Building the Right Things
Peter F. Drucker once said [‘Essential Drucker’] – “Leadership is doing the right things and management is doing things right”. For product managers and leaders, it is critical to guide the product ecosystems towards building right things. What are these right things from a product platform perspective? What are the right market problems that are worth solving and in what sequence? While there are a lot of successful products to admire, purchase and use; yet there are many more product failure stories and every product professional should take a careful note of them. Many industry reports indicate that 80 to 95% of the products built every year fail in the market and 3 out of every 4 products fail to generate any revenues for their organization. There are many famous examples, where organizations were bullish about their products; yet they failed in the market, like Google glass, Fire Phone, Microsoft Office Assistant Clippy, Twitter Peek, Tata Nano, Pepsi Blue to name a few.
These failed products missed few key elements of product thinking frameworks like those mentioned in ‘The Three Lenses of Innovation’ by Ideo. The three lenses of desirability, viability and feasibility are really a litmus test for any major product/platform business case. It is critical for decision makers to justify these parameters as deeply as possible before proceeding towards building any product/platform. This is further explained by Isaac Jeffries by mapping various sections of Business Canvas [business model framework by Strategyzer] to the three lenses of Innovation.
Traceability Focus
Defining products and its major capabilities to ensure success in the market requires careful consideration of an organization’s larger business objectives. An organization’s vision and mission define their purpose, their future aspirational role in the industry and the approach to achieve that ambition. Accordingly, a corporate strategy is formulated, and LOB/portfolio level strategies are created that are focused on specific business segments with defined MBOs/OKRs. Product vision defines the product 'North Star', which explains its 'what' and 'why' to the product ecosystem and is communicated by a carefully crafted product positioning statement. Product strategy defines business capabilities to solve key market problems, with a clear focus on business value and competitive position. Product roadmap creates business themes and timelines for actions and tasks to achieve product strategy, with a detailed plan for immediate capabilities to be built. Product backlog is created as set of product functionalities, required for effective execution of the product strategy in iterative releases and sprints.
Strategic Thinking
For the focused strategic thinking, some of the well-established and widely used frameworks like Porter's Five Forces by Michael Porter help organizations to identify areas of attention. Deep studies on current competition in the industry, bargaining power of customers and suppliers, threat of new entrants and substitutes can uncover opportunities that serve as a great input for corporate/portfolio/product strategy.
These inputs can then be combined with insights from a detailed SWOT analysis including:
- Internal organization’s strengths and weaknesses (S-W)
- Outside-in opportunities and threats (O-T)
- Strengths that can help leverage opportunities and defend any threats, and
- Weaknesses that needs to be managed to take advantage of opportunities and take care of any imminent threats to the business.
Various other strategic industry frameworks can also guide product teams to establish the north star for the product.
Alignment with Market
Before any action is taken based on a strategic direction, it is critical to look at the product market fit, which is explained very well in Dan Olsen’s Lean Product Playbook to understand the degree to which a product satisfies a strong market demand. There should be a good alignment between market aspects like target customers, underserved needs and product aspects like value proposition, feature set and overall user experience.
The first step in establishing a product-market fit would be to do evaluate and understand the relevant market size and determine target customers. Of the overall market, total available market (TAM) is the total market demand for a product with the assumption that there is no competition and entire market is serviceable. Serviceable available market (SAM) is a subset of TAM that the product can service while there is no competition. Serviceable obtainable market (SOM) is a subset of SAM that the product can realistically capture, keeping the current and potential competition in mind. The market would need to be further segmented into small sets to channelize product and marketing efforts and target only realistically achievable segments.
Sources of Market Problem Identification
For each identified target segment, a detailed persona analysis needs to be conducted for each possible buyer and user type. It would be required to research, define, and use these personas while analyzing any market problems. Persona analysis captures all possible aspects of a buyer or user including demographics, job description, incentives, motivations, and frustrations.
Further research needs to be conducted to uncover the potential market problems that can be the source of product ideas worth pursuing. Current customers can be studied [& observed], can be asked to participate in a design workshop and their customer service requests can be analyzed to understand their underserved needs. Customer journey mapping can be charted to understand customer’s pain areas/problems against each customer’s activities across various stages of their digital and physical touchpoints. Current products are also a great source identifying problems through NPS or customer satisfaction research data analysis and current business model and distribution analysis. One great tool for identifying latent needs is through empathy mapping, where empowered product teams try to understand what the customer would say, think, feel and do at every product touchpoint and then try to improvise the product offering to create customer delight.
Other sources include new possibilities through emerging technologies, industry mega trends, operations/support processes and any surprising consumer behavior apart from the initially thought product usage.
Market Problems Catalogue
By applying the above proven methods, more market problems can be identified than what can possibly be resolved in a short span of time. It is recommended to capture all these problem statements well and maintain a problems and ideas catalogue with the following details.
Once there is a solid problem backlog, the next step will be to prioritize the market problems to effectively win the market with definite product capabilities, built as per the product strategy.
Prioritize in alignment with Product Strategy
Some of the long range strategic frameworks are well described in 'Blue Ocean Strategy' book by Renée Mauborgne and W. Chan Kim i.e. Strategy Canvas (visualize organization’s capabilities against key competitors to understand which capabilities need to be pursued to compete well in market) and the four actions framework (to decide which capabilities need to be created, reduced, raised or eliminated to create a new value curve in market).
Below are the key techniques to maximize business value, leveraging limited organization resources:
- MoSCoW: Each market problem is categorized as either Must (absolutely important), Should (important but can wait), Could (desirable but not urgent), and Would (nice to have)
- Weighted Shortest Job First (WSJF): Prioritization based on an index of [cost of delay/job size] where the cost of delay is the summation of user-business value, time criticality and risk reduction indexes.
- KANO Model: Categorization of all market problems into three categories i.e. must-haves, performance, and delighters. It is expected that delighters will eventually become must-haves for the product category.
- Impact-Effort Matrix: Plotting of all problems in 2x2 matrix with impact and effort as the axis.
- Low effort - high impact quadrant will be easy wins
- Low effort – low Impact will add incremental value
- High effort – high Impact will be the big bets.
With a good set of prioritized market problems to solve, it is important to plan the build phase following a key product mindset principle i.e., Iterative product development approach. MVP and phased approach should be deployed to validate and build the product functionality iteratively. With these guardrails in mind for doing the right things, we can next focus on how to do things right!
About the Author:
Nitin Varshney is Director - Product Management at Optum Global Solutions and leads the product management team of product managers, product owners, market intelligence & strategy experts for various business segments across the healthcare spectrum. He is also co-lead for the NASSCOM Product Skills Initiative. He has deep industry experience, primarily in product management, product strategy, business consulting and business development for various US healthcare providers and payer business segments.
