Thomson Medstat Transforms Product Management Through Intense Focus on Customer Needs

As part of the world’s largest professional information services provider, Thomson Medstat delivers mission-critical healthcare information and software tools that help its customers better manage the cost and quality of healthcare. This requires ongoing innovation, integration, and an intimate understanding of customers’ day-to-day work flow and information needs. The Medstat product management department has transformed the way it addresses these critical factors—resulting in significant improvements in R&D operations, time to market, and customer satisfaction.

Medstat is part of The Thomson Corporation, which generated $8.7 billion in 2005 by providing value-added information, software tools, and applications to more than 20 million users in the fields of law, tax, accounting, financial services, education, scientific research, and healthcare. Medstat is the leading provider of healthcare decision-support solutions. Its customers include Fortune 500 companies, more than 1,000 hospitals, state and federal government agencies, most major U.S. drug companies, and 100-plus health plans.

With a market so broad and deep, it’s a monumental challenge to keep information resources on the cutting edge. That’s where the Medstat Product Management team comes in. Doug Schneider, Vice President of Product Management, heads up a team of nearly 20 people charged with managing decision-support systems for Medstat. When he took over the product management helm several years ago, Schneider realized that extending the Medstat leadership position would require substantive changes—particularly in building a broader and deeper team to focus on customers’ needs.

So what exactly does Product Management do?

In the past, the answer to that question was somewhat murky. “If a task didn’t have a home, it landed in Product Management’s lap—primarily because no one really understood Product Management’s role,” Schneider says. “The team used to be called Product Planning, and we were focused heavily on specifying the features and functions we were going to build for the next release. If you are always planning for the next release, you lack focus on new market innovation and you wind up chasing the market.”

To help clarify the Product Management team’s mission and broaden its scope, Medstat turned to Pragmatic Marketing® for insights and best practices. “The Practical Product Management® course broadened our view of product management,” says Schneider. “When we looked at the Pragmatic Marketing Framework, we realized there were several areas we weren’t paying enough attention to. To become a mature and effective product management organization, we needed more complete coverage across all of the boxes included in the framework.

“The other ‘aha’ moment in the training,” Schneider continues, “was that we needed to get people into the field spending more time understanding customer needs. Too often, our product managers were getting pulled into working with Product Development on the next release and providing tactical sales support that could be done by others in the organization. That had to change.”

Mark Gillespie, a Director of Product Management at Medstat, echoes that sentiment. “In the training, the instructor drove home the message that you’re not going to learn anything sitting in your office. You have to get out there and talk to people—not just customers, but prospects. What transformed my role was becoming a market-facing product manager, getting out there and having my finger on the pulse. Yes, we need to understand what our competitors are doing. But if all we do is follow them, we’re going to lose. We need to be out there ahead of them and talking to the people who are going to buy.”

Clarity and focus boost customer satisfaction and the bottom line

After going through the course, Schneider reorganized his team into three main groups. The first is market-facing product managers, who serve the four decision-support markets that Medstat supports. The second group comprises platform-facing product managers, who oversee the company’s software assets. The third is a senior product manager responsible for driving new market innovation.

“Implementing market-facing product managers put a lot of clarity into our organization,” says Schneider. “Now there is a single focal point in Product Management for each market. More importantly, our product managers now spend more time in the field and less time looking over Product Development’s shoulder.”

The new organizational structure wasn’t the only transformation. Medstat also revamped its processes for defining and developing product requirements. “In the past, we had a traditional waterfall approach to the requirements process,” Gillespie recalls. “We would gather some information from customers, write a requirements document, and then throw it over the wall to Software Development. The problem was, we would get to the end of a software release and find that there was a gap between what Product Management was expecting and what Software Development delivered.

“Now, before we put pen to paper,” he says, “we conduct brainstorming sessions with the development team. We articulate where we want to go, and they can ask questions and try out ideas for solutions. As a result, the development team has a better understanding of the use of the product in the market. That front-end process has helped us close the gap between the vision and the reality of what’s delivered.”

The impact of the transformation has been substantial—both on customer satisfaction and the bottom line. “What we’re really going for in Product Management is a good return on investment for our R&D money,” Schneider explains. “In the last few years, we have significantly improved the amount of revenue we are generating per dollar of R&D. In other words, we have improved our innovation batting average by better understanding market needs. That also translates into a significant improvement in our customer satisfaction measurements—a 15% jump over the last three years across a very large customer base.”

Gillespie provides further evidence. “In the last year, we have seen a noticeable difference in the feedback from our Client Advisory Council. They are saying, ‘You are really hitting the mark and delivering exactly what we told you we wanted.’ That is directly attributable to the improvements in our requirements processes and in our new market-facing attitude.”

Solution rollouts vs. feature rollouts

Another important transformation occurred in the product rollout process at Medstat. “For a long time, we recognized the need to improve our go-to-market methodology, but the Pragmatic Marketing training gave us a standard framework for doing that effectively—including articulating strong value propositions and win themes,” Schneider explains.

Says Gillespie: “Previously, we would schedule meetings with marketing and sales teams a month before a release to demo product functionality and review a bullet list of features. Since going through the Pragmatic Marketing training, we are focused on the business value. Now we conduct ‘solution rollouts,’ in which we talk about what’s happening in the market, the latest buzz, what the competition is doing, our ‘marketecture,’ and the message we want to communicate to specific constituents. That has been very successful with the salespeople. And we are able to do that three to six months before a product is due to release. This gives Sales more lead time to talk with customers about what’s coming up and to include that positioning in RFPs.”

The impact on time-to-market has been profound. “Before, it took us 12 to 18 months to absorb a new capability into the field organization and start selling it effectively. We would have great new product capabilities, but it took a long time for the market to understand we had them. Now that is happening within 60 days of the product rollout.”

Boosting the “confidence factor”

By listening to the market, refining the requirements process, and strengthening the rollout process, Medstat also has boosted its sales and marketing teams’ confidence in communicating new innovations to the market.

“Today, by the time we baseline the requirements, we have a 90% confidence level in what will come out of the gates,” Gillespie says. “Our sales and marketing teams now have the right kind of information—well ahead of the curve—to talk to prospects with confidence and to lead the market. And leading the market is exactly where Medstat wants to remain.”