Cost Volume Profit Analysis

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.

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!

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!

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?

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.

Transition Continued

Ok. It’s been a couple of months since I left the previous product management position and plugged into the new one. What a refreshing change of pace! Granted, there are always fresh challenges with a new gig, but in this case, the transition has been quite nice. Earlier today, I colleague asked how I felt about this move relative to the previous two. I’d have to say it’s a distinct improvement!

Jumping from a large, publicly traded corporation which was hidebound in process and politics to a smaller, privately held firm unencumbered by such restrictions has been the difference between night and day. Albeit there are areas in which a little more structure or process would be helpful, on balance throwing off the chains of big company institutional inertia has been profoundly liberating. Hopefully, this remains the case well into the future.

Now, I can become more fully engaged in all pieces of the value chain. It’s possible to actually spend time on the manufacturing floor or in the test labs to get hands on time; to really ask questions. Being able to make decisions and re-direct the business quickly is a real kick in the pants! And benefiting from personal interaction, face-to-face, rather than voice mail to voice mail has been a boon to productivity. In short, all the things product management should be are at least possible in a smaller organization. It reminds me of my first product management job almost 9 years ago. Chalk one up for business retro!

Transition

It’s a fascinating process to leave a product management job with one company to take a product management job with another. It’s possible to see the old position from the perspective of an external third party or consultant -- almost. Without the day-to-day operational fog that normally enshrouds you, you can enjoy a simplified picture of the product and the business. Things become clear, uncomplicated, and straight forward. It’s unfortunate that perspective is the exception rather than the rule in product management land. Product managers and their businesses would be much better if it were the norm.

This clarified perspective may be what the folks at Pragmatic Marketing are angling for within the framework of their product management training seminars. Keep things simple, clean, and to the point. It’s far too easy as a PM to become embroiled in politics, turf battles, and the flotsam and jetsam of corporate process -- all to the complete detriment of your business. Finding a means of escaping it to focus in an unabridged manner on the fundamental business appears to be the holy grail of product managers everywhere.

What’s the solution? Pragmatic Marketing’s seminars help by delivering product management tools which are not complex or elegant, but appear to be effective. This is a start. Aside from that, I’m afraid the only other option is to bear down. Be proactive and persistent in your efforts to simplify, simplify, simplify. Become educated about your market, your business, your product, and your processes. Read! The more you understand about each, the easier it will be to cut to the chase, fashioning a more focused environment.

Of course, one could also spend time moving from one product management role to another to benefit from the aforementioned consultant style perspective. However, you need only do so a handful of times before witnessing a majority of the transition perspectives which are of value. From there it’s time to apply them. Thus begins the second half of the transition; the arrival at the new firm. It’s going to be fun!

Good Information Leads to Good Decisions

Good information leads to good decisions is an aviation axiom. The corollary of this is that poor information leads to poor decisions. The unspoken but all-too-important point is that poor decisions can lead to tragic consequences when it comes to flying airplanes.

If good information leading to good decisions is at the forefront of the decision making process in an arena in which the consequence of failure may be catastrophic, then why would this reasoning be less than applicable in the role of a product manager? The answer is… it’s not.

While it’s true that good information does not guarantee good decisions, nor do good decisions guarantee good results, the fact is that this line of reasoning does improve the odds that good results will ensue. The alternative is to leave good results strictly to chance. This is NOT something one does when staving off gravity, nor should it be the norm when facing down critical business decisions.

Another way to look at this is to say that when decisions need to be made, information, data, and facts should normally win out over theory, speculation, or feeling. Granted, there are times when this prioritization may not be true, but across the set of decisions product managers make over the course of their careers, it constitutes best practice the majority of the time.

So how do product managers acquire good information – or at least the best information available? The same way pilots do… through research. In the case of product managers this means tapping into customer feedback, analyst reports, competitive intelligence, financial information, third-party publications, and any other source of data which can be compiled and intelligently applied within a decision framework.

In conducting research, the PM must be aware that there is no such thing as perfect information. And if one were to spend an unlimited amount of time trying to acquire perfect information, said PM would get nothing else done. As a result, there comes a point where the opportunity cost of doing more research is superseded by the need to make a decision and take action. Understanding where this point occurs is something that comes with product management experience and refinement over time.

Thus, good - but not perfect - information leads to good - but not perfect - decisions. This is what solid product managers should strive for. Given time and repetition under the guise of this premise, product managers who exercise their decisions in this manner will generate increasingly well run and successful products. And in the final analysis, isn’t that the goal?

Incremental Product Management

Is it possible to turn a bucket of fertilizer into a rose petal? Yes. It is. However, it requires time and effort. And progress is measured in small increments rather than large leaps. This, in a nutshell, is product management. It’s a process. It’s time consuming and most often measured in minor victories – hopefully steady ones. It’s rarely a home run let alone a consistent string of them. The earlier you realize this, the greater the brain damage you’ll save yourself.

How does one manage a lengthy process of tiny victories in order to achieve great success? Other than exercising a boat load of patience, that is? The key is to make good decisions consistently. While it’s true that you will, through your product management career, make many bad decisions you should continually work to reduce the number of bad decisions and increase the number of good ones you make in both quantity and quality.

While this is a worthy objective, it’s much easier said than done. Consequently, one must bear in mind that over time, the balance of favorable outcomes tips in your favor by making consistently good choices versus making a preponderance of poor choices. Also, for every decision you make, good or bad, you should learn something from it and apply it to the next decision point. This combination helps you replicate good decisions while reducing the poor ones, thus building your success.

By exercising the lessons learned from each decision, your judgment becomes more refined, helping you make better choices going forward. This process is cumulative. The more decisions you make, the more you learn and the deeper your experience becomes. The more of that experience you have at your command, the easier it is to make sound, future choices.

The more positive decisions you make, the greater the probability of successful outcomes and learning which can be built upon further. Truly, striving for consistent, sound decision making for your product or business is very much like compound interest. As Ben Franklin said, there is no greater force in nature than that of compound interest… paraphrased, of course.

The point is this; good decisions repeated improve your odds of success. Poor decisions repeated increase your odds of unemployment.

As a product manager, it’s imperative that you strive to make consistently good decisions by learning from all decisions previously made. Thus, it becomes a process of incremental improvement in your skill set much the same way in which a bucket of fertilizer, under the right conditions, is used to turn a seed into a plant bearing rose petals. It’s all incremental.

As previously stated, product management is slow, it’s incremental, and there are few home runs. But if you understand the basic premise behind the process and work to exercise the fundamentals – consistent good decision making and learning from each decision, then applying those lessons - you’ll see the results you hope for across time. Profitable products, happy customers, satisfied management, and bigger pay checks are yours for the taking – one incremental improvement at a time!

Olympic Business

The Olympics are on TV and I’ve been watching sporadically during the evenings. The athleticism, stamina, strength, flexibility, and quality of the competitors is amazing. They’re fun to watch and they make their performances look easy - deceptively so. This, despite the world records which are falling in droves.

Now what on earth could any of this have to do with business in general or product management in particular? Simple. The effort and practice put in by the athletes over the years is the key. The repetition. The mechanics. The consistency.

Striving for perfection, not by dreaming up elegantly complex routines or wearing the trendiest uniforms, but by drilling their minds and bodies to act and react almost instinctively. Again and again, with great precision, upon each repetition they refine their motor skills, their strength, their agility, their stamina, their mental toughness to ever greater degrees.

In short, Olympic athletes work tremendously hard on the value chain of their individual performance characteristics to align them perfectly and consistently. In doing so, they maximize their odds of success in order to become the best athletes the world has seen.

As a product manager, you will have a value chain of performance components you must strive to align consistently and well. Driving a business or product line to success requires performing fundamental business skills and activities over and over with precision. Like the Olympians, doing so maximizes your odds of success.

If you believe that writing the best business plan, crafting the most elegant strategy, or dreaming up a great value prop are all that are required to succeed as a product manager, you will fail miserably. Despite watching Olympians make their complex activities look armchair easy, nearly everyone knows that 4 years or more of diligent, concentrated, and difficult effort have been invested to obtain the results we watch on television.

Unfortunately, too many product managers believe they can generate great success with their lines without engaging in the hard, time consuming work needed to make less-than-sexy value chain activities line up and function well. Building cool strategy decks, grand business plans, or mind share grabbing value propositions is sexy and fun. But at the end of the day, no matter how great those things are, they won’t be sufficient to overcome poor customer research, flawed pricing, inefficient manufacturing operations, or inadequate sales support and training any more than sleek uniforms or great sound bites will translate into Olympic gold.

To be a successful product manager, you have to behave like an Olympic athlete in training, day in and day out. Take care of the fundamentals. Develop reliably consistent performance across your value chain and you can achieve greatness. It may not be fun every day, but the result will be worth it!

Process This!

Product Managers are often called upon to be process managers. Getting a concept from idea to dollars requires multiple steps, in the appropriate sequence, in order to ensure success. Consequently, a product manager must work to align the steps and help guide and propel the idea through those steps in a systematic fashion i.e., a process. This is a requirement. Nay, even a necessary evil it seems at times.

To the great joy (read consternation) of product managers everywhere, there frequently exists an internal functionary otherwise known as a busy-body, whose sole role is to impart additional process to the, ah…. process. These are the folks for whom process is the end-all, be-all of their existence. Or at least it should be from their blinder addled perspective.

These people believe that more process equates to heightened success and greater performance. This is similar to stating that market share exactly equals profits (Ask the airline industry or dot bombers how well this equation works!). But I digress.

The process police will put formula and propriety before the actual objective of you as a product manager. To them, checking the boxes is more important than generating revenue and profit. This is called, no value add. In less polite society, it’s also referred to as “Revenue Prevention.”

What’s the anti-dote to such an inane stance? Education. Facts. Persistence. In combination and large doses. And bribes - little ones, of course e.g., coffee, bagels, schmooze, etc. Those help – sometimes. If you can prove to the process police, via profligate fact that their desires stand in the way of great riches, rather than enabling them, you may have a chance of getting beyond their insidious clutches and extricate your product from the evil (not necessary evil, mind you) of undesirable process activities.

Remember, KISS – Keep It Simple, Stupid. Your facts must be numerous, well organized, and simple to communicate / understand. Your delivery needs to be calm and reasoned. And above all, you must be persistent. For without these things, the unthinking, unblinking process will overwhelm all who stand in opposition. Your product will be left in the dust and those promising dollars will gladly head to your competitors, at which point in time even the, “I told you so’s” and the “process this, will ya!” won’t do you or your product any good.

Thus should be your mantra… KISS. Simple facts to educate in a persistent manner. Because at the end of the day, cash is fact, profit is theory, and process should be nothing more than a means to those ends, not the end itself.

A pig in drag

There are times during your PM career in which you may be handed, or unwittingly volunteer to take, a product of someone else’s handiwork. Often times, what you receive will be well thought out, diligently constructed, and artfully run. In this case, all you have to do is to make sure you don’t auger it into the turf. That’s the best kind of inheritance!

However, there are other situations in which you may find yourself suddenly clutching one large pig in serious need of enormous quantities of lipstick. And despite applying said beauty balm generously, the result still ain’t gonna be pretty! Upon receipt, you will quickly find there was no business level forethought, little structure, and even less of a clue on the part of the preceding parties about how to build and run a product. Thus, a pig.

You will find that fundamental business concepts have been completely ignored with this pig. Economies of scale in manufacturing? Piffle! Sales cycle and coverage? Yeah. Right. Simple, clean, orderability? Non-sense! Clear-cut position - both competitive and relative to product line or portfolio? Ha-rumph! Margin? What’s that? You get the picture.

These kinds of issues are usually the result of having had nooooo adult supervision within moon shot of your new fangled pig! As the PM, you will be tasked with finding, assessing, and fixing all the issues. Unfortunately it will take tremendous work and patience… very much like that which is required to turn a bag of all-natural fertilizer into a rose petal. It can be done, but it won’t be quick. And you’ll sweat a lot! Or more likely you’ll swear a lot. Either way, you’ll earn your keep.

What’s the key to all this you ask? As soon as I figure it out, I’ll let you know. For a dollar… or maybe a beer.

Truthfully, the key is simple. Not easy, but simple. It’s patience. And a LOT of sound business practice application. Go back to the basic building blocks you learned (hopefully!) in business school. Make sure you’ve covered the fundamentals - thoroughly. And did I mention patience? You’ll need both.

Also, you’ll be wise to find a sounding (venting?) board to offer support. This will be crucially important on those days when the business infidel are many and your patience is shot. Without a cool hand, applying sound business principles to spruce up your farm animal will be more than most mortals can accomplish.

Good luck with your pig!

Good ideas... Hard choices

In big company parlance, the land of good ideas is sometimes known as corporate row or the C Suite. This is the ethereal plain on which grand strategies are hatched and good ideas propagated downward to the masses. It’s also the area which suffers a disconnect from the realities faced by the rest of the business. And the rest of the planet, come to think of it.

While some ozone level ‘good ideas’ may have merit, others do not. A few actually sound reasonable. There’s a logical flow to them making use of fuzzy connections and various lapses which, without reflection, allow ‘good ideas’ to grow, prosper, be repeated, and eventually implemented.

Unfortunately, in the implementation stage, ground pounding product managers are tasked with pulling together pieces of the product value chain to bring the ‘good idea’ to fruition. This is known as the point where the rubber meets the road. It’s also the point where the wheels tend to fall off.

C Suite people are big picture people. Not a bad thing to be. Many visionaries and artists are big picture people. Take Monet and his work for instance. At a distance, it’s beautiful. It’s not until you get close that you realize it’s also rather messy. I sometimes wonder if “C” row folks fancy themselves as business Monet’s. Paint a picture that looks great from a distance, but don’t inspect it closely.

Product managers, however, have to inspect the picture closely in order to make it a reality. Upon peering closely at the ‘good idea’ from above, PM’s begin to see not just messy brush strokes, but real flaws. Some of which may be fatal. For instance, it’s a good idea, but service can’t support it. It’s a good idea, but not for this market. You get the picture. At this juncture, PM’s are faced with difficult choices.

A) Take the ‘good idea’ and implement as best they can, hoping something good will happen.
B) Push back with sound reasons for making changes to the ‘good idea’ so that it becomes an idea that works.
C) Find a new job.

If you choose “A” you are a ‘yes’ man product manager. You’ll agree to anything management passes down. You have become a passive product manager. The success or failure of your product is no longer within your sphere of influence. You are corporate fodder.

For those selecting “B”, you could be viewed as an unreasonable dissenter – depending on the predilections of the corporate wigs. Or you may be viewed as a worthy PM with the strength to see things through. Either way, at least you have a shot at influencing your product for better or worse. You are a player. (Possibly for another team if the “C” folks are ticked off, but a player non-the-less.)

Choosing “C” means you may not be long for product management. You don’t like being a “yes” person and you’re not fond of conflict. You are unemployed.

The truth is, every product manager will face this scenario along his or her PM career path. The question is, how will you respond when it happens to you?

Value Chain Terms

Engineering / Development – a.k.a., Hobbyists or technology garage guys. The gear heads who want to build all the cool stuff, despite the fact that sometimes the market doesn’t call for it. Never mind that we can’t make money at it, it’s still too cool not to build. Just like Alaska’s bridge to nowhere...

Manufacturing / Operations – a.k.a., Woops…. As in, woops, we failed to deliver. On most anything in a timely manner. These are the folks who are so tight (cost control oriented) you can stuff a lump of coal up ‘em and have a diamond in 10 days. They’re well meaning, but their business vision typically does not extend beyond their keyboard. Can you say myopic? We might make money if we could deliver it, but hey… we might have to spend a dime to do it. Not happening.

Marketing – a.k.a., The 5 Dumbest People in the Company. My airline friend coined this term. These are the peeps with grand ideas but absolutely no clue about the technical, operational, or practical realities of delivering a product or service. But they are a happy lot! Then again, ignorance is bliss.

Professional Services – a.k.a., Revenue Prevention. If anybody can conjure up a sales inhibitor, professional services can name 7 ways to get the job done. You can install it and use it, but it ain’t supported. In other words, if something goes wrong, you’re basically a test pilot. But if we support it, we’ll have to do something. That’s un-American. Besides, if we did then you’d lose the thrill of being the Chuck Yeager of high tech.

Sales – a.k.a., Wine-alots. If the deal doesn’t do itself, it’s not getting done because it would impinge upon the golf game. You know, the only point in time where talking about someone’s handicap isn’t considered impolite? If there’s huge money in it, and the sales guy doesn’t have to do anything, he’ll think about getting involved in the deal. Otherwise, you’ll hear about it. That’s what the SE, product management, sales support, tech support, engineering, and management are for. The rep just introduces ‘em all to the customer and lets it ride. That’s how they roll.

Finance – a.k.a., Bean counters. This one is pretty well understood. For all those who failed calculus in college, but managed to get the right digits into the correct columns, this is where it’s at. Finance will provide grand numbers, but really doesn’t know what they mean to the business. They generate some pretty groovy graphs and charts, though!

Legal – a.k.a. The road to hell and good intentions. Lawyers have ‘em – good intentions that is, but they’re the reason most of us know not only what the road to hell looks like, but all the detours, rest stops, gas stations, and tourist traps along the way, too. And to make the trip interesting, the lawyers take away our GPS so the ride takes longer. Nothing like dragging out the suspense when you know you’re going to hell anyhow.

Management – a.k.a., The Albatross Gang. You know ‘em, the birds who fly in unexpectedly, raise a ruckus, dump all over, then fly off leaving others to clean up the mess? These folks are the reason “The Peter Principal” was dreamed up in the first place. For management, powerpoint slides ARE strategy. The rest is irrelevant.

Product Manager – a.k.a., The idiot… as in the dolt attempting to provide some level of adult supervision to this value chain mess in order that maybe, just maybe, the product and business will make a little coin. Good luck!

Disclaimer - a.k.a., The fine print. The characterizations drawn here are the result of a long day of product managing and not intended to be truthful or accurately portray people actually holding any of these positions. But if they do.... any parallels or perceived similarities are merely coincidental.

Product vs Value Chain

Sometimes product ideas come along that look great in PowerPoint. The concept resonates with customers and executives when pitched by charismatic idea owners. The owners can gloss over the inconsequential or fail to deliver the whole truth whether known or not. But they do it with zeal. The ability to convey propositions with singular exuberance and passion in the quest for victory is why those folks are in sales – not always in product management.

When great ideas converge with solid value chain structure, the fusion of energy and execution can deliver outstanding business results. Unfortunately, when great ideas meet value chain structures which aren’t built for them, contention ensues. And sometimes the contention may only be resolved with a radical change.

Having navigated product management waters in several firms, I’ve seen this contention before. However, in the current case, it appears to be significant. At the moment, a product idea which has been hatched and escaped into the wild looks great on paper. It appears to be customer friendly, comprehensive, integrated, and uses leading technology.

Unfortunately, the idea is not sales order friendly, it’s extremely difficult to deliver in volume, has a disjointed service component and is cumbersome to manage from an upgrade standpoint. Ah-ha! Trade-offs, you say. The stuff of product managers… and politicians. If that doesn’t give you a warm and fuzzy about being a PM, I don’t know what will!

Should a product manager focus on delivering the customer friendly, despite the value chain problems which may be systemic across the global corporation? If you can’t change major value chain components to fit a product, then accept them you must. Venturing down this path includes accepting reduced sales volume and ability to meet targets, but hey, the great idea is still in-tact.

Conversely, would it be prudent to modify the good idea so it’s “less good” from a slide deck perspective, but more value chain friendly providing alternative customer goodies? One might de-feature the product to fit the value chain model, thus delivering other customer goodies. Do swift delivery times, ease of use, and streamlined serviceability for the customer result in a better business if you can push up the sales volume? What of the political ramifications of down-leveling someone’s “great idea”?

Well, if you read my previous post, you would know that I prefer a great business with mediocre technology over outstanding technology and a poor business. With that, I suppose the choice is clear. I wonder how it will work out?

Good technology. Bad business.

If we build it, they will come. It’s a great movie line, but extremely poor business practice. In the high tech arena, it’s an all too common mantra for corporate success. Having worked for 4 high tech firms as a product manager, I’m yet discouraged by executives incapable of grasping the full issue.

A product or business may be thought of in terms of a sports team – let’s say football - American, that is. The successful team does not have the best quarterback in the land, but the best team. Having players in various roles who understand those roles is important. Of greater concern, is ensuring those players are working within each role to maximize the performance of the team…. not the performance of an individual player.

As any armchair fan, coach, or player can attest, maximizing the quarterback’s contribution while neglecting the performances of the supporting cast on both offense and defense is a recipe for mediocrity or abject failure. You can have a perfect season with such a philosophy. Perfectly abysmal that is.

Product managers and executives, if not astute, will quickly devolve their interest to the single component (technology) of the business while neglecting the supporting roles within the value chain. If only we can build the best, fastest, largest, most feature rich widget, the rest of the business will take care of itself. Shoot, the product will sell itself. We will dominate the market with a break through offering and live richly thereafter. In theory.

In practice, such great focus goes into building the best widget that little attention is paid to other necessary items within the value chain. Inadequate or misdirected sales coverage ensues, limiting volume. Schizophrenic messaging and dilutive marketing efforts are propagated, confusing customers. Manufacturing efforts slide precipitously delaying product delivery.

Any number of value chain components can run amuck, damaging your business. In other words, the executive coaches focus on a single player in the zealous belief that if the player can become uber dominant, the inadequacies of other players on the team will be eclipsed to such an extent that success is assured. It's the industry's best technology. It’s magic. It’s misguided.


Product managers who own a product or business own the value chain. Consequently, they must endeavor to coordinate the value chain participants to maximize the business. They should do so like a coach coordinating the efforts of his players to maximize team performance and not just the quarterback’s.


This may be the most crucial activity a product manager may engage in to facilitate the success or failure of her product. Concentrate on the business, the whole business and nothing but the business. Great technology is but one facet of that. I’d much rather own a great business with middle of the road technology than award winning technology and a losing business. Wouldn’t you?

Great strategy? Good Execution!

“Leadership is a potent combination of strategy and character. But if you must be without one, be without the strategy.
-General Norman Schwartzkopf

“However beautiful the strategy, you should occasionally look at the results.”
-Winston Churchill

“A good plan, violently executed now, is better than a perfect plan next week.”
-General George S. Patton

“A half-baked strategy well executed will be superior to that marvelous strategy that isn’t very well executed.”
–Allan Gilmour, former Vice Chairman, Ford Motor

“Quality of execution is far more important than the idea.” -Barnett Helzberg, Helzberg Diamonds (bought by Warren Buffett, Berkshire Hathaway)

Strategy shows up in Power Point decks, in corporate brochures, and to the delight of executives, in business publications with their names prominently attached. Great time and effort go into slicing and dicing markets, attempting to find sweet spots, and pontificating at the 100,000 foot level how to grow the biz.

Unfortunately, that which is often neglected is the execution. To unfortunate ends. As anyone reading at the grade school level can attest from the lines above, execution plays a central role to organizational success. This is true of not only military organizations, but those of a business bent as well.

Why then do so many, spend so much, for so long, on something which can yield so little? Particularly if the support and performance aren’t there? Because it’s sexy, that’s why. It’s more interesting to tell your neighbor that you’re a strategist rather than a manager or an operations grinder. And for these folks, by the time the chickens come home to roost, they can simply say that market conditions changed, requiring a change in strategy, and away they go.

As a rock solid PM, you cannot lose sight of the execution tree for the forest that is strategy. Many product lines fail to produce and firms fall because the execution was not present to support the strategy in the Power Point. In other words, without consistent execution, the greatest of strategies becomes expensive slide ware, vapor ware, or any other empty “ware” you care to call it.

Strategy… fine. Execution…. Required!

Outside the Box

What a ridiculous phrase within the business world. Likely to be one of the most oft used and trite phrases imaginable. No doubt it’s a top pick in boardroom bingo games across the continent.

Why such derision where these three words are concerned? Because they’re liberally thrown about when events aren’t going as expected. Sales volume not up to par? How do we get outside the box to drive deal velocity. Operations having difficulty containing costs? Let’s focus outside the box and find ways to trim expenses while maintaining product flow. Yak, yak, yak!

Unfortunately, the phrase “outside the box” may be a thin cover for a lack of proficiency inside the box. In other words, when people or firms can’t execute the basics with great consistency, failures occur. Rather than targeting flaws, which means identifying culprits, it’s much easier to say, “Let’s blah, blah, blah outside the box” and boo-ya, problem solved!

When folks hear “outside the box” they forget about proficiency of business principals and instead gaze into the magic 8-ball to divine new, novel, risky, and “unique” solutions. This is done in hopes of diverting attention from the ineptitude that got them into hot water in the first place.

There’s nothing better than confusion and obfuscation to cover one’s bum in hopes of getting lucky with another tactic!

The sad fact is this. By revisiting the fundamentals and exercising them in an expert and consistent fashion, a great many of the individual and business problems raising their ugly heads can be effectively addressed. I’ve been dumbfounded by firms in which I’ve worked, that ignore business basics to their detriment, yet continue chasing the holy grail of “getting outside the box” to improve performance.

Get back in the box! Return to the basics and learn how to do them extraordinarily well. If you can’t execute the fundamentals IN the box with great proficiently, attempting anything complex or fancy outside the box should be considered speculation, not investment and certainly not sound business practice in a great many cases.

Tyranny of the Urgent

The nice thing about being a product manager is that you get involved in all kinds of stuff. The bad part of being a product manager… is that you get involved in all kinds of stuff! There’s more work to do in a given day than there is day in which to do it. Everything is important. Even urgent. This is where a product manager has to be careful.

When managers, engineers, or sales people are pinging you for help immediately, it’s easy to get caught up in the “need asap” mode. Unfortunately, there are times when someone’s “need now” is not as important as the overall health of your business. As a product manager, you’ve got to think longer term. Many of the requests you receive, which seemingly must be addressed today will, by next week, be nits.

Conversely, items which don’t appear critical today, may become infinitely more so in a month. By putting off those activities because the deadline isn’t immediate may leave a product manager too little time to act on the greater need. The result could be a product “short” of the resources required to succeed.

The moral of this story? Consider your options. Weigh the opportunity cost of engaging the urgent need at the expense of the critical activity. If you don’t, you may become entangled in a never-ending loop of urgent requests, monopolizing your time like a tyrant pillaging a country even as your product dies.

Training Tools

Over the course of the past year, I’ve been slowly absorbing the best practice wisdom published by the Product Development and Management Association (PDMA). Both “The PDMA Toolbook for New Product Development”, Editions 1 and 2, as well as the Journal of Product Innovation Management (JPIM), have been worth the read.

While each resource leans more toward academic best practice than “rubber meets the road” practicality, they do deliver significant wisdom. Throughout each chapter or monthly publication, I’ve gleaned a nugget of information or found some useful tool with which I can further my product’s likelihood of success.

Since I work in new product development and management, rather than managing a mature product or an OEM offering, having the ability to see what others are doing on the front side of the business is helpful. Sometimes the help comes in the form of tools, ideas, or information which is immediately applicable. At others, it’s simply knowing I’m not the only PM suffering (learning!) how to improve the process of bringing new products to market.

Over the years I’ve seen far too many PM’s who, once they become comfortable in their role – stop improving their skill sets. They put it on auto-pilot and coast. I don’t mean this in a bad way, per se, since these PM’s continue to work hard. However, they discontinue searching for, retrieving, and putting to use the knowledge and insight that’s available around them. For PM’s who want to become outstanding, engaging cruise control isn’t the answer.

With that said, there are numerous resources available in the market today. Training on line, in class, during seminars, and the most ubiquitous of all – simply reading. That’s what I’ve been doing a lot of lately and it’s paying off – without even resorting to the use of picture books!

To become a great product manager, just pick up a publication devoted to product management and get going. The PDMA, referenced above, is a good start. There are plenty of other resources from which to choose as well. Google away and get started. Your business and your employer with thank you for it.