Tag Archives: business-driven

Is your Org Chart Broken?

Is your Organization Chart getting in the way of creating great products that delight your customers? Is it getting in the way of capturing more marketshare?  Let’s face it, the basic structure of org charts has not changed. There’s the President along with Vice Presidents heading up the Finance, Marketing, R&D and Sales departments. But why are many companies so dysfunctional when it comes to defining, building and delivering products? Maybe it’s the structure of the organization. We’ve seen it / lived it over and over – marketing and R&D sometimes just do not play nicely together. Fiefdoms, egos, mistrust – whatever the reason, it can be a real toxic atmosphere. And when times are tough (as they are now) the departments hunker down protecting their turf. And Product Managers who straddle both sides bear the brunt of all this as they try to get products and releases out the door. It’s no wonder that defining, building and delivering products and releases can be sometimes so hard. But it doesn’t have to be.

If you are in a product-driven company – i.e. the business model for generating revenue is by defining, building and selling products – or transitioning into a product-driven company, then this blog post is for you. If you are a services-driven company and have no intentions of becoming a product-driven company, then maybe this post is not for you.

Generally speaking there are 3 major buckets of activities within a product-driven company. Finance and Corporate Services look after the internal workings of the company – making sure that everything is in place and operating properly (including adhering to GAAP so that the president stays out of jail, but I digress).  Next is Sales and Services (if Services is a component of your product offering) who are responsible for extracting as much money out of new and existing customers as possible; whether it is direct, indirect, online, telesales, etc. And last (but not least) are the activities around finding markets, defining and building solutions to address market needs and supporting customers. The latter certainly sounds like Product Management. So why do we split this between Marketing and R&D? Why do we have separate fiefdoms to support this essential set of activities? Isn’t managing the product portfolio one of the most important activities in a product-driven company?

So we need to view the org chart from that perspective. I propose an org chart that views the activities of defining, building and delivering products as paramount.

New Org Chart

As you can see I propose keeping the VP Finance and Corporate Services and VP Sales and Services roles intact. However the  Marketing and R&D roles become the VP Product Management role. This group is chartered with finding markets and their problems, defining solutions to address those problems, building the product, launching the product, communicating its goodness and supporting the customer base. As you can see everything related to the product is in one group. You’ll notice that product development reports into Product Management and that the Technical Product Manager role is absent – it’s part of Product Development. Lastly we have the CTO role. This role is about future technology – embracing new technologies, searching for / inventing technology that will improve the product in the future.

The biggest benefit? The management of the product portfolio, which is the lifeline of a product-driven company, is now the priority … not marketing it, not building it.

Clearly Define your Product Manager Role!

As software product companies adopt agile principles, the role of the Product Manager is changing and therefore needs to be clearly defined and established. As more and more companies adopt agile principles, people aspiring to be Product Managers need to understand what’s in store for them over the next 5 – 10 years. Looking back over the past 5 – 10 years the greatest influencer on developing products is the increase in the amount of change. It used to be that Waterfall methodologies actually worked well. Why? The reason is that once all the up-front requirements gathering and design was completed the amount of change over the course of the implementation phase was negligible. Projects that lasted a year and delivered product that was still relevant, were quite common.

Times are different, we as consumers love choices; we love changing our minds; we love new and innovative products. Even users of B2B products see what’s happening with the technology in our private lives – for example, searching for information on the Web where variations in search terms are easily handled and returns the highest relevant item has become standard – so why can’t my B2B product have the same capabilities? This all ripples up to the developer of the product. Bottom-line is that the ability to embrace change is key to surviving … and with the amount of change increasing, this is becoming quite a challenge.

So the trend of switching from Waterfall methodologies to Agile methodologies as a way of embracing change continues. More and more software product companies (and hardware product companies with a software component to them) are adopting, to some degree, an Agile methodology (Scrum, XP, etc.) to help them gracefully embrace the change that will inevitably happen. How this happens is that the amount of up-front activity is reduced to the bare minimum (as compared to the Waterfall methodology) – essentially what’s required to support the first sprint/iteration is completed up-front. The consequence, however, is that the up-front work for each feature/enhancement takes place when needed during the project – more of a Kanban (pull) approach.

Agile methodologies (Scrum in particular) introduces the role of Product Owner. There is much debate as to whether this new role is in fact the Product Manager or what activities the Product Manager now performs. The Product Manager role is very broad – it encompasses strategic activities related to the current and future target markets, technical activities related to the actual product and communications/training/support activities related to launch and sales. The technical activities of the Product Manager role are very closely aligned with the activities of the Product Owner. In smaller companies these roles can be supported by a single person and as the company grows multiple people will be needed; split between Technical Product Manager and Product Owner where they work very closely together. Companies that already have an established Technical Product Manager role are in a good position to make this transition. The key is that this role must extend from the customer/users to the development team – user intimacy, feature prioritization, requirements definition and prioritization, customer validation, etc. are all part of the role. Technical Product Managers that are too deep into requirements and design need to “move” towards the users – i.e. they need to be more engaged with the users of the product.

Companies that do not have the role of Product Managers crisply defined, will struggle in their transition. Product Managers that do (or attempt to do) all of the activities encompassed by all segments of the role will not be able to properly embrace the cadence and needs of the Agile methodology. In other words, the ability to provide the up-front work at a just-in-time pace during the project will be severely hampered. Companies need to clearly define this “customer/user to development” role and staff it properly. Responding to change throughout the entire project is vital … customer feedback comes quickly, business objectives/situations change – all of which needs to be handled very quickly and in time so that development is always busy and working on the most important items.

So the bottom-line is that product companies need to staff a role – Technical Product Manager – that spans the length between the users and the development team. Whether this role is the same as the Product Owner, depends on the size of the company. Companies also need to staff a role – Marketing Product Manager – that looks for and understands the markets that are suitable for the company to embrace. For start-up companies that only have the resources to staff one position – staff the Technical Product Manager role (as defined above) first – understanding your users and building your product that delights them will pay huge dividends in the long run.

Transitioning from Waterfall to Agile

Is your transition plan in place? Are you thinking ahead to that inevitable moment? Summer holidays are starting to happen. I can, with almost 100% certainty, state that a product manager in some company will return from holidays to hear that familiar refrain – ” we have switched to agile … oh by the way where’s the backlog”.

So before that happens when you, Mr. Product Manager, return from your fabulously relaxing holiday and you get even further behind, here are some important ideas to ponder and some key items to have at the ready before you head out on your holidays.

  1. Make sure that you have a system and process in place to easily and quickly manage your list of enhancements (the requests from customers and what you need to do to your product to help increase sales in current and potential markets). In the old methodology you were able to assemble and debate the features on the list early in the project and that’s what development agreed to build over an agreed upon timeframe. Now however the cadence of your development team (e.g. the sprint or iteration length) is short and so you need to be able to re-prioritize your list very quickly; you need to add and prioritize new items easily and quickly; and you need to be able to handle changes in business priorities very quickly. Before every sprint your list needs to be up-to-date.
  2. Make sure you reset the expectations of your executive team. In the old methodology the executive either fully participated in creating the list of features or they were peripheral to the process but kept their finger on the status of the meetings. In any event, the result was a list of features that development agreed to build within the agreed timeframe. Now with an agile methodology your executive has visibility at the sprint level. In other words, the horizon of agreement is far shorter with this new methodology; they do not have the full list of features that will be in the release – it is revealed sprint by sprint. The upside for your executive team is that the ability to embrace and react to change is far easier than with the old methodology.
  3. Make sure that you have a system in place that gives as much visibility of the project status as possible to as many stakeholders as possible. Your system should be easy to update from one sprint to the next. Executives like the high level picture – what enhancements are done, which ones are underway and which ones are ‘on deck’. Make this information available to them in real-time and make sure that the status is updated as soon as the state changes.
  4. Make sure that you have the ability and a process to assess when you have developed enough value for the release. Early in the project define the objectives of the release. Then later in the project, evaluate what has been completed against the objectives at the end of every sprint. At some point you will need to decide that you have enough value to go to market with. Everyone needs to be in agreement as to how this will be evaluated.
  5. Make sure that you gain an understanding with development on the product manager vs. product owner roles. Understand the product owner role and the differences / similarities with your role as a product manager. If you take on the product owner role then make sure that development understands that you still need to leave the office and visit customers – maybe at the most inopportune time.

If you think through these points and come up with an action plan, your transition will be relatively smooth.

Can you feel the business in your finger-tips?

A handful of companies ago the CEO asked me, the head of product management, if I could feel the business in my finger tips. He went on to say (while rubbing his thumb over his finger tips) that you need to be able to feel the business on the tips of your fingers. I’ve kept that phrase with me for all these years and have asked the many product managers I’ve mentored over the years the exact same question.

What it means is that you get to the point where you have so much information about the business you are in that making product decisions is easy and that you can make them with such a high degree of confidence, you just know it is the right decision. Connecting the dots, developing strategies and tactics all come easy and natural. It does not come over night; it does not come by reading reports; it does not come by learning how the product works. It comes by getting out of the office and talking to people that are connected to your business – customers, partners, prospects, analysts, subject matter experts, and anyone else who is associated with your business.

Right from day 1 as a product manager in your new company make it a habit to talk to these people. Schedule on a monthly basis to visit (face-to-face) at least 4 customers – find out about the day in the life of a user; find out their challenges before they started using your product; find out how your product has impacted their business. Arrange with the sales team to sit in on 3 sales calls a week – don’t dominate the call, don’t influence/derail the selling process … listen and learn; contribute when asked. Attend regional sales meetings and user group meetings. Seek out the subject matter experts in your business domain, and take them to lunch or dinner. Ask them anything you want about your business … including what they think of your company and your product. Sit in on all of the webinars from the analysts in your business domain. Some of it may be directly relevant, some may not – the point is to understand your business and the bounds of your business (how do you know the boundary if you don’t know what’s beyond).

How do you know when you’ve reached this state? Good question. A lot has to do with confidence. You all of a sudden wake up and realize you’re there. You can answer every question confidently without saying “I’ll have to get back to you” … maybe that’s it. Every individual is different, but if you work at it you will get there and at some point you will realize that you are there.

Is your Product Management process Agile?

I’ve read many articles on whether product managers need to become agile as the development team embraces an Agile development methodology. Saeed wrote a great article for the March ’09 pragmaticmarketing.com newsletter proving that, in accordance with the Agile Manifesto, product managers have been living the elements of the Manifesto for some time (but may not have known it). Having been with companies that decided to ditch non-Agile methods and embrace Agile development the biggest challenge for my PM team was not for the product managers to become agile (or more agile) but instead the timing of when they perform their activities. Long gone where the days of a 6-8 week planning cycle where product managers brought everything to the table and the horse-trading began. It now meant that the team had to on a regular, timely basis (synchronized with the iteration cycle) prioritize new requests for the backlog, analyze the current backlog, and describe the usage scenario and key requirements as quickly as possible … as well as meeting with customers, performing market research, liaising with the development team on the work items of the current iteration, etc.

It also meant that the team became engaged with the project throughout its lifecycle on a more consistent basis instead of cyclical as was the case with the non-Agile method – i.e. the PM resource loading for the project remained relatively constant. It also meant that they needed to iterate through the requirements gathering / analysis / documentation process. First was to understand the top 5 requirements that meet the request and convey that to the development team. Next was to drill a little deeper in areas where dev neede more understanding. And lastly was to stop, when dev understood what was needed (I recommend reading Lean Software Development by Poppendieck – it provides a great discipline for this type of an environment).

In order to become business-driven in an agile world, product management processes need to be tuned so that product managers can perform all the activities that are needed so that business objectives are met.

Transitioning to a product model

I met with another company that is struggling to transition from a services based business model to a product based business model. Many hi-tech companies start out with a single contract to provide a solution to a particular client. They find more clients that need to address the same set of requirements … sort of – the solution is customized for each and every client. The net result is a handful of one-off solutions to different clients that address roughly the same need. Revenue grows; number of new-named accounts increases and now it is time to scale the business to the next level. Clearly creating these one-off solutions is not a scalable model – you are bounded by your development resource pool. The transition from a professional services driven model to a product-driven model needs to take place. A product-driven model revolves around the sale of a single (possibly configurable) product to customers who have the same needs, or problems that need to be solved. In other words, you develop a single product that you sell to many customers in your target market.

Sounds simple! But there are many challenges to making this transition … here are some of the key challenges:

  • Moving away from the culture of ‘Yes’ – in a professional services model your goal is to secure that single contract and so saying yes to the wishes of that single customer to win that contract is paramount. In a product-driven model your goal is to sell your single product to as many customers within your market as possible. This means that you have to learn to say ‘No’. When a customer requests something, you have to determine if it has broad market applicability – if it does not have broad market applicability, then saying ‘No’ is your best answer. Why? You have finite resources and they need to be laser-focused on meeting your goal to secure as many customers from within your market as possible … divergences that do not move you towards your goal is a waste.
  • Changing the feature debates – if the customer, in the professional services model, decides where you should deploy your development resources; who decides in the product-driven model? Clearly you make the decision; but at what level do you decide what to put in the product? Far too often the debate rages at a very high level, i.e. each of development, marketing, sales, customer support, etc. have their own top priority item that must go into the next release and so the discussion ends up being opinion-based. Business-driven product management brings the discussion level down to the objective level, i.e. the debate needs to be centered around how well each feature request meets a set of business objectives. The end result is that the business objectives control what goes into the product – not some subjective opinion.
  • Assigning new ownership – in a product-driven model, product management owns the product. In other words, through their deep understanding of the market, their ability to objectively analyze requests, and with their full and complete view of the product, product management decides what goes into the product. The owner in the professional services model is the project manager or the account manager and their responsibility is solely focused on the client … not the market.
  • Developing a process-driven approach – process has been given a bad rap. No one wants to be process heavy. On the other hand, a lack of process will not deliver the repeatability necessary to become a product-driven company. The process in this case is the clearly defined steps you go through to decide what features to put in the product, the interaction between product management and development. This process is the core of a product-driven company – if it does not operate efficiently and cost effectively, then delivering your products on-time with the right feature set to meet your goals will be a struggle.

Let me know if you can think of other challenges. Maybe you have an experience you would like to share.

Business-driven Product Management

Hi-tech companies grow … they get a healthy, active customer base that loves to contribute. The requests for improvements flow in and the attitude for the first few years is “whatever the customers want” and “whatever to make the sale”. At some point in this growth, the challenge becomes satisfying existing customers, expanding into new markets or deeper into existing markets and innovating the product.

So, what’s the problem? In order to make all fronts happy, you need to balance all three – or least understand that you consciously need to examine all three to determine their relative importance to your company. With a finite set of development, qa, and documentation resources, that in all but the rarest cases, can not do everything, this becomes a real challenge.

Here are the potential results of not addressing this challenge.

  • Customer dis-satisfaction – unhappy customers question whether they should renew their maintenance and support contract – jeopardizing a revenue stream that accounts for 18% to 28% of the initial license sale or, in the case of a SaaS model, the actual contract may be in jeopardy.
  • Inability to expand markets – expanding into new markets or expanding within current markets means  more potential new name accounts – failing here means not getting the revenue.
  • Unable to innovate at the technology level – products that have been around for a few years, need updating to leverage an updated infra-structure or need improvements to make that next big innovative leap in the market – lagging behind invites new competitors to jump in.

Each of these generate innovative ideas (features) or they expose gaps in the product that need to be filled. Business-driven product management is about deciding what to include in the product to best meet balancing the investment in Customer Satisfaction, Market Expansion and Technology Innovation.

A weighted set of business objectives reflects the goals of the business for the near, medium and/or far terms. In other words, it determines the priority of your investment. Are you going to invest more in making customers happy (or happier)? Or is investing in expanding into another market more important. Assessing the feature requests against these objectives will determine the relative importance of these requests and thus your product releases will match your corporate goals. There’s no point in investing in features that do not move you closer to your objectives!