19
Jun 15

What’s the Business Value of PM? Podcast Episode 7

In this podcast I go into a bit more detail about a topic I covered a few weeks ago in The Astonishing Financial Benefits of Improving PM Effectiveness, namely, the “business value” of product management. (By the way, I was happy to see this concept mentioned in Janna Bastow’s post on ProdPad this week – How Much is a Product Manager Worth? Setting Product Management KPIs.)

There’s a very big number involved – $41,000 per day. Or $10 million per year. In the podcast I talk about the implications of that number. If you can improve your performance against this number, the results go almost straight to the bottom line. ([tweetthis hidden_hashtags=”#prodmgmt”]When u improve your performance as a #prodmgr the results go straight to the bottom line -[/tweetthis])

And I set out some guidance on how to use the number to assess your product management organization and analyze your performance. I describe an action plan to hit that giant number, some of the key steps of which are:

  1. Find big market problems by doing constant discovery.
  2. Dozens or hundreds of conversations yield a handful of insights.
  3. You need a “market problem” pipeline – just like the sales pipeline.

(By the way, you’re not going to have time to write a lot of user stories.)

Once you’ve found and validated important market problems to solve, and selected the best one or few to focus on, then you need to guide the creation of excellent solutions to those problems. And you need to prepare sales and marketing to go out and find and close the people who have those problems.

Summary

  • Product managers have a number.
  • You can use the number for assessment, analysis, and guidance.
  • Becoming more effective goes straight to the bottom line.
  • Being more effective is mostly about the problem, not the solution.
  • Better problem leads to more revenue.

A PM’s stock in trade is important market problems that people will pay to solve. If that’s not what we’re working on, we’re probably not going to hit that big number.

Solves-a-Market-Problem-vs-Doesn’tAnd to whet your appetite for some upcoming topics, here’s a chart I created recently. Not all market problems are the same. The ones you come up with on your own are worth, generally, a lot less than the ones you discover. But discovering real big market problems requires a lot of listening for very “weak signals” – that will be a topic for an upcoming podcast.

If you like this podcast, please subscribe via iTunes (search for “responsibility authority” to find the listing) or your favorite subscription method via this feed. And please consider rating and reviewing the podcast on iTunes. The feedback is very helpful for me.


22
Jan 15

A VALUABLE Rubric For Product Requirements – Podcast Episode #5

In this podcast I talk about a problem that afflicts many product companies – poor communication between product management and developers. And I describe an approach that can help improve the communication, and improve everyone’s motivation – a new rubric for writing good requirements which I call VALUABLE. That’s an acronym for: Valuable, Aligned, Loved, Understood, Acceptance tests, Bounded, Leverages, and Expected Usage. It will all become clear when you listen to the podcast – or download the infographic.

The infographic I mention in the podcast is here – please feel free to download it and print it out and put it up on your wall. Or whatever you want to do with it.

In the podcast I mentioned a number of earlier posts, a book, and some useful posts on other peoples’ blogs.

Links

If you like this podcast, please subscribe via iTunes (search for “responsibility authority” to find the listing) or your favorite subscription method via this feed. And please consider rating and reviewing the podcast on iTunes. The feedback is very helpful for me.


05
Mar 14

“Creating Value” Means Eliminating A Problem Completely, Not Making It 5% Better

If your goal is to create value in the world with your product or offering, then you need to make sure your product either:

We all get these credit card offers in the mail every week. The people sending those direct mail offers are doing their best to send fewer and fewer, and have more and more of the recipients actually take the offers. But the numbers are pathetic. A great response to one of those come-ons is that 2% turn into customers after three impressions. That means that for every customer I get, I had to send out 150 of those mailers. And the 49 people who got three different offers are pissed off at me. And a giant pile of paper needs to go into the landfill. And that’s for an offer that performs well – if an offer performs badly it might be ten times as many mailings for the same result – one customer.

If you are sending out credit card offers, you can get marketing software today that might help you increase that 2% response rate slightly. Say to 2.1%. That’s a big enough increase that if you send the offers to enough people you’ll make a measurable amount more money. But I have to ask – is that marketing software helping you create value? Or is it just extracting value?

What if you had marketing software that could ensure your ad will only appear for people who will buy your thing. If a person won’t buy it, they won’t see the ad. That would be a gamechanger in the marketing world. It changes marketing software from a tool for extracting value to a tool for creating value, by ensuring the people who need your product hear about it, while those who don’t care aren’t bothered.

I don’t want to pick on marketing software – it’s just an easy target. But there are a lot of enterprise software companies out there whose value proposition is “we will make you 20% more effective” (or 5%, as in my example). Most consumer software companies have the same message. But I’m interested in products and processes that will make a problem go away completely.

That might be a fantasy for marketing software, given human nature, but there are examples where it’s happened. That’s what the Toyota Production System did in the 70’s and 80’s for example. Toyotas went from having a slightly-worse than industry standard level of defects in their car to essentially zero defects. That changed the company, the industry, and consumers’ expectations. And as a result, it created a huge amount of value in the world.

The iPod, in its own way, made a problem go away completely. In the days of the Walkman it was always a challenge – “Which tapes should I take with me so I will always have music I want?” When the iPod came out you could put all your music on it. Problem gone.

Generally, a new product is not worth the cost of changing if it doesn’t improve the process (at least some part of it) by an order of magnitude, or completely eliminate a problem. That’s where you really start to create value in the world, instead of just extracting it.