Hit the Market Bullseye with Product Management

StrategyThe Challenge

As someone who has helped startups with their business plans I understand that to capture the interest of the investor community it is hugely important to articulate your value proposition right from the start. Clearly representing the problem or need you address for your target market, listening to your target customers and understanding how you will drive revenue growth is essential to ensure you get the kick-start of investment you need to scale your business.

Strategy is based on a differentiated customer value proposition. Satisfying customers is the source of sustainable value creation.” Robert Kaplan and David Norton (Strategy Maps)

Business plans typically only get shared with a targeted group – generally the leadership stakeholders and potential investors. The continued articulation of the value proposition within the company, especially as the number of new employees grows, can be ad-hoc at best.

A company that has captured initial investment through a clearly defined business plan will move quickly to focus on the execution of this plan – hiring engineers, marketers and sales personnel. As time progresses and they learn more about their target market they may change their initial corporate strategy and re-evaluate their initial hypotheses of what the customer needs. Somewhere along the line their “internal” value proposition changes but often this is not captured or re-communicated clearly to everyone in the organization.

Once the company begins to execute the business plan different dynamics can occur across the organization.

  • The background and focus of the engineering team means that they will generally position the product from a technical standpoint, often failing to understand or demonstrate the “business value” of what they are creating.
  • Marketing will battle to understand the technical complexities of the product and might fail to create compelling positioning material.
  • Sales will struggle without a clear view of the target market, the value the company brings or the product’s unique selling points.

Without a defined value proposition the company will struggle to position the product and potential opportunities will be missed. Articulating your value proposition across the organization allows you to:

  • Create an aligned and collaborative organization that shares a common understanding of how the business will create value
  • Ensure the organization remains focused on corporate strategic objectives
  • Maximize ROI for corporate resources and ensure all resources are delivering effectively
  • Support decision making for all employees
  • Enable Sales and Marketing to clearly position the products and solutions to the target market and thereby drive revenue growth

The Solution

Whether you are a startup or SME you should take the time to ensure that your“Internal” Value Proposition is clearly articulated inside your business so that everyone can clearly represent it outside your business.

Product development, sales and marketing teams are often too busy delivering current project priorities to focus on the company’s value proposition and it can be beneficial to bring the team together under a moderator to focus efforts in this area.

I have recently spent time running “internal” value proposition workshops with technology companies and the exercise has been enlightening for everyone – particularly those companies that have spent a lot of time focusing on the “execution” rather than the “strategic” part of product management.

5 Steps to Deeper Customer Insight

RespectFor many companies “voice of the customer” can simply involve letting their existing customers dictate what they would like to see in the product. Sometimes, more influential customers (those with a strong contribution to overall revenue) can drive product strategy.  However, just because one large company wants something does not mean that there are lots of customers with this same need.  Individual customers generally have little concern for the needs of other customers.

In this scenario, it is often easy to lose sight of the market demand  – if your corporate strategy is to deliver a broad-based market-driven offering then focusing on individual customer demands may not help you to achieve this – it is more likely to drive you down a services route.

Customers can provide lots of useful insights related to their use of the  product and what they would like to see in our product. However, there are steps you can follow to proactively capture deeper customer insight, enabling you to focus on the broader market.

 Step 1: Understand Customer “Jobs to be Done”

Customer Insight Steps

Identify the type of customer segment that you are targeting and describe the potential customer’s role as best you can. What jobs do they need to complete?  What responsibilities do they have? Think like the customer – not like yourself!

Step 2: Document Customer’s Problems/Needs

What problems might customer’s in this segment have in performing their job or in fulfilling their role? What tasks are they finding it difficult to complete? What issues might they have with an existing product? Is there something that they would love to do differently? Use the “voice of the customer” to articulate these problems or needs.

Step 3: Prioritize Customer’s Problems/Needs

Make sure you prioritize the problems or needs identified for this segment – ask real live customers to help you. Understand the urgency of the problem/need from the point of view of the customer – is it a passive, latent or urgent problem? Are they motivated to solve it? How will it benefit them if the problem or need is addressed?

Step 4: Define your Solution

Once you completely understand the problem or need then you need to define a solution to address these problems/needs? How might this solution be architected? Are there any dependencies on 3rd party components?

Step 5: Validate with the Market

Get out and talk to customers (lots of them) to validate your hypothesis about how they operate and to begin to discuss your solution with them – you can do this before you write a line of code. Be careful though – you need to approach this in the right way – listen carefully and represent their voice as accurately as you can. Sales meetings are not good places to validate as you are typically in broadcast mode not listening mode – find another opportunity to talk to the potential or existing customer about their job, needs, priorities and objectives. Feed this information back into your definition of the customer and review your solution as appropriate.

Remember: “The customer rarely buys what the company thinks it is selling him. Companies need to take a customer-first perspective to succeed…”

Peter Druker, Innovation and Entrepreneurship
What Next for your Company?

See how IntegratedThinking can support your organization through our Customer Insight workshop.

Top 10 Indicators that your Company should adopt a Product Management Discipline

mentoringPosition your company for revenue growth, future investment or value realisation through a strong product-oriented approach

Whether consciously or not, most companies adopt some aspects of a product management discipline from their inception. The founders often perform the product management role – defining product strategy, setting revenue targets, meeting customers, capturing requirements, supporting marketing initiatives, and managing investment priorities. However, as the company grows it becomes more difficult to cover all bases and the essential parts of a true product management discipline need to be part of a more structured function within the company. 

The transition to a point where product management is a necessary part of an organization can be gradual and the signs may be missed. Here are my observations on the top 10 indicators that a company needs to reposition to adopt a product management discipline – you may not experience all of these but it will hopefully give you some pointers:

1) Absence of Customer or Market Focus – “Inside-Out” rather than “Outside-In”

Although your company is having conversations with customers they are typically driven by a handful of people, often senior leadership, and there is inconsistent feedback to the product development team. There is little understanding across the organization of the target or addressable market resulting in ad-hoc capture of competitor, customer or market data. This lack of customer focus means product requirements are not linked back to a customer need or problem and there are no formal links between marketing and product development. With no mechanism in place to support proactive engagement with customers your company is struggling to create products that customers truly value.

2) Lack of Alignment to Drive Strategic Objectives

As your company has grown it has become increasingly difficult to align everyone towards a common goal. Engineering, marketing, finance and sales teams have grown organically but are  operating in silos with little cross-functional alignment. This has led to  a lack of cohesion on how these functions will drive corporate strategic objectives or prioritize product strategic direction. It has become difficult to benchmark or measure the effectiveness of these teams.

3) Lack of Focus – Unclear Product Direction

In your early stage company  your founder worked to a clearly defined business plan and growth strategy which ensured they captured necessary investment. As the company has scaled the focus has shifted away from the customer or market and the product strategic direction has become predominantly driven from personal hunches. In the quest to win more business there is little focus on customer validation and tentative links to corporate strategic objectives. The “Highest Paid Person in the Organization (HIPPO)” is having a huge influence on how individuals prioritize their work and in this culture of the priority du jour there is a large element of confusion and an unhealthy lack of focus.
In order to cope with fluctuating markets, requirements are changing continually – business priorities are not articulated clearly and the product direction is not aligned across functions. Engineering is calling the shots and often drop or change features with little or no consultation with key stakeholders. Requirements are not understood during development so are regularly re-scoped to suit tight deadlines with little understanding of market or customer impact. Resources move frequently between projects and there is a developing culture of “fire fighting” or “organized chaos”. Engineers are creating and testing code but if asked to link back to a clear business case they are struggling.

4) Adopting a Tactical rather than Strategic Approach

In order to win business your company has  approached each customer engagement as a bespoke deployment, with solutions tailored to the customer’s exact needs. This  has resulted in a lack of cohesion or repeatability between customer releases with a large “services” component for each deployment. Code has become difficult to manage across customer sites and the development team are struggling to manage an increasing number of customer quality issues with a knock-on impact to release dates. Engineering priorities are predominantly driven from sales opportunities with little focus on the strategic direction.

5) Ad-Hoc Product Positioning

Although your company may have initially created a technically masterful product they are failing to articulate its value to the market. When asked, Engineering position the product from a technical standpoint and fail to understand or demonstrate how the product relates to a customer need or problem that can be addressed. Consequently, Marketing battle to understand the technical complexities of the product and with a lack of a defined value proposition the company is struggling to position the product to their own sales team and ultimately to the market.

6) Unclear View of Product Commercial Performance

Development resources are assigned arbitrarily to projects, with little focus on “return on investment” or any link back to corporate objectives. It has become difficult to ascertain the cost to develop a product release or to link these releases to a value proposition or product strategy. Marketing promotions are failing to associate upcoming releases with value to the customer. Win/Loss analysis does not exist or is ad-hoc at best and customer data is not fed back to the product development team. Product pricing is  arbitrary and unclear. There is no mechanism to associate product releases with clear revenue targets. Pricing varies across customers due to the bespoke nature of the deployments.

7) Too Many Projects and Too Few Resources

Due to an uncertain economic climate or investor pressure to grow revenues key decision makers in your company are feeling the need to say “yes” to any new revenue generating projects. In this tactical environment, resources are scurrying between projects with little focus on the end-game or corporate strategic objectives. The company has no gating process to prioritize project investment based on ROI.

8) No Innovation/Ideation Strategy Established

Due to the tactical nature of your business there is no clear process for capturing new ideas, prioritizing these ideas or bringing them through a gating process. You have a team that have the potential to generate lots of ideas but there is nobody to catch these and prioritize investment.

9) Unconscious Decision Making

With a lack of market or customer data product decisions are being made in a vacuum. The company is moving so fast that it cannot recognize that it is in a cul-de-sac.

10) Lack of Competitive Differentiation

Your competitive landscape is crowded and customers are finding it difficult to find compelling reasons to select your company’s products. You struggle to identify unique selling points for the products or solutions and it has become increasingly difficult to position your company competitively.

These indicators can manifest themselves to varying degrees in companies, depending on their stage of growth, but are a useful litmus test for the need to adopt a product management discipline.

Understanding what product management means to your organization – irrespective of your stage of development product management principles will help to align key stakeholders in your organization to deliver your growth strategy, supporting you:

  • To create scalable and repeatable products or solutions that customers truly value
  • To ensure future growth through the continued progression of innovative ideas
  • To ensure the organization is focused – marching not only in the “right direction” but in the “same direction”
  • To ensure that the organization works to a clearly defined business model that meets corporate strategic objectives
  • To allocate the finite set of resources available to the company to resource the right projects and achieve maximum return on investment

Understanding your Value Proposition

ValuePropHow many start-ups (or possibly even established companies) can really claim that they clearly understand the problem or need they are addressing for their target market? How many actually know who their target customer is and what makes them tick? How many companies really understand the “value” that they will add to the world by existing at all?

Often companies start with the “inside-out” approach where they have some clearly bright people who have created a whiz-bang new technology that they really believe everyone is going to need. They take this whiz-bang concept and invest heavily in engineering, marketing and sales to bring this idea to the market. It is only at this stage that they discover that nobody really cares! They fall into a hole where 6 out of 7 new ideas end up – and it is a very black place! This is often a costly mistake and one that could have been avoided.

There are many reasons why a new product concept just does not hit the mark in terms of revenue generation. In my view one of the stand-out reasons is a lack of understanding of the value proposition for the product or service.

When someone comes to me with a new idea I start by asking what problem or need it addresses – more often than not the person (certainly in the technology industry) starts by telling me how great the product will be, how many cool features it will have, what a fantastic, real-time, highly-performant engine it is built on… what they cannot articulate without some help is the “why will anybody care about this?”

Clearly, defining the problem is an art – it takes a whole new way of thinking and a little coaching to put yourself in the “mind” of the customer but everyone can do it with a little training – and everyone in your company should be able to think like the end customer – everyone should be able to articulate your “value proposition”.

Of course, once you think you know what your “value proposition” is then you need to validate your hypothesis with your target customers – apply the “outside-in” approach. You do this before you invest anything in engineering, sales or marketing. Talking to the customer in the right way is critical – these are not “sales calls” – they are “validation calls”. You simply need to validate that your customer is “excited” by what you have to offer and they believe you have identified an “urgent” problem to solve.  Put simply, you need to validate that your hypotheses about your target customer are correct?

I have been pleasantly surprised over the years at how target customers will open up to you when you approach them in the right way and talk to them in a language that helps them to understand the value that you bring.

The Value of In House Product Management Mentoring

mentoringMany companies over the last few years have made the bold move to establish a product management discipline in their organization. They understand that to be successful they need to:

  1. Create products or services that customers love.
  2. Ensure the organization is marching not only in the “right direction” but in the “same direction.”
  3. Work to a clearly defined business model.

This requires someone to hold it all together and keep the company focused. As Steve Jobs said “You need a very product-oriented culture… lots of companies have great engineers and smart people. …there needs to be some gravitational force that pulls it all together.”

Initially, when the company is small, the CEO or CTO will fulfil this role – but as the company begins to scale it is important that the CEO looks for support. Adding a product manager to the team is the right next step… but what exactly does this product manager do and how will they integrate with the existing team?

Often there are a myriad of political obstacles that need to be addressed as people’s roles change and the organization settles into a new way of thinking. There are a lot of functions the product manager “could do” – the question is what functions “should they do” that align best with the organization’s structure and vision.

Although there are many organisations that provide great frameworks to help product managers understand all aspects of their role,  quite frankly the breadth and depth of areas to be covered would give any new product manager palpitations! You would need to be superhuman to address everything effectively! So, how do you decide which aspects of the framework make sense for your new product manager? Well, it depends on the stage of your growth as a company.

I think it is best to start with a “lean” approach to product management – don’t overwhelm yourself and your new recruit from day one. For many new and established product managers they exist in a state of constant bewilderment and despair as the enormity of the role becomes apparent to them. They often have a very unclear definition of the role, unachievable expectations are set by senior leadership or often no expectations are set at all (which is even worse), there is no clear prioritisation of projects and they have to juggle the demands of a sales and engineering team who expect their undivided attention 24/7. This situation can become a cycle of despair where the product manager becomes increasingly disillusioned and the leadership team begin to dismiss the product manager as ineffectual.

Things do not have to be this way – understanding who does what in your organisation and clearly defining the role and boundaries for each group is a first step. Then, applying a structure and discipline to product management that aligns with the stage your company is at is crucial.

Helping the product manager to apply methodologies in areas such as portfolio management, value proposition creation, requirements management, agile product management, customer validation, ideation, ROI analysis, sales management and leadership alignment will undoubtedly help alleviate the pressure.

As someone who has performed the role of product manager and ultimately managed both a portfolio of products and a team of product managers I understand more than most the demands of the role. I learned quickly that applying structure and discipline ensured myself and my team could work effectively.  We can all read books or attend courses that will give a good grounding in the product management discipline but the application of this discipline and the understanding of what works in reality comes with experience.

Don’t wait until either you or your product managers have reached the point of despair – seek the support and help of those who have done this before, who have been at the coalface and who understand the demands of the role. I loved this quote from Eric Ries of the Lean Startup because it is so applicable here – “Start-up success is not a consequence of good genes or being in the right place at the right time. Success can be engineered by following the right process, which means it can be learned, which means it can be taught.”