Why the hurry to launch an MVP?

Originally published in Oct/2012.

Why do we need to make an MVP, a Minimal Viable Product? Why do we need to hurry to launch a half-baked product? Why not wait to have the product with more features to launch it? Herb Kelleher, co-founder and former CEO of Southwest Airlines has a famous phrase to motivate people to do things:

We have a ‘strategic plan.’ It’s called doing things.

This “strategic plan” can be translated into the #jfdi hashtag which means something in the lines of “just focus and do it” or “just freakin’ do it” (polite form).

But why the hurry? Why can’t we keep working on our product until we feel comfortable it has all the features we believe are needed to solve the user’s problem?

Well, I’ll give not only one but 3 main reasons:

Reason #1: The moment of truth!

The longer you take to put your product in front of real users, the longer you take to start getting feedback from real people to know if you’re on the right track. And what’s even worse, you’ll probably be giving too many steps in the wrong direction.

A digital product is supposed to solve a certain problem of its users. You will not know if you have built a good digital product until the product is used by real users and it actually solves one of their problems. The longer it takes for this to happen, the longer it will take for you to know if your product is or is not the solution for someone’s problem.

And if it is not, what should you do? Change, adapt and present it again to real users! The sooner you know that what you’re developing is not on track, the better because you’ll have spent less time, energy and money moving into the wrong direction.

Reason #2: Featuritis

There’s a limit to the number of features a user can understand. When we present a software full of features to a potential user, instead of providing her with a possible solution to one of her problems, we may end up creating a new problem for her. Kathy Sierra, well-known software development and user experience instructor, designed the Featuritis Curve that illustrates in a clear and fun way how user satisfaction diminishes as we increase the number of features of a product.

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Reason #3: ROI

The longer you take to put your product in front of real users, the longer it will take for you get some revenue and the longer you’ll have to invest from your own money or investor’s money. Below is a typical return on investment chart. While you don’t launch your product and don’t have revenue, all you’ll have are costs, i.e., you’ll be in the investment phase of the curve below. This situation will only change when you get some revenue and this revenue pays your monthly costs. This is the monthly profitability phase in the chart. Only after a few months in the monthly profitability phase, you’ll be able to get to the return on investment phase. It’s a long way:

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Now take a look at the chart below. If you decide to delay your launch in 3 months, this can delay your return on investment in 6 months! Are the features that you intend to implement in those 3 months you are delaying the product launch worth the 6 months delay to get to the return on investment phase?

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On the other hand, if you are able to launch 3 months sooner than what’s described in the first chart, you’ll get into the return on investment phase 6 months sooner. Isn’t that worth figuring out how to launch your product faster?

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If you’re not embarrassed…

There is a famous quote by Reid Hoffman, founder of LinkedIn, which really resonates with the MVP concept:

If you are not embarrassed by the first version of your product, you’ve launched too late.

To illustrate this quote, here are some print screens of early versions of well-known software products:

Google, 1998:

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Twitter, 2006:

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Linkedin, 2005:

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Facebook login screen, 2005:

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Facebook, 2005:

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Gympass, 2012:

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So, what’s preventing you from putting your product in front of your users?

Digital Product Management Book

Do you work with digital products? Do you want to know more about how to manage a digital product to increase its chances of success? Check out my book Product Management: How to increase the chances of success of your digital product, based on my almost 30 years of experience in creating and managing digital products.

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How to expand a marketplace?

To answer this question we need to understand the dynamics of a marketplace. Basically, there are 3 types of elements in a marketplace:

  • Supply: goods or services available for consumption
  • Demand: people or businesses that may need goods or services offered by the supply
  • Marketplace: where demand finds supply and a transaction happens

These 3 elements relate to each other in the following manner:

  • Value delivery: marketplace delivers value to both demand and supply. The value delivered to supply is people or businesses interested in its goods or services. The value delivered to demand is a varied number of goods and services suppliers.
  • Payment: in order to have access to the goods and services offered by the suppliers, the demand pays the marketplace and marketplace pays the supply. Normally the marketplace retains a fee per transaction. This fee can be fixed or a percentage of the payment.
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Let’s analyze Uber as an example. Supply is the drivers. Demand is the riders. The marketplace is Uber. Uber delivers new riders to drivers and delivers transportation services to riders through its supply of drivers. Riders pay Uber who then pay drivers and retain a fee.

Another example is Uber Eats, a 3-sided marketplace where supply is both the restaurants and the drivers who deliver the food to the user. Demand is the users who order food through Uber Eats, which is the marketplace. Uber Eats delivers demand to both restaurants and drivers and delivers a food ordering service to its users. Uber Eats charges the user and pays both restaurants and drivers, retaining a fee. In this case, Uber Eats connects 2 types of supply (restaurants and drivers) to one type of demand (users).

A 3rd example is Gympass, a 3-sided marketplace where supply is gyms and studios and demand are companies and their employees. Gympass delivers new users to its supply while delivering a network of gyms and studios that are offered by the companies as a corporate benefit to their employees. Companies and employees pay a fee to Gympass, which pays gyms and studios. In this case, Gympass connects one supply (gyms and studios) to two interconnected types of demands (companies and their employees).

Expanding the marketplace

So you run a marketplace and want to expand it. There are some different paths you can take to expand your marketplace:

  • Demand diversification: you can offer the goods and services of your marketplace to new segments and geographies. Uber did that in its international expansion. Uber also offered its transportation services to companies, besides its regular offer to end-users.
  • Supply diversification: you can offer new goods and services to your demand. Uber did this with Uber Eats. Amazon started out offering only books. Now it offers almost anything.
  • New value delivery: you can offer new value to both your supply and your demand. Uber offers many services to its drivers like car rental, car maintenance, phone plans, and health insurance. iFood, a Brazilian company similar to Uber Eats, offers a PoS system to its affiliated restaurants. MercadoLibre, an Argentinean marketplace similar to eBay, offers to its sellers MercadoShops, an eCommerce site builder and becommerce, a back-office management solution.
  • Payment financial management: since the payment from demand to supply goes through the marketplace, you can offer financial services to both your demand and your supply like advance payment and credit, and you can manage the spread. iFood is offering through its app the ability for its users to pay the bill when they are in the restaurant. Uber partnered with Intuit to offer financial management services to its drivers. Both MercadoLibre and eBay offer a payment solution for its sellers and buyers. MercadoLibre offers MercadoPago and eBay acquired Paypal. Most recently MercadoLibre decided to offer loans to its sellers in Brazil and Mexico.

The image below shows the 4 types of marketplace expansion.

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So there you have it, 4 types of marketplace expansion. These 4 types are not excluding. You can explore all 4 options simultaneously, but remember that each can be a new business on its own, so be careful not to distract too many resources from your existing marketplace business.

Digital Product Management Book

Do you work with digital products? Do you want to know more about how to manage a digital product to increase its chances of success? Check out my book Product Management: How to increase the chances of success of your digital product, based on my almost 30 years of experience in creating and managing digital products.

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Let’s talk about digital product revenue

One of the most important questions from the opportunity assessment questionnaire we saw in the article about “A lot of opportunities” is the question: “How are we going to measure success and make money from this product?”. It deals with two subjects: metrics and revenue. We already discussed metrics in the “Be a data geek” article. Now let’s talk about revenue.

What are the costs of developing, distributing and operating a digital product?

Every software development has a cost. When this software is a digital product – that is, software that has users – the product has, in addition to the development cost, the operating cost, which is the cost of getting that software to users and depending on the type of product, the cost of storing data from these users.

Before the internet, software products were sold in boxes with manual and floppy disks, or installation CDs. The revenue came from selling these boxes with the software. Some companies even charge an annual maintenance fee, which gives customers access to newer versions as they become available.

This digital product runs on the customer’s computers, meaning that all operating costs are your responsibility. The manufacturer recommends a minimum equipment configuration to run this software and the customer is concerned with owning, configuring and maintaining this equipment.

In addition, administering this digital product is also your responsibility, as well as ensuring that it is running on equipment with sufficient disk space, sufficient memory, and that the generated data is safe and backed up. Revenue from the sale of this software product serves to pay for its development and distribution costs.

With the internet came the possibility of offering software to be used remotely, that is, it became possible to use software that is no longer running on the client’s equipment and does not need to be managed by it. This is what we are calling here as a software product. In this new commercialization model, there is not only the sale of the software but also the sale of the service of its operation. Even smartphones apps, which run on users’ phones, have mostly some online component, that is, they search and store data on remote servers, which will also bring operating costs.

That is, every digital product has costs to develop the product plus costs to operate it. To cover these costs, you need to have some kind of return on investment to build the product.

Digital Product Revenue Types

Basically, there are 3 ways to monetize a web product:

User Paid Revenue

It is the model used in most business digital products, such as products offered by Locaweb, Google AdWords, MailChimp, and more. In this case, the revenue comes from the periodic payment (monthly, yearly etc.) for the use of the digital product. Another very common option is pay-per-use (I’ll talk more about these forms of payment later).

Revenue paid by the user is also a form used by some end-user software products, but it is more difficult to charge this type of user. Netflix, Spotify, LinkedIn, and Dropbox are some examples. To understand how difficult it is to charge an end-user, imagine paying for Google search. That is, even if the end-user perceives a lot of value in a product, it is hard to justify for this type of user that she must pay to use it.

Revenue paid by someone interested in your user

In this model, you usually do not charge the user of your product, but someone who is interested in your users. This model is widely used in end-user digital products. Typically, the business model is ad selling. One example is Google, which allows anyone to use search, and charges companies for placing ads along with search results.

Another similar example is Facebook, which also offers free access to users, and charges for ads from companies interested in advertising to their users. Another form of revenue is selling reports based on usage data. In addition to advertising and selling reports, another revenue option is to allow other companies to sell services to their customer base and share revenue. An example is Brazilian personal free finance app Guia Bolso, which offers credit options to their clients, credit offered by financial institutions that share with the Guia Bolso part of the revenue generated with the loans.

An important point to note is that in order to be interesting to someone to the point that they want to pay to gain access to your user, you need to have a lot of users. Think in term hundreds of thousands who return often to use your product.

To attract hundreds of thousands of free users, you are likely to invest a lot of money, so you have to look for free ways to market your product. In addition, this should promote frequent user feedback, as this will give you an audience that will be of interest to anyone who wants to pay to talk to them.

To make your user base even more attractive to prospective advertisers, you should try to know a lot about your users, such as demographics, behavior, and preferences. This way you can offer more assertiveness and efficiency to advertisers.

Indirect Revenue

It is the revenue you earn as a result of users using the software but not paying to use it. There are basically two types of indirect revenue:

  • Revenue from sale or lease of physical or virtual items: This is the case with online stores that use online store software and services as a software product to sell or rent physical items. Amazon and Submarine are good examples. There are also stores that sell or rent virtual goods, such as Netflix’s *streaming* service or Amazon’s Kindle book sales. In the case of books, the sale is per item. In Netflix’s service, they charge a monthly fee to access *streaming* content. It is worth noting that the trading sites that broker the sale of physical items such as eBay and Etsy are not of this type. They are the type in which the revenue is paid by the user of the digital product, that is, by the person who places the physical item for sale, paying a commission for the sale. These sales brokerage sites are in the platform category.
  • Cost savings: This is the case of internet banking, high school or college intranet, a system for access to laboratory test results, among other software products that do not market anything and do not charge for access. In this type of product, there is no revenue, but cost reduction. Internet banking reduces the costs of face-to-face customer service at branches; The intranet allows for more streamlined communication flow between school and student or student parents, saving you on college and college visits and meetings. and access to results via the Internet reduces costs for other forms of exam delivery, such as printing and mailing.

Payment Types for Digital Product Use

When you pay for the use of a product, it can be done in two ways:

  • Recurring Payment: is a lump sum payment to use the product, such as a cable TV subscription or a gym membership. If you fail to pay, you can no longer use the product and no longer have access to all information that may be stored on it. The most common periodicities are monthly and annual.
  • Pay Per Use: In this case, you pay for the use of the product. This usage should be very easy to measure and track. For example, in an email marketing product, which allows email messages to be triggered to an address book, you may be charged for the number of messages you send. Another good example is paying for ads, which can be paid per view, clicks, or ad conversion. The commission charged by intermediary sites selling physical items like eBay and Etsy is another example, as is Skype’s charge to make calls to landlines and mobiles.

It is also possible to have a mixed model, with recurring payment plus pay peruse. A good example is a product for internet telephony, where you can charge a monthly fee for access to the product, plus a charge for outgoing calls, such as Locaweb’s Virtual PBX. Another example is a product that offers the possibility for its user to have an online store. In this case, you may be charged a monthly fee plus a usage fee based on the number of sales your customer makes using this store.

Digital Product Management Book

Do you work with digital products? Do you want to know more about how to manage a digital product to increase its chances of success? So check out this book I’m writing based on my almost 30 years of experience in creating and managing digital products. The book is called Product Management: How to increase the chances of success of your digital product.

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The need for domain experts

Conta Azul is a platform that connects Brazilian small businesses to their accountants and everything they need to run their businesses. It connects small business owners to their bank in order to provide centralized finance control of their businesses. It connects them to the government in order to generate invoices and better control the taxes they need to pay. It connects them to fintechs in order to provide financial services like payments and credit. And it also connects them to many types of systems such as CRMs, e-commerce providers, and niche specific ERPs through it APIs. For the accountants, it provides a CRM so they can manage their customers as well as a cloud-based accounting system, so they can work in the same version of the finance and accounting data their customers are managing.

In order to cope with all the complexity of accounting and tax management, Conta Azul has some Product Managers who are expert in taxes and accounting. Some of the product managers there have a business accounting degree and before joining Conta Azul they worked as accountants and made the career change to product manager at some point in their work life.

Complex domains may require dedicated domain experts

Accounting, finance and tax management are very complex domains. Even though we had at Conta Azul some product managers with expertise or even a degree in those domains, we perceived that’s not enough. We needed someone dedicated to helping us cope with this complexity. And when I mention “we”, I’m not talking only about the product managers, or the product development team, who needed someone to talk to about the complexities of these domains so they can implement it into the product. I’m talking about the entire company. Customer support needed a go-to person to talk about complex issues that the customer brought. The marketing team needed someone to help “translate” the technical wording of accounting, finance and tax management to a more understandable language. Salespeople needed to talk to an expert to understand the complexities and be able to fit customers’ needs and problems into the product they are selling.

For this reason, we created what we called the compliance team, with experts in accounting, finance and tax management. In my view, it makes sense to have this team as close as possible to product managers. This team will serve many areas of the company such as customer support, marketing, and sales, but being closer to the product development team will make it easier for the team to build a product not only more compliant to regulations but also easier to understand and to use. 

Wikipedia brings a good definition of this role:

A subject-matter expert (SME) or domain expert is a person who is an authority in a particular area or topic. The term domain expert is frequently used in expert systems software development, and there the term always refers to the domain other than the software domain. A domain expert is a person with special knowledge or skills in a particular area of endeavor (e.g. an accountant is an expert in the domain of accountancy). The development of accounting software requires knowledge in two different domains: accounting and software. Some of the development workers may be experts in one domain and not the other.

At Conta Azul this team reported into one of our Group Product Managers, who was responsible for leading other product managers, so leading people was not an issue for him. Actually, it was an interesting new challenge, to lead other people that were not product managers. 

Even though I recommend this team reporting the product development team, it is ok the have it reporting to another area in the organization, as long as it stays as close as possible to the product development team.

What types of product may require domain experts?

Recently I talked to some people from companies that also have the need for domain experts. One offers credit to users and the other one offers insurance, both very regulated markets that require dedicated experts to support the entire company to deal with their markets complexity. Other examples are banking, medicine, aviation, law and so on.

Besides being complex, some markets probably are regulated by the government and may be subject to auditing and changes by the governing entity. This only supports the need for a dedicated person or team to help cope with this complexity and constant change. It may be tempting to join the two roles, product manager and domain expert in one person but I recommend not doing this for two reasons. First, it is not easy to find someone who is both a good product manager and a deep expert in a certain domain. The second reason is that each of these roles has a lot to do in their day-to-day jobs.

If you are in a traditional company who is building their digital product, most certainly you already have domain experts in your company. You just need to bring them closer to the product development process.

On the other side, there are markets that are less complex and minimally or not regulated at all. If your digital product is within these markets, normally the product manager can be also the expert in the domain. Some examples are content publishing, advertisement, marketplaces, CRM, etc. Note that I said that the product manager CAN be the domain expert. However, if you believe that your product and the context where your product is used are complex, even being in a non or minimally regulated market, feel free to add domain experts to your team.

Digital Product Management Book

Do you work with digital products? Do you want to know more about how to manage a digital product to increase its chances of success? Check out my book Product Management: How to increase the chances of success of your digital product, based on my almost 30 years of experience in creating and managing digital products.

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How to make a career change to product management?

That is a question that I get a lot in my talks and in my inbox so it seems to be a hot topic. Here’s my suggestion on how to make this career move.

First step: Study

Even though this is a relatively new career, there are already some good courses you can make to understand better the digital product management world. There are 2 courses that are mandatory for anyone who is willing to be a product manager:

  • Certified Scrum Product Owner (CSPO): this course will give you the basics on how to work as the product person of a software development team which is using agile methodologies. There are many courses available all around the world. It is a 16-hour, in-person course that will help you understand how modern software development works and what’s the role and responsibilities of a product person in this process.
  • Product Management Courses: these courses go deeper into the roles and responsibilities of a product manager and adds to what a CSPO course provides you. In a PM course, you will learn techniques for building product vision and strategy, product development team structure, product-market fit, roadmaps and OKRs, problem discovery, analytics, product culture and much more. Here in Brazil, there are two that I recommend. Tera’s Digital Product Leadership, a 20-hour, in-person course and PM3 (10% discount using this link), a 40-hour, on-demand course you can attend whenever and wherever is better for you. While Tera’s provides you with face to face interactions with people like you who are looking to understand more about the product management world and with experienced instructors that are already practitioners of the craft for some time, PM3’s course gives you the flexibility to study on your own schedule. In the US and all around the world the best options is SVPG’s “How To Create Products Customers Love” public workshops normally thought by Marty Cagan, who was most recently senior vice-president of product management and design for eBay, where he was responsible for defining products and services for the company’s global e-commerce trading site. I also provide in-company product management workshops that can be customized to fit your company’s need.

Besides these 2 mandatory courses, there are other very helpful courses that I recommend:

  • Lean Inception: an 8-hour, in-person course where you’ll learn how to align people and build the right product. Even though the public agenda only shows courses in Brazil, you can ask Paulo Caroli for in-company training anywhere in the world.
  • SQL: data is a key tool to any product management role and knowing SQL will definitely help you mastering this tool enabling you to run your own analysis without depending on the data team to build you the reports you need. Probably an online course will do as an introduction to the topic. You can dive deeper later if needed.
  • Finance: your product will help your company generate revenues and cut costs while generating cost from the product development process, so you should understand the financial dynamics of your company to better understand the impact of your work in your company. An online introductory course will do as a first step into this topic to understand terms like Gross Profit, EBITDA, assets, amortization, and others. You can dive deeper latter as needed.
  • Marketing: you will manage one of the 4 Ps of the famous “4Ps marketing mix”. However, it is very important that you know and understand the other 3Ps, promotion, price, and place. Again, an online introductory course will do as a first step into this topic. You can dive deeper latter as needed.

Books are also a good source of knowledge, but if you have a chance to attend a course, I recommend doing so in addition to reading books. Some of the books I recommend on new product creation are:

And about product management are:

Next step: career change!

Ok, so now you studied the craft and are ready to make this career change, right? What’s the best way to do it?

The first advice is that it is easier to make a career move in the company you are now. It’s quite difficult to change career moving to a different company, no matter what career you are now and the one you are moving into. People will hire you for the experience that you have. If you have no experience as a product manager, it will be quite hard for someone to hire you as a product manager.

So, to make this career change, the best option is to do it in your existing company. Before any move, you should consider discussing this career move with your manager. She may be able to help you in this transition.

If your company already have a well-established product management function, it is possible that they will accept apprentices, i.e., someone with good experience in other area and who is willing to move into product management. At Gympass we call this position Associate Product Manager (APM). It is valuable to have someone with good experience in the business domain willing to make the move into product management.

However, if your company does not have a well-established product management function, there are two ways you can make this career change:

  1. The easiest way is to move to a company that has a well-established product management area, but you should make the move to this new company first into your existing area (marketing, customer support, legal, finance, etc.) and once inside that company, make the move into product management. It’s quite rare for companies to hire someone from another area directly into a beginner product management role. Normally, for these beginner positions, companies prefer to move someone internally from another area that already has a good knowledge of the business.
  2. The other way to make this career move is not that easy, but can be a great career opportunity. You can build the product management function in your existing company and be the very first product manager. You just need to apply and practice your knowledge that you acquired during your product management studies in your day-to-day, whenever you see an opportunity. For instance, your company decides to build a new app, you can volunteer to be the project coordinator for this new endeavor and then apply your product management knowledge to manage the app development. Or your company may decide to build a new site or a new system. Again you can volunteer to help manage this project and you can apply what you learned in this new project. After the project is successfully delivered, you can discuss with your leadership about how you applied product management techniques in creating this product and maybe it is time to build a product management area in the company. In the case the leadership does not see the value of creating this area, at least now you have a product management experience to include in your resume and to talk about when applying to product management opportunities.

Below I’ll cite some people that made the career change from some other areas to product management, so you can see their profiles or even connect with them to talk about their career changes. Some of them even wrote about their career change challenges and learnings:

Digital Product Management Book

Do you work with digital products? Do you want to know more about how to manage a digital product to increase its chances of success? Check out my book Product Management: How to increase the chances of success of your digital product, based on my almost 30 years of experience in creating and managing digital products.

Product Management Book

Putting it all together: vision, strategy, roadmap, and OKRs

In my articles about the growth phase of the product lifecycle, I described a set of 4 tools that will be of great support for your digital product management work when used together:

  • vision: is the reason why the product exists. It’s what guides all decisions regarding the product. It gives the context for the product development team to make decisions about what to prioritize.
  • strategy: is the detailing of the steps you will take to get your product closer to the vision. Both product vision and strategy are long-term tools, i.e., help you set, communicate and align the direction of your product for the next 2 or more years.
  • roadmap: enables you and your team to plan and communicate the view of the future that you have for your product for the next 12 months. It is important to have 12-month roadmaps in order to give additional details of what’s coming. You’ll probably be able to provide more details of the next 3 to 6 months, but that’s ok. The purpose of the 12-month planning is to give a chance to check if things left to be done later should be brought to be done earlier and to give some sense about when to discuss what is not being discussed for the next quarter.
  • OKR: objectives and key results, or motivation and metric, i.e., what we want to accomplish and how we will know that we accomplished it? OKRs are composed of two parts, a goal (objective) and 2 to 5 key outcomes (key results) indicating that the goal was achieved. OKRs are normally short term, during a quarter. It is possible to have 12 or 6 months OKRs but since you already have the 12-month roadmap as a mid-term tool, it’s better to use OKR with a quarterly frequency. For some time, I advocated replacing roadmaps, but now it’s clear that these two tools together yield better results. OKRs providing short-term planning and alignment. Roadmaps providing mid-term planning and alignment.

Putting it all together in one image, here are the product management 4 tools: 

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Final comments

With this article, we concluded the growth phase of the software product lifecycle. We understand how to handle customer feedback, and what it is and how to prioritize a roadmap. We also looked at the most varied types of metrics, including conversion funnelengagement, churn, global and individual financial metrics, revenue and negative churnNPS, loyalty metricssome considerations about metrics. We saw what is and how to build the product vision and strategy, useful tools for making decisions about what will be the future of your product and how to get there. And in this article, we saw how these 4 tools (vision, strategy, roadmap, and OKR) work together to help us manage our product with long, mid and short-term views.

Digital Product Management Book

Do you work with digital products? Do you want to know more about how to manage a digital product to increase its chances of success? Check out my book Product Management: How to increase the chances of success of your digital product, based on my almost 30 years of experience in creating and managing digital products.

Product Management Book

Designing your digital product strategy

Once you have defined the product vision you’ll be probably thinking something along the lines of: “Hum, I think my product is still far from this vision.” Then comes the question “how do I get my product closer to this vision?”. This is where the product strategy comes in, i.e., what steps will be taken to bring the product closer to the vision.

A good tool to help build product strategy is the SWOT analysis, to help you and your team analyze Strengths, Weaknesses, Opportunities, and Threats to your product.

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Strengths and weaknesses are internal items (from your product development team, or your company) that you, your team or your company have some control over, that help or hinder your product from reaching your vision.

Opportunities and threats are external elements to the organization over which the organization has no or minimum control, and which can influence positively or negatively the attainment of the vision of the product.

Filing the SWOT should also be a team effort. The product manager must have one or more sessions together with UX, engineering and marketing people to build your product SWOT. It is likely that your organization has also done a SWOT analysis for the organization as a whole, which can be a great input for your product SWOT.

SWOT analysis can be tricky, especially in the weaknesses quadrant. It tends to be a big list of items your product doesn’t have yet. My suggestion is to limit all quadrants to 3 items. Having this discipline, you’ll be able to prioritize what are the 3 more important items in each quadrant. Since we have 4 quadrants, you will have a list of 12 items to take care of.

In order to build a more comprehensive SWOT analysis is very important to have a good market analysis available. This market analysis should include:

  • Competitors: a good view of your product competitors is very important to help you build your product SWOT. Don’t forget to think also about indirect competitors. For instance, an email product has the telephone as an indirect competitor.
  • Potential and addressable market: ultimately our product could have the total global population as users or total number of companies worldwide in a B2B product. However, you most likely designed your product for a subset of these users – or companies. For instance, you designed a delivery product for people who sell things and since it is a delivery product, it is limited to a certain region. This is the potential market. The addressable market is the size of this market that you believe you can reach.
  • Market growth: as important as it is to now the size of the market is to now the growth of this market. For instance, the number of landline telephones is close to 1 billion, but this is a shrinking market since there’s a clear movement to mobile telephones.
  • Disruptors: as important as it is to know your competitors is to know what can disrupt your product. For instance, at Locaweb we were seeing a decline in email usage, possible due to migration of part of the communication which was normally carried out through email being made by other means such as WhatsApp and Slack. Anyone managing a riding or a delivery product such as Uber, Rappi and others should be already discussing the impact of autonomous vehicles in their product and business.

Having the SWOT filled up, it’s time to draw the strategy of your product. Product strategy is nothing more than a short, medium and long-term roadmap. Long term?

You are certainly thinking that as you use agile methodologies in the product development team, it makes no sense to have a long-term roadmap, not even a medium-term roadmap makes that much sense. In fact, it does, but not in the classic sense of roadmap as a list of features, but instead using the roadmap as a priority list, a list of focus points that must be tackled in a specific order to make the product gets closer to the product vision.

With your product SWOT analysis completed, you should look at each of the items in each of the quadrants, along with the team (UX, engineering and product marketing), and evaluate what impact each item has on the product vision you have created. Are there strengths to be strengthened? If so, which ones should be strengthened first? Are there weaknesses to be tackled? If so, which ones should be tackled first? Are there opportunities to be taken advantage of? If so, which ones should be looked into first? Are there threats to be fought? If so, which ones should be tackled first?

This analysis will help you define the motivations and goals, i.e., the macro themes of your roadmap. Remembering that roadmap = motivation + metric, which is being popularized with the acronym OKR (Objectives and Key Results). This analysis will help you define what to focus on now and what to leave for later, always aiming ultimately to get closer to your product vision. And that’s the product strategy, the path that you and the product development team will go through to get to the product vision.

Your product evolves, your vision and strategy too!

An important point is that your product evolves as the team works on it. A lot is learned about the users of the product, its problems and needs. New alternatives may appear to help your user solve their problems and needs. The software owner can also revisit their strategic objectives and, consequently, revisit the defined goals for the digital product.

In addition, strengths and weaknesses may change over time, and opportunities and threats may appear or disappear. So it’s important to understand that neither the vision nor the strategy of the product are written in stone. They can and should be revisited periodically.

My suggestion is that they are revisited annually, or when a relevant event happens, such as when there is a change in the strategic objectives of the company, or when an alternative that solves the problem or need of the user in a different way from the one of its product.

Summing up

With this article, we are almost closing the theme about the growth phase of the software product lifecycle. In the next chapter, we will put it all together. Vision, strategy, roadmap, and OKRs. 

Digital Product Management Book

Do you work with digital products? Do you want to know more about how to manage a digital product to increase its chances of success? So check out this book I’m writing based on my almost 30 years of experience in creating and managing digital products. The book is entitled Product Management: How to increase the chances of success of your digital product.

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What is and how to build your product vision

At some point during the growth phase of your product, it may be helpful to create its vision and strategy. These tools will greatly help you in the decisions about what the future of your product will be. For this reason, I will explain in this chapter what is product vision and strategy and how to create them.

What is product vision and why do we need it?

The same way your kids wants be something (doctors, lawyers, engineers, etc.) when they grow up, the product vision is what you want your product to be when it grows up. Product vision is how you envision your product in the future. It is the reason why the product exists. It is what should guide all decisions regarding this product. It gives the context for the product development team to make decisions about what to prioritize in relation to the product.

As I mentioned earlier when defining product management as the function responsible for building the connection between the company’s strategic goals and the problems and needs of clients, a product must at the same time meet the strategic objectives that the product owner has for this product while it solves problems and needs of its users. There you have the two elements needed to make your product vision.

Creating the Product Vision

The vision of the product will be created by bringing together these two elements, understanding the objectives of the product owner and the problems and needs of the user of the product. So the first step in creating your product vision is to be clear about what the product owner’s goals are.

For example, a bank creating an internet banking system may have the objective to reduce the need for in person, face-to-face interactions. A clinical lab the creates an app for user to view their clinical exams results may have as its objective to lower the operational costs of handling and sending results.

Then you need to understand what the problems and needs that this product will solve for your users, in which context these problems and needs happen and what motivation these users have to see their problem or need solved.

A nice tool to understand the user is the empathy map.

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This map helps to focus on the different perceptions that the user may have:

  • See? – What does your user see? How is the environment where it uses the product? What does the market offer?
  • Listen? – What does your user listen to? What do your friends tell you about your product? What does his boss say? What do the influencers say?
  • What do you say and do? – What does your user say and do in relation to your product? What does he talk about with friends and on social networks? What can he do with his product?
  • Think and Feel? – What does your user think and feel when using your product?
  • Pain? – What are the main pains, fears, frustrations and obstacles that your user encounters?
  • Gain – What are the key winnings, desires, and needs that your user expects to have when using your product?

Another useful tool is persona, which represents a group of users with similar patterns of behavior, attitudes, and motivations in terms of purchasing decisions, use of technologies or products, lifestyle, etc.

The personas are used to:

  • Know and understand customers and users of products and services;
  • Bring the user to the project focus;
  • Make design decisions more human and less abstract.

The following figure shows how to build a persona:

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The first step is to define a name and some characteristics of that person. This helps in conversations about the product. In the name, it’s nice to already give a hint of the main characteristic. For example, Maria, the cool girl or *Michelle, the busy *.

If you are making a product for Michelle, the busy and want to insert a new feature, one question that comes to mind is: “Will Michelle, the busy one, be able to use this feature? Will she find it useful enough to find time to learn how to use it? “

Beyond the name and basic characteristics, it is also important to describe your behaviors and your problems. The following examples will make the concept of person clearer.

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Maria, the cool girl is one of the personas that we used at Locaweb. Given the different products that we have in our portfolio, we ended up building eight personas. However, for each product in our portfolio, we had no more than 4 personas, being one of them the primary persona for that product, i.e, for whom all decisions about the product are taken.

As part of understanding the problem or need that your user expects to be solved by your product, it is very important that you map out the alternatives that exist today for her to have that problem or need solved. In the case of commercial products, they are the competitors. In the case of products that are systems without clear revenue objectives, such as internet banking or the clinical lab system for result visualization, the alternatives are going in person to the bank or the lab, calling the bank by phone, receiving results by mail, etc.

This alternative mapping is very important to understand how your user deals with her problem or need without your product. How these alternatives are better and in which they are worse than the product you manage.

Empathy mappersona, and alternative mapping can and should be created in conjunction with UX, engineering and product marketing people.

Okay, you already have all the elements to create the vision of your product:

  • The objectives of the owner of the product you manage;
  • Who the users are and what problems and needs these users expect to solve with your product. Useful tools for this are empathy map, persona and alternative map.

Remember that to get these elements, the product manager will have to use a lot of empathy to talk to the owner of the product she manages and understand their goals, and to talk to the product users and understand them.

With these elements in hand, you are ready to create your vision, which is nothing more than to make clear these elements. Simple, right? It would be something like this:

(name of software owner) has decided to have this software for (objectives of the software owner to have such software). This software is used by (description of the people who will use the software) that, when using this software, expects to solve (problem or need that the user expects to solve) in a better way than (existing alternatives).

(Include more information about the problem or need, including context and motivation to have it solved).

Please do not copy + paste this text! Create your own product vision, which does not have to be text. It can be a presentation or a video, remembering that the vision of the product is the reason why the product exists. It is what should guide all decisions in relation to it.

As you get your product vision more clear, it is important to circulate it within your company to get inputs, feedbacks, and questions. By doing this, you’ll have a chance to complete the product vision as well as get the alignment and buy-in from all stakeholders.

Product Vision examples

Internet banking

Here’s an example of a bank where the owner decided to create an internet banking app so they could decrease their cost of building, staffing and maintaining physical bank branches:

XYZ Bank has decided to have an internet banking app to reduce the operating costs of bank branches.

This software is used by bank account holders who, when using this software, expect to solve their banking needs (see account balance and report, pay bills, make investments, etc.) in a better way than when they visit the bank’s agencies.

Locaweb’s Email product

During my tenure at Locaweb we put together the following product vision for Locaweb’s Email product:

Locaweb’s Email product will be the most complete and flexible email solution of the Brazilian market.

Conta Azul’s product vision

We built Conta Azul’s product vision as an image because with the image it was easier to explain all the elements of what we saw as the future of Conta Azul product.

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Gympass Product Vision

Again we preferred an image instead of words. The saying a picture is worth a thousand words has a reason to exists.

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Next article

In the article, we will see how to create a strategy to bring your product closer to your product vision.

Digital Product Management Book

Do you work with digital products? Do you want to know more about how to manage a digital product to increase its chances of success? So check out this book I’m writing based on my almost 30 years of experience in creating and managing digital products. The book is called Product Management: How to increase the chances of success of your digital product.

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Some considerations about metrics

Measuring is good. Metrics are essential for knowing deeply your product and for making more accurate decisions. But you must be very careful. The excess of metrics can get in your way and overshadow your full knowledge of your product.

Data-driven

Instead of excessively collecting metrics, you should follow a data-driven approach. When you manage a product in a data-driven way, you run experiments that generate data that feed your decisions on the next experiments. It is this simple, and it seems to be an excellent way to manage a product. But there a few problems within this approach.

1) Easy versus most relevant

There’s a natural tendency to measure what is easy to measure, and that can happen to the detriment of measuring what is most relevant. For instance, what is easier to measure: clicks in a message from an e-mail marketing campaign or the user perception (curiosity, happiness, disdain, etc.) when getting this message from the e-mail marketing campaign? 

Before taking actions over the existent data, it is always good to ask if these are the best data for making the decision.

2) Local optimization

Another concern in relation to decisions based on data is the hazard of sticking to the improvements focused on local optimization. That is, you make incremental improvements in your product focusing on improving a given metric, but you donít realize that if you make a more radical change you can get a considerable increase in this metric, larger the largest increase obtained from these incremental improvements. 

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3) Quality of data

It is necessary to understand the quality of data, that it, how they are obtained and processed before you get them into the analysis. The results are statistically relevant?

You must have heard of A/B tests, right? It is a test in which you build two versions of something. Next, you set apart the traffic in these two versions and start to measure the behavior on the two versions according to a given goal, such as clicks on “Buy” button. After running this test for a while, you will know which of the two versions reaches the goal more often.

Now try to run an A/A test, that is, an A/B test in which the two versions of the page are identical. After running the test, check out the results. Chances are you will find one of the A versions of your page reaching the goal more times than the other one. How is that possible? Statistical variations, seasonality, and unpredictable effects. 

Every data can be subject to statistical variations and that is why. In quantitative data, it is always good to understand the size of the sample and how it was collected. The season when the data sample was taken also affects the data quality: time of the day, day of the week, day of the month, the period of the year, and so on. Data are a photography with a date and time set, and the same datum collected minutes later can give you different information. 

4) Qualitative knowledge

Not only from quantitative data lives the product management. Au contraire, the product manager must use different tools to learn more about the user, the problem afflicting this user, the context in which this happens and what motivates having this problem solved. Many of these tools present qualitative data, that is, exploratory research data, through which it is seeking to understand reasons, motivations, and opinions. This kind of understanding is very difficult, if not impossible, to obtain from quantitative data analysis. 

Data-informed

Instead of data-driven, we need to be data-informed, in other words, using data as one more input to decision-making, not the only input. Take the experience, the intuition, the judgment, and the qualitative information into consideration, along with the metrics to increase the quality of decision-making. 

One of the best examples I can quote has to do with the website hosting product from Locaweb. Through the years, in a reasonably informed way, but always counting on a lot of intuition, we altered our hosting plans in order to have more disk space, data transfer and the number of sites that could be hosted in each plan. In 2011 we noticed that more than 90% of our clients were choosing the basic plan because it attended the needs of most people who needed a website.  

We wanted the largest plans would play a bigger role in sales, but with the limits we had, there was no motivation for clients to buy them. We thought of changing the plans for new subscriptions, decreasing the limits to incentivize clients to get bigger plans. However, as this was a significant and very sensible change, we brought in a consulting expert in pricing that helped us collecting and analyzing several data, to suggest which was the best plan structure change to be done.  

We implemented the changes suggested in 2012. There was a little variation on the distribution of plans, but the number of plans acquired per month didn’t change. Moreover, it even decreased a little, which resulted in none alteration in the amount of monthly revenue. That is, we spent time and money collecting and analyzing data that made us take a decision that didn’t change the company’s result. Maybe if we had defined the changes more intuitively we would have saved money and would know the result of the decision more quickly.  

A little bit on A/B tests

There are two great tools for A/B tests – Visual Website Optimizer and Optimizely. I used the services from Visual Website Optmizer, that gave you one free month to test some hypotheses about the home of ContaCal.

For those who don’t know, ContaCal is a digital product I created in 2011 during nights and weekends with no connection with my day job in order to experiment with building a startup using the most recent software development and product management methodologies and best practices. ContaCal is a virtual food log that counts calories with a twist. Besides telling you the number of calories you’ve ingested it also tells you the quality of these calories.

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In less than 30 minutes, I was able to create 4 versions and began to run the test. I decided to test two things. One was the color of the “create account” button to see if it would make a difference in the number of people who would click on it:

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The second test: if changing the explanatory video for a photo would increase or decrease the number of people who would click on the “create account” button:

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The result was that the photo of the healthy family had more clicks in the “create account” and the one with the woman measuring her waistline had the worse click-through rate:

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After seeing this result, I got the impression that if I put the green button with the healthy family picture I was going to increase the conversion even more. So, I decided to run this test and the result was that, with the healthy family photo, the green “create account” button was the worst, and the best option was the blue button:

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Therefore, take care, appearances can be deceiving! Make experiments before taking conclusions!

Analysis paralysis

Lastly, aside these precautions, it is necessary to take care with the analysis paralysis effect, that is, analyzing data all the time and not taking any action. As seen on the picture from xkcd.com, analysis paralysis can cost you a lot:

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Final thoughts

The metrics are not the reason for the existence of your product. The users, their problems and the strategic goals of the business are the reasons for its existence. In other words, metrics are a mean and not the end, the results, and the goal. Therefore, use them more like one of the tools to help you to drive your product in the right direction.

With this, we close the theme on the growth stage of a software product life cycle. We understood how to deal with client feedbacks, and what it is and how to prioritize a roadmap. We also saw several types of metrics, including the conversion funnel, engagement, churn, global and individual financial metrics, revenue and negative churnNPS, the loyalty metric, and we also approached some considerations on metrics. 

In one of my next articles, we will understand better the next stage of a software product life cycle: maturity. 

Digital Product Management Book

Do you work with digital products? Do you want to know more about how to manage a digital product to increase its chances of success? Check out my book Product Management: How to increase the chances of success of your digital product, based on my almost 30 years of experience in creating and managing digital products.

Digital Product Management Book

More on special requests

In my previous article about special requests I explained that the way you deal with special requests depends a lot on your product and your client base. If you have a B2B product focused on bigger customers, the product manager “must pay full attention to special requests. There are few customers, but all of them are special and demand customized attention. The product manager must be careful and not implement features that will be used by only one customer. However, requests from one customer, especially the bigger ones, will always be a priority in this scenario.”

How to manage these special requests

So this means that the product manager should do everything that big customers demand?

The short answer is NO! You are still managing a product so two important aspects of product management still applies:

  • Demand normally comes in the shape of solutions, and big customers can be quite incisive describing the solution they want. It’s the product manager’s job to understand what’s the underlying problem that made the customer request that specific solution. Quick tip: ask why the customer need that solution and what she will do as soon as she gets that solution. This will give you lots of insights on the customer’s problem.
  • You are managing a product, not a tailor-made software. If you implement each and every feature request from customers, you’ll be building a tailor-made software for each customer or, what’s even worse, a “frankenstein software” product.

The longer answer is no, but you’ll still have to manage the special requests. There some techniques that can help you deal with these special requests:

  • modularization: if you are able to build your product as modules that work together in different combinations to deliver different types of solutions, this will enable your sales team to mix and match the modules to fit the needs of your customers. And whenever a new feature request comes, and you figure out the underlying problem and decide to build a solution for that problem, you can build as a separate module. You can even charge this customer for the development of this new module. Charging a customer for the development of a new solution, even considering that this new solution can be offered to other customers, is a good way to test the real need of this customer. If he is willing to pay you to deliver this solution, he really needs this solution and trust you to build it. SAP is a good example of modular solutions.
  • advanced configuration: another way to customize your product without making look like a “frankenstein software” product is though advanced configuration. For instance, for a certain customer, feature X can be delivered as the sequence of step A, step B and step C. For another customer, that doesn’t want feature X, but need feature Y, it can be delivered by the sequence of step C, then step E, and you turn off feature X for this customer. Depending on the complexity, it is possible also to deliver this advanced configuration through programming languages. Some examples are, again SAP, with its ABAP (Advanced Business Application Programming) and Salesforce with Apex, which enables developers to add business logic to most Salesforce system events, including button clicks, related record updates, and Visualforce pages.
  • integration: another common need from big companies is to have your product integrated with other products they already use. For instance, let’s imagine your company provides ecommerce solutions. Your customer hired your ecommerce product and they will have all of their product catalog, and also data on customer and their purchases in your ecommerce product. This big customer will certainly ask you to integrate your ecommerce solution into their ERP, so they can invoice customers and manage their inventory. This integration can be done in many ways, completely manual through re-typing of data, through file exchange or using an API integration. The best solution is through API, since it provides an error-free and real-time solution for the data integration between systems. For this reason it is very important that your product has APIs with the needed endpoints to connect with other systems.

Technical Sales (or Sales Engineering)

New special requests come up during the sales process. Each of these special requests will take time from the product manager as well as the product development team. The team needs to understand the special request, the underlying problem and design solution options that can be used with other customers. This will take time from the product manager and the team.

At a certain point, the team will use the above described techniques to cope with the special requests in a scalable way. As soon as the team starts to use these techniques, the need to interact with customers for each request will probably persist or even increase. The sales team will ask the product manager to have meetings with the customer and help them show the customer what are the technical options available in order to address the request.

The first step is to train the sales team. However, this won’t be enough. The product manager will continue to be asked to join meetings to answer technical questions. To help with this issue, we should create a new role, the technical sales, also known as sales engineer, someone with technical background who will engage in technical discussions with the customer during the sales process.

Sometimes this role, since it has the sales word in it, is placed under the sales leadership. It’s a possibility, but can lead to misalignment of incentives. Under sales leadership, the incentive is number of sales. So if a tech seller is taking too long to design the solution, and other requests get delayed, a new tech seller is hired, increasing headcount and, consequently, the cost of selling. An alternative is to place this position under product management leadership so the focus is on sales enablement, i.e., provide the sales team with the needed tools to conduct sales without the need for a tech seller.

Professional Services

Supposing everything goes well with the negotiation and the customer decides to buy your product, if there are customizations to be made, additional work is required, no matter if it will be through modules, through advanced configuration, and / or through integration, This work may end up falling into the product development team backlog, which is not ideal, since this work is specific to address a certain customer request, while the product development team should be working on things that could be used by the majority of customers.

To help with this issue, we should create a second role, called professional services. A person with this role work on this type of projects. Setting up a new customer using the customization techniques from the product (modules, advanced configuration and / or integration). It should be people with technical skills able to do the customization work needed to setup the new company. Professional services can be done by a team within the the company that offers the product and / or by third parties. For instance, to implement SAP, Salesforce or Zendesk you can choose to use professional services from them or from certified third parties that have knowledge and experience implementing and customizing their software in many customers. This work is normally billed as setup fee.

Summing up

Dealing with special requests may be a need of your market, specially if you are in the B2B space with bigger customers. It is possible to build a product that fits these special requests without building a “frankenstein software” product. In order to do that, the product manager and product development team should use one or more of the known techniques to deal with special requests, modularization, advanced configuration and integration. Having these techniques in place won’t probably be enough, since the sales team will still need help in order to present the options to the customer and, after the sale, to implement it. Then enters two new roles, that should be close to product management: technical sales – or sales engineer – and professional services, which could be internal, could be done by third parties or both.

Digital Product Management Book

Do you work with digital products? Do you want to know more about how to manage a digital product to increase its chances of success? Check out my book Product Management: How to increase the chances of success of your digital product, based on my almost 30 years of experience in creating and managing digital products.

Product Management Book