4 Things Every Product Manager Or Entrepreneur Should Know, and 4 Classic Movie Reminders
Over the past couple of decades, I have led IT product development initiatives and implementations at various companies, including Fortune 30 and Fortune 1000 companies, venture-funded startups and private-equity-held companies, and most recently as Chief Information Officer at the U.S. national pioneer of court e-filing solutions. Prior to that role, I was its Vice President of Product Management and Strategy. I'm also a founding investor and principal at VentureC, a cyber security and software development company. I keep learning. That being said, in my experience, a business lives and dies by the viability of the products and services it delivers to its customers as well as its capacity to effectively take those products and services to market before it runs out of sustaining cash or, in more subtle terms, before its investors and creditors run out of patience.
It is important for tech product managers (and entrepreneurs) to understand what often keeps executives (and board members) up at night. The most entrepreneurial and resourceful product managers will understand what the CEO sees. And here is the ten-thousand-foot view: A company runs on cash. Cash comes from sales or lines of credit or loans or investments. Sales won't happen without a winning product-market fit. Investors and lenders won't bite without the promise of a winning product. A product doesn't sell itself. And the competition won't take your advances toward their customers lying down. Even more, they will make bold advances toward yours.
Presented as cornerstones, here are four things every tech product manager or entrepreneur should know to be effective and four classic YouTube movie clips as a reminder.
1. The Money Thing: If your investors can't wait for it, your customers won't ever see it.
It is often said that it is all about the customer. That is, of course, very true. But also true is the fact that if your investors aren't happy, nobody is going to be happy. And the product manager may never get to see their product vision realized.
Investors range from those who want to see their returns tomorrow to those who are willing to wait a little while. They range from those who want more predictable returns with little risk exposure, to those who seek out-sized returns and accept the high risk that comes with the territory.
Money makes the world go 'round -- the business world, that is -- and Liza Minelli, daughter of Judy Garland of "Wizard of Oz" fame, reminds us of the money thing (the cash flow thing) in this musical song and dance in the 1972 movie "Cabaret:"
It is no secret that the so-called Goldilocks period for a turnaround sale by certain private equity firms is only three to four years from the time they purchase a company. Three years is not enough time for the vast majority of disruptive innovations to get built, refined, and find their footing in a market in any serious way. It is barely enough time for an incremental or sustaining innovation or two, depending on the industry.
If a product manager, in their entrepreneurial exuberance to knock out the competition, introduces and champions a product or line of products with a seven-year horizon to a pennies-to-dollars turnaround private-equity firm that wants to see their money back in three, the product manager is likely to fall short. There will be a misalignment of goals and expectations.
Product managers unaware of the risk tolerance of their investor stakeholders, may find themselves working on disruptive products with a longer time horizon than the investors have the patience for. If this happens, the investors eventually pull the plug, and the product will fail, even if it is destined to succeed elsewhere with investors who may share the product manager's long view.
Product managers must understand their investors, and ensure their product strategies are aligned, or their products may be left with a one-way ticket to Palookaville (movie reference), as they are left mumbling the words of Marlon Brando's boxing character in the 1954 film "On the Waterfront:" I could've been a contender. I could've been somebody. (Sidebar conversation for a future "People Process Product" post on business capability: while everybody may not get a trophy, everybody is somebody.)
2. The Getting-the-Word-Out Thing: If you just build it, they won't come.
In the 1989 movie Field of Dreams, Kevin Costner's character walks through a corn field. Amid the rustling of corn leaves, he hears a ghostly whisper: "If you build it, he will come."
And so Costner's character builds his baseball field of dreams. To his surprise, a ghostly ball player appears. Then more ghostly ball players follow. And eventually the spectators arrive. Hooray for Hollywood! But this is usually not how it works in the world of tech product development. More commonplace, a product manager gets the product wrong the first time. The product won't be perfect out of the gate, in part, because customer feedback and market research are usually insufficient. All too often the customers don't know what they really want until they actually see it. Furthermore, there is the thought experiment that goes: "If a tree falls in a forest, and there is no one there to hear it, does it make a sound." In simple terms: You have to get the word out. A lot of it. And that's usually just the beginning. The message gets refined. The target audience gets reassessed. The message gets refined again. And marketers have to do it all amid the noise of everyone else trying to get their word out. And the noisier it gets in the marketplace, the louder you may need to shout or the more creative you may need to get. The landscape of businesses past is strewn with the carcasses of ventures that may have had better products, but lost the fight to be heard. One example: the triumph of VHS over Betamax in the old days of video tape. Most products are not cactus plants -- they are not born "default alive." In the real world, there is usually no substitute for the sales and marketing grind. Hear it from Alec Baldwin's character in his classic "Always Be Closing" speech in the 1992 film "Glengarry Glen Ross," probably the best movie on sales ever made. Warning: his speech is laced with profanity. Glengarry Glen Ross also features Ed Harris, Jack Lemon, Al Pacino, Kevin Spacey, Alan Arkin and Jonathan Pryce. It's well worth watching. When you're done, find a salesperson and shake their hand. Buy them a cup of coffee. They find the deals that feed the pride. And realize when the deals aren't coming in, that some deals may take months to procure. Product managers must understand the procurement (sales) cycles of the products they create and must communicate those clearly to their financial stakeholders. Everyone needs to be on the same page. If your product is not a mere incremental innovation ancillary to your current product and audience, you will likely need a ton of sales and marketing dollars, and quite a bit of time, to properly get the word out. Waiting for it to go viral is like playing the lottery. It takes a lot of capital or institution-driven media access or usually both to generate the buzz a tech product needs to be relevant in the marketplace, no matter how good the product is. And, to be sure, VC firms, and accelerators like Y Combinator, are most definitely institutions. Don't wait for viral. That would be like planning to retire on a mega-millions' lottery win because one John Doe won the mega-millions a year ago. Have and set proper expectations. Often, critical stakeholders at your company may have spent an entire career at one or more established companies and may only be used to taking products to market which are already mature or ancillary or incremental to a mature product they already deliver. For these stakeholders, the direct, linear go-to-market path that is typical for gaining traction with incremental innovations will make the most sense. If you drive or oversee incremental innovations as a product manager, you may thrive at ease as long as disruptive competitors are still at bay. But if your space is getting crowded, or your product is getting commoditized, and you are attempting to swim upstream to less crowded waters with a disruptive innovation of your own, expect even seasoned stakeholders to get thrown off guard. Making matters worse are the classic Horatio Alger rags-to-riches myths of Fortune magazine front-cover lore. You've seen them. Some genius in a garage comes up with an idea, and eureka, no marketing needed, all viral, it becomes a super success. While that makes for a compelling two-hour Hollywood drama -- or these days, a compelling 2-minute youtube clip -- they often skip the crucial part about the tens of millions, sometimes hundreds of millions of dollars, spent on the sales, marketing and PR ground-and-pound game, the gory details often reduced to a montage overlaid by the riff of Queen's "We are the Champions." Remember this: A rocket on a platform with no fuel is but a monument. A car on a race track without an engine won't drive. If you just build it, they won't come. If you just plant it, it won't grow. Your product needs water. It needs a cogent go-to-market strategy and adequate funding to back it. Without that, you're rolling serious dice. 3. The Market Thing: Everett Rogers' Diffusion of Innovation Curve and the realization that markets bend. Everett Rogers was a renown sociology professor who researched the dynamics of innovation adoption. In his 1962 publication, Diffusion of Innovations, he described a bell curve. It showed that when presented with an innovation a small fraction of the achievable market, about 2.5%, were inclined to try it almost immediately. He called this group the innovators. Let us call them mavericks. Think of them as the consumers who pre-ordered the now defunct Google glasses. They bought the very first Segways. They fired up auto-pilot in their self-driving Tesla, even while the bugs were still being worked out. They roasted their brand new kicks on hover boards when they were still catching fire. They are inclined to throw caution to the wind to try new things for the thrill of it, often enjoying the social status that comes with being the first, with being the ones in the know. Society needs mavericks. We may have evolved to watch mavericks taste new mushrooms in the wild, gaze at them to see if they survived, before the rest of us dove in. Mavericks have always served a grand purpose. Close on the heels of the mavericks, not quite the ones camped outside the Apple Store in tents awaiting the latest iPhone, are what Everett Rogers described as the early adopters. They make up somewhere around the next 13.5% of the achievable market. They are the ones to first ask the mavericks, “how is that new iPhone working out for you?” The maverick shares his experience and the early adopter considers her options and purchases the product only if the experience shared passes muster. While the early adopter is comfortable being at the cutting edge of product adoption, you’ll find the maverick at the bleeding edge, somewhere perched at the very precipice. Another difference between the maverick and the early adopter is that the maverick is quickly onto the next shiny thing. The early adopter is less flighty. For a product to endure in the marketplace (beyond a niche market), it usually has to be adopted by the next tranche of consumers: the early majority. Everett Rogers describes the early majority as the next 34% of the achievable market. The essential idea is that the first to adopt is usually the first to move onto better things. So product stickiness is most likely achieved when the product starts to be adopted by the more reluctant early majority. To pry them away from their "status quo good enough" product, you will need the boost of sales and marketing dollars. This is akin to the boosters that a space rocket needs to peel itself away from the gravitational pull of the earth. Without that boost, your product stands a good chance of fizzling and falling back to earth in epic fashion. That critically necessary leap to the early majority, the next 34% of the market after the early adopters, is what is often referred to as crossing the chasm. Perhaps, the most enjoyable time to join any product company is right after that chasm has been jumped. After the early majority, comes the next 34% of the market, which Everett Rogers refers to as the late majority. By the time the late majority starts to adopt a product, the product is actually in decline. Although to most product managers and to the folks who crunch and run the numbers, it will still feel like harvest, it is usually planting season already and long overdue. The astute product managers who understand how markets work, will nervously request funding for the replacements of the very successes they created, but will often get the usual rebuff to focus on the proverbial "bread and butter" of the company. As market adoption decelerates, there will be sales and marketing team member requests for adding more and more features to the existing products as they try to get the product deeper into the late majority of users, and past that to the last tranche. The final 16% is what Everett Rogers refers to as the laggards. The push to make laggards happy rarely scales. The laggard is that customer asking for an artificial galloping sound to be added to their automobile to make it more like the horse and carriage they owned prior. If there ever was a customer whose particular product needs you are permitted to ignore, it's probably the laggard. Unless your market is the niche, you may need to politely direct the laggard in the niche direction and carry on with your innovation for the greater customer good. As products start to reach the end of their life cycle, you see them start to compete for development and go-to-market resources with what should be their replacements. The natural tendency is for finance stakeholders to use a linear analysis that suggests a focus on yesterday's heroes. But markets aren't linear. They are logarithmic. They bend. They curve. And it's important for any product manager and the finance stakeholders who support them to understand what is going on in the market and where on the curve each of their products sit. That deceleration in product adoption, that added push needed to sell that thing that sold quite easily before, that horse galloping sound you have to add in that automobile to push just one more unit to the gent who won't give up the horse, that distraction to boost sales by adding nachos along the checkout lane at a Blockbuster video store about to go kaput in the face of online rentals, is the market bending on you like a bullet-dodging Neo in the 1999 hit film "The Matrix."
4. The Product Thing: Your Minimum Viable Products, as the name implies, must of course be viable.
When Netflix was mainly just mailing DVDs on a subscription basis, one can see how Blockbuster product managers may have bought into the argument that the inconvenience of waiting for ones DVDs to arrive in the mail would limit Netflix's challenge to their turf. Boy, were they wrong. An astute Blockbuster product manager would have seen Netflix's mailing effort as a minimum viable product leading the charge up Everett Roger's Diffusion of Innovation curve to lay claim to the video rental throne. Blockbuster should have seen itself less as a video store and more as a filmed entertainment delivery service facing a potential threat by another filmed entertainment delivery service.
To think minimum viable product, a product manager will need to first think big. What is your company really? Is it a car company? Or is it really a transportation products company? Is it a retail store? Or is it really a consumer products delivery company? Once a product manager fully understands what their company really is from their customer's perspective, they will better understand the potential challenges to the company's addressable market. And then they'll need to take incremental discovery steps, building minimum viable products or making minimum viable enhancements to their existing products, to address market challenges.
Determining one's minimum viable product (MVP) is as much an art as it is a science. But as nebulous as the exercise may seem, whatever that MVP may be, it needs to address a market even if, in its minimalist form, that addressable market is a scurry of mavericks. The product manager must know their ultimate business objective. Is it transportation? If so, a tire is not the minimum viable version of a car. A wing is not the minimum viable version of a jet. A foot is not the minimum viable version of a human. By themselves, they fail to meet even the needs of the maverick. The maverick would, however, drive a motorized wagon, fly a motorized sail plane, hitch a piggyback ride.
Yet, it is not enough for a product manager to just know what an MVP is or to just understand that it needs to be viable for the grander business purposes intended. Product managers need to also know the segment of consumers along the Diffusion of Innovation curve best suited for their latest MVP. They should not make the common mistake of jumping ahead of the diffusion curve to present their minimum viable product to established customers, namely, the early majority, the late majority or, worse, the laggards. Account managers, marketers and sales reps eager to help the product manager get market feedback are likely to push established customers onto the product manager for product trials if there is no mechanism at the company to identify that 2.5% sliver of try-anything mavericks. If the MVP is merely an incremental enhancement, by all means, the established customer may do. Otherwise, resist the urge and pressure to test MVPs with established customers because they usually can't think past non-disruptive enhancements to the products they are currently used to.
Even if the feedback from your mavericks are positive, the product is going to need to crawl first before it can walk -- and walk first before it can run. Does your organization have the patience for that? If you work for a private-equity-held company, possibly no. If you work for a VC-funded company, possibly yes. If you work for an established publicly-traded company, it depends -- usually on various market forces beyond your immediate control.
Part of the art of creating that MVP is knowing investor goals. Product managers and entrepreneurs may often find themselves time-boxing end-to-end development of their MVPs with an ode to investor needs. If you have six months: well, you probably have six months. And this is where the creative part of innovation comes in: figuring out that minimum viable product that will address the early adopter market, evidence market traction, and set you up on your way along the Diffusion of Innovation curve to the early and late majorities before time runs out.
That journey won't be a straight path unless it is a mere incremental enhancement or sustaining innovation. If it is a play for serious market share, expect some duds along the way. Even Steve Jobs delivered some of those. You will too. Learn from them. Here's a youtube clip of 1968's Chitty Chitty Bang Bang as a musical reminder that up from the ashes of disaster, grow the roses of success. Enjoy!
