What Products Must Have To Succeed?MODULE OBJECTIVEAt the end of this module, you will be able to understand:
- What Is the Management of Products?
- What Products Must Have To Succeed
- The Product Life Cycle Framework and Product Life Cycle Process
- Required competencies for successful management of products
- Decision Making and Organizational Structure
- Values And Vision
- Future of Management of Product in Today’s Today’s Business Environment
- Careers in Management of Products
SESSION OBJECTIVEAt the end of this session, you will learn:
- The key things products must have to succeed
“If everyone is moving forward together, then success takes care of itself.”Henry Ford
- Technology: The organization of knowledge for practical purposes
- Product failure rate: The percent of new products actually introduced to the market and then fail to meet commercial objectives of the business unit that launched the product.
- Product Market Strategy
- The Product Life Cycle Framework and
- Product Life Cycle Process
- Process Maturity
- Decision Making
The world, according to Battelle, spent about $1.6 Trillion on research and development in 2014. Each year Battelle and R&D Magazine reports on their “annual forecast of global research and development funding, which is a public service for use by policy makers, corporate research leaders, researchers, educators, and economists.” They claim that research and innovation “contribute in the short and long terms to prosperity and competitiveness, as well as to the resolution of society’s greatest challenges in areas like health, energy, and security.” But not all of those expenditures translate into “prosperity” because many of the resulting products and services fail in the market place. We will discuss throughout this book the reasons for those failures and what key things can be done to reduce the rate of failure and as a result reduce waste and increase the productivity of research and development.
The common assertion is that 80-90% of products fail. It is repeated widely and, as a result, according to George Castellion of SSC Associates and Stephen K. Markham of North Carolina State University, it is an urban myth as they discuss in their white paper entitled: “Myths About New Product Failure Rates: New Product Failure Rates: Influence of Argumentum ad Populum and Self-Interest”. They say, “The common assertion that 80-90% of products fail is an “urban legend.” The empirical literature does not support this popular belief. No matter how many times it is asserted or how many people believe it, the idea that 80% of products fail is as common as it is wrong. The actual product failure rate is around 40%.” Ok, so instead of having wasted between $1.28 B and $1.44 B our world only wasted $.64 Trillion in resources. Even if we could do just a little better, the increase in productivity will have a measurable impact on improving society because successful products can enhance life and the environment if applied. Imagine if we could use the same techniques that reduced airplane accidents to reduce the level of product failure! In the same way Steve Jobs built a company (with a ton of help from many others) that changed the world, imagine if other companies and organizations can also do the things Apple does well, too. That shall also truly change the world and help many more beyond those who purchase Apple’s products. Our studies have found that product failures tend to fall into six general areas. In this session we will give you a high level overview of the six essential keys to averting failure and enhancing the chances of product success.
These are the keys of product success and company success:
We will cover each in more detail in this section.
The first key to product success is to have a strategy. A strategy for the product. A product market strategy. By strategy we mean exactly that “a plan of action or policy designed to achieve a major or overall aim.” All too often products are developed with this process in mind: Some even call it: Ready, Fire, Aim. A very popular expression used by venture capitalists, angel investors and others. They are flat wrong. What happens if:
- What is conceived is not solving the problems of what people and/or companies do?
- What is developed is for problems people and companies have no interest in solving?
- Sales people swarm the masses pushing a product that people don’t want or need?
But it is done all the time. In fact, it appears it is a good part of the 40% failure rate of products/services and the failure of startups. Here is what is missing. The strategy or plan. We will cover each of these topic in greater detail in subsequent sessions. But here are the key components of the product market strategy.
Do you completely understand what your customer does? What are the tasks they are trying to get done. What job are they trying to accomplish? For a “business to consumer” activity do you know your customer’s customer and what they “do”?
Can you innovate? Can you come up with ideas, not for the sake of ideas, but with ideas that solve real problems you know your customers are having. Market and competitive researchCan you do market research and/or direct someone who can? Can you do competitive research on both the products that compete with you and with the companies you are competing with?
Can you identify and define targeted personas based upon your research?
Based upon understanding what your customers want to do, your innovation and your target personas, can you develop and write a clear value proposition? Your marketing and sales people’s success depends on this.
Based upon your value proposition and market/competitive research can you come up with a compelling positioning statement that you marketers can translate into compelling messaging that is memorable and enables your product to stand out?
Can you aggregate your personas into markets and pick the ones that will give you the greatest success?
Can you produce a sensible product roadmap for both your insanely great customers and for your sales team? That is easy to understand and will solve their problems?
Can you implement? Can you get things done in a timely fashion?
If you can get any of these things done better than the competition, they become significant differentiators and will make life difficult for them. The more you can do well, the more differentiators you have, and the better your chances of success.
Over time, the elements of this strategy become your “brand”, the “promise” of your product and/or company that sets you apart from your competition. Apple does this extremely well and it is a major part of their success.
2. Process: Product Life Cycle Framework, Process, Maturity and Responsibility
“If you don’t have a product life cycle process you end up having a culture of blame” VP of product management in Silicon Valley. Do you have a repeatable, mature and optimized product lifecycle framework with a process? Without such a framework that includes who makes what decisions, who needs to be informed/consulted and who is driving the product, you will not only enhance your chances of failure but also will develop a culture of blame within the organization. You also will not be able to move up the process maturity curve. A product life cycle, that everybody agrees to stick to, will enhance the chances of success and reduce duplication of effort and nearly eliminate rushing a product to market before you are ready. Strong, clear processes will build a “can-do” culture. A culture of success.
Example: I was the product manager for the first desktop video editing system ever sold. One day we were preparing to display that product at a trade show. The marketing communications manager came to me and demanded that I produce copy points or bullets he could put on the trade show signage. Keep in mind he was rated on how well he got text on signs and didn’t care what the sign said. I said “I just started this job (I took over for a recently departed product manager) and for the past month I have been trying to get senior managers (CEO, Marketing Manager, Engineering Manager and Sales VP) to sit down and agree on:
- What does the product “do”?
- What are the target personas?
- How do we compare to the competition?
- What is the target market(s)?
- What is our positioning statement?
I couldn’t get them to sit down and discuss those six questions. Further, when I talked with each of them individually, they had different answers to each question.
- What does the product “do”? They said:
- Video switcher
- Machine controller
- Character generator
- What are the target personas? They said:
- Macintosh users
- Video users
- How do we compare to the competition? They said:
- Runs on a Macintosh
- What is the target market(s)? They said:
- Macintosh users
- Video users
- What is our positioning statement? They said:
- Desktop video (What does that mean. Shoot a video of a desktop? Does anyone understand what that means?)
At that point the company had raised $30 M from one of the leading venture capital firms at the time Kleiner Perkins. The lead investor was Vinod Khosla who was a co-founder of Sun Microsystems and went on to champion Green Energy. He had placed me in that job. I found out that the company had not done any market research, so even if the questions I raised were answered by the CXOs, it was merely speculation based upon their experience and not on hard research. So the marketing communications manager, exasperated by my response, drafted some key value propositions based on the CXOs guesses, made his signs, spent $120,000 on the show, generated 1,200 leads (I should say that the “leads” were people that wanted the T shirt and had little interest in the product) and resulted in $24,000 in sales. Most would agree that was not a good return on investment. The first thing I did was primary market research and found the product was being used by video professionals in post production suites, not the targeted Mac user. It cut the cost of a post production suite in half. It help integrated discrete components in the suite. The target market is those who already know how to product videos not the targeted Macintosh user who does not know video production. The CXOs at my company did not know this. A year after I left the company, the company went out of business riding the tail of over 30% of its customer being dissatisfied with its products and support. If that company had a product life cycle framework as shown below, everybody might have understood where the six holes described above are and help try to fill them. This framework depicts the major stages of a product’s lifecycle:
- Product Planning
- Product Development
- End of Life
It is a framework designed specifically for products and services. Many companies have tried to adopt frameworks from software engineering, quality control, just in time manufacturing but with varying levels of success. We will cover each of these in detail throughout the rest of this book.
This diagram describes the context in which the framework operates in an agile fashion. The framework goes from innovating of the product, to agile management and to end-of-life.It starts with conceiving the product and then in the agile management phase, it iterates from planning, to developing, to validating the product in the marketplace and with customers, to launching the product and sustaining marketing. It ends with an end of life plan that should protect your customer’s investment and loyalty to you. The entire framework is based upon a customer centric collaboration with your customers in order to create insanely great products for insanely great customers. The insanely great customers are the ones you want to target and keep.
Most customers worldwide have had a focus on their processes for quality improvements, cost savings, reduced delivery time, product engineering and supply chain management. A few have a process focus on the product life cycle. In the same way process improvement gives a competitive advantage in the other areas the same is also true for a product. Since the product tends to cover much of the organization’s activities by following a framework and a process will significantly improved success in addition to creating a more competitive edge. As shown below, organizations need to work up from no frameworks and processes to managed and optimized in order to increase their productivity, reduce repeating the same mistakes and eliminate duplicative efforts.
Each product should have a DACI or RACI chart. DACI stands for Decision, Advise, Consulted and Informed. RACI stands for Responsible, Advise, Consulted and Informed. With such a document in place, everybody knows who is responsible for what areas and to what level of responsibility. Example:Here is an example of failing to have an agreement on who the decision makers are and who should be informed, consulted and advised. I was teaching product management to the Botswana Telecommunications Company and also in attendance was a senior product manager from a leading South African bank. As we moved into the second day of class, the bank product manager put up his hand and said he got a phone call and his product just got cancelled. He said a new general manager just joined the bank and told the president to cancel the product. I asked if he had a DACI or RACI chart, He said no. I asked if that General Manager’s position would have appeared on the chart. He said “no…that position would have had nothing to do with his product.” So if lines of authority were clear, he could have gone then to his president and said that the General Manager doesn’t have the authority or any involvement and therefore the work of a dozen people over 18 months should not have been wasted.
To manage a product effectively one needs to have information and knowledge available in order to track and make corrections. This information includes all of the information necessary to pull together a product market strategy and up to date information about how well the marketing is working, how sales are going and what’s happening in all aspects of operations. With out it, managing the product is flying blind. We will discuss in greater detail what information is mandatory and optional later in this book and how to get it.
Does your Product and your Company help your customers “do” what they want to do? If your product and your company truly help people do what they want and need to do, then you will be wildly successful. In turn, by generating your value proposition based on the your innovation for what people “do” and positioning statements which in turn will drive your marketing, messaging, and media efforts makes it more effective and easy. Generating your value proposition becomes easy if you start with what people “do”. Likewise after doing competitive market research the combination of information from the innovation, customer value makes positioning easy too. Messaging and key selling points then quickly fall out.But frequently companies start with the messaging and have to backtrack to all of the things above it. And they have little time to do it before going to market and as a result, it significantly reduces the chance of success.
Does your organization have the right people with the core competencies necessary to build, market, sell, and support insanely great products as depicted below? If not, you probably will have gaping holes in your company’s competency maps and you will probably have less success. We will discuss each of these competencies in greater detail throughout this book. Example: Kodak comes to mind with their failure to transition from chemical to digital technology for the capture, storage and presentation of images. In less than 10 years, the number one player in the photography market is now no longer relevant.Obviously they did not have the organizational and individual competencies they needed to cross over in the digital transformation.
6. Systems and Tools
Do you have the tools and systems in place to support the product lifecycle and improve productivity?Most managers of product are using tools designed for other purposes–not for them. Managers of product need systems and tools that enable them to:
- Find what they are looking for when they are looking for it
- Enable coordination across departments
- Provide management visibility into the status of each product within its product lifecycle
- Notify contributors to the management of the product about what they need to do and when
- Archive previous product’s information so things that went well can be copied and those that did not go well is not repeated.
To succeed, a product and also a company must have a Strategy, Process, Information, Customers, Employees and Systems. It is not easy to pull all this together but it is essential for success!
- QR Code for Video
- If a concept can be enhanced with the use of a video this would be added to the session
The Big Picture (Optional)/Real Life Connect
Its Not the Technology
Some people think that if they simply invent a technology, that such a better mousetrap will lead to the world beating a path to their door. This has been the feelings of modern industrial society starting in the 1960s when the US space agency, the National Aeronautics and Space Administration (NASA), started trying to justify its expenditures, in part, on the basis of “technology transfer”. I know, I was there. I testified before the United States Congress, as a college sophomore, in support of funding the space shuttle and some of the arguments I used was the benefits of technology transfer. It was and is still to a great extent believed that the “technology” was some kind of magic that will do people good. The same strategy was used by Xerox PARC but studies in the 1980s found few successes of transferring inventions from PARC to real products. Likewise, I was responsible for a short time to do the same for HP Labs to transfer their technology to the division. I was not very successful. It was only in those instances where that “technology” actually did something for people did the transfer succeed into a successful product. Example:
This technology was developed to help prevent things from sticking together and it is a good insulator. It was used in the space program and NASA promoted it as “spin-off”. Initially it was a technology in search of a solution. It wasn’t really invented by NASA but at that time they promoted it. Teflon was discovered in 1938 and applied it to cookware 16 years later by French engineer Marc Grégoire. If people did not have a need or want to prevent food from sticking to their cookware, Teflon would have been just another technology solution looking for a problem.
Its not the Market
Others think that if they just pick a big market and go after it, everything would be just fine. Example:Kodak thought they were in the “film market”, the market whereby film is consumed for still and moving images. But the market was really the capture, storage and display of images.
- This will be a list of key considerations and/or knowledge that is trying to be covered
- This will be a leading to higher level learning. In this case to the intermediate and advanced level. It could also serve as a springboard to our future intermediate and advanced sessions
- This will be an exercise that teaches by doing. We could offer these up as Google Docs to be shared with the instructor for feedback?
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