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If You Build It, Will They Come?
Product Strategy and Management Insights
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the product management lifecycle

            Now we get down to another level of detail in nine steps.

 

            It could be ten steps, it could be eight, but it starts at “New Product Assessment” in the first orange segment. That is the phase where we ask things like: What should I do? What is it I could do? It goes all the way around to the final green segment, “Product Monitoring and Evolvement,” where we say, “I did it. I'm done. It's out there. People bought it or didn't buy it. Did they buy it for the reasons I said they'd buy it?” Sales force, you made your quota. Why? “Because your customers said that they needed a blue round thing, and that is what we sold them.” Or did they say, "I kind of wanted a blue round thing, but that red square was attractive, so I didn't buy it from you because the red one did more things."

            The process goes round in a circle because that is what it is. Somebody asked me this morning, “When do you get engaged with a customer?” We really get engaged during the building process when they’re saying, “I have this blue round thing and I need some people to buy it. Can you help me? Can you help me understand how to position it, and who would buy it, and why I should do it?” That is really where most of our purchasing agreements come from. The question came back, "Don't you really want it to be earlier?" My answer was, “Yes, but I can't evangelize.” I can't sit up here and tell everybody in the world that they should do it this way all the time. People have to try. I helped co-found a company and we went down a road. It turned out that it wasn't the road we really wanted to be going down, but we went down it anyway because that's where we thought we should go.

            So, let’s go through this lifecycle loop, and we'll hit each phase one at a time.

            The idea behind the New Product Assessment phase is: What is the overall value to this product? Not price, not how it makes me feel, but the value. It's really focused on four high level points. If you really want to get into a process discussion, we could have a process discussion about templates and gates and all those things, but let’s stay out of that for now, okay? At the higher level, I first need a Product Landscape. If I'm going to build a blue round thing, how many other blue round things are out there? How many of those blue round things do people buy? Why did they buy them? Who did they buy them from and where? Sounds like a business that would be okay. It could be a big market. I also have to consider my Business Synergy. Can I build them? Did I miss out on blue round things, so I'll build red ones? I also need a Customer Needs Analysis. What does the customer want, or, not want? Do they need a blue round thing? They might want to spend money on a Ferrari, but they buy the Yugo, instead, because they can get 10 for the same price. The need is to drive. Finally, I need a Technology Assessment. Do I have the wherewithal to build this thing?

            All of this is about finding out: What is the overall market and could I address it? In the process, we take not a really high level view, but a mid-level view of things like the buying habits of your customer. You don't need to know that the person who says yes to your blue round thing is typically 45 to 52, risk averse, and at the latter stage of their career where mistakes are critical. That's too much data for this stage and it will slow you down. We recommend that you do it, just not now. At this point, you're trying to answer: Is this a good idea and, if it is, what do I do?

            The next phase is Product Market Analysis, more specifically finding out who is the market segment and what is the opportunity? Detail level, now. Who is doing it, and why? We’re doing Market Research. I want to know the top 10 competitors. We have a customer who says, “It's on my bonus sheet. If my boss walks into my office and I can't name the 10 people we compete with and, more importantly, why we win or lose to them, I don't get a portion of my bonus.” It's that black and white. “I'm in the upper right-hand quadrant of the Competitive Analysis matrix, and that is where I want to be. The real value is: What are those X and Y axes? If I'm going to be better, why am I going to be better? What is it I'm going to do for a customer that makes them see why I'm better than my competitor?

            This phase also explores Product Viability, which is to say, “Yes, I could do it -- there are people who buy it, it seems like a really good idea, there are competitors, and I can find a niche in the market -- but what is the addressable size of the market?” Is it a viable business for me? If I wanted to define success as “making back what I invested,” can I do that? If I think so, and you say, "I don't feel like going into business that way. I'm going to invest $10 and I want a $1 hundred, $1 thousand, $1 million,” is it viable for me to do that? Can we create a business base so that it is? That is what good product market analysis is all about.

            The next phase, Product Market Strategy, is different. The definition of analysis is that I'm going to gather data, and I'm going to do some intellectual work on it. Strategy is: I've got all that data, what am I going to do? Once built, how do I get this product to market? Am I going to sell through a retail chain? Am I going to sell through a distributor? Am I going to deliver it over the Web? I want to do all that stuff, who do I need help from to get it done? There are three competing blue round things out there, mine is going to take the upper right quadrant of the market. That is great, but how am I going to get it there? Do I have to have an analyst who says it is the best blue round thing in the market? Probably. Do I have to have a sales channel organization? Is it important for me to build a sales channel, or could I buy somebody else's? It happens all the time. There are a lot of ways to do it. You need to do Product Positioning, you need a Sales Plan & Process, a Partner Program Strategy and a Distribution Channel Strategy. Am I going to put it on my shelf or yours? Am I going to put it in your toolbox or mine? How am I going to get that done? It’s all the things that come out of the goals and objectives, plus the tactics to implement it. How am I going to get this to market? By the way, I would assert that you shouldn't be building yet. It’s not that you shouldn't have a prototype that you’re showing to customers, but you shouldn't be dedicating resources and building your business plan until you can get to this point. Don't make those decisions.

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            Product Planning and Design is the first phase in the Design & Build part of the process. Specifically, what am I going to do? I have to write down the Product Definition so that somebody else could view it and understand it. At this point, you should start writing down your Launch Plan. When I build it, I'm going to build it to a set of specifications, to these kinds of requirements, for these kinds of customers, in this market. How am I going to tell people what to do? What should I tell them now to ensure that they do it? Break that all the way down and see what happens. Getting the customer's input at this point is going to tell us a lot. Understand how to get this thing to market now, rather than later, and you have to be able to adjust along the way.

            The next phase is the Technical Product Development. That's building stuff. That's for engineers. It's writing code and hooking stuff together. It’s getting some hardware and soldering it. It is the technical part. You can do it from the user perspective using all of your internal assets, and what I mean by that is, if you are going to build this thing, find out how they'll use it. If it's a physical device, how do they use it? If it's a service, how am I going to change the process? Phil asked: Is it strategic? Do you say, “If you buy from me and you pay me $10 a month, I'll change the way you do business.” Great. Do I know who the user is and what they're going to experience? Will they like it? Then I should do it. Maybe I don’t really know who the user is, but I know the buyer. We need to know the buyer. He's just as important as the user. If the user is going to sit down to download icons, it may be hard or complex to do it. I have a 15-year-old. He'll spend about three seconds to do something really cool. And if it doesn't work in three seconds, he goes on to the next thing that is really cool. Usually cars. That is what he does, so what is the User Experience Model that will actually catch on? Also, what are the Requirements and the physical Specifications to build this thing? Let's build this, and build it to an architectural specification so you can adjust it on the lot. Maybe you build code and the architecture is all right, or you've written down the architecture for a piece of hardware, software, or a service, then you find out at launch through customer feedback that this little thing over here that you thought was cool is really an impediment. You take that off and put something else in. That is what the architecture is going to allow you to do, so look at it on an architectural level.

            The next phase is Product Building and Testing. Now that I've got it, what do I have to worry about? We're worried about finished development: Will I really have it on November first, or is it probably going to be November fifteenth? It's only 15 days, maybe nobody will care, but you might have customers who are waiting to test it for you. Then you've set a precedent in the market that it's okay for you to be late, and this thing you believe they desperately need is not going to get there when they desperately need it. That just sets a bad precedent. Development and delivery are important -- product development, quality assurance (QA), all of those things are really, really important. If you're in the development process, you know they're important, so I'm not going to preach about it. You have to have a Release Plan, and you have to manage that release plan. You have to say, "I'm going to give it to these customers on the first of November. It's going to be ugly; it's going to crash 16 times, and because of that, I'm going to take some of my best and brightest technology people and they're going to deliver it to my customers. They're going to install it, and they're going to sit with it, because it's important for that customer to know that we all agree it is an alpha product and it's going to be a little flaky. My best guy's here because this is something they need. It is something that will change their world, and it's just as important to me as it is to them.” So, it’s not just planning the releases, it’s actually managing the releases, getting it into the customer's hands the way you want it. Whether it's a hardware product or software product or a service, it's all the same. You are going to put something in the hands of the buyer because it does something they need to have done. You have to manage and control that process.

                As you move to the Go To Market stage, you start with the Product Launch phase. There’s all the analyst stuff, but I'm not going to talk about pure marketing things. There are press releases and lots of other things to do. Product managers drive all that. They don't necessarily do it themselves; they drive the marketing department to do it. At launch I have to be focused on what makes my product different and how to prove it to the market.

            I always tell the story, of how people in this one company sat down one day and somebody said, "We make the best dang logistics management software in the world. Isn't it great?"

            Somebody said to him, "How do you know it's the best dang logistics software in the world?"

            "I don't know, it's just that it is."

            Another smart person asked, "What company is world-renowned in this area?"

            This was four or five years ago, a lifetime ago. The company world-renowned for being great at logistics was FedEx.

            “Does FedEx use your product?"

            "No, but maybe they should."

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            They took it as a goal and said, “We can't brag that we’re the best if FedEx isn't a customer.” I don't know what they did with FedEx, some creative things, but, at launch, they stood up and said that a world class company in logistics management was using their technology. That is a very powerful marketing message, a proof point. “FedEx is using our technology, maybe you should, too.” In their case, the deciding proof point was that I have to have the top provider in my space using my tool. I can't prove that I'm the best without it. So Proof Point Development is very important, as is building it into your Sales Strategy and building it into your Channel and Partner Development Program. What partners do you want? I want partners that prove that I'm the best or the fastest or the cheapest or whatever it is that I decided to do. I want to prove it because if I can't prove it, it's only my word against the next guy. It goes down through your Sales and Marketing Campaign. If we’re Wal-Mart, my sales force has to be happy and friendly, and it has to know how to take your cash. If we’re Nordstrom's, taking cash is not something we need to worry about. We’re going to get it, not because we take it from you, but because you feel compelled to give it to us. At Nordstrom’s we give you so much good service, you'll give us your money. They've proven that it works. So, how do I make my sales organization and my marketing organization understand what my goals are in this product? Product management is the process of saying it and proving it.

            Now it's out there, so what do I do? Customer Satisfaction Analysis and measurement of Marketing and Sales Effectiveness are part of the Customer Feedback phase. How do I make sure that the product is received the way I said I wanted it to be? If I said that I wanted it to be a blue round thing, but people want red round things, I have to know that so I can go buy a bunch of red paint. Or maybe I have to make it square, or whatever I have to do. I have to get feedback. This is what I said I wanted to do, this is the market I said I wanted to address, we're addressing it, and it's working or it's not. Either way, I'm going to adjust.

            Look at my sales pipeline. I have lots of leads, lots of proposals written, but very few wins. What did I do wrong? It sounds like something typical in the sales world, you're addressing the “wants.” You're writing proposals to give a person exactly what they want, not what they need. You're getting in the game, writing lots of proposals, spending lots of money on sales resources, and not winning. Where am I winning customer satisfaction? “Are you happier using my product than the product I replaced? Are you happier using this feature than the one I had before? What don't you like about it, because I'm going to take care of it and put it in the product plan next time around. You, my 10 best customers, I want you on my advisory board. I want you giving me guidance and direction as to where your business is going so you can provide feedback all the way through the process.”

                The last phase, which isn't really the last -- to some of you it's the first -- is Product Monitoring and Evolvement. Take all that satisfaction data and ask: What is it I'm going to do in the next version? Keep a keen eye on the competition because, if you do put the best blue round thing out on the market, the other providers of blue round things aren't going to sit down and let you take the market over. They are going to say, "Aha! Those guys did this, now I've got the technology." If they're smart, they're thinking, “I've got the best engineers in the world who can build a feature into my blue round thing that they can't build.” If they listen to me, they'll build it into their marketing campaign, train their sales forces on it, and start taking your market share. This is the game everybody plays: How much market share can you steal from the next guy? I have to look at my competitors. I have to actually get their products. If I find out that the one reason I lose on the sales side is that their blue round thing doesn't have three legs, it has four, well, I'd better be asking, "How am I going to get four legs on mine? Why did they add four? What did they do that made four legs the right way to do it, and what should I be doing about the fact that four legs is the right way to go?” It’s all about Product Evolution, Competitive Review, and Investigative Engineering.

the process keys and enablers

            Process drives all that I have been talking about, and the keys to process are:

  • Defined inputs at every phase. It's not enough to say, “I'm going to do my competitive analysis now and talk about the things they do better than me.” There are some defined inputs. You have to know these sets of things about these sets of customers.

  •   Defined outputs which feed the next phase. If I am going to give a spec for an engineer to build, for example, maybe they're offshore, then I have to have defined outputs that say, “This is what it has to look like. This is what it has to have in it. This is the data they need to build it, to sell, or whatever.”

  •   Defined effort to produce the required outputs. I'm not going to run willy-nilly and research the 150 companies out there that might need my product, I'm going to apply my experience to my process and know that I really only have 10; and, if there are 10, there are really only three that are the real keys, so I'm going to spend a lot of time on understanding those three.

  •   Go/no-go decision points at every phase. We didn’t say to ourselves, "Those other guys could get there first, so let's just not do it." No, instead we said, "They could get there first, and this is how they could get there, so we'll veer off. We'll change our plans, spend our money differently, get a different partner, and prove we're better now, not then.” That is what you have to do. You have to have decision points all along the way, not necessarily to stop, but to adjust. You don't get into the business you are getting into because you want to go fast, work hard, miss your family, and all of a sudden say, "Oh, never mind, nobody wants that." You want to adjust. That is what it's all about.

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            For the last 20 minutes or so, I spent a lot of time trying to convince you that you should have a process that you could follow, a defined way to do things. How will that work if you don't pay attention to some other things, which I call the “process enablers?"

 

            Start with Project Management. I don't like project management. I don't like saying things like, “I said it would take me 3.5 days to do this, but it took four and I needed one other person. One more person is all I needed.” But, I have to manage the project, I have to have gates to go through. I'll have to say, “It will take $100,000 to get there.” Did it take $100,000 to get there? Project management is something you have to do, and you have to be really, really good at it. If I promise to make a delivery six months from now, I have to make sure I hit it because I'm going to start forming a contract with my customer at that point in time. Project management is important.

            Competitive Intelligence is another enabler. You do that at a high level early on, then you do it again in the middle, looking at every little detail. Competitive intelligence can never stop because, sure enough, you go to bed knowing you can win the market with your round blue thing, then a red round thing maker and a blue paint manufacturer merge overnight. All of a sudden, that red round thing has lots of blue paint and they kill you, so you have to stay very focused on competitive intelligence all the way through the process. It's a never-ending cycle. Somebody is in a room talking about exactly the same thing you’re talking about. How do you beat that company? They're smart people, too, so staying ahead of that curve means paying attention to it every second of every day.

            Phil talked about Organization and Culture. Do what you're good at. Build your business around what you're good at, and embody that in your company. I only tell one story about the downward trend of our company. We went from four people to 127 people in nine months. Very fast. When the wheels started coming off, slowly at first, all 127 people knew exactly what was happening. At the end of the day, we took our last little bit of money and had a huge blowout party, and 145 people came. Spouses of the people we had just laid off came, and it was because we always told them the truth. From the day we started together we said that part of our culture would be to tell everybody what is happening with everything all the time. It even hurt us along the way. We looked a customer in the eye, one who could have helped make us in the market, five months into it and said, "You know, we are never going to build what you need. We are sorry, but it's not what we want. We started this conversation because we were going down a road, and we thought you were going down it with us, but you are not. You need something else. You don't need a blue round thing, you need a green square thing. We're sorry. We'd love to have you advise us because we'd like to make sure that when your business gets to what our product is going to be, we could get back together and sell you something, but, right now, we're not going to the same place.” It's a hard conversation, very difficult, but, in a culture of honesty and openness, you need to do that.

            Quality Assurance (QA). I'm going to hit this gate. Did I do it, and did I do it right? QA is not a point in time. Our engineering department was very big, and they said, "We need QA, so we're going to go hire a guy. Just before we release the product, we're going to give him the code and let him tell us if it seems good." I said, "It's your job." I was pointing to the person responsible for building the product and his entire team, “It's your job every day. If you need somebody to measure for you, great, we'll take care of that, but quality assurance is not a point in time, it's something you do all the time as you're building your product.”

            The last enabler is Communication. You can't say enough about communication. Everything else I talked about won't work if everybody is quiet.

          I coach a little league soccer team. They're great players, a great team. They lose every game they play, at least they did for the first five games. I said one time, "When we go to games, the only people that I ever hear talking are the coaches. We're going to try something. You kids have to communicate, so we coaches are going to shut up." In the first half they were getting killed, just killed. I got on the field and said, "So what was it? What is happening to you out there?" One kid, a real calm, neat, quiet kid said, "I don't know where anybody is." Man, that was big, because they all got it. They won in the second half, and they didn’t lose again. We threw them in a tournament -- they're 11-year-olds and you have to let them play -- and they blew everybody out. They won this tournament going away. We used our second string in the second half of the championship game because we could. You know what was different? It was the same kids, the span of time was only four weeks, but one kid said something very intelligent, and the other kids actually listened to it. Communication is sending and receiving and figuring it out. They have to work together, and they have to talk. Communication enables everything else. If you don't do it, it kills everything else. You can have a 137-step process, the best process in the world. It could have driven 38 products to market very, very successfully and made a lot more money than you spent, but, if you're going to drive that process, something bad will happen. It always does. If you're not talking about it, you won't see it coming, no matter what your foundation is.

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