Course Manuals 1-12
Course Manual 1: Product Failure and Its Impact
At the end of this workshop, you will be able to:
LO1: Define product management
LO2: Discuss six key steps to product success
Each year, Battelle (a nonprofit research organization) and R&D Magazine publish a report on the global research and development funding forecast (The Annual Forecast of Global Research and Development Funding), which is a public service for use by policymakers, corporate research leaders, researchers, educators, and economists. They believe that research and innovation ‘contribute in the short and long terms to prosperity and competitiveness, as well as to the resolution of society’s greatest challenges in areas such as health, energy, and security.
The world, according to the report, spent about USD 1.6 trillion on research and development in 2014. But not all those expenditures translated into ‘prosperity’ because many of the resulting products and services failed in the marketplace. The product failure rate can be defined as the percentage of new products actually introduced to the market, which then failed to meet the commercial objectives of the business unit that launched the product.
Each year, Battelle and R&D Magazine report on their “annual forecast of global research and development funding, which is a public service for use by policymakers, corporate research leaders, researchers, educators, and economists.”
They claim that research and innovation “contribute in the short and long terms to prosperity and competitiveness, as well as to the resolution of society’s greatest challenges in areas like health, energy, and security.”
Product failure is a commonly discussed theme in today’s world. The common conviction today is that approximately 80%–90% of products fail.
George Castellion of SSC Associates and Stephen K. Markham of North Carolina State University, however, do not agree with this data. According to one of their White Papers (Myths About New Product Failure Rates: New Product Failure Rates: Influence of Argumentum ad Populum and Self-Interest), the common assertion that 80%–90% of products fail is an urban legend. Instead, they claim, the actual product failure rate is around 40%.
So, even if we were to believe this assertion, then instead of having wasted USD 1.28–1.44 billion, our world wasted only USD $0.64 trillion in resources. Even that is a huge amount!
If we could do just a little better, the increase in productivity will have a measurable impact on improving our society overall, because successful products can enhance our life and the environment immensely. Imagine if we could use the same techniques that reduced airplane accidents to reduce the level of product failure!
In the same way, Steve Jobs built a company (with a ton of help from many others) that changed the world, imagine if other companies and organizations could also do the things Apple does well too. That shall also truly change the world and help many more beyond those who purchase Apple’s products.
The question becomes:
What are the reasons for product failures, and what key things can be done to reduce the rate of failure? If the rate of failure can be reduced, then that waste can be reduced with those resources being used elsewhere.
Failure reduction will also increase the productivity of research and development.
Product failures tend to fall into six general areas. Here is a high-level overview of the six essential keys to averting failure and enhancing the chances of product success. We will go into much more detail in the upcoming workshops.
The Six Keys to Building Insanely Great Products — You won’t learn in MBA School!
Product success is first based on building a company or organization that can be successful, then understanding the customer, innovation, a market strategy for the product, and then the hard part — the implementation: marketing, sales, service, support, and operations.
This article “11 Reasons New Products Fail” by Jared Shaffer is a pretty good review of the issues.
Great products fail all the time. It’s difficult to say precisely how common product failure is. Some popular statistics overestimate that 80% to 95%—the vast majority—of new offerings wind up as failures. While newer research suggests that the number is closer to 40%, the likelihood of product failure still represents a very real risk to fledgling companies. The stakes are high for new startups to launch products that earn enough revenue to sustain the business—but it isn’t an easy feat to achieve.
New products can fail for a variety of reasons—poor product-market fit, unanswered customer needs, or staunch competition, to name a few.
Reason #1: No Product-Market Fit
Achieving product-market fit means you’ve developed a product that offers value to the right market for your business. When you’ve found it, you’ll see signs like:
• Increased sales
• Low churn rates
• Product popularity growing through word of mouth
• High usage among your core customers
Without product-market fit, you’re unlikely to find much success with your product, no matter how well it works.
I’m sure you remember how Microsoft decided to take on the iPod in 2006. The company launched Zune, which promised to do everything that Apple’s device could do too. Yet, in spite of great promises, Zune failed on the market.
Why did Zune fail? Microsoft was just chasing Apple and created a product that offered no reasons for customers to switch. Microsoft’s marketing campaign fell flat compared to Apple’s, and the Zune’s feature set wasn’t as valuable to users as the iPod’s was. What’s the lesson from this mistake? It’s hard to know how the market will react to a product and marketing messaging, hence why it’s crucial to test these things beforehand.
Targeting the wrong market can lead to problems with fit, as can chasing a market that’s too small to sustain your business. Companies that routinely earn and keep product-market fit do so by adapting their product regularly to fit the changing needs of their market (not the other way around).
Reason #2: Solving the Wrong Problem
Every successful product needs to solve a problem for its users, and, going back to the idea of product-market fit, there need to be enough users with that specific problem. Solving a non-existing or rare problem won’t earn the popularity you need to gain traction in the market.
In 1990, Maxwell House launched Ready to Drink Coffee. The premise behind the product was simple: To create a new, convenient way for customers to enjoy coffee instantly, without having to actually make themselves a cuppa at home. Sounds genius, right?
A customer could buy the product at their local supermarket, bring it home, microwave it, and … voila, their coffee was ready. So why did it flop?They experienced a common problem many business leaders (especially early-stage entrepreneurs) encounter: feeling overly attached to their idea and convinced that there’s no need to change course. In this case, they envisioned a high-tech way to tackle a problem that didn’t need such an intricate, resource-intensive solution.
It turned out that you couldn’t microwave the coffee in its original packaging. Instead, customers had to pour the product from the packaging into a mug before putting it into the microwave … an activity no different than pouring yourself a cup of fresh coffee from the coffeemaker. That’s exactly what customers kept doing, forcing the company to abandon the product.
The solution for this kind of problem is to talk to your customers and target market. You may start out by creating a product that solves a problem you experience—and that’s a great place to begin. However, if you don’t check in with a larger audience, you’ll never know how widespread that problem truly is. Going back to your customers and validating your product decisions during (and even after) the build is the key to creating long-lasting, highly efficient products. Keurig’s continued success is a great example of a company finding an innovative way to solve the same problem Maxwell House tried to address.
Reason #3: Aiming for “Perfect” Instead of “Done”
When you’re launching something new, you have to balance the value you’re trying to deliver against the timeframe needed for your team to develop it. While putting a half-baked product on the market can certainly lead to problems, so can waiting too long to launch. It’s better to spend a month creating and launching an imperfect product that will garner feedback than it is to devote a quarter to perfecting software that may not actually address the problem you want it to.
That was what happened with Google Lively, the search giant’s answer to Second Life. After prolonged product development, Lively finally launched in 2008, just as the recession started to take its toll. As a result, the company pulled the product after just five months to “focus more on our core search, ads and apps business.”
New products (and new businesses) often fail because they spend too much time and resources trying to create something “perfect” instead of going to market with a completed product that can begin earning revenue. By the time that over-engineered product does hit the market, customer needs could have changed, the market segments may have evolved, or the economy could have shifted.
It’s completely normal to feel a little embarrassed when you launch your minimum viable product (MVP)—in fact, if you don’t feel at least a little worried about how your first launch will go, you’ve probably waited too long to release your product.
Reason #4: Not Gathering Regular Feedback from Customers
Customer feedback is the key to developing a product that solves their problems. Without checking in regularly, you’ll never really know if your product is delivering value or not. Even if that initial feedback is negative (which, if you’re working with an MVP, some of it will be), it contains actionable insight into how you can make incremental changes and improve your product over time.
In 1970, AT&T became blinded by its own vision and ignored negative feedback in trials, which led to the failure of the Picturephone. The company’s executives believed that a million units would be in use within 10 years of launch. Instead, after spending years researching and trialing the product, they pulled it off the market in just three years due to a lack of consumer interest. We know now that customers want video calls (we use them every day), so why did Picturephone fail?
As it turns out, users found the equipment too bulky, its controls unfriendly, and the picture too small to view clearly. The price for the service was also too high for most consumers—and these were all things users brought up during the trial phase.
Negative feedback can be difficult to deal with, especially if your company is brand new and you’re trying to make your entrepreneurial dreams a reality. It’s completely natural to want to avoid acting on it—or to avoid collecting it altogether. However, if you don’t ask your customers for their truthful opinions, you’ll never be able to iterate on your product responsively and quickly.
Your best defense against frivolous spending and wasting precious development cycles is proactively gathering feedback and validating every new feature and iteration of your product to better understand which product features add the most value for your end-users.
Reason #5: Iterating too Slowly
Quick updates are another key component of a successful product. The emphasis here is on “quick”—customer needs change fast, and so does the competitive landscape. The only way to keep up is to move in fast iterative software development cycles.
Fast iteration is part of what propelled Slack to its current success (which is a story we’ve discussed before on our blog). What started as an internal communication tool for a video game company was tested and tweaked until it became the uber-popular work tool it is today.
Timing is very important for B2B SaaS companies. In fact, mistiming a launch is a common reason why startups ultimately shut their doors. Your best option is to get comfortable making fast changes (and even get comfortable occasionally breaking things). It’s better to fail fast and learn something actionable than it is to move slowly and never understand why your product failed to gain traction.
Fast iterations will sometimes mean deviating from your initial product roadmap. That’s OK, and it’s quite common for early-stage startups to make big pivots away from their original plan. The key is to prioritize those pivots, which will deliver the most value for your customers.
If you’re not sure which changes to prioritize, your customers will tell you. Try to use feedback as a guide pointing you toward which iterations offer the most strategic benefit for your product’s overall success.
Reason #6: Using Incorrect Assumptions About Your Customers
It’s not always immediately clear how your customers will use your product—and sometimes, they use it in a way you didn’t intend. If your customers are getting value from your product, that can still be a win, and understanding user habits is the first step toward giving them the experience they want (even if it’s not the one you originally envisioned).
PayPal is a great example of how to pivot once you find out that your assumptions about your customers were wrong. When they initially developed their product, founders Max Levchin and Peter Thiel intended to provide an online banking service. Users came to rely on the service for quick online payments that didn’t require checks or money orders, and PayPal was born.
However, be careful of incorrect assumptions that can create problems if you’re not aware of them. If your customers are relying on your product for an unintended use, it’s only a matter of time until a competitor shows up to offer that functionality more purposefully than your product does. In fact, PayPal has made recent rate changes in response to increased competition in the digital payments space.
In product management, we talk about a concept called the intention-action gap. This gap is the distance between the way a customer would theoretically use a product and the way they’ll actually interact with it under real-world pressure and time constraints. The intention-action gap can be tough to plan around: prospective customers will sometimes assume they would use a product one way during a survey, even if that’s not realistic to their everyday life.
You can understand how your customers use your product by talking with them and, if possible, by watching them interact with it. Usability testing gives you the opportunity to find out exactly how your product is solving problems for your customer base. Short validation tests can also help you determine what your customers are using your product for.
Reason #7: Pricing Your Product Wrong
Products that aren’t priced to fit the market can fail. Customers won’t buy products that are priced too high, but if you set your price too low, you won’t generate enough revenue to sustain your business. It can be difficult to get your pricing strategy right, and many entrepreneurs put too little thought into how they’re going to turn a profit off of their idea. Some venture-funded companies eat through cash quickly because they don’t consider how much it really takes to earn a profit off of their product.
The Apple Newton PDA flopped for a number of reasons. Although some observers cite poor handwriting recognition as a main reason for the product’s failure, the steep $700 price point contributed significantly. That cost was too high for many consumers at the time, and, in the next few years after the Newton came out, cheaper alternatives became available.
The popular freemium model presents another pricing challenge for startups. Convincing customers to open their wallets and switch from a free version of your software to the paid flagship product is sometimes easier said than done. If the free version of your software offers enough perceived value to users, they won’t feel motivated to switch to the premium version. Meanwhile, your business can run out of resources while you’re waiting on free users to convert to paying customers.
If your pricing is getting in the way of your product’s success, it’s time to adjust. You can look to your competitors for an idea of what the market will sustain. Also, keep in mind how much expenses really go into creating your product. There are many strategies for pricing your product, and it’s OK to change course if your current approach isn’t working.
Reason #8: Not Enough Market or Industry Research
Successful products serve the needs of the market and industry. If you’re missing information about your target market or overall industry, it’ll be difficult (maybe impossible) for you to develop a product that fits.
Market research is an essential step to launching a successful new product. In fact, consulting firm McKinsey identified “incorporating market insights” as one of the most important steps for a successful product launch. Understanding who you’re serving is, of course, crucial for creating a valuable product, but it also influences how you position and market your product within your industry.
As a startup, Instagram successfully pivoted thanks to in-depth research into product analytics and user behavior. When it started, Instagram was called Burbn and, among a long list of other features, it allowed iPhone users to check in at different locations and share photos of their exploits. Burbn turned out to be too complicated for users—most people ignored the app’s full feature set and relied solely on its photo-sharing feature.
Instagram’s research into user behavior uncovered an important finding: the social media market was missing a simple photo-sharing app. Thus, Instagram was born.
Instagram’s success would not have been possible if co-founders Kevin Systrom and Mike Krieger didn’t check in with people to find out how they were really using their product. Without that step, they may have remained hyper-focused on offering a feature users didn’t really want or need.
If you constantly talk with your customers, you’ll uncover insights that can help you make sure your product fits the needs of your target market.
Reason #9: Investing in the Wrong Areas of Your Business
When you’re just starting out, it’s common to have a tight budget and limited time to devote to your product. Under those constraints, you need to be extra careful when you decide which areas of your business receive time and money and which ones can wait until later.
You may not need to devote a lot of money to a marketing blitz, for example, if you already have deep industry connections and word-of-mouth buzz. Your budget may be better invested by hiring capable developers and conducting regular customer surveys and interviews to gather their feedback.
In 2007, Joost promised to be the peer-to-peer TV network of the future and seemed off to a flying start. Unfortunately, Joost had various problems with its architecture, player, content library … you name it. Their team wasn’t able to fix those issues, and, as a result, it never took off. Two years after its launch, whatever was left of it was sold to Adconion.
The lesson? Lack of resources and internal support can hinder your efforts to produce a product that satisfies customer needs.
Early-stage startups are often fast-paced and a little unpredictable—as are new product launches. You and your team can lean into that unpredictability by staying malleable and being willing to pivot with little notice. It’s often better to shift course and make a mistake, as long as you do it quickly and learn how to do it better next time.
Reason #10: Problems with Your Competition
B2B SaaS is intensively competitive, and being outcompeted is a common reason that new startups fail—as much as 20% of startups closed because of a crowded marketplace.
It’s possible to pivot even if you’re facing a seemingly insurmountable challenge. Twitter did this quite successfully. Originally known as Odeo, the company had developed a podcasting platform while founders and staff tinkered with what we now know as Twitter on the sidelines. Odeo’s hopes to corner the burgeoning podcasting market were dashed once Apple released podcast support on iTunes. So the company pivoted to offering a micro-blogging social media platform—a segment they still dominate today.
If your market share is challenged by a new product, you have a couple of options on how to respond:
• Figure out what valuable functionality is missing from the product and add it to yours (but be sure it’s something that customers really want)
• Determine what users love about your product and focus on pleasing that segment of devoted customers
Whichever path you take, try to be sure you’re innovating and not just copying the competition.
Reason #11: Poor Execution
So many things contribute to new product failure: bad design, poor user experience, sloppy implementation, feature creep, and lack of quality control. Microsoft alone has several examples of how poor execution affected their product’s performance on the market.
Microsoft’s BOB, a UI addition that was intended to make PCs more beginner-friendly, relied on technology most users didn’t possess at the time—and that resulted in the product not functioning properly. The 2007 iteration of their core product, Windows Vista, used so much power that most users found it unusable. Vista also created a plethora of problems when using the Internet, including slow-loading pages and missing graphics. It was a recipe for failure. It’s no surprise that four months after the launch, Microsoft allowed Dell to sell computers with an older version of Windows pre-installed.
It’s tough to learn that your team didn’t execute part of your product strategy successfully, especially when you’ve poured so much time and dedication into your work. However, learning those hard lessons is the first step to iterating and correcting your initial mistakes. Even if your new product launch didn’t achieve the level of success you hoped for, it’s not too late to address the problem and try again. Microsoft learned how to improve on some of the problems with Vista in the later iterations of its OS.
Understand Why Your Product Is Failing
Before you can fix the problem with your product, you need to understand the reason why it failed. If you’re not sure what was behind the initial failure, talk to your customers. Ask them via surveys or one-on-one interviews which aspects of your product fell short of their expectations, and look at your product analytics to find out how users behave.
The approach to fixing the problem will vary depending on what’s behind your failed initial launch. If your product’s functionality is great, for instance, but something is amiss with your user experience, fixing the problem may be as easy as simplifying your user onboarding process.
Your best option is to talk with your customers and prospective users before your new product fails. That will help you identify potential problems early so you can iterate fast and deliver more value than your competitors.
The combination of a company’s values/vision, processes, employees, and systems/tools is what builds the company. One needs a strategy, information about the development and implementation of that strategy, and a clear understanding of what their customers want to “do.” The reasons for product failure are contained in one or more of these areas.
Problem-Solving Exercise 1
Divide the group into two teams.
Each team should assign a scribe to capture the output.
Choose a well-known product or service that failed to achieve success.
You can choose something from your own company or a more common one. It needs to be something everyone on the team understands.
Here are some well-known suggestions if you need help: Apple Lisa, Tata Nano, Microsoft Windows Phone, Cheetos lip balm, Zima beer.
Research the product and identify which of the 11 reasons attribute to the failure. Look deep and try to identify as many as you can.
As a group, share the processes or procedures used at your company that you think would have avoided some of the issues you discovered.
Rejoin the two groups and report your findings and your best ideas to mitigate them.
Course Manual 2: The Six Keys to Product Success
The Six Keys to Product Success are:
6. Systems and Tools
Or a good mnemonic is SPICES. And, by the way, the name of the company that have developed these workshops.
“Success is a side effect of doing the right things in the right time” – Andre Hawit
1. Strategy (Product Market Strategy)
Every product should have a strategy, and a plan. The strategy should be mostly done before the development begins.
Many simply make the mistake of just identifying a few parts of the strategy and then jumping into development. Only later, when the product is being announced or even after the product is in the market and does not sell, does the organization go back and try to figure out the strategy.
This approach of “ready, fire, aim” leads to many product failures.
It is far better to “ready, aim in the general direction, fire and refine.”
A strategy or a plan for your product for a specific market or markets is what I call a “product market strategy.”
A product market strategy is essential to product success.
Product Market Strategy Checklist
• Values, Vision/Mission Statement
• Decision Making: DACI or RACI Chart
• Schedule with responsibilities
• Problem Scenarios, Use Cases, and Outcomes
• Opportunity and Risks
• Value Propositions
• Market/Competitive Research and Analysis
• Market Status and Adoption
• Technology Insights
• Product Positioning
• Market Size, Segments, and Target Market
• Total Available Market
• Product Market Vision, Opportunity, and Description
• Competitive Environment
• Strengths, Weaknesses, Opportunities, and Threats (SWOT)
• Product Features, Advantages, Benefits and Problems Solved
• Pricing Strategy
• Market Penetration Strategy
• Channels, Partners and Affiliates
• Training for Sales, Marketing, Distribution, Channels, Partners, Affiliates, Operations, Support and Service
• Cost and Pricing Strategy and Business Model
• Basic Data Analysis
• Sales Forecasting
• Budgeting, Expense Control and Return-On-Investment
• Intellectual Property
• Product Road Map
• Product Portfolio
• Budget and Return on Investment
Importance of Process
“If you don’t have a product lifecycle process, you end up having a culture of blame” – A VP of product management in Silicon Valley
Do you have a repeatable, mature, and optimized product lifecycle framework with a process?
Without such a framework — that includes who makes what decisions, who needs to be informed/consulted, and who is driving the product — you will not only enhance your chances of failure but also will develop a culture of blame within the organization. This is because of the nature of some humans to blame others for failure.
A product lifecycle framework that everybody agrees to stick to will enhance the chances of success, reduce duplication of effort, and nearly eliminate rushing a product to market before you are ready.
The Spice Catalyst product lifecycle framework takes into account the digital transformation businesses are being forced to do today to remain competitive and the customer journey (which requires focusing on all stages and not just the purchase, agile, innovation, social media, messaging derived for products that were designed from the beginning to provide value). It also considers compassion for the customer and reward for their loyalty when the product they love is brought to its end of life, and an understanding that operations, support, service, and training are contributing more and more to the customer believes that a product is truly an insanely great product.
Unfortunately, other frameworks from the most popular training companies mostly fail to consider what is listed above — thus, if followed, their frameworks enhance the chance of product failure.
“Why is it they would be pushing a framework that is going to hurt and not help?” you might ask?
It’s because they just want to repeat, “That is the way it has always been done.” They do not want to think through the impacts of organizational and interpersonal behavior.
I looked in-depth at their frameworks to assess them from the standpoint of completeness and currency. I am uniquely qualified to evaluate these frameworks since I have had personal experience with each – either by teaching or taking classes from all of them. In addition, I have experience in conducting extensive analyses of several companies’ processes and providing senior management with a report as to their strengths and weaknesses.
Agile Product Lifecycle Process
While each has its own set of strengths and weaknesses, they all suffer from these eight key aspects:
1. Digital Transformation: Changes caused by digital technology are not reflected.
2. Customer Journey: Product managers and product marketing managers have to be concerned with the entire customer journey – not just bits and pieces.
3. Agile: A real integration of Agile product management is needed. Most briefly cover agile as a form of product development, but it is typically just bolted onto an existing waterfall framework or ignored completely.
4. Innovation: Generally, it is only cursorily mentioned in the product description or requirements documents, which seems odd. So does that mean the product manager has nothing to do with innovation, even though most authors of the frameworks say the product manager is the “voice of the customer?”
5. Social Media: Not mentioned even though in the past five years, it is the fastest and becoming the most important part of the marketing mix — not only to get the message out, but also to monitor what the market is saying about your product. This is a huge failure. I cover social media marketing in Marketing Insanely Great Products.
6. Messaging: It is derived from the value propositions by persona and positioning, which incorporates your competitive and market research.
7. End of Life: Many companies ignore maintaining customer loyalty when they bring a product to its end of life.
8. Operations: Support/Service/Training: Many companies fail to plan for customer support, service and the training of them and the channel
Part of the reason for what I outlined above is because the latest version was done in 2011, before the concepts of the digital transformation, customer journey and social media leaped in the product process mix.
Many of the reasons why products fail are a direct result of the limitations of the frameworks being used and promoted. Failed frameworks = failed products – it is as simple as that.
Another part of the reason these frameworks are flawed is the background and experience of the folks who put them together. Many are just plain lazy. Quite often, one framework is merely a copy of another. Additionally, two “current” frameworks actually date back to the 1990s – which was significantly before there was any consideration of the eight factors listed above.
While several frameworks have been published publicly as innovative, they do not reflect any current improvements in process or procedures from what has been done for decades. One framework strongly reflects the author’s’ experience at one company, which has ultimately failed. How is that helpful? Most are neither “complete” nor “optimal” (beware of false advertising). Furthermore, the most studied framework reflects nearly three years of work from nearly 60 people. Sounds good, right? Unfortunately, it too misses the mark since, for the most part, the eight factors for success are largely not taken into account.
After hearing Marshall McLuhan (Canadian professor, philosopher, public intellectual, and one who is viewed as one of the cornerstones of the study of media theory), the statement occurred to me:
“The medium is the message.”
I believe there is a corollary:
“The process is the product.” – David Fradin
Because if there is a flawed process, one ends up with a flawed product. If the process is good, the product is almost always consistently good.
Product Management Lifecycle Framework
Spice Catalyst Product Management Lifecycle Framework
According to the Gartner Group, you also will not be able to move up the process maturity curve from having operational problems, to being aware of the process, to internal and external control and automation, to enterprise goal driven control, and then to agile innovation.
Process Maturity Curve
The Six Phases of Business Process Maturity (BPM) Courtesy: Gartner.
A modern framework and strong, clear processes will build a “can-do” culture – a culture of success.
Assess Your Product Lifecycle Process
16 Questions to Assess Your Product Management lifecycle
Now that you know the Six Keys to Product Success and the need to have mature, repeatable processes that follow a modern framework, the question becomes, where is your organization in terms of keys to success, process, and framework?
Over the years, I have developed 16 questions you can ask in order to conduct an assessment.
They cover all the interpersonal and inter-organizational behavior questions that are key to understanding what is working well, what is not, and what your team should suggest being done to improve. The questions and their resulting answers also cover asking about the inputs that will help your team get the job done and what competencies they need to actually do their job. The questions also help you get a feel for how well your team understands your company’s culture and whether or not the culture is enhancing success — or encouraging failure.
Here are the questions to assess your process:
1. What is your role?
2. Who owns the overall responsibility for the product’s success?
3. What is your process for gathering and prioritizing requirements and feature requests?
4. What deliverables do they own or greatly contribute to?
5. What is working best?
6. What is missing?
7. What are your biggest challenges?
8. Where are the biggest bottlenecks? What slows you down most?
9. What changes would you make?
10. Are there things that you have done or seen at other companies that worked better?
11. What tools and software do you use today?
a. What is good about them?
b. What could be improved?
12. Specifically, what information about your customers and your product is available to your product managers and product marketing managers that helps them do their job?
a. What additional information do they need?
13. How do you go about assessing the competency of your product managers and product marketing managers?
a. What are your plans to improve those competencies?
14. In your words, what is the vision of your company?
15. What are the values of the company?
16. Please describe the company’s culture.
To manage a product effectively, one needs to have information and knowledge available before decisions are to be made in order to track and make corrections.
This information includes all of the information necessary to pull together a product market strategy, up-to-date information about how well the marketing is working, how well sales are going, and what is happening in all aspects of operations.
Without it, managing the product is flying blind.
The questions you should ask are:
● What information do you need?
● How are you going to get it?
● In a digital world, how are you going to stay on top of it?
“There are three principal means of acquiring knowledge available to us: observation of nature, reflection, and experimentation. Observation collects facts; reflection combines them; experimentation verifies the result of that combination. Our observation of nature must be diligent, our reflection profound, and our experiments exact. We rarely see these three means combined; and for this reason, creative geniuses are not common.” – Denis Diderot
• How well do you know your customers?
• What are you doing to be sure you keep them happy?
• Does your product and your company help your customers “do” what they want to do?
• If your product and your company truly help people do what they want and need to do, then you will be wildly successful. If not, then you will know the impact of the consequences.
In turn, by generating your value proposition based on innovation for what people “do,” and positioning statements – which in turn will drive your marketing, messaging, and media efforts – everything becomes more effective and easier.
Generating your value proposition becomes easy if you start with what people “do.” Likewise, after doing competitive market research, the combination of information from the innovation and customer value makes positioning easy, too.
As a result, messaging and key selling points quickly fall by the wayside.
“Business is not just doing deals; business is having great products, doing great engineering, and providing tremendous service to customers…” — Ross Perot
Alfred Sloan, the Chairman of General Motors, codified business accounting principals with such things as people as “liabilities” and inventory as an “asset.” The principles are followed today by most MBA-trained leaders and the financial community. As society evolved from an agricultural to an industrial one, Sloan developed this “modern accounting system.” Even though we have gravitated from an “industrial” society to an “informational” one, Sloan’s system affects most corporate decision making and it is causing problems. Sometimes it drives decisions that are not always in the best interest of the company, its employees, its shareholders, and most importantly, its customers.
Let’s discuss these two concepts.
“Train everyone lavishly, you can’t overspend on training” – Thomas J. Peters
Inventory is a Liability, NOT an Asset
For example, during the great recession of 2008, General Motors had over 1.5 Million cars they could not sell. If you do not have customers, your inventory is worthless. Using Sloan’s principles, those cars should have been very valuable, but instead they were a major liability.
HP didn’t strongly believe in Sloan’s standard accounting methods as a means of strategic management of the company. How do I know? First of all, I was there. In addition, the history books show how HP helped pioneer the field of “just in time” manufacturing (maintaining minimal inventory) and helped teach the Japanese how to do it (which has evolved into “agile” these days).
David Packard wrote and spoke frequently about the issue. There was also an attempt in the 1980s by the Association of Accountants to change the practice, but it failed and we still use Sloan’s principles today.
People are an Asset, NOT a Liability
When a downturn occurred, HP knew that its people were the most important asset, not a liability, as Sloan’s accounting methods articulated. On occasion, when there was an economic downturn, employees volunteered to work less, so that all could work. They would work nine out of every 10 days. The result: when the recession ended, the company didn’t have to go to the expensive cost of finding and training new people.
HP also doubled down and invested more during a recession, doing product research and development. It was the same thing Steve Jobs was quoted as saying in 2008 about doing at Apple – he probably learned that from David Packard. Hence, we are seeing the results now of that strategy. Apple doubled down on new product development during the great recession, and as a result, by 2012, it became the most valuable company in the world. Inventory is a liability and people are assets, not the other way around.
6. Systems and Tools
You need to have the systems and tools in place to meet the challenges listed below. I discovered them by researching, watching and interviewing those who are responsible for managing products.
“Give us the tools, and we will finish the job” – Winston Churchill
Challenges of Managing Products
The Challenges of Building Insanely Great Products
One of the many significant challenges we have in building insanely great product is managing its product lifecycle. We did interviews of five dozen managers of products around the globe and across multiple domains.
These are the challenges we found:
• Process / Methodology: The first major challenge is the process. The process doesn’t ensure success but can help reduce the failure rate through checks and balances and repeating what works vs. what does not work. This means that process maturity is key. As a result, organizations must give serious thought to which process might or might not work for them.
• Enterprise Assets are being stored as Personal Assets (information on personal computers, for example): Most are using “point” solutions such as Office (Word, Excel, PowerPoint, and Email) for word processing, financial analysis, presentations, and communications. The resulting artifacts, such as competitive analysis, vendor analysis, and cost analysis, are also stored on personal desktops, making it difficult for others in the enterprise to access – especially when the knowledge worker is traveling.
o Collaborative tools like Wikis, SharePoint, and Google Docs are beginning to be used. With these, there are risks of data loss, critical human resources going on emergency leave, or human error.
o Organizations need to make sure these assets that form the knowledge base of the product are available, created, and easily accessible by those who need it, and at the right time.
o In addition, that information needs to be the right information and be current and up to date.
• Unstructured data: If it is left to individual intelligence on how product information is organized, then the artifact structure can become very complicated. Each will create their own structure, while others within the organization will have their own standards and conventions. Given the fact the information is distributed in various ways, either they will end up wasting a good amount of time to keep the information structured, or let an unstructured format take precedent. This results in wasting time looking for information, including finding the most up-to-date information at the right time.
• Collaboration: There are many options teams can use day-to-day to work together. Chat, Phone, Video call (Skype/Google Hangout), Slack, Jive and Webex/GoTo Meeting are all popular in 2016. On top of these tools, teams often have their own collaboration platform, which means that collaboration on the chat, phone, and other spaces are not necessarily stored in the collaboration platform. Without close and timely collaboration between all the stakeholders, the odds of product failure increase.
• Communication, Task Assign, and Tracking: Email is still the number-one tool used to communicate. There have been studies on the side effects of overusing email that enables critical communications to be lost or overlooked. Despite the many issues, organizations rely on this tool, given that stakeholders are accustomed to it. Email is sometimes used as an action tracker system for tasks that email was not generally designed to accomplish. As a result, it is difficult to prioritize tasks and track their status. Furthermore, the rich history of information sharing and decision-making is buried in email threads that are hard to find, especially in a timely fashion.
• Visibility: Managers, directors, and VPs must have effortless visibility on what their team members are working on. How much visibility do all product team managers have on their related areas of product development and go-to market activities? Many are perhaps working on quarterly deliverables with monthly reviews, which may not be frequent enough for agile, mid-course corrections. For example, product managers might create market research that may contain errors, only to be found when being reviewed and after the errors have been disseminated. These product managers, as a result, may not have had an opportunity to seek the input of their team in order to maximize the research project. As a result, strategic decisions might sit in wait mode while these reviews happen. Since business dynamics are so fast, more visibility and transparency are necessary to make it easy for organizations to adapt to rapid change and thus be agile.
• Lack of Authority: Influence is the key to overcoming this challenge. But what else can product managers do to enforce a viable work product? RACIs or DACIs document the concept initiation stage and make cross-functional teams clear on roles and responsibilities. It might have to be revised when required. But many teams do not use this technique. Maintaining a structured way of working along with all team members, knowing for sure the extent of their responsibility and authority, is key. Doing so would be proactive, forcing cross-functional team members to respect the product lifecycle workflow and help avoid counterproductive political issues.
• Thus, one of the keys to building insanely great products is to have the systems and tools in place to do word processing, financial analysis, presentations, communications, collaboration, process management, task management, and document control (storage, search, retrieval, access, version management, and organization), reporting, and decision management. Now with this list in hand, you can go out and look at the available systems and tools and select the ones that make the most sense for your organization.
Problem-Solving Exercise 2
Product enterprises work in the intersection of product customer (user), business, and product teams. You will need a strategy of strategies to deliver a product or service that users love to use while the business makes money by selling the product/ service.
The product business enterprise needs a strategy of strategies to achieve product success. The key areas are:
Systems and Tools
Divide the class into groups into 5 students. Each group should assign a scribe to capture the final ideas synthesized in word/ PPT format.
Each of the groups to identify and select one of the popular software products for analyzing product strategy based on articles published in Medium ( https://medium.com ). Netflix, WhatsApp, Spotify, Microsoft, Miro, Dropbox.
a. What are the strategic focus areas of software companies? (e.g Growth, product engineering…)
b. What are the key process steps needed in the context of the products listed above?
Identifying un-met needs of the end-users
Market validation of a new product feature
Preparing for launch of a new product release
Setting-up support desk for newly launched product
c. How companies like Netflix have leveraged data (Analytics)? What data helps them to make next movie to watch recommendation?
d. What are the benefits of investing in developing insanely great user experiences for a product enterprise?
e. What are the critical responsibilities of a agile product owner? Which are the stakeholders a typical product owner needs to engage & why? Which information contained in the deliverables of product owner is consumed by a business analyst?
f. What are the digital tools used in agile product development? Compare MURAL and Miro collaboration platforms.
g. Make a list of different strategies under the following strategies:
Feature prioritization & market alignment
Product sales channels
Listening to voice of customers
Listening to employees for product innovation
Building relationships with channel partners
h. What can we learn from failed strategies?
i. What are the popular techniques/ frameworks used to arrive at product strategy?
Course Manual 3: What Is a Product?
What Is a Product, a Product Manager and more on the Keys to Product Success
A product is an article or substance that is created or refined with the intention of being used. Typically, it is marketed to be sold and/or delivered. A product usually is tangible. Even though one cannot touch software, it is considered to be a product too, because people interact with it through their computers or other devices.
A service is an intangible product.
Therefore, the services that are developed and/or delivered by commercial or non-profit organizations, including government, are products too, and the foundations discussed in this workshop also pertain to them.
Who Is a Product Manager?
In many organizations, the person or persons responsible for the success of a product has the title Product Manager or Product Marketing Manager. However, they also some- times go by different other titles—perhaps as many as a few hundred more titles—but they pretty much do the same things (or a subset of the same things) and need to have the same competencies. In information technology, they are also called Business Analysts, but they only perform a portion of the responsibilities that have been discussed in Module 2: Product Market Strategy.
The concept of a Product Manager (which we will cover in more detail later) started in 1932 at Procter and Gamble (P&G) and spread, based on my research, from P&G to Hewlett-Packard, to Apple (and others) and then to many companies in Silicon Valley and around the world. This includes such places as Australia, Sweden, and recently Germany, Portugal, and India.
Nonetheless, a sizable number of organizations in many countries (such as Singapore, India, China, and parts of Europe), generally believe they do not need Product Managers. The rest of the world has little recognition of the role, but some of the techniques of entrepreneurship (which is a subset of all of the competencies required for product success) are just beginning to be deployed in such places as Africa and Pakistan.
Further, many organizations that currently offer services, such as the huge outsourcing IT services industries in Singapore, India, and the developing one in China, also widely do not understand that what they are providing is a product as well. And that if they want to shift from a product management model, based on their domain knowledge, to sell their service to others beyond the original contracting client (thus producing sustainable, repeatable, and longer-term revenue with possibly higher margins), they need people responsible for over 130 competencies necessary for product success.
Failure to learn and deploy people with these competencies will be at their own risk, and significantly increase their chances of failure.
Product management and product marketing management have been the keys to Silicon Valley’s long-term success. It has spread principally from Santa Clara County to San Francisco, and now the rest of the Bay, including the area between Palo Alto and San Francisco, to Oakland, and more recently to Fremont and the Livermore Valley.
However, in its transition from P&G to HP, it lost what P&G’s brand managers had, which was the authority over the product’s budget to develop the product’s market strategy and do its marketing. This has resulted in the Product Manager today having all the responsibility, with no other authority than their persuasion and political skills. In such cases, the senior management of organizations can learn to do what the management teams of Apple, Google, Facebook and others have done, leading to their tremendous success.
Over the past dozen or so years, the Sales Vice President in these organizations has been renamed the Chief Customer Success Officer. On a similar note, I advocate that the time has come to start calling the people that are currently called Product Managers or the like, as the Product Success Officers. Their group director would then have the title of Group Product Success Officer and the Vice President or Executive (or Senior) VP would be called the Chief Product Success Officer.
But how can we ensure that we make more effective products and why do so many products fail? Could we use the same techniques that reduced airplane accidents, to reduce the level of product.
What if other companies and organizations also could do things that an organization like Apple does well, and build a company the way Steve Jobs did (with a ton of help from many others), that changed the world? Making effective products can truly change the world and help many more beyond just those who purchase Apple’s products.
Throughout this course, we will understand in depth the various reasons for product failures and what key things can be done to reduce the rate of failure, and as a result, reduce waste and increase the productivity of research and development.
In this context, it is important to remember that the success of the product or the responsibility to make a product successful does not lie only with the Product Manager.
While the Product Manager plays an important role in planning and implementing this initiative, it is ultimately the responsibility of the entire management team, and the organization as a whole, to work cohesively to create a customer-centric Product Management culture, which ultimately leads to the success of a product.
In this introductory module, we will get a bird’s-eye view of the key steps that organizations or Product Managers need to keep in mind to plan, develop and manage successful products. The other modules in this program will elaborate on these steps and help you develop the skills to work on each of these stages.
Six Keys to Product Success
My studies have found that causes for product failures tend to fall into six general areas. In this session, we will give you a high-level overview of these essential keys to averting failure and enhancing the chances of product success.
The following are the six keys to product and organizational success—in short, SPICES which we covered in an overview.
We will now go into further detail about the strategy in this workshop and the rest in next workshop:
Let us discuss each of these.
1.`Strategy: Strategy or Product Market Strategy
The first key to product success is to have a clearly laid out strategy—a strategy for the product, a product market strategy.
By strategy, we mean a plan of action or policy designed to achieve a major or overall aim.
All too often, products are developed with the process as shown in Figure 1.1.1 in mind: op
Typical Product Planning Process
Some even call it Ready, Fire, Aim—a very popular expression used by venture capitalists, angel investors and others.
I believe this process is flat wrong!
What happens if:
• What is conceived, is not solving the problems of what people and/or companies do?
• What is developed, is for problems people and companies have no interest in solving?
• Sales people swarm the masses pushing a product that people do not want or need?
But this is exactly what is done all the time. In fact, it appears this is actually a good part of the 40% failure rate of products/services and the failure of startups.
Here is what is missing:
A strategy or plan!
Since a product, to be a product, also must have a market, a product market strategy is a clearer description of a product strategy to be successful in a particular market.
The Product Management framework depicts the major stages of a product’s lifecycle. Note that product planning and product market strategy is only one of the phases. The six stages of the Product Management framework include:
• Product Planning (Product Market Strategy)
• Product Development
• End of Life
This is a framework designed specifically for products and services. Many companies have tried to adopt various other frameworks, including those for software engineering, quality control or just-in-time manufacturing, but only with varying levels of success.
Steps to Building the Product Market Strategy
Although frequently misunderstood, a plan is essentially the strategy. Sometimes, the terms get used interchangeably. For example, if my goal is to conquer a hill, one of my layouts is a plan to go around it to the left and breach a weak spot. That is the strategy—to go around it to the left rather than a frontal attack.
Figure 1.1.2 Product Management Lifecycle Framework
An organization first gets started with product planning by making sure the company’s vision and values are complete. In addition, it needs to determine who will be responsible for which decisions and a schedule is established.
Following are the key areas and questions one needs to find answers to, to put together an effective product planning strategy.
1. Discover: Do
Do you completely understand what your prospective customer does? What are the tasks they are trying to get done? What job are they trying to accomplish? What are their pain areas or challenges in getting this job done?
You learn this by observing, then interviewing, and then surveying. You come up with a hypothesis of the problems your prospective customers are having first, by observing what they do.
Then, you validate the existence of those problems by interviewing additional prospective customers that fit the same persona. Last, by conducting surveys, you can quantify the magnitude of the problem. You might iterate on observing, interviewing, and surveying until the real problem that has to be solved has been clearly defined.
For a business-to-business (B2B) activity, do you know your customer’s customer and what they do?
2. Discover: Innovate
Can you innovate? Can you come up with ideas, not for the sake of ideas, but with ideas that solve real problems you know your customers are having?
3. Discover: Market and Competitive Research
Can you do market research and/or direct someone who can?
Can you do competitive research on both the products that compete with you, and with the companies you are competing with?
4. Discover: Personas
Can you identify and define targeted personas who would be users for your products, based on your research? Can you clearly define their characteristics, behavior, their needs and what they would want to see in a product? In short, can you clearly say the product will actually do what the target persona wants to achieve?
5. Discover: Value Proposition
Based on understanding of what your customers want to do, your innovation and your tar- get personas, can you develop and write a clear value proposition for your product? Your marketing and sales people’s success would depend on how clearly this has been done.
Based on your value proposition and market/competitive research, can you come up with a compelling positioning statement, which in turn your marketeers can translate into a compelling messaging that is memorable, and enables your product to stand out?
7. Discover: Target Markets
Can you aggregate your target user personas into market segments and addressable markets and pick the ones that will give you the greatest success?
8. Discover: Product Roadmap
Can you produce a sensible product roadmap for both—your insanely great customers and for your sales team? And a roadmap that is easy to understand and will solve their problems?
9. Execute: Implementation
How well can you implement and execute? Can you get things done in a timely fashion?
10. Develop: Differentiators
If you can get any of the above things done better than the competition, they automatically become significant differentiators and will make life difficult for the competitors. The more you can do the above well, the more differentiators you have, and the better your chances of success.
11. Develop: Brand
What would your brand message be? Over time, the elements of your product strategy become your brand, or the promise of your product and/or company that sets you apart from your competition.
Product Branding: Apple
Apple does the entire process of product planning and translating their product strategy into their branding message extremely well, and it is a major part of their success.
Problem Solving Exercise 3
The city of Netherlands wants to develop a human centric and sustainable city by 2034. Your team has been chosen to develop a plan for this project. What is your approach to getting this project started? Use the following template to develop top three customer ‘Dos’
Form a group of 5 members, discuss the product planning strategy to develop the new age urban plan based on the following steps. Each group should assign a scribe to capture the final ideas synthesized in word/ PPT format.