Most technology companies have a product management department serving as the “voice of the customer” and helping to better understand market needs but is product management really being used strategically?
Most technology companies have a product management department serving as the “voice of the customer” and helping to better understand market needs.
This function typically generates an extensive roadmap of new products and enhancements, but is product management really being used strategically? For example, what is the product strategy that is driving roadmap priorities? And how is the product strategy linked to the company’s overall strategy?
Since most technology companies’ revenues come primarily from their products or services, you would think that the product strategy would be carefully crafted with the close scrutiny of the executive team and that it would be meticulously aligned with an overarching corporate strategy.
But this is often not the case. Without the engagement of the leadership team most responsible (and presumably most qualified) for determining strategy and direction, the risk is suboptimal financial performance at best, and complete company failure at worst. Let’s take a look at some practical approaches to making product management more strategic by engaging executives in key product strategy decisions and encouraging better corporate strategic planning.
The essential goal of a product plan should be to ensure that a product is built that delivers some business value to a specific set of customers in order to meet certain financial goals based upon a defined corporate strategy. Successive plans should increase that product’s effectiveness in doing so. A product plan describes the market opportunity, profiles the target customers, specifies pricing, identifies the financial goals, indicates the key priorities for development and enhancement, and provides a roadmap for delivery for at least the next four quarters.
For a new product, a comprehensive MRD (Market Requirements Document) might well serve as the product plan.But each product that continues to be offered to customers should have a product plan updated every year. So, how does product management create a good product plan?
Let’s assume that the product management department is already managing several products that are currently serving customers. After getting feedback from customers, speaking with the sales teams, obtaining a list of the top technical support issues, surveying competitor positions and features, and receiving new ideas from development, the product management team has generated a list of possibly hundreds of potential product enhancements across the product line as well as some new product ideas. Project prioritization typically takes place next due to limited development resources.
Many companies apply some arbitrary prioritization scheme based upon the perceived number of times the feature/product has been requested or how much revenue they think the feature can generate. The product manager (or his development friends) may also make assumptions about value based upon how they think the product should be used. The product management team then creates a roadmap and a release schedule based upon these priorities and voila, the product plan is done, right? No, it certainly is not!
The product plan is not complete because the company’s strategy has not yet been considered. The executives who are chartered with running the company have not had an influence on the product plan. The plan is merely a reaction to a somewhat random set of market facts and events.So how exactly does the corporate strategy relate to the roadmap? Well, the goal of almost any technology company is to increase revenues.
Without a strategy to indicate HOW the company plans to increase revenue, then just about any product plan could arguably help the company achieve its goal, including the plan we just created. But with a strategy that specified how new revenue will be generated, a product plan tailored to supporting that strategy can then be developed.
For example, your company could plan to grow revenue by selling its flagship product into new geographic regions. Your company could plan to grow by establishing a new reseller channel. Your company could grow by enhancing its existing products to appeal to a wider base of customers. Your company could plan to grow by developing new products that appeal to the existing customer base. Each of these decisions carries with it significant implications on the product plan.
Selling into new geographic regions would require local language support and may have other specific regional requirements. Selling through a reseller channel may require multi-tier administration and branding.Enhancing products to appeal to a wider customer base requires profiling that new customer and understanding his/her unique needs and requirements. And developing new products requires new analysis, requirements, design, and development work.
Thus, each of these strategies would result in a different prioritization of the projects on the product manager’s candidate list and a different allocation of resources. The product plan we created previously is reactionary and haphazard, while the product plan that responds to corporate strategy is directed and intentional.
So why aren’t corporate strategies incorporated into product plans? There are several possible reasons, but three of the most prevalent ones I have come across are: 1) no strategy exists, 2) the strategy has not been clearly communicated, or 3) the strategy appears inconsistent with market and customer data. Let’s analyze each in the following sections and propose some ways to solve them.
If no strategy exists, then one should be created. At one Internet Services company, the executive team employed a process where they reviewed and prioritized the top project requests every six weeks. This approach resulted in constantly shifting priorities since the highest priority projects were always related to the biggest sales opportunities at the time. Less critical product features never made the cut resulting in a product line that became increasingly uncompetitive. Without a driving strategy behind it, your company risks being jacked around by short-term opportunities.
Product management is in a good position to persuade executives to develop a high level strategy as part of the product planning process.Here are some key questions that product managers can ask executives to help with product planning that might very well stimulate some strategic discussions.
Bill Thomson is a consultant and expert in strategic product planning based in Fort Lauderdale, Florida. He has 25 years of experience conceiving, developing and successfully growing high-tech products and services and has over 12 years in product management leadership at companies including AT&T, Citrix, Adir Technologies,and NTT/Verio. Bill may be contacted at 954-757-9882 or email@example.com.