Startup Product Talks with Ron Lichty, Co-Author, Managing The UnManageable

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6/13/12 Best Practices in Startup Product Management with Dan Olsen, Startup Product Talks SF

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April 25, 2012 App Developer Privacy Summit @StanfordCIS @AppsAlliance

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Storified: SF Launch Festival 2012 Day One

The Marketing Side of Agile at the SVPMA

Please Retweet: Report on: Marketing Side of #Agile w/@browncompany @svpma http://bit.ly/ozCmwH @prodmgmttalk


Around 60 people attended the September 7, 2011 meeting of the Silicon Valley Product Management Association meeting held at Tech Mart in Santa Clara. Ron Brown presented “The Marketing Side of Agile: 10 Secrets for Success.” 

Ron Brown is a patent holder, corporate spokesperson, and author of the book, Anticipate, The Architecture of Small Team Innovation and Product Success, on promoting creativity and innovation at the team level. Brown is currently the CEO of United Keys, Inc. 

Ron’s career spans three industries. One third of his career was in the packaged goods advertising industry where he learned principles of professional creative problem solving. The second third he spent in high-tech hardware and software companies, where he learned about supply chains and distribution channels. One third has been within Silicon Valley internet startups. His career includes experience at Nestle, international ad agencies J. Walter Thompson and BBDO. At JWT, Brown managed the HP computers and printers businesses. As VP Corporate Marketing at Wyse Technology, he gained global channels, distribution, and corporate marketing experience. As president at eFax.com, he built one of the fastest growing consumer internet sites.  

Brown said that the failure rate for new product entries has been increasing. Whereas 50 years ago, most new products were successful, twenty years ago the failure rate was 50%, while it is 70% in today’s business environment. He set out to discover what knowledge leading companies have about new product innovation that distinguishes them from their industry peers. He started by digging through 60 years of industry research about product success, then he interviewed developers and managers from a wide range of companies.  

Brown defines “leading companies” as those that generate over twice as much revenue from new products compared to their industry peers. Specifically, the successful companies generate 49% of sales from new products compared to 22% of sales from new products in other companies. They must always have a fresh flow of “new” products in new categories at any given time. In contrast, most companies lose a tremendous amount of time and money on internal costs that result in poor moral and failed products while their competitors get stronger.  

The successful companies spend much more time figuring out how to be more innovative than the unsuccessful ones, because they recognize that innovation is key to winning in the market. Small development teams must have freedom and resources to be effective. Brown discovered that engineers operating from the Agile manifesto talk to customers regularly, although they may not recognize that customers are fickle and that product management skills are necessary to determine how to convert customer input into features, explicit product descriptions and strategic positioning.  

Brown isolated 10 core strategies of leading companies that are not readily apparent, including the ability to anticipate what customers want and deliver new products by thinking like customers and understanding human behavior and motivation.

1. Leading companies make entrepreneurial teams the focal point of their strategy.  
A major obstacle to innovation is the entrenchment of linear development processes such as Waterfall that result in late stage rework with associated risks. The benefits of Agile are reduced risk, increased product/market fit, decreased time to market.

Brown defines Agile teams as
- small cross-functional teams
- that are self-regulating and
- self-governing, and are
- empowered to make strategic decisions

2. Leading companies push decision making to the edges of the organization close to customers.  
The higher up in the organizational chart of the manager charged with decision making power, the less awareness they have of the day to day issues, patterns of problems, and understanding of the end users’ needs, wants and pains.

3. Leading companies employ development techniques tailored for the “fuzzy” front end.
Early stages of a development cycle are referred to as the “fuzzy” front end. This is the phase when the company is first conceiving and considering an opportunity before determining if it is worth developing. The creative development process takes an idea and works it into a tangible product. However, manufacturing control processes don’t apply to creative thinking. Total Quality Management (TQM) or  statistically based manufacturing techniques developed by W.Edwards Deming are not conducive to pre-revenue activities. Even Six Sigma, although flexible, doesn’t translate well when attempting to formulate an idea properly. Development and manufacturing don’t occur on the same continuum, although they are often depicted visually as if they have the same characteristics and implementation strategy. Development formulates an idea and implements, while manufacturing replicates and scales – each requires unique skill sets, orientations and management technique.

4. Leading companies commit to customer immersion and problem detection techniques.
Seven out of ten product failures result from poor customer input procedures. Customers are not rational and buyers may not know why they buy. Brown cited a 2008 Microsoft commercial featuring Bill Gates and Jerry Seinfeld going to live with “average” people in their homes. When Gates asked Jerry why they were doing it, Seinfeld suggested that they needed to understand what it was like to be a regular person, since they were too removed. This is a literal example of customer immersion, which came from social anthropology and ethnography. Living with customers provides insights into the customer moment to moment experience in their own environment. Direct observation provides insights into customer motivation, pain and behavior.  Once you start thinking like a customer, you can anticipate what they want which provides a strong competitive advantage. VCs ask whether startups are an aspirin or a vitamin. An aspirin kills pain while a vitamin prevents pain. Leading companies solve important problems exclusively by finding the screaming baby and urgently solving the problem.

5. Leading companies develop creative problem solving skills at all levels.
Brown cited a study that showed that projects were nine times more productive and quicker to market if managers had proven high levels of creativity as measured by the Myers-Briggs Type Indicator creativity index. Everyone, regardless of inherent tendencies, can be trained in creative thinking skills which improve with practice.

6. Leading companies generate meaningful ideas from the entire value chain.
A supply chain includes the network of vendors required to bring the product to market. Each component in the supply chain has an associated cost which must be kept as low as possible for financial accountability. In order to differentiate, marketing recognizes that each component can be positioned as a source of value to the customer. Porter defined this perspective as the value chain. Leading companies reinforce brand trust at every opportunity in the value chain even bringing suppliers into the action as early as possible to identify potential for innovation.  Proctor and Gamble has a program called “Connect and Develop” which looks outside the company to discover at least 50% of new product concepts. McDonalds added menu items such as the BigMac and Egg McMuffin from franchisee suggestions.

7. Leading companies emphasize superior implementation throughout the organization.
Taking a concept from an idea into a finished project requires an ability to implement well in an elegant way. Innovation is a process, not a chance endeavor, which requires structure. The structure of innovation is comprised of identifying the idea, developing the strategic direction that the idea should be taken in, and executing on that strategy.  Strategy turns an idea into an invention, providing it with form and function.  Execution turns the invention into a product that customers can purchase and utilize. Implementation equals strategy plus execution.

8. Leading companies utilize business models for strategic planning.
Brown referenced management writer Joan Magretta, as the guru of business models. She defined a business model as “the story that explains how an enterprise works.” Peter Drucker described the business model as the answer to the questions: Who is your customer, what does the customer value, and how do you deliver value at an appropriate cost?

Making money occurs one transaction at a time. A business model for a new product is a strategic document focused on transaction level value creation. A transaction is an exchange of value between the company and the customer. A product is a vehicle for a transaction. The dynamics of the business transaction between the company and the customer must be understood and analyzed in order to be enhanced and refined. This focus on transactions is referred to as “unit economics” since it is concerned with value creation rather than production costs. Business models are also designed to generate stories, since stories are what customers buy and fuel word of mouth communications. Business models fail when the narrative isn’t believable and when the numbers don’t add up.

9. Leading companies recognize the importance of precise messaging.
Differentiation is the tip of the arrow and the value proposition seals the deal. The positioning presentation has to be razor sharp and repeated often.  The USP is the unique selling proposition which describes the qualities unique to the product in a tangible way that differentiates it from the competition and motivates a large audience to take action. It must be tangible so the audience can experience the benefit through their senses to measure its performance. Products that demonstrate their value are easier to communicate and sell. The USP = Benefit + Differentiation + Motivation.

The strategic positioning statement defines the target audience, describes character or personality of the brand, and provides the reason why.  The reason why is important because it establishes the credibility and the believability for the benefit claim. Brand character projects an attitude and reinforces the main claim with a feeling. Drama, storytelling and emotional component are effective aspects of the statement. Strategic Positioning Statement = Target + USP + Brand + Why

10. Leading companies measure and track key decisions.
Brown described a simple Audit on a slide with 4 boxes within a square, each box pointing to the next box in counter-clockwise direction. Starting with the Idea in the top left box, pointing down to Critical Success Factors, which points to Audit in bottom right, pointing up to Track in top right, which continues to point to the Idea. Critical Success Factors focus on the most important areas to get to the very heart of both what is to be achieved and how it will be achieved. Feedback mechanisms measure and track progress, provide insights for continual improvement and correction, simplify and speed up decision making, enhance communication and collaboration, consistently include team members disparately located. Identifying rules, best practices, critical success factors, appropriate metrics and feedback mechanisms contribute to design thinking for constantly iterating business models in leading companies.

In short order, Brown identified the keys to successful leading companies as those that show their teams how to collect and process customer input more effectively, develop creative problem solving skills, use business models to stay on course, and measure and track progress.  

Ron will be speaking at the Global Product Management Talk on Twitter on February 6, 2012. Join in the twitter talk weekly Mondays 4:00-5:00 PM PT @prodmgmttalk  #prodmgmttalk

Global Product Management Talk^TM is a weekly mini-product camp Socratic discussion (on Twitter) of pre-posted questions (on Facebook) with live audio of thought leader and co-hosts commenting (on Blogtalkradio). 

Please Retweet: Report on: Marketing Side of #Agile w/ @browncompany @svpma http://bit.ly/ozCmwH @prodmgmttalk

Recap: Building the Case for a Market-Focused Approach w/Greg White

Please retweet: 9/12 Recap: Building the Case for a Market-Focused Approach w/ 

@GregWhiteOC http://bit.ly/n88AnN #prodmgmttalk @prodmgmttalk

At our most recent, Sept 12 Global Product Management Talk on Twitter, Greg White led us in an inquiry into Building the case for a market focused approach.  Following is an edited recap of the tweets. Cindy F. Solomon was joined by Erika L. Andersen as co-host. Use this as a jumping off point to blog your insights and responses.

• Listen to the audio part of the discussion here:  http://bit.ly/o4lAjN
• Transcript of all tweets: http://slidesha.re/mZ8okZ

Greg says, "This discussion assumes that the audience is familiar with business cases. It's about steering the direction of the company and business cases are one of the tools to do that. Another is a clear vision of the future in the form of a good product roadmap." 

MENTIONED DURING THE TALK:

                                                      ·    Ries & Trout's THE 22 IMMUTABLE LAWS OF MARKETING http://bit.ly/qm6UBD

·     You Can't Analyze Your Way to Growth http://bit.ly/pvvVBE

·     "Strategy is about taking many small risks" Jeff Bezos http://bit.ly/paUaNM

·     4-part article. Overcoming Organizational Resistance to Change: http://bit.ly/mW8cHj

·     Ford never made that quote http://bit.ly/qJFobU  

·     the pyramid, pushing decisions 2 team http://bit.ly/o6Ac3C

·     I like the Henry Ford quote, whether or not he said it http://bit.ly/nWXC8f

·     Why Twitter for this discussion? http://bit.ly/hbEgyt

Q1 How important is understanding your target market to the success of your product?

• rcauvin A1: Understanding your market of course helps in #prodmgmt. But don't forget to formulate & test hypotheses. 
• lmckeogh A1: should have a general understanding. Think it is better to understand customer's problems that may/may not jive w/ a market 
• Ycnt_ibdonlyjen RT @rcauvin: A1: Understanding your market of course helps in #prodmgmt. But don't forget to formulate  & test hypotheses. 
• lmckeogh @rcauvin : seek to debunk hypothesis rather than confirm them 

Q1a  Have you had to defend a business case, and if so, how?

• GregWhiteOC We've all developed business cases. There can be influences & agendas within the company to pursue a particular direction. 
• lmckeogh Yes. The strength of defending the business case comes from the data used. Data is the great equalizer.  
• rcauvin A1a: Sure, formulating & defending a biz case is a common Strategic  #prodmgmt  activity.  
• lmckeogh When defending the biz case, lay out the options and compare all of them equally. Remember to include option to do nothing  
• rcauvin A1a: But in addition to "defending" spell out your plan for testing the business case.  
• GregWhiteOC: Had to convince exec that customers would not appreciate. They listend, put resources elsewhere  
• lmckeogh When creating biz case, try to identify risks, their probability, and impact. Also any plans to mitigate them 
• rcauvin A1a: Business case should draw upon both strategic marketing principles & market information.
• GregWhiteOC: Your biz case must be quantifiable. Hard,fast data, not opinions. 
• GregWhiteOC: Need metrics instead of just "I think this will happen." Put into model and see if flies.
• lmckeogh When creating biz case for unknown/new market hard data is not always available. Call out assumptions and gut decisions. 
• rcauvin A1a: For marketing principles, turn to Ries & Trout's THE 22 IMMUTABLE LAWS OF MARKETING. 

Q2 What are some ways you have gained insights into your target market’s needs?

• lmckeogh You Can't Analyze Your Way to Growth http://t.co/ujLduLc past doesn't include opps that exist but have not yet happened 
• ErikaLAndersen Erika: A2 Personas! (must say at least once each tweetchat) 
• rcauvin A2: prospect interviews, surveys, ethnographic studies, and put real stuff in front of them to test my assumptions.
• thebuddygroup A2: Surveys, but most importantly, studying the heartbeat -- the convos -- of our target market to see what they want & need 
• GregWhiteOC: Take concept, throw it against the wall, see if sticks 
• lmckeogh Analysis excludes ways to serve customers that have not been tried or imagined or ways to turn non-customers into customers. 
• GregWhiteOC: Put out a landing page, do some A/B testing, see if it works. 
• GregWhiteOC: This doesn't work for projects that take 60-90 days or more 
• lmckeogh @GregWhiteOC : talking to customers & listening to their problems &creating sln rather than creating sln & trying to find mkt 
• ErikaLAndersen @GregWhiteOC DOES NOT ADVOCATE the throw against the wall approach...example of what NOT to do 
• lmckeogh @ErikaLAndersen @Mack_McCoy @GregWhiteOC : when throwing against the wall, use small bits, ala Amazon approach
• GregWhiteOC The whole point of a business case and using a mkt focused approach is NOT THROWING against a wall.
• lmckeogh "Strategy is about taking many small risks" Jeff Bezos bit.ly/n5u2a1 
• Mack_McCoy @lmckeogh That's true. It could work for features or subsets, but for an entire product is incredibly risky.
• rcauvin A2: Focus not on what customers say they WANT, but on what PROBLEM it would solve, and what they DO. 
• ErikaLAndersen @rcauvin Customers know life experience, but not how to design products to meet needs. Thus, have no clue what they want. 

Q3 How do you respond to executive direction that you know is not going to be a successful model?

• lmckeogh A3: This is where your metal as product manager gets proven. If you cannot sell an idea may want to find other line of work 
• Mack_McCoy A3: Diplomatically, but also don't be shy. You're paid to make successful products, not exec's vision. Depending on...
• thebuddygroup Hopefully the execs have their own version of a cabinet, whose opinions and input they value  #BuddyUp  
• lmckeogh A3: Going back to data as the great equalizer, sit w/ exec show the data & ask to see theirs. If yours is wrong rethink it. 
• Mack_McCoy A3: ...the org, will determine how you approach. Some orgs are data driven, so you'll have to go that route. Others prefer... 
• Mack_McCoy A3: ...stories or persona or "real customer" feedback. It all depends. 
• thebuddygroup A3 If you see holes in the strategy, propose a solution, don't just point out the issue or you're causing a problem, as well 
• wapolanco A3: I'm a big advocate of "the answer is in the numbers" stats will always prove or disprove a case. 
• lmckeogh a3: it is not really exec's job to truly know what to do, they rely on others around them for advice and direction.  
• wapolanco Also, an effective PM can get top clients to comment/opine on roadmap. Sometimes that alone will persuade execs. 
• Mack_McCoy A3: Good 4-part article. Overcoming Organizational Resistance to Change:  http://t.co/ZmLgWRw   
• lmckeogh A3: how you couch the proposal is also important. Don't put exec in a meeting, hit them cold and expect a favorable decision 
• ErikaLAndersen Team: becomes collaboration with best of what ppl have to offer 
• reinfluence @rcauvin @lmckeogh Yes to empowerment! But they don't make the executive's decisions.  
• wapolanco @rcauvin: @reinfluence @lmckeogh Some of the best execs empower a TEAM to make decisions. Means moving frm mgr to leader! 

Q4 Have you ever had to create a no-go business case?

• lmckeogh A4: Yes on both. Showed 5 options that all logically built to doing nothing. Net ROI didn't get us any further ahead so why 
• thebuddygroup Sometimes you need to swat out the options to ideate 
• GregWhiteOC You need to do a lot of education and lobbying. 

Q5 How important is a product roadmap to aligning your product with market needs?

• GregWhiteOC The product roadmap supports the business case and is a great tool for socializing your vision.  
• Mack_McCoy Yes! Roadmap is key piece of internal communication & political selling. 
• wapolanco A5: Roadmap is essential in communicating the alignment between pm/org/industry. 
• rcauvin A5: A product roadmap is provisional but important for expressing & testing hypotheses. 
• thebuddygroup A5 A roadmap is very important. Know where you need to go, including budget & resource allocation, but prepare for bumps 
• Mack_McCoy @GregWhiteOC It's also a critical piece for alignment to reduce duplicate work and set the stage for the development effort. 

Q6 Have you ever built a product that no customers specifically asked for?

• ErikaLAndersen A6: One well-known example, Ford built Car even though customers wanted faster horses 
• lmckeogh A6: Yes. Customers exist in the problem space not the solution space. Understanding their problem can build a solution to it 
• Mack_McCoy A6: You can find that everywhere. People often fall in love with tech for tech's sake & build sol'n THEN look for a market.
• ErikaLAndersen @GregWhiteOC: Initially, no one wanted smart phones; but iPhone came out, and devs built apps
• rcauvin A6: Yes, the decision to launch my @Dadnab service a few years ago was based on market research but not requests.
• ErikaLAndersen @GregWhiteOC: Now people finding ways to use apps to serve needs, ordering burrito from chipotle
• thebuddygroup Analyze the negative space for a positive! RT@lmckeogh: A6: Yes. Understanding [your customers'] problem can build a solution 
• lmckeogh @ErikaLAndersen : actually Ford never made that quote http://t.co/iFA1wHw.
• GregWhiteOC Early phone apps were "toys" but now you can order a burrito or do your banking with an app. 
• rcauvin A6: Part of the reason for focusing on market problems rather than requests is to truly innovate. #prodmgmtGregWhiteOC: Need to solve problem for mkt, not ind customers, otherwise run around solve each cust's needs 
• rcauvin @ErikaLAndersen @lmckeogh I like the Henry Ford quote, whether or not he said it. http://t.co/3KlFRMB
• Mack_McCoy @wapolanco I kinda disagree. Twitter was in response to the pain of group txt'ing. Granted, that's not where it ended up. :) 
• thebuddygroup @wapolanco Great example. If your prototype offers insight for a great product line, you've won. Just don't waste it
• reinfluence @rcauvin @lmckeogh Sure, inverting the pyramid, pushing decisions 2 team. http://t.co/zedqLN6 But not all want to share power 
• GregWhiteOC @rcauvin also to create a solution for a "market", not a "customer" 
• wapolanco @Mack_McCoy Twitter itself is an example of this. Tool was built first, market(s) determined later. Still being defined today 
• thebuddygroup @mack_mccoy Kinda glad @Twitter steered off course! Otherwise, we all may never be in the same conversations #grouptext 
• cindyfsolomon
 Why Twitter for this discussion? http://t.co/XNKLpfA 

Thank you @GregWhiteOC for speaking today and @ErikaLAndersen for co-hosting! Everyone's participation appreciated! 

Today’s stats 304 tweets generated 279,547 impressions, reaching an audience of 12,010 followers 

Join us next week for Managing the Backlog During Initial Development in B2B ISVs w/ @Johnpeltier and co-host Roger Cauvin @rcauvin with Cindy @cindyfsolomon  http://bit.ly/qMMDVp 

Please retweet: 9/12 Recap: Building the Case for a Market-Focused Approach w/ 

@GregWhiteOC http://bit.ly/n88AnN #prodmgmttalk @prodmgmttalk

Global Product Management Talk^TM is a weekly mini-product camp Socratic discussion (on Twitter) of pre-posted questions (on Facebook) with live audio of thought leader and co-hosts commenting (on Blogtalkradio).