “Both had worked in scale ups, international environments. Both understand and strive for an empowered way of working,” he says.
The next step was to hire others that could help them both bring the technology in house and at the same time create the right kind of culture. “We hired a lot on the tech side but also in the product team. We also onboarded new product managers and new product designers in line with the way of working we were aiming for.”
Working down the funnel
The product strategy and next steps was guided by the company’s goals.
“It's super important to understand the ambition and and objectives of the company,” says Christian. “What was pretty clear was that, we were planning to expand into many more markets and bringing the current product experience into as many markets as possible.”
That being the case, the team started at the top of the funnel with the eCommerce experience. One of the first big migration projects was to change the entire shopping experience to become more scalable and more flexible and meet the needs of different markets.
“The new web experience couldn't look the same in all markets because they are at different stages,” explains Christian. “In Germany, everybody knows Tonies. We were in the UK at that point, but we were not so well known. And we were about to launch in even more new markets.”
Next they moved on to the mobile app experience, bringing that in house. Finally they moved further on to the physical product: the hardware and firmware.
“It made sense because we knew with the firmware and the hardware, we wouldn’t make major changes in the first years because we want to bring the same product into more markets,” says Christian. “We moved along the funnel starting at the top and moving closer and closer to the core product.”
This was also the order that they hired and built their in house team. This meant they organised around each platform: the eCommerce web experience, the app experience and the hardware.
Even though they were rebuilding the product and building a team, they knew they couldn’t stop shipping. “While we were looking for in house teams, we either continued with external partners or brought in freelancers temporarily to still make progress.”
From platforms to missions
Once they had rebuilt their technology with in house teams, enabling them to quickly expand into new markets, the next step was to introduce a more customer-centric approach to unlock innovation.
“We are on the path to transition into mission-led teams,” explains Christian, “where teams are responsible for improving certain part of the experience.”
I ask him why this is important. “It’s about working in a user-centric way,” he says. “One of the core skills is product discovery. Starting from the customer problems and then defining the right solutions.”
To begin with, they didn’t change the structure. The first step was to give the platform teams missions rather than simply working on the shop or the app. This worked particularly well as their platforms already closely mirrored the customer journey.
“On a higher level, you could say the web app’s mission is acquisition,” explains Christian. “For the mobile app, the mission is retention. So you can formulate quite good missions without changing the structure.”
This approach came after an initial false start. “We tried to move to Mission Teams a lot faster. But we realised the team is not yet there,” he remembers. “We were too ambitious and underestimated, the change this takes in terms of ways of working. In such a transition, the team have to learn some new capabilities.”
They realised to reduce friction and improve momentum, they had to adapt the approach to the team. “That’s when we decided to stay with platform teams, but start formulating more meaningful missions than just working on the web or the app.”
Product team structure
The platform teams had been built with a future mission-based approach in mind and are structure into a classic product trio, alongside five or six engineers.
“We have what we call the trio structure,” explains Christian. “A product manager, a product designer and an engineering manager, which some called a tech lead. Those three are ultimately responsible for product success. They own different parts of the risks that are involved. But they are together responsible for product success and driving it jointly.”
When they hired, they had looked for people with the skills that allow these teams to work relatively independently. Product managers were data literate with basic data skills. Product designers had research skills.
Along side these they have a dedicated product analyst and UX research to support the teams to more deeply understand different customer problems and the impact they are creating.
The mission-led approach also allows them to more easily grow the team and divide up responsibilities: “Rather than having one team that is looking after your mobile app, you can have multiple teams that might be focusing on different missions that are related to what that platform does,” says Christian.
He reflects that when creating the team topology, there is a trade off between vision/strategy and technology/skills. “You need the right skills to serve platforms, but clear missions that make sense from a customer journey perspective.”
‘Lighthouse’ pilot teams
One of the techniques they adopted to support the transformation was to create ‘Lighthouse’ pilot teams that could demonstrate the benefits of this new approach.
“One of the core skills to learn and apply is proper product discovery based on customer problems identifying the right solutions,” says Christian. “And we had two very specific customer problems that would benefit from such an approach.”
One was about improving the core product. And one about innovation.
Improving the core product: Time To Play
“We always had a bit of struggle with the setup process in our app,” says Christian. “Customers have to set up the boxes and connect to the WiFi when they first install it. For some customers, this was a cumbersome experience. So we decided, we need to fix this.”
They tasked the app team with improving the success rate to connect the box.
“It requires a lot of proper discovery: you really need to understand the setup funnel, where do customers drop out? And then you need to define ideas, tactics, how to solve those drop out rates, test different ones…”
In less than three months the team had more than doubled the success rate and so they broadened the scope to reduce the Time To Play. “We didn't want to stand in the way between between holding the box in your hand and kids actually using them,” says Christian. “So the teams mission became “We want to make sure kids can use the box as fast as possible.”
The team managed to reduce the Time To Play by more than 30%. “On a customer basis, it was minutes,” he says “But I did the math and calculated that for all the new users that we acquired during Christmas. There were literally customer years that we saved. This was an absolute ‘WOW’ moment for the entire team.”
He also notes they saw a massive reduction in the volume of support tickets. So not only were customers happier, so was the Customer Care team.
Innovation: AI powered stories
The second example is from the beginning of 2023 when AI was on everyone’s lips.
"We are a content company. So we needed to experiment with AI and how we can make use of it. So we wanted to explore a feature for kids and families to create their own stories.”
They put a small team together: the content team PM, one in house engineer and a contract engineer. This meant both a small initial investment with minimal distraction but also a nimble team that could focus and move fast. They gave them six weeks to develop an idea and test it, initially with just 1000 customers.
“In six weeks we generated some super meaningful results and insights,” says Christian. “We learned those who understand prompting and had experienced chat GPT already, got the best experience with super nice and diverse stories.”
So the team were given another 8-weeks to improve the onboarding experience and create a simpler user experience for the mass market, with less AI experience. This time they expanded the test to 3000 customers.
This gave them more feedback and presented a clear opportunity. They are now in the process of refining the idea and figuring out the business model.
Christian believes that they wouldn’t have got so far so fast without the new way of working. A small investment upfront to build the case for investing in a new team to confidently go after the opportunity.
Celebrating success
These pilots have helped the team to demonstrate the benefits of the new approach. It was important to find opportunities, to talk about them and highlight what the teams were learning.
“We celebrated these examples a lot in our team meetings and in company meetings,” says Christian. “We ensured that first of all, everybody just understands the progress we're making. But we also had dedicated sessions where we explained the way of working, why it was important, what worked, what didn't work well, and so on. It's an important part of these Lighthouse teams to not just let them happen, but also talk about them to ensure that the entire team benefits of the expertise.”
Key takeaways
We reflect on the things he has learned on the journey.
You can find product market fit with third-party technology. But to keep innovating, you may need to own the technology.
Hire for the ambition, not the status quo. Bring in people to help you build the right culture.
The team structure needs to follow the strategy. For Tonies, this was enabling the growth in new markets, then improving the core product, then introducing new product innovations.
You need to find a balance between strategy and skills required when organising teams. For Tonies, their platforms nicely aligned with the customer journey.
Give teams missions, not feature sets. This enables you to focus on user problems and create more customer impact more quickly.
Don’t try and introduce a new approach all at once. Use pilot teams to demonstrate the benefits of a new approach and find stepping stones like giving platform teams missions.
Use Pilot teams as a way of helping the team learn new capabilities and skills. Share the approach to help the wider team learn.
I ask for his final reflections on how to lead teams through a transformation like this. “It's important to really understand the status quo. Then the ambition,” he says. “And then consider the required structure for that ambition and how large the gap is. This will help you to really be aware of the magnitude of the transformation. And then approach implementation in a smart way by taking small steps, like Lighthouse pilot teams.”
This case study features in my new fellowship programme on Building Mission-Led Teams. The next cohort starts 23 September.