My product management toolkit (21): Assessing opportunities

Earlier this year I wrote about the tools and techniques to use when exploring market viability. I believe that the ability to properly assess specific opportunities is closely linked. I’ve found that, especially at the early startup stage, there are plenty of opportunities to potentially go for, as they’ll all bring in revenue and offer growth potential.

However, I believe that this can be a blessing and a curse. I’ve seen companies that went for all business / market opportunities and ended up with heaps of technical debt, operational cost or bespoke solutions that couldn’t be reused. Hence why I believe it’s critical for us product managers to be able to assess opportunities and make tough tradeoff decisions.

Let’s look at some of the tools and techniques you can use to assess and decide on opportunities:

1. Business Case

 

Fig. 1 – Sample business case format – Taken from: https://www.slideshare.net/projectingit/the-prince2-business-case

I’m pretty sure that we’ve all seen a business case template like the one in Fig. 1 before. The biggest risk I see with most business cases is that people spend an awful lot of time drafting them, for the business case to become obsolete as soon as the product has been built or launched.

Pros:

  • A familiar format for most stakeholders
  • Detailed breakdown of revenue & cost projections

Cons:

  • Often based on lots of assumptions, which are then treated as gospel
  • Often out of date as soon we start building or launching a product

2. Opportunity Assessment

1. Exactly what problem will this solve? (value proposition)
2. For whom do we solve that problem? (target market)
3. How big is the opportunity? (market size)
4. What alternatives are out there? (competitive landscape)
5. Why are we best suited to pursue this? (our differentiator)
6. Why now? (market window)
7. How will we get this product to market? (go-to-market strategy)
8. How will we measure success/make money from this product? (metrics/revenue strategy)
9. What factors are critical to success? (solution requirements)
10. Given the above, what’s the recommendation? (go or no-go)

By Marty Cagan – Taken from: http://svpg.com/assessing-product-opportunities/

In my toolkit blog post no. 6 I wrote about Marty Cagan’s opportunity assessment, and how you can compare product opportunities or ideas in a very objective and like-for-like manner.

Pros:

  • Less time consuming than business cases
  • More market, customer and problem centric, easy to translate into testable hypotheses
  • Outcome focused, establishing clear success factors early on

Cons:

  • Unfamiliar format for some stakeholders
  • Less numbers centric than a business case

3. Auftragsklärung (Alignment Framework)

Fig. 3 – Auftragsklärung template – Taken from: http://produktfuehrung.de/framework-no-9-auftragsklarung/

The product guys at Germany-based Xing have a created a very useful tool called “Auftragsklärung” or Alignment Framework, which helps assessing opportunities at the earliest stage possible.

Pros:

  • Helps to ‘take a step back’, honing in on fundamental questions
  • Facilities strategic thinking
  • Ongoing reference point for bigger opportunities 
  • Outcome and metric focused

Cons:

  • Unfamiliar format for some stakeholders
  • Risk of being too high level to base trade-off decisions on

4. Scoring

Fig. 4 – Scoring against a number of assessment factors – Taken from: https://www.slideshare.net/JasonBrett/the-60-second-business-case

What I like about this “scoring” method as created by Jason Brett is the idea of quantifying one’s assessment, using comparative scores. At the same time, however, my worry is that people can score subjectively to achieve a desired result.

Pros:

  • Encourages thinking about key considerations e.g. customer experience and operational necessity
  • Quantifiable and comparable results

Cons:

  • Risk of people making up numbers to meet the criteria 🙂
  • Finger in the air and subjective
  • Harder if some of the weighting factors have not been fully defined

5. Change Types

Fig. 5 – Doblin Ten Types of Innovation – Taken from: http://blog.hypeinnovation.com/using-the-ten-types-of-innovation-framework

With Doblin’s Ten Types of Innovation, the focus isn’t just on the product that you’re looking to develop. The model encourages us as product manager to carefully consider aspects such as the underlying business model and the experience around your product or service.

Pros:

  • Encourages thinking about business and customer impact
  • Easy to translate and communicate from a dual track roadmap point of view
  • Thinking beyond just the product or service

Cons:

  • High level, harder to base trade-off decisions on
  • Open to subjective views on nature of change

6. Minimum Viable Product (‘MVP’)

Fig. 6 – Definition of an MVP – Taken from: https://www.quora.com/Where-is-the-line-for-MVPs-minimum-viable-products-What-are-your-principals-guidelines-for-defining-your-MVP-in-particular-where-to-stop-building-too-much

Readers of my blog will undoubtedly know how much of a fan I am of MVPs, but only in the truest sense of the word. For example, when I developed my own MVP a few years ago, I tried to be as strict as possible with the minimum number of feature that could deliver maximum value to my users and maximum learning to me.

Pros:

  • Delivering value early
  • Early customer validation
  • Bringing riskiest assumptions forward
  • Increase speed to market

Cons:

  • Misunderstanding of what an MVP is / isn’t
  • Open to abuse; misinterpreting “minimum” and “viable”
  • “When are you going to do everything else!?”

7. Calculating Cost of Delay

Fig. 7 – Cost of Delay; Weighted Shortest Job First  (taken from: http://scalingsoftwareagilityblog.com/prioritizing-features/)

Fig. 8 – Cost of Delay Divided by Duration – Taken from: http://blackswanfarming.com/cost-of-delay-divided-by-duration/

When assessing opportunities or making tradeoff decisions it’s important to look at the cost of not doing something (now). I often see people either deciding to everything at one – I don’t consider that prioritisation 🙂 –  or not take into account cost of delay when making assessments.

8. Calculating Return on Investment (‘ROI’)

Fig. 9 – ROI formula – Taken from: https://www.poweredbysearch.com/blog/ppc-advertising-roi-calculator/

Similar to creating business creating business cases, the risk with calculating ROI at the very beginning of the product lifecycle or project is that you pluck figures out of the air. Often this simply occurs because you don’t yet have any actual figures to apply – especially with true greenfield opportunities.

However, having  initial ROI calculations based on the numbers available can serve as a very useful ongoing reference point to compare as soon as the product enters its lifecycle. This way you can start comparing and contrasting actual vs planned ROI and act based upon your insights gained.

Main learning point: Whichever tool or approach you use to assess opportunities I don’t care, as long as you find a way to ‘take a step back before going straight into decision and/or build mode!

Related links for further learning:

  1. https://www.prince2.com/uk/prince2-business-case
  2. http://svpg.com/assessing-product-opportunities/
  3. http://produktfuehrung.de/framework-no-9-auftragsklarung/
  4. https://en.wikipedia.org/wiki/Outcome-Driven_Innovation
  5. https://hbr.org/2002/01/turn-customer-input-into-innovation
  6. http://johnpeltier.com/blog/2014/01/06/opportunity-assessment/
  7. https://www.slideshare.net/JasonBrett/the-60-second-business-case
  8. http://blog.hypeinnovation.com/using-the-ten-types-of-innovation-framework
  9. http://blackswanfarming.com/four-steps-to-quantifying-cost-of-delay/
  10. https://marcabraham.wordpress.com/2014/04/07/my-learnings-from-lean-day-london-14/
  11. http://blackswanfarming.com/wp-content/uploads/2014/03/BlackSwanFarming-Canvas.pdf
  12. http://blackswanfarming.com/cost-of-delay-divided-by-duration/
  13. http://www.marketingmo.com/campaigns-execution/how-to-calculate-roi-return-on-investment/
  14. http://www.investopedia.com/articles/basics/10/guide-to-calculating-roi.asp
  15. http://www.tracead.net/161/roi-return-on-investment-how-to-calculate-roi
  16. http://transformcustomers.com/minimum-viable-product-how-it-helps-time-to-market/
  17. https://www.quora.com/Where-is-the-line-for-MVPs-minimum-viable-products-What-are-your-principals-guidelines-for-defining-your-MVP-in-particular-where-to-stop-building-too-much

 

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