Product Management Challenges for Homemade Lemonade
I was once asked to think about how I would explain some of the startup challenges faced by a product business in a way that a small child would understand. I decided to use an analogy about making and selling lemonade – something I hoped everyone could relate to as so many of us had these little entrepreneurial ideas when we were children.
So hear goes, …
- Imagine one day that you are playing happily in your garden with your friend. You are both thirsty so you grab a refreshing glass of homemade lemonade from the house. Your friend thinks it is the best lemonade they have ever tasted. You’re eager to make some pocket money. So you decide to ask your parents to give you some money to buy ingredients so that you can make more of it and sell it from a stall in your front garden. They are a little sceptical but they like your passion and drive so decide to invest!
- You setup a little stall and your friends who live next door come and buy your delicious lemonade. You love spending time chatting with your friends and you are delighted that they love your new lemonade and are happy to pay you some money for it!
- You quickly spend the money you have made and are eager to make some more. You know that there must be more people who would love to buy your lemonade! You just don’t know where they live, how you are going to tell them about your stall and how you will get them to come and buy some lemonade.
- You ask your friends, who have already bought the lemonade, to tell their friends and this does help to bring more people to your stall. You put a sign up in your garden to attract passers by.
- Although you have more people who want to buy your lemonade, they all have ideas about how you might change the lemonade to suit their tastes a bit better. Some think that you should add some fizz, some want it sweeter and others just want it to be cheaper. You end up spending lots of time in the kitchen trying to do everything they are asking for. You no longer have any time to spend on the stall talking to your friends and customers. You now have to ask another friend to help you sell the lemonade – they of course want a share of the money you make.
- The more customers you have for your lemonade and the more you try to please your friends the busier you become. You have made so many changes to your recipe that it is no longer quite as delicious as it once was. You forget that the reason everyone came to your stall at the start was the delicious recipe you made for your friend in the beginning. Some of your old customers are not happy with the changes you have made and stop coming to the stall.
- Making lemonade takes a lot of your time and it is beginning to cost you and your parents a lot of money. By the time you give money to your parents for the ingredients and to your friends helping you on the stall there is very little money left over each day.
- What started as a way to make a little pocket money has now made you so busy that you don’t have time for anything else! You have to ask more friends to help you in the kitchen but they all want a share of your small profits.
- You are spending more and more time making lemonade and less time talking to the people who buy your lemonade!
- One day, one of your friends talks to some of your customers in the queue for your stall. They realize that these customers are complaining about how warm your lemonade is! It has been left sitting in the sun. Your friend, jealous of your success, decides to setup a stall of their own. They use your original recipe but with one simple change – they add ground ice to the drink before serving. Your customers are curious and they head over to their stall to try it. They love it, the weather is hot and so they decide to buy from your friend’s stall instead.
- You realize you were too busy in the kitchen to see this happen!
- In order make sure your friends keep coming to your stall you now decide you would need to buy an icemaker. You ask your parents for more money and they agree to help you buy the icemaker.
- But … it is coming into winter and the kid on the other stall has been watching her customers and realizes that they are no longer as interested in the cold lemonade. She chats with her friends as they play outside and she decides that hot chocolate will sell a lot better than cold lemonade in the winter. She quickly changes her stall and whatever customers you had left all decide to visit her stand for her lovely hot chocolate.
- Your parents are fed up, they have an ice-maker in their kitchen that is not being used and they are not prepared to give you any more money. By the time you have paid all your friends who have been helping you make lemonade in the kitchen you have no money left over to buy the ingredients for hot chocolate or any other great idea.
- You realize too late that if you had spent more time outside with your friends and customers, instead of being stuck inside making lemonade, that you would have spotted that the weather was changing and that your customer’s needs were changing.
- You have learned a big lesson but it is all too late – but you are just a kid so how were you to know!
Startup Challenges – so what are the lessons here?
As adults and business professionals we
- Understand the importance of recognising and protecting our competitive advantage.
- We know that it is really important to get out of the business and validate that we have understood our customer’s requirements.
- We realise that capitalising on the market segments we are best placed to serve is crucial.
- We understand that as a Product Manager, paying too much attention to the technicalities of making our product and too little time capturing insights from our target market is not a good idea.
- We know that it is really important to think clearly about the potential return on investing in any new product idea and not all ideas are the right idea.
- We know that our investors will require a return on their investment and won’t be willing to fund everything we do – we know we need to make money.
- We know this isn’t child’s play and startups are tough but rewarding when you are focused and clear about what you are doing and why.
- We know we need the right people around us and we need to reward loyalty and hard work.
- We understand that goals may need to change when circumstances change but we know why we started the business in the first place and we know that our customers are our lifeblood so we have to stay close to them.
A 6 year old can’t know all that … they just like making lemonade!