There are tons of tools out there which Product Managers can use to help make themselves dangerous – for good and bad. Over the years, one of those which I’ve found most useful is Cost Volume Profit analysis or CVP.
I’ve had the chance to exercise this tool at two of my four previous employers and am just now getting down to brass tacks with it for my fifth company. In those cases in which I could use it, it was effective. In those cases in which I didn’t get the chance to utilize it, I wished I had.
CVP is a simple tool that allows you, as the master of your universe, to really dig into the effects of changes to your business. Whether those changes are among the multitude of cost components you can manipulate or efforts on the marketing and sales side relative to revenue generation and subsequent profitability, CVP can help you determine which levers to pull to optimize your business.
One tremendously important benefit of CVP is that it allows you to quickly conduct “what if” analysis on your concern. For instance, what if this component of my fixed cost increases? What are the ramifications to my volume and profitability in terms of break-even points or profit targets? If I discount the price of my product, by how much will the sales volume need to change to break even or get ahead? Are my sales channels and manufacturing pipeline capable of managing the volume change needed? Is the market sufficiently large enough to produce the sales volume I need to meet desired targets?
There are few things more clarifying to the decision making process than quickly and effectively running sensitivity analysis on your business, demonstrating the outcomes required to maintain equilibrium, and assessing whether or not your organization can manage those changes to hit desired profit targets. Incidentally, this kind of analysis is particularly useful when working with a sales force unaccustomed to price discipline in the field.
Maybe CVP will be useful to you, then again maybe it won’t. Having had the chance to spot check it in real life across a couple of industries and a few companies, I’ve found it’s at least worth a look.
Monday, March 9, 2009
Sunday, February 22, 2009
Getting Things Done
Getting Things Done is the title of the book by David Allen. As product managers with scads of projects and activities, figuring out how to organize, prioritize, and complete those things can be daunting. Consequently, my employer decided that all product managers, managers, and executives should undergo training based on Mr. Allen’s work.
As with most professional training, the key is to find the tools which you can take from it, deploy in your work place, and generate results – hopefully good ones. You don’t have to replicate in detail the framework provided. However, many training professionals won’t tell you this.
There’s an unspoken expectation, it seems, that whatever the trainer pontificates upon should be put into practice directly and completely. Fortunately, the trainer in our case was more realistic in explaining that we should take from the training the things which fit us rather than scrapping our current systems and completely revamping them. What a relief!
Based on what I’ve learned thus far – still have to finish reading the book – I think I’ll try the master list divided into buckets or categories which Mr. Allen suggests. This, hopefully, will allow me to better organize, prioritize, and focus upon the most critical or valuable tasks first while relegating less important activities for later dates.
Currently, I have mini-lists, partial lists, sticky notes, and white board scribbling scattered about. This provides plenty of opportunity for things to fall through the cracks or inadvertently allows me to spend time on lesser things at the expense of greater.
In theory this bucket brigade methodology sounds like a fine idea. I’m sure there are people out there who use it to great advantage. Whether or not it works for me remains to be seen. However, I do know it takes 2-3 months of repetition with something before it becomes habitual. That being the case, I guess I’m my own test subject in this little experiment until mid-May or so.
If you can’t test on yourself, who CAN you test on, right? Who knows, maybe in the end I’ll get things done – more so than I already am, and in less time. That’s goodness in my book!
As with most professional training, the key is to find the tools which you can take from it, deploy in your work place, and generate results – hopefully good ones. You don’t have to replicate in detail the framework provided. However, many training professionals won’t tell you this.
There’s an unspoken expectation, it seems, that whatever the trainer pontificates upon should be put into practice directly and completely. Fortunately, the trainer in our case was more realistic in explaining that we should take from the training the things which fit us rather than scrapping our current systems and completely revamping them. What a relief!
Based on what I’ve learned thus far – still have to finish reading the book – I think I’ll try the master list divided into buckets or categories which Mr. Allen suggests. This, hopefully, will allow me to better organize, prioritize, and focus upon the most critical or valuable tasks first while relegating less important activities for later dates.
Currently, I have mini-lists, partial lists, sticky notes, and white board scribbling scattered about. This provides plenty of opportunity for things to fall through the cracks or inadvertently allows me to spend time on lesser things at the expense of greater.
In theory this bucket brigade methodology sounds like a fine idea. I’m sure there are people out there who use it to great advantage. Whether or not it works for me remains to be seen. However, I do know it takes 2-3 months of repetition with something before it becomes habitual. That being the case, I guess I’m my own test subject in this little experiment until mid-May or so.
If you can’t test on yourself, who CAN you test on, right? Who knows, maybe in the end I’ll get things done – more so than I already am, and in less time. That’s goodness in my book!
Sunday, February 15, 2009
NIHITO
Nothing Important Happens In The Office. This phrase comes from the folks at Pragmatic Marketing. While it may be a bit of stretch in some cases, there is much more than a grain of truth to it. As product managers hunkered down in our palatial digs – ok, cubes – we often take for granted information regarding our product, business, or market about which many customers and prospects have little clue.
This fact is readily proved out the moment you exit the office and start talking with customers. Picking their brains on their home turf or at neutral sites like trade shows and conferences can be invaluable.
As one who is intimately familiar with your field, you may take for granted that all breathing hominoids are aware of basic specs or product usage surrounding your gizmo. In believing this, it’s entirely possible you’ll miss a golden opportunity to deliver to the customer the value your product can provide AND instill in that person the perception that you are a trusted advisor with whom they can relate.
The best part of this story is that getting out of the office and talking with customers and prospects to develop information doesn’t require advanced knowledge of industry research technique. Nor do you need to grasp advanced statistical analysis to divine answers from the information.
Put directly, you only need to be able to listen and speak as any normal human is capable of doing. Ask simple questions and listen to the answers. No need for copious notes, fogging the conversation with technical minutiae, or extolling the virtues of your device through an lengthy sales monolog.
An easy, social chat can reveal remarkable details – or lack thereof – about your customer or prospect’s knowledge of your offering. These nuggets, when aggregated, can paint an astounding picture of opportunity into which your product can be inserted.
Although it’s not likely you’ll get well defined, easily dissected, quantitative information, the qualitative information you gather from these social interactions helps provide color and texture to the lines and delineation which focused market research normally provide. Nuance, perception, and emotion, which frequently escape quantitative studies and which can doom decisions if missed, are available to you through personal interaction. Don’t miss out on it because you can’t escape the office.
Nothing Important Happens In The Office… don’t let your business and your career run aground because you thought EVERYTHING important happened in the office. Go talk to the customer. You may find out the experience is not only valuable to your business, you may also learn that it’s actually fun!
This fact is readily proved out the moment you exit the office and start talking with customers. Picking their brains on their home turf or at neutral sites like trade shows and conferences can be invaluable.
As one who is intimately familiar with your field, you may take for granted that all breathing hominoids are aware of basic specs or product usage surrounding your gizmo. In believing this, it’s entirely possible you’ll miss a golden opportunity to deliver to the customer the value your product can provide AND instill in that person the perception that you are a trusted advisor with whom they can relate.
The best part of this story is that getting out of the office and talking with customers and prospects to develop information doesn’t require advanced knowledge of industry research technique. Nor do you need to grasp advanced statistical analysis to divine answers from the information.
Put directly, you only need to be able to listen and speak as any normal human is capable of doing. Ask simple questions and listen to the answers. No need for copious notes, fogging the conversation with technical minutiae, or extolling the virtues of your device through an lengthy sales monolog.
An easy, social chat can reveal remarkable details – or lack thereof – about your customer or prospect’s knowledge of your offering. These nuggets, when aggregated, can paint an astounding picture of opportunity into which your product can be inserted.
Although it’s not likely you’ll get well defined, easily dissected, quantitative information, the qualitative information you gather from these social interactions helps provide color and texture to the lines and delineation which focused market research normally provide. Nuance, perception, and emotion, which frequently escape quantitative studies and which can doom decisions if missed, are available to you through personal interaction. Don’t miss out on it because you can’t escape the office.
Nothing Important Happens In The Office… don’t let your business and your career run aground because you thought EVERYTHING important happened in the office. Go talk to the customer. You may find out the experience is not only valuable to your business, you may also learn that it’s actually fun!
Thursday, February 5, 2009
Think or Go Home
It’s been said that most men would rather die than think. Scary, but true. Not that people are violently against thinking. Just that thinking requires effort while expiring doesn’t. Most folks would also rather zone out, pig out, or watch Oprah than think as well. These folks are not bad, just a wee bit lazy at times. Or simply uninformed.
Complacency of this nature must be guarded against as you run your product or business. You will encounter many people who unknowingly prefer Oprah gaping to productive cogitating. They may not realize this. As the leader of your business, it’s your job to gently, but directly, train them to consider more than their professional navel.
Dynamics of this nature can occur as one specialist, trying to reach the pinnacle of his specialty, neglects to consider (think) about the ramifications of his efforts on the balance of the business. This can result in a net loss to your business in terms of value adding productivity.
For instance, as a product manager, if I think that uber accurate market information will lead to all other goodness with my product, it’s not exclusively bad. But if I commandeer the engineering troops for many hours each day to help refine market research tools and trap the best possible info, then I impinge upon their ability to work their engineering mojo.
In doing so, I may drive added value to the market research function, but more than off-set it with losses to engineering productivity. I’ve now produced a net loss to the product or business. Nice job. No bonus for me.
This is called opportunity-cost consideration. As a PM, you should be aware of it. The people on your team must be as well. They must think about the value they add relative to the value they may remove elsewhere. Otherwise, they’ll continue on their merry way, perfecting their corner of the universe, while cannibalizing their brethren. And if they don’t / won’t / can’t think about this, then you must. Otherwise, go home. That’s where the TV and couch are, right?
Complacency of this nature must be guarded against as you run your product or business. You will encounter many people who unknowingly prefer Oprah gaping to productive cogitating. They may not realize this. As the leader of your business, it’s your job to gently, but directly, train them to consider more than their professional navel.
Dynamics of this nature can occur as one specialist, trying to reach the pinnacle of his specialty, neglects to consider (think) about the ramifications of his efforts on the balance of the business. This can result in a net loss to your business in terms of value adding productivity.
For instance, as a product manager, if I think that uber accurate market information will lead to all other goodness with my product, it’s not exclusively bad. But if I commandeer the engineering troops for many hours each day to help refine market research tools and trap the best possible info, then I impinge upon their ability to work their engineering mojo.
In doing so, I may drive added value to the market research function, but more than off-set it with losses to engineering productivity. I’ve now produced a net loss to the product or business. Nice job. No bonus for me.
This is called opportunity-cost consideration. As a PM, you should be aware of it. The people on your team must be as well. They must think about the value they add relative to the value they may remove elsewhere. Otherwise, they’ll continue on their merry way, perfecting their corner of the universe, while cannibalizing their brethren. And if they don’t / won’t / can’t think about this, then you must. Otherwise, go home. That’s where the TV and couch are, right?
Sunday, January 25, 2009
Pummel the Heathen
This past week was our annual sales kickoff week. You know, that time of year when the entire field sales force descends upon the home office and drains the surrounding territory of available beer. Then we train the sales peeps on products, competition, and strategy while they’re all hung over.
During the training, we discuss competitive positioning or how to beat the enemy. This is otherwise known as pummeling the heathen. The CEO will like that perspective – but I digress.
When your product is not well differentiated from similar offerings in the market, or if you don’t know HOW it’s differentiated, you end up focusing on nits. Our widget has a sprong setting 2 one-hundredths of a furlong less than that of brand C, providing huge superiority on something, but we’re not sure what. That’s why you should pay big American dollars to buy our gear rather than theirs. Please… your 5-year old nephew knows that’s weak.
I’m a very big believer in focusing on a few major things and letting the rest go. Clearly articulate the three major differences. Then specify, how they translate into value and dollars – to the customer, not to the sales guy. The remaining nits will take care of themselves in being discussed by the gear heads ad nauseum while they’re all on line gaming.
The Big 3 should provide clearly distinct differences which allow your product to be quantifiably and qualitatively separated from the riff-raff in your space. If your product absolutely doesn’t have these, it’s a commodity. Or a clone.
For instance, if you can’t demonstrate that your widget holds 3x the volume in 50% of the space, delivering 125% greater performance at the same price point as the heathen – preferably through direct comparison to your competitor’s products or documentation for the sake of veracity, you have a problem. And your hung-over sales folks will know it. You will be summarily jeered from the speaker podium by them as they reach the bottom of their mimosas.
Remember. The word differentiation means “set apart by differences”. If that’s not happening with your product, you have your work cut out for you. And the beer saturated sales people will make sure you know it.
During the training, we discuss competitive positioning or how to beat the enemy. This is otherwise known as pummeling the heathen. The CEO will like that perspective – but I digress.
When your product is not well differentiated from similar offerings in the market, or if you don’t know HOW it’s differentiated, you end up focusing on nits. Our widget has a sprong setting 2 one-hundredths of a furlong less than that of brand C, providing huge superiority on something, but we’re not sure what. That’s why you should pay big American dollars to buy our gear rather than theirs. Please… your 5-year old nephew knows that’s weak.
I’m a very big believer in focusing on a few major things and letting the rest go. Clearly articulate the three major differences. Then specify, how they translate into value and dollars – to the customer, not to the sales guy. The remaining nits will take care of themselves in being discussed by the gear heads ad nauseum while they’re all on line gaming.
The Big 3 should provide clearly distinct differences which allow your product to be quantifiably and qualitatively separated from the riff-raff in your space. If your product absolutely doesn’t have these, it’s a commodity. Or a clone.
For instance, if you can’t demonstrate that your widget holds 3x the volume in 50% of the space, delivering 125% greater performance at the same price point as the heathen – preferably through direct comparison to your competitor’s products or documentation for the sake of veracity, you have a problem. And your hung-over sales folks will know it. You will be summarily jeered from the speaker podium by them as they reach the bottom of their mimosas.
Remember. The word differentiation means “set apart by differences”. If that’s not happening with your product, you have your work cut out for you. And the beer saturated sales people will make sure you know it.
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