Book review: “Good Strategy. Bad Strategy”

I came across a senior executive a few months ago, let’s call him “Bob”, who talked me through his startup’s strategy. In short, Bob showed me three ‘strategic pillars’ for the business. Each pillar contained a load of specific products and initiatives. When I asked Bob about the strategic challenges that his business was looking to tackle, I got a blank stare in return. My explaining the need for having clear business and product strategies unfortunately didn’t seem to resonate much with Bob …

This experience prompted me to read “Good Strategy. Bad Strategy” which was first published by Richard Rumelt in 2011. Two main questions drove me to pick up a copy of “Good Strategy. Bad Strategy”:

  • Is this going to be yet another strategy book, with lots of buzz words but little tangible content!?
  • How can I clearly articulate what constitutes a good strategy and what makes a bad one?

Ultimately, I want to improve the way in which I take people like Bob on a ‘strategic journey’, helping them to convert their goals into proper strategies. “Good Strategy. Bad Strategy” definitely delivered on this objective. Firstly, it paints a good picture of the problem space surrounding strategy. The first part of the book is all about common misconceptions about strategy and explaining ‘why’ there’s so much bad strategy around. Secondly, the book then outlines what is needed to create good strategies, explaining what goes into the “kernel” of good strategy.

Bad strategy

“Good Strategy. Bad Strategy” starts off listing some of the hallmarks of bad strategy:

  • Fluff – Fluff is a form of gibberish masquerading as strategic concepts or arguments. For example, I believe that terms like “seamless” or multi-channel have become so overused that they have lost a lot of meaning.
  • Failure to face the challenge – Bad strategy fails to recognise or define the challenge that a company is facing. Bob’s strategy was a good example in this regard. His strategy provided a number of solutions without the underlying strategic problems or challenges they were intended to resolve.
  • Mistaking goals for strategy – Many bad strategies are just statements of desires rather than plans for overcoming obstacles. For example, phrases such as “entering new markets” or “becoming the leading [fill in any sector of your choice here]” leave me wondering “why?”. These high level goals fail to highlighting specific strategic obstacles or opportunities a business is facing.
  • Bad strategic objectives – A strategic objective is set by a leader as a means to an end. As  Rumelt explains, “strategic objectives are “bad” when they fail to address critical issues or when they are impracticable.” For example, if the strategic objective is “to become a world leading furniture maker”, I’d argue that this is a vision statement and not a strategy. A related strategy would describe some of the key challenges to overcome in order to achieve the vision. Rumelt goes one step further by arguing that Google’s “vision mission strategy” template often misses the mark, as he feels it doesn’t cover true analysis of the challenges and opportunities ahead.

In short, in “Good Strategy. Bad Strategy” Rumelt makes the point that most strategies fail to acknowledge the key obstacles or problems companies need to overcome. I see an analogy with  the need to engage in a constant obstacle race, and businesses competing to overcome certain hurdles first.

Fig. 1 – Strategy as an ongoing obstacle race – Taken from: https://www.pledgesports.org/2017/02/down-dirty-the-rise-of-the-obstacle-course-racing-industry/

So why is “bad” strategy such a common theme across so many businesses!?

The primary reason, as Rumelt highlights, is that bad strategy trumps analysis, logic and choice, with people hoping that they can avoid these often gnarly fundamentals and any issues in overcoming them. Rumelt stresses that “good strategy is very hard work”. I agree with this sentiment completely, as I’ve seen first hand that it can feel easier – in the short term at least – to ignore what’s happening or what could happen. Similarly, making strategic choices and deciding on tradeoffs is often very tricky and painful.

Good strategy

Rumelt describes the structure that underlies a good strategy as a “kernel” (see Fig. 2 below). The kernel of a strategy contains three elements:

  • A diagnosis that defines or explains the nature of the challenge. A good diagnosis simplifies the often overwhelming complexity of reality by identifying certain aspects of the situation as critical.
  • A guiding policy for dealing with the challenge. This is an overall approach chosen to cope with or overcome the obstacles identified in the diagnosis.
  • A set of coherent actions that are designed to carry out the guiding policy. These are steps that are coordinated with one another to work together in accomplishing the guiding policy.

In essence, the kernel forms the bare bones skeleton of a strategy. Aspects such as visions, hierarchies of goals and objectives or timeframes are typically left out of the kernel. These aspects are treated as support layers instead.

The diagnosis

Coming to a diagnosis is about, putting it simply, understanding what’s going on. For example, as soon as Bob and I started exploring the situation that his business was in, we came to the conclusion that it was operating in a market close to reaching saturation point. As Rumelt points out, “an explicit diagnosis permits one to evaluate the rest of the strategy.” In addition, by turning the diagnosis into critical part of the strategy, the rest of the strategy can be revisited as and when circumstances change.

The guiding policy

The guiding policy outlines an overall approach for overcoming the obstacles highlighted by the diagnosis. The guiding policy doesn’t commit to a specific set of actions. Instead, it rules out a number of actions and suggests an overarching method to deal with the situation as described in the diagnosis. For example, one’s guiding policy could be to focus on improving the lifetime value of existing customers as opposed to acquiring more new customers that conduct one-off transactions.

Coherent action 

Rumelt points out a common mistake people often tend to make by calling the guiding policy a “strategy” and subsequently stop there. Strategy is all about taking action to overcome obstacles or seize opportunities. This doesn’t mean that you need to outline every single proposed action in its finest detail, but at least provide sufficient clarity to help make certain concepts more realistic and tangible.

Fig. 2 – Maz Iqbal, Kernel of Strategy – Taken from: https://thecustomerblog.co.uk/2012/10/08/what-is-the-kernel-of-strategy-part-iv-coherent-action/

I felt that thinking about the kernel of strategy makes it easier to then figure out some of the strategy’s support layers:

  • Taking a strong position and creating options – Rumelt disagrees with strategic thinkers that feel that in uncertain and dynamic environments, companies do well to plan ahead as much as possible. In contrast, Rumelt argues, the more dynamic and uncertain the situation the more proximate a strategic objective should be. He cites President Kennedy announcing the US’ ambition to land a person on the moon by the end of the 1960s as a good example of a proximate goal. Despite not knowing exactly how or when the US could land a person on the moon, the US had done enough research and testing for President Kennedy to feel confident about taking a strong position (i.e. committing to the first moon landing) and to exploring various options to get there.
  • Hierarchies of objectives – In organisations of any size, high-level proximate objectives create goals for lower-level units, which, in turn, create their own proximate objectives, and so on and so forth. I really like Rumelt’s related point about proximate objectives cascading and adjusting over time, as it does justice to the uncertain and dynamic nature of most of today’s market environments.

Main learning point: “Good Strategy. Bad Strategy” is a great book for anyone slightly at loss where to begin when it comes to creating or evaluating a strategy. In the “kernel of strategy”, the book offers a very useful structure to underpin every (good) strategy.

Related links for further learning:

  1. http://www.stephenbungay.com/Strategy.ink
  2. http://panmore.com/google-vision-statement-mission-statement
  3. http://goodbadstrategy.com/
  4. https://www.youtube.com/watch?v=UZrTl16hZdk
  5. https://gbr.pepperdine.edu/2010/08/whats-the-problem/

My product management toolkit (22): how to create a product culture?

What can you do when you’ve joined a company that hasn’t (yet) got a proper product culture? Making it harder for you to do your job or get people’s buy-in. Unfortunately, this tends be harsh reality for a lot of product managers, who then become increasingly frustrated with a lack of progress or an unchanged mindset.

However, there’s no need to despair, as there are a number of techniques and tools to start instilling a product mindset and creating a product culture. In this piece, we’ll first define what product culture means and then explore ways in which you as a product manager can contribute to the creation of a product culture.

What is product culture?

Fig. 1 – Martin Eriksson, “What Is A Product Manager?” – Taken from: http://www.mindtheproduct.com/2011/10/what-exactly-is-a-product-manager/

If you look at the famous product management venn diagram by my friend Martin Eriksson it quickly becomes apparent how the three components of Martin’s diagram feed into my components of a strong product culture:

  • Customer understanding – We all know how easy it can be to pay lip service to ‘customer empathy’ or ‘understanding user needs’! However, a strong product culture begins and ends with your customers. In organisations with a strong product culture, all staff members interact with customers or are at least fully aware of their customer needs. Companies like Zappos and Amazon are well known for their focus on customer centricity factors (see Fig. 2 below). In my experience, signs of  non customer centric companies are those where only a small part of the business ‘owns’ the customer relationship or where the customer has become this imaginary persona for most staff members. Also, I encourage you to pose a healthy challenge to those people in the organisation who claim to “know what the customer wants” based on their experience.
  • Everything is geared towards creating great products – Throughout the company with a strong product culture one can find a strong sense of innovation, a desire to experiment in order to create great products. Etsy is a good example of a company that develops new products and services iteratively, constantly testing and improving on previous product releases. One of the telltale signs of a strong product culture is when employees possess what Marty Cagan refers to as a product mindset (see Fig. 3 below).
  • Value proposition and business model – A shared understanding of your business’ value proposition and business model is a clear sign of a good product culture. Alignment around the value you’re aiming to provide to your customers – combined with an awareness of who those customers are – is a critical part of a strong product culture, as it underpins the products and services that you put out there.
  • Curiosity and experimentation – You know that things could get challenging if you, as a product manager, turn out to be one of the few people in an organisation to ask ‘why’ and be curious. These are traits that can be learned and adopted, and the more innovative and customer centric businesses are those that aren’t afraid to be curious, learn and ‘fail well’. I heard a colleague of mine phrasing it quite well the other day when he spoke about “taking calculated risks”. In other words, taking risks in such way that you learn a lot – quickly and cheaply – about your riskiest assumptions, whilst any negative ramifications are limited or non-existent.

 

Fig. 2 – Steven MacDonald, How to Create a Customer Centric Strategy for your Business – Taken from: http://www.superoffice.com/blog/how-to-create-a-customer-centric-strategy/

 

Fig. 3 – Marty Cagan, Product Mindset vs IT Mindset – Taken from: http://svpg.com/product-vs-it-mindset/

  1. Purpose.  In an IT mindset organisation, the staff exists to service the perceived technology needs of “the business.”  In a technology-enabled product organisation, the staff exists to service the needs of your customers, within the constraints of the business.
  2. Passion.  In an IT mindset organisation, product and technology are mercenaries.  There is little to no product passion.  They are there to build whatever.  In a product organisation, product and tech are missionaries.  They have joined the organisation because they care about the mission and helping customers solve real problems.
  3. Requirements.  In an IT mindset organisation, requirements are “gathered” from stakeholders, prioritised in the form of roadmaps, and implemented.  In a product organisation, we must discover the necessary problem to solve or product to be built.
  4. Staffing.  The IT mindset shows up very visibly in the staff and the roles.  The lack of true product managers (especially strong product managers), the lack of true interaction designers, the prevalence of old-style project management, engineers unfamiliar with the demands of scale and performance, the existence of old-style business analysts, and heavy use of outsourcing, are all clear examples of this.  I would argue the most telling manifestation of the IT mindset problem is that the product managers in IT mindset companies are typically very weak, and at true product companies they are necessarily very strong.
  5. Funding.  In IT mindset companies you find them still funding projects (output) rather than product teams measured by business results (outcome).   There are many serious problems with this antiquated model, and it generates all kinds of bad behaviour in the organisation as they try to work around the constraints of this system, but most importantly, it results in very poor ROI for the company because of the very high cost of finding out which ideas work and which don’t.
  6. Process.  In IT mindset companies, you usually find very slow, heavy, Waterfall processes, even when the engineers consider themselves Agile.  The only part that would be considered Agile would be at the tail end of build, test and release.  Much of this stems from the Funding issue above, but deciding what areas to invest in, staffing a team, defining and designing the solution, and release planning are all typically very Waterfall.  Technology-enabled product organisations simply must move much faster, and work differently, in order to deliver the necessary solutions for our customers and our business.
  7. Silos.  In IT mindset companies, people align by function, creating silos between the different areas of the business, product, user experience design, engineering, QA and site operations.  In contrast, in a product organisation, we depend on true collaboration between product, user experience design, technology and the business units.  In a product organisation we optimise for product teams, not for the individual functions.
  8. Organisation.  In IT mindset companies, engineering is often under a CIO, and “product” (if it exists at all) is often under marketing or absorbed directly in the business units themselves.  In product organisations, there’s a big difference between the engineers that support “true IT” and those that work on the commercial products,  The True IT engineers usually report to the CIO, and the commercial product engineers report to a CTO.  Similarly, product is not a sub-function of marketing.  It is a top-level activity on par with marketing and technology.  It is not so much the org chart that matters here, as much as a recognition that the way we manage True IT work is very different than how we manage commercial product efforts.
  9. Accountability.  In IT mindset companies, accountability frankly is a farce.  The people actually working on a project typically have no real say in what they are building, and sometimes even in how it’s built, and even when it’s due.  In theory, the leadership team could try to hold the requesting stakeholders accountable for the results, but if they do they immediately hear complaints that they didn’t get what they actually wanted, and because of delays and costs, critical things had to get cut, and so it’s certainly not their fault.  So management writes it off as yet another failed technology initiative.  In contrast, in a product organisation, we are measured by results.
  10. Leadership.  As with so many things, much of this boils down to leadership.  In IT mindset companies, the technology is viewed as a necessary evil.  It is a source of fear more than a source of inspiration.  Leadership in IT mindset companies is always looking for a silver bullet when it comes to technology.  Maybe they should outsource the whole mess?  Or maybe they can acquire someone else that hopefully has a better track record than they do.   In contrast, in a product company, technology enables and powers the business.  It is embraced and valued.  The people that create the technology are respected as the key contributors they are.  Leadership in a commercial product company understands that it’s their job to create the culture and environment necessary to nurture continuous innovation.

Where to start?

As daunting it may sound, starting to create a product culture doesn’t have to be overly complicated or onerous. As always, my advice is to smart small. Kick things off with some simple but targeted initiatives:

  • A visioning workshop to create a shared product vision – A product culture starts with a shared vision of what the product is (not), and what we’re trying to achieve with it for our customers and our business. Lack of a shared vision usually manifests itself in a product that wants to be too many things to too many people. As a product manager you can drive both the creation and the shared understanding of a product vision, starting with the facilitation of a visioning workshop.
  • Agree on a mission statement (and make sure it’s omnipresent) – Whereas a product vision is typically more aspirational and future oriented, a mission statement is all about the problems your business is aiming to solve right now (see Fig. 4-5 below).
  • Live and breathe clear values that underpin your (product) culture – Naturally, every organisation will have its own unique values – both explicit and implicit. However, there are a number of values that I believe underpin most product cultures: curious (see above under “what is product culture?”), courageous, innovative, open, trying and learning. Formulating and agreeing on such values is the easy part; truly embodying them on a daily basis tends to be much harder. For example, within my current product team, we’ve got a ‘team manifesto’ which encapsulates our core values and principles, and we use this as a living reference point, asking ourselves regularly whether we’re actually living up to our principles.
  • 5 simple ways to become more customer centric – Especially if you find yourself in a business with an IT mindset (see Fig. 3), bringing the customer into the picture can be difficult. However, I’ve discovered and applied five simple techniques that have helped me in making organisations and colleagues to think more about the customer and their needs (see Fig. 6).
  • Hire and fire for the right behaviours and values – A successful product culture depends heavily on the people within the organisation. This means that when you’re hiring product people, you’ll be looking for some of the key values that underpin your product culture. For instance, when I recruit new product people, I always try to filter out any ‘product janitors’ as quickly as I can, simply because it doesn’t fit with the values that I’m trying to instil into my product teams. Equally, this also implies that you sometimes need to make tough decisions and fire those employees who might be great people but don’t form a good fit with your product culture and its underlying values (see above).
  • Clear goals, celebrate success and failure – Outcomes over outputs. I understand people’s obsession with certain features or ideas, but I believe that businesses benefit from a continuous focus on goals and problems instead of of fretting over features. I’ve found a goal-oriented roadmap to be a great tool in terms of driving an understanding of common goals.
  • Continuous learning – In my experience, the ‘learning’ aspect comes from continuously exploring different ways to tackle a problem, celebrating success as well as reflecting on the ‘failures’. The more you can share these learnings with the wider organisation, the better. This helps in creating a culture where there’s full transparency with regard to both achieved results as well as those things that didn’t go according to plan. In turn, this breeds a culture of experimentation, taking calculated risks, experimenting and being open about the outcomes, whatever they are.

 

Fig. 4 – Elements of a mission statement:

For (target customer)

Who (statement of the need or opportunity)

The (product name) is (product category)

That (key benefit, compelling reason to buy)

Unlike (primary competitive alternative)

Our product (statement of primary differentiation)

 

Fig. 5 – Mission statement examples from Patagonia and Cradles to Crayons – Taken from: https://blog.hubspot.com/marketing/inspiring-company-mission-statements

 

Fig. 6 – How do we become more customer centric – Five simple ways to get there:

  1. 5 customers every fortnight – User research and usability testing don’t have to part of massive projects, getting input from thousands of customers. In contrast, engaging with 5 (target) customers every two weeks goes a long way in my experience. It gives you an opportunity to learn continuously, in tandem with your development work and product / feature releases.
  2. Team based user research – I learned from UX expert Erika Hall about the importance of collaborative or team based research. The key point here is that user research isn’t a one person job. People across the business will benefit from learning from and about their customers.
  3. Exposure hours – Similar to team based user research, the idea behind so-called exposure hours is to share customer learnings directly with team members and stakeholders, by them sitting in on a user interview for example and being directly exposed to customers.
  4. Feeling what users feel – In my previous company, Notonthehighstreet, we had a programme called “In Your Shoes” which meant that all employees had to spend one day at a customer and be part of their businesses and lives for a day. It was a great to experience first hand the problems and needs customers have, and understand their contexts better.
  5. Product retrospectives – Finally, I’ve found product retrospectives to be a great way of instilling a more customer focused mindset. Regular product retrospectives are a great opportunity for a team and the wider business to reflect on its products or services. How are our products performing? What did we release last month and how is that release doing? What are our customers saying, thinking and feeling? Product retrospectives are explicitly not about the team or process improvements. Instead it’s all about the product and its users.

Main learning point: Creating a product culture is by no means easy but as a product manager there are number of tools and techniques one can use to instil a product mindset and a more customer-centric approach.

Related links for further learning:

  1. https://www.slideshare.net/abrahammarc1/how-to-create-a-product-culture
  2. http://svpg.com/establishing-a-true-product-culture/
  3. https://www.slideshare.net/reed2001/culture-1798664
  4. https://medium.com/we-are-yammer/onboarding-as-a-product-manager-cc7ad1d618c9
  5. https://www.quora.com/What-companies-have-a-strong-product-management-culture-and-how-do-they-achieve-it
  6. http://www.walkingthetalk.com/zappos-customer-centric-culture/
  7. http://www.superoffice.com/blog/how-to-create-a-customer-centric-strategy/
  8. https://leanstartup.co/heres-how-5-companies-create-remarkably-innovative-cultures/
  9. https://apptimize.com/blog/2014/01/etsy-continuous-innovation-ab-testing/
  10. http://www.svpg.com/the-product-manager-contribution/
  11. https://blog.hubspot.com/marketing/inspiring-company-mission-statements
  12. https://articles.uie.com/user_exposure_hours/
  13. http://www.tommyandlottie.com/in-your-shoes
  14. https://hbr.org/2012/11/its-not-just-semantics-managing-outcomes
  15. https://www.playbookhq.co/blog/lean-product-development-positive-economics-of-failing-fast
  16. http://www.cleverpm.com/2015/08/25/fail-fast-fail-cheap-and-fail-often/
  17. https://techcrunch.com/gallery/internet-trends-2017/

How PSD2 is set to change banking up as we know it …

Fig. 1 – A prophetic vision by Bill Gates!? – Taken from: https://www.slideshare.net/patrickpijl/how-square-is-disrupting-banks/6-Bill_GatesBANKING_ISNECESSARYBANKS_ARENOT

“Banking is necessary.  Banks are not.”  Yep. Bill Gates said it. Back in 1994. And 28 years later, it’s it’s set to become reality. From the 1st January 2018, banking will no longer be the exclusive domain of banking institutions because PSD2 is going to drastically alter the way in which we bank.

The biggest consequence is that more than 4,000 European banks will need to open their legacy (mainframe) data stores to Third Party Players (‘TPPs’) and allow them to retrieve account information (‘AIS’) or initiate payments (‘PIS’). Both capabilities will be facilitated through APIs. I wrote about the scope and ramifications of PSD2 a few months ago, and I’ve been thinking ever since about the implications for existing banks and whether they’ve got reason to be scared.

It would be surprising if some of the traditional banks weren’t nervous about the extent to which they’ll have to open their kimonos under PSD2. And even if the Facebooks, Googles or Amazons of this world don’t become banks overnight, I expect the traditional, lifelong bank-customer relationship to slowly evaporate as a result of PSD2 (and subsequent versions of PSD).

Fig. 2 – PwC: PSD2 providing third party access to data and payments via APIs – Taken from: https://www.finextra.com/finextra-downloads/newsdocs/catalyst-or-threat.pdf

Facebook could easily decide to become an AISP (Account Information Service Provider – see Fig. 2 above), which would enable them to offer an aggregated view of a user’s bank accounts. As a result, they would be able to analyse spending behaviour, understand their users’ financial profiles and personalise a user’s banking experience. This isn’t that revolutionary, as virtual assistants like Cleo and Treefin have already starting offering this functionality, and I believe it’s highly likely that we’ll see it roll out across Facebook Messenger or WeChat in the near future. If you need more convincing, Facebook made their first move two years ago by appointing David Marcus, former CEO of PayPal, to head up Facebook Messenger, so watch this space. Similarly, US bank Capital One integrated with Amazon’s virtual assistant Alexa last year. This integration enables Capital One customers to pay their credit card bills and check their balances, by talking to their Alexa devices.

Fig. 3 – PwC: Six API-powered banking business models – Taken from: https://www.finextra.com/finextra-downloads/newsdocs/catalyst-or-threat.pdf

In addition, any remaining doubters about the power of APIs are likely to be converted as a result of PSD2. In the current Fintech landscape, there already are large number of banks that are either using APIs to hook into existing banking infrastructures (e.g. Varo Money) or offer additional services (e.g. N26). PwC recently conducted a study into the strategic implications of PSD2 for European banks and they listed no less than six API-powered banking business models (see Fig. 3 above).

Main learning point: It will be interesting to see what the actual impact of PSD2 will be, but if I were a traditional European bank, I’d be working as hard as I could to open up my APIs from today and start working on the creation of strong alliances with 3rd parties and their developers. As Nas once rapped on “N.Y. State Of Mind”, “I never sleep cause sleep is the cousin of the death.” If I were a traditional bank I’d follow Nas’ advice and give up on sleep completely …

Nas, lyric on “N.Y. State of Mind (Illmatic, 1994) – Taken from: https://uk.pinterest.com/MrConceptz/hiphop-101/

 

Related links for further learning:

  1. https://www.finextra.com/blogposting/14101/psd2-is-fast-approaching-dont-bury-your-head-in-the-sand
  2. https://www.finextra.com/videoarticle/1469/data-is-a-key-legal-issue-for-open-banking
  3. https://techcrunch.com/2017/01/12/what-facebooks-european-payment-license-could-mean-for-banks/
  4. http://www.ibtimes.co.uk/apple-facebook-amazon-primed-psd2-demolition-card-networks-1606188
  5. https://www.siliconrepublic.com/enterprise/fintech-banking-psd2
  6. http://www.bankingtech.com/675841/psd2-and-the-future-of-payments/
  7. https://www.evry.com/en/news/articles/psd2-the-directive-that-will-change-banking-as-we-know-it/
  8. http://www.sepaforcorporates.com/single-euro-payments-area/5-things-need-know-psd2-payment-services-directive/
  9. https://techcrunch.com/2015/07/12/the-future-of-finance-is-in-real-time/
  10. https://www.finextra.com/finextra-downloads/newsdocs/catalyst-or-threat.pdf
  11. http://www.pymnts.com/news/b2b-payments/2015/task-force-launches-eu-instant-payment-plan/.VYpo1rnhBTI
  12. https://venturebeat.com/2016/06/05/say-hello-to-messenger-banking/
  13. https://www.finextra.com/newsarticle/28602/capital-one-integrates-with-amazon-alexa-for-voice-powered-payments

 

My product management toolkit (18): Keeping an eye on consumer trends

As a product manager, I know how easy it can be to get trapped into the every day and lose sight of what the future could bring. We tend to get immersed in the more tactical, day-to-day stuff and forget about the bigger picture. Also, there’s a daily avalanche of new technology developments and market trends, and it can be tempting to act on the latest trend, out of sheer fear to miss out. But how do you know whether it’s worth following up on a specific trend!?

A few months ago I learned more about how to best identify and assess trends by listening to a podcast with Max Luthy – Director of Trends & Insights at TrendWatching. TrendWatching have developed this very handy framework in the “Trend Canvas” (see Fig. 1 below).

 

screen-shot-2016-12-28-at-16-50-02

Fig. 1 – The Trend Canvas by TrendWatching – Taken from: http://trendwatching.com/x/wp-content/uploads/2014/05/2014-05-CONSUMER-TREND-CANVAS1.pdf

The Trend Canvas distinguishes between the “Analyze” and the “Apply” stages. During the Analyze stage, you assess a trend and its underlying drivers. What are the basic consumer needs a trend is serving and why? What kinds of change is this trend driving and why? In contrast, during the Apply stage you’ll look at ways in which you and your business can best tap into a trend, and who would benefit from this trend.

I’ve found the Trend Canvas to be very useful when exploring and assessing trends. The thing I like most about this framework is that it forces you to think about the customer and how a customer is impacted by a particular trend. Let’s take the trend of electric cars as a good example:

 

electric-smart-car

Fig. 2 – Smart Electric Drive – Taken from: https://cleantechnica.com/2015/07/31/11-electric-cars-with-most-range-list/

 Analyse trends

  1. Basic needs – What deep consumer needs & desires does this trend address? – I haven’t spoken to many electric car owners yet, but the ones that I’ve spoken to mention “environmental consciousness” and “cost saving” as the basic needs that drove their purchase of an electric car. The experts at TrendWatching mention some other typical types of basic of needs worth considering as part of your analysis (see Fig. 3 below).
  2. Drivers of Change – Why is this trend emerging now? – What’s changing? – To analyse the drivers of change, it’s worth looking at ‘shifts’ and ‘triggers’. Shifts are the long-term, macro changes that often take years or decades to fully materialise. For example, a rapidly growing global middle class and increasing scarcity of oil are significant drivers of the appeal of electric cars (this report contains some interesting insights in this regard). Triggers are the more immediate changes that drive the emergence of a consumer trend. These can include specific technologies, political events, economic shocks and environmental incidents. I feel that recent improvements to both the technology and infrastructure with regard to electric cars are important triggers.
  3. Emerging Consumer Expectations – What new consumer needs, wants and expectations are created by the changes identified above? – Where and how does this trend satisfy them? – Purchasing expensive fuel for your car is no longer a given, and consumers starting to become much aware of the cheaper and environmentally friendly alternative in electric cars.
  4. Inspiration – How are other businesses applying this trend? – When analysing a trend, a key part of the analysis involves looking at how incumbent businesses are applying a trend. For example, the Renault-Nissan alliance has thus far been the most successful when it comes to electric cars and learning about the ‘why’ behind their success will help one’s own trend analysis.

Fig. 3 – Basic needs categories to consider when analysing trends – Taken from: http://trendwatching.com/x/wp-content/uploads/2014/05/2014-05-CONSUMER-TREND-CANVAS1.pdf

  • Social status
  • Self-improvement
  • Entertainment
  • Excitement
  • Connection
  • Security
  • Identity
  • Relevance
  • Social interaction
  • Creativity
  • Fairness
  • Honesty
  • Freedom
  • Recognition
  • Simplicity
  • Transparency

 Apply trends

  1. Innovation Panel – How and where could you apply this trend to your business? – To me, this is one of the crucial steps when exploring trends; asking yourself that all important question – how can I best apply this trend to my business? For example, how does a specific trend fit in with our current offering of products and services? Why (not)? It’s similar to when you assess a product opportunity and go through a number of questions to look at the viability of a trend for your business (see Fig. 4 below).
  2. Who? Which (new) customer groups could you apply this trend to? What would you have to change? – How often do we forget to think properly about who this trend is for and why they benefit from it. Which demographic is this trend relevant for and why? For instance, with electric cars, one could think about middle class families who are very cost and environmentally conscious consumers.

Fig. 4 – Assessing “Innovation Panel” when applying trends – Taken from: http://trendwatching.com/x/wp-content/uploads/2014/05/2014-05-CONSUMER-TREND-CANVAS1.pdf

  • Vision: How will the deeper shifts underlying this trend shape your company’s long-term vision?
  • Business Model: Can you apply this trend to launch a whole new business venture or brand?
  • Product / Service / Experience: What new products and services could you create in light of this trend? How will you adapt your current products and services?
  • Campaign: How can you incorporate this trend into your campaigns, and show consumers you speak their language, that you ‘get it’.

Main learning point: The Trend Canvas provides a great way for anyone to assess trends and innovations, looking at a trend from both a consumer and a business point of view.

 

Related links for further learning:

  1. http://productinnovationeducators.com/blog/tei-083-trend-driven-innovation-for-product-managers-with-max-luthy/
  2. http://blog.euromonitor.com/2012/11/10-global-macro-trends-for-the-next-five-years.html
  3. http://trendwatching.com/trends/pointknowbuy/
  4. https://about.bnef.com/blog/liebreich-mccrone-electric-vehicles-not-just-car/
  5. http://trendwatching.com/trends/cleanslatebrands/
  6. http://www.cheatsheet.com/automobiles/10-car-companies-that-sell-the-most-electric-vehicles.html/
  7. http://www.cheatsheet.com/automobiles/the-10-best-selling-electric-vehicles-of-2014.html/

My product management toolkit (17): Assess market viability

Whether you’re a product manager or are in a commercial or strategic role, I’m sure you’ll have to assess market viability at some point in your career. For that reason, I wrote previously about assessing markets, suggesting tools that you can use to decide on whether to enter a market or not.

A few weeks ago, I listened to a podcast interview in which Christophe Gillet, VP of Product Management at Vimeo, gave some great pointers on how to best assess market viability. Christophe shared his thoughts on things to explore when considering market viability. I’ve added my sample questions related to some of the points that Christophe made:

  1. Is there a market? – This should be the first validation in my opinion; is there a demand for my product or service? Which market void will our product help to fill and why? What are the characteristics of my target market?
  2. Is there viability within that market?  Once you’ve established that there’s a potential market for your product, this doesn’t automatically mean that the market is viable. For example, regulatory constraints can make it hard to launch or properly establish your product in a market.
  3. Total addressable market – The total addressable market – or total available market – is all about revenue opportunity available for a particular product or service (see Fig. 1 below). A way to work out the total addressable market is to first define total market space and then look at percentage of the market which has already been served.
  4. Problem to solve – Similar to some of the questions to ask as part of point 1. above, it’s important to validate early and often whether there’s an actual problem that your product or service is solving.
  5. Understand prior failures (by competitors) – I’ve found that looking at previous competitor attempts can be an easy thing to overlook. However, understanding who already tried to conquer your market of choice and whether they’ve been successful can help you avoid some pitfalls that others encountered before you.
  6. Talk to individual users  I feel this is almost a given if you’re looking to validate whether there’s a market and a problem to solve (see points 1. and 4. above). Make sure that you sense check your market and problem assumptions with your target customers.
  7. Strong mission statement and objectives of what you’re looking to achieve  In my experience, having a clear mission statement helps to articulate and communicate what it is that you’re looking to achieve and why. These mission statements are typically quite aspirational but should offer a good insight into your aspirations for a particular market (see the example of outdoor clothing company Patagonia in Fig. 2 below).
  8. Business goals  Having clear, measurable objectives in place to achieve in relation to a new market that you’re considering is absolutely critical. In my view, there’s nothing worse than looking at new markets without a clear definition of what market success looks like and why.
  9. How to get people to use your product – I really liked how Christophe spoke about the need to think about a promotion and an adoption strategy. Too often, I encounter a ‘build it and they will come’ kind of mentality which I believe can be deadly if you’re looking to enter new markets. Having a clear go-to-market strategy is almost just as important as developing a great product or service. What’s the point of an awesome product that no one knows about or doesn’t know where to get!?

Main learning point: Listening to the interview with Christophe Gillet reinforced for me the importance of being able to assess market viability. Being able to ask and explore some critical questions when considering new markets will help avoid failed launches or at least gain a shared understanding of what market success will look like.

 

Fig. 1 – Total available market – Taken from: https://en.wikipedia.org/wiki/Total_addressable_market

1000px-tam-sam-market

Fig. 2 – Patagonia’s mission statement – Taken from: http://www.patagonia.com/company-info.html

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Related links for further learning:

  1. http://www.thisisproductmanagement.com/episodes/assessing-market-viability
  2. http://www.mindtheproduct.com/2013/05/poem-framework/
  3. http://smallbusiness.chron.com/determine-market-viability-product-service-40757.html
  4. https://en.wikipedia.org/wiki/Total_addressable_market
  5. https://blog.hubspot.com/marketing/inspiring-company-mission-statements

App review: Zuora

One of the product areas I’m keen to learn more about is billing; understanding how small businesses go about (recurring) billing. A few years ago, I used Recurly to power subscription management and payments for a music streaming service. I’ve now discovered Zuora, who aspire to “turn your customers into subscribers.”

“The world subscribed” – I really like Zuora’s vision – “the world subscribed” – and its 9 keys to building a subscription based business (see Fig. 2 below). Zuora aims to make managing subscription payments as intuitive as possible. For example, when I look at the info that Zuora provides on a specific customer account, it feels clear and clean, enabling the user to digest key account information at a glance (see Fig. 3 below).

Part of an ecosystem – The thing I like best about Zuora is the numerous integrations it has with partners and marketplace apps. As a result, Zuora users can integrate easily with payment gateways such as Adyen and link with accounting software packages such as QuickBooks. Similarly, there’s a whole host of apps and plug-ins that Zuora users can choose from.

Main learning point: Even though subscription management / billing forms the core of Zuora’s value proposition, I feel that there’s much more to it: helping people run their business operations as efficiently as possible. I don’t know whether the people at Zuora would agree with me on this vision, but I believe that, especially through it’s 3rd party integrations, Zuora can support its users more widely in their day-to-day operations.

Fig. 1 – Screenshot of Zuora’s “Quotes” overview – Taken from: https://www.getapp.com/finance-accounting-software/a/zuora/

9966-1523463673

Fig. 2 – Zuora’s 9 keys to building a subscription based business – Taken from: https://www.zuora.com/vision/the-9-keys/

  1. Price – Find your sweet spot. Dynamically adjusting pricing and packaging is the surest way to attract and retain customers, and multiply the value of your relationships.
  2. Acquire – Boost subscription rates with tools like flexible promotions, integrated quoting and multi-channel commerce.
  3. Bill – Subscriptions mean more invoices and more payments. Automatically generate fast, accurate bills and deliver them online.
  4. Collect – Get paid. Collect payments instantly through automated and manual channels, while maximising completed transactions and minimising write-offs.
  5. Nurture – Build beautiful relationships. Keep your customers engaged and happy. Seamlessly manage rapidly changing upgrades, conversions, renewals and other orders.
  6. Account – Measure everything. Twice. Zuora plugs straight into your accounting software and General Ledger. Register subscription and process deferred revenue with ease.
  7. Measure – No paper, no worries. Analytics make forecasting, accounting close and audits a breeze. Plus, it gives you the right insight your subscribers, so you can make smarter decisions.
  8. Iterate – Try something new every day. Subscriptions can involve complex customer relationships. Zuora lets you iterate and test what’s working with just a couple of clicks.
  9. Scale – Get growing. Zuora is built on a secure, scalable technology infrastructure. So wherever you start out, we’ll keep the system running as you grow.
Fig. 3 –  Screenshot of Zuora’s “Customer Accounts” page – Taken from: https://www.crunchbase.com/organization/zuora#/entity
zuora-1
Related links for further learning:
  1. https://www.boomi.com/solutions/zuora/
  2. https://www.zuora.com/product/partners/
  3. https://connect.zuora.com/appstore/apps
  4. http://fortune.com/2014/06/10/10-questions-tien-tzuo-founder-and-ceo-zuora/
  5. http://www.forbes.com/sites/edmundingham/2015/10/13/why-own-anything-anymore-zuora-founder-explains-rise-of-subscription-economy-at-subscribed-ldn/#735812d65a49
  6. http://blog.servicerocket.com/podcasts/episode-7
  7. https://www.zendesk.com/customer/zuora/
  8. https://medium.com/the-mission/the-greatest-sales-deck-ive-ever-seen-4f4ef3391ba0#.xbezrudzi

My product management toolkit (14): Product Portfolio Planning

One of the key things that I’ve had to learn over the last couple of years is how to best manage a portfolio of products. When I started out as a product manager, I could focus on a single product and was fully accountable for the performance of that product. However, as time has gone by, I’ve found myself becoming responsible for a range of products, and having to make tough trade-off decisions between them. Being able to manage a portfolio of products is therefore an important skill to have in your toolkit as a product manager:

  1. What is a product portfolio? – A set of products, services or features that a company offers and which often need to be managed simultaneously.
  2. What is product portfolio management? – Managing a portfolio of products is all about a balanced allocation of resources – people, time, money, hardware, etc. – to achieve business goals. It’s all about “value maximisation” as new product development expert Carrie Nauyalis called out in a recent podcast.
  3. Types of product portfolio: top down – “Top down” portfolios are typically more strategic, with a ‘programme of work’ at the top (see Fig. 1 below). For example, the business might be looking to deliver products or services into a new market. These are often conscious decisions, taken at the executive level of an organisation.
  4. Types of product portfolio: bottom-up – With “Bottom up” portfolios, the strategy is often coming from customer requests – both with regard to B2C and B2B products or services – and tends to be more tactical. For example, customers asking for specific features to meet their needs or to solve their specific products.
  5. It’s all about analysing trade-offs and decision making! – Some product people use a Stage-Gate approach to create and manage a balanced portfolio, and to help make tough prioritisation and trade-off decisions (see Fig. 2). I personally don’t use the Stage-Gate approach, since I work in more a iterative and continuous fashion, but to me it’s all about linking to key goals and results that the business is looking to achieve, and making hard trade-off decisions on the back of these data points (see Fig. 3 below).
  6. Use data to make your trade-off decisions and evaluate product portfolio performance – As the aforementioned Carrie Nauyalis explained in the podcast, the ultimate role of having a product portfolio is to analyse. Looking at performance of the different products within a portfolio and understanding how they each attribute to key business goals. Reason why I believe it’s critical to include metrics in your product portfolio roadmap – you can see a good example of this in Roman Pichler‘s template for a goal-oriented product portfolio roadmap (see Fig. 3 below).

Main learning point: I don’t feel like you need a whole new toolkit just to manage a suite of product or services. What I’ve learned about managing product portfolios is that it brings difficult trade-off questions to the fore more. Having a clear, goal-oriented product portfolio roadmap will help you in analysing  trade-offs better and making well-informed decisions.

 

Fig. 1 – Top down vs Bottom up approach to portfolio management – Taken from: https://www.sopheon.com/top-down-vs-bottom-up-resource-planning-which-is-better/

screen-shot-2016-10-17-at-08-54-30

Fig. 2 – The standard Stage-Gate approach to product innovation – Taken from: http://www.stage-gate.com/resources_stage-gate_omicron.php

img_chart_nov

Fig. 3 – A goal-oriented product portfolio roadmap – Taken from: http://www.romanpichler.com/blog/the-go-portfolio-roadmap/

the-go-porfolio-roadmap-template

Related links for further learning:

  1. http://www.planview.com/solutions/product-development/product-portfolio-management-for-product-development/
  2. http://www.prod-dev.com/portfolio_management.php
  3. http://www.stage-gate.net/downloads/wp/wp_13.pdf
  4. http://www.romanpichler.com/blog/the-go-portfolio-roadmap/
  5. http://www.productinnovationeducators.com/blog/tei-084-product-portfolio-management-with-carrie-nauyalis/
  6. https://www.sopheon.com/top-down-vs-bottom-up-resource-planning-which-is-better/