As many of you have certainly experienced already, there are a lot of managers who expect to have a plan thought to the end – including a business plan. Especially when it is about presenting to a Board of Directors for budget approval. There is nothing wrong about this. I would just like to highlight some caveats that this approach might bear.
During my business strategy lectures @HEC we have worked on several cases like Dell, Patagonia or the Cola Wars case. Those cases sound “logic” and looking backwards all pieces come together in a meaningful way. We then talked about gaming theory, aka how to anticipate moves of competition and understand the impact of psychology on own decisions. We looked at the Ryainair case for that. In many examples we could literally compute the changes in willingness to pay (WTP) by looking at the numbers given in the cases. But if you go beyond airlines and apparel and enter the space of digital, this becomes more and more difficult. And still: the Professor was talking about such things as “intuition” when thinking about strategy. And finally there is the time factor, typically decision makers don´t have infinite time to come up with conclusions. The more uncertain predictions are the more blurry is the future. Many executives react with the task to try harder to come to a concrete case.
Everyone knows the Pareto rule with 80% of the effort needed to get to the last 20% of the result. This perfectly applies to our context. Instead of insisting on getting the last 20% right, there must be a clear decision on how much time and effort to invest to get more certainty. Given the dynamics of the markets and the role of technology there might be the moment to listen more to those who have a good intuition.
Right brainers are intuitive, left brainers aren´t. Left brainers even instinctively fear intuition because it makes them feel uncomfortable. Most companies are managed by left brainers. So you can imagine what role intuition is playing when deciding issues. This results in lengthy planning processes and a lot of discussions. This hurts the 80:20 rules and doesn´t always give an adequate answer to current challenges. But – what is much worse – intuitive people don´t feel appreciated in this kind of environments. Going 80:20 means listening to them. Are you really sure to want to invest 80 % of your time to get to an anyway blurry 100% before making your decision? Your stakeholders might have an opinion on this…
A challenging role for Chief Digital Officers
Three steps towards successful digital transformation
To successfully respond to the (digital) challenges, there are three simple steps: Have a clear picture on where to go, understand the current situation of your business and ensure the transformation.
Having a clear picture of the future is all about understanding what products will be successful looking forward. Already now it is clear that those products will be based on user interactions (“big data”, “social”, “sensored” context, etc.) and therefore will have to be very close to the behavior and needs of customers. The ways how companies will deliver services to their customers will be increasingly digitally driven. Even the pretty much innovative CVS Extra Care only gives an indication on what will be possible in the future. (So far) other companies like LinkedIn or XING are purely digital. XING have started with the vision to manage your professional network digitally and have become very successful with this. Starting from real life groups, its services have evolved into virtual ones. At the same time, XING isn’t limited to online networking only. It is all about a seamless integration of both worlds – with focus on building superior solutions and services for customers.
How to address the challenge
In other words, there is a strong need for a concrete product vision and strategy. If a CDO is not a strong Product Manager, he/she won´t be able to come up with it. And yet this won´t be enough. This strategy needs to be embedded into an overarching corporate strategy – and the entire CxO suite is responsible for that. The CDO needs to apply state of the art Design Thinking tools. The CEO might be that strong Product Manager, in this case a CDO might not be necessary. But how many CEOs of larger companies are good at defining a product vision and a product strategy? And even if they are, a CDO might be a good facilitator of the CxO suite discussions on behalf of the CEO. There is a successful role model for that already: supply chain management. A Supply Chain Manager doesn´t necessarily make the final decisions but is having the whole value chain in mind and facilitates the process. This person makes sure, all decisions are aligned to the supply chain strategy. The CDO needs to do the same: ensuring all decisions are in line with the product strategy of the company.
Understanding the current situation seems to be obvious, but isn’t trivial. The biggest challenge will be to “make the boat leave the harbor” and not to think too incrementally. A CDO will have to be the tireless warner to be more bold while acknowledging reality (e.g. business modeling, the skills available, the time it will take etc.).
Last, the transformation needs to happen in reasonable steps to get to the clear product vision of the CDO. The biggest risk that the steps are mixed up with the final vision. Even the CVS Extra Card is just a first step towards a vision. What will come next? There should be ONE answer, and then it can be broken down into the responsibility areas of the functional experts.
Benefit for companies
The CDO must pave the path into the (digital) future. As Product Manager she/he needs to come up with answers. Building the right products will be decisive for the (digital) future of companies.
Being inspired by the lecture of “A whole new mind” by Daniel H. Pink I am realizing why modern product management will really make the difference. Having just started a new consultancy project for a large scale company, I am experiencing a high level of complexity. And how I am reacting to it today as opposed to a couple of years ago.
Before, I was trying to control the way I was getting on boarded to a new position in the sense of taking notes, collecting to-dos, approaching the complexity etc. etc. As a strong left brainer I was really trying to embrace the structure in a “scientific” way. Very rational, recalling where I had jotted down the necessary information (I am blessed with a kind of photographic memory), always busy, always down to the facts. What was the result?: I missed important points. Such as empathy for customers. Or the openness to really relevant information.
Now, things seem to have changed for me.
It feels more like a mosaic that comes to life step by step. All over the place. And: boy, relax. It´s ok. An analogy is coming into my mind: there are two ways of painting a picture. One is nitty-gritty step by step. Form after form. The other is more generous. A stroke of the brush here, a stroke of the brush there. Only slowly the picture comes to life. As if by an invisible hand. Now think of the observers in the two scenarios. In the first scenario they are feeling assured that something of value is being manufactured. They can even estimate how long it will take and how it will look like. This is the complete opposite of the second scenario. Only very late there is confidence that something meaningful is coming out of the exercise.
What are the two biggest challenges when painting holistically?: first the observers (let´s name them “managers” and “stakeholders”) and second the uncertainty that is in yourself (let´s name that “missing roadmap” or “missing PRD”). Big things only can be created if right and left brain thinking come together. Serial and holistic thinking will do the job.
In that sense: Product Managers, brave the gap!
Having learned about maturity levels of supply chain management in organizations during our lectures @HEC, I thought it might be interesting to assess the maturity levels of product management.
- The lowest level can be simply described as “Absence of Product Management”. This means, in that company there is not even the function product management. Please keep in mind that we are not talking about product management in a marketing context. We are defining product management as defining and building digital products for customers.
- The second lowest level can be described as “Alibi Product Management”. In this type of organization there is at least one Product Manager. But the person is not working as a state of the art Product Manager, but much more as a project manager or coordinator. His/her responsibilities don´t include understanding the needs of users and defining the roadmap of the IT teams. The Product Manager in this organization is of low skill level and is typically driven by decisions of executives and/or shareholders.
- “Tactical Product Management” is the maturity level or organizations who have installed product management on a tactical level. The responsibility remains with the upper organizational levels of the company, but the Product Managers are enabled to steer product development on a daily basis. A typical characteristic of this type of company would be that the Product Manager has to ask for approval before launching features and for his/her product roadmap from people who are not Product Managers.
- Organizations who have established product management on executive level can be named “CPO level Product Management”. Here, the most senior Product Manager is reporting into the CEO and is member of the management team. Product Managers in these organizations are having a sponsor on the highest management level and an enabled product management organization. Please note that having a CPO might be possible without being on this maturity level. Sometimes the job title “CPO” is misleading. Criteria must be an enabled product management organization as described in the three lower levels above.
- The most mature level is “Strategic Product Management”. Organizations of this type have a clear product vision and product strategy that have been defined by a Product Manager based on e.g. Design Thinking. A product management organization is supporting the Product Manager on Executive level to deliver products customers will love. The CDO/CPO/VP Product will support the CEO and the CXO suite to align towards this vision and will have major influence on the direction of the company.
Most companies I have seen or I have had interviews with during the last months are on levels 2. and 3. Very few seem to understand the need to establish the product function on CXO level and to see product management as strategic discipline. In the light of the upcoming digital challenges and increasingly changing customer behaviors I consider this as reckless. Without a sufficiently skilled Product Manager on the top of your organization you will fail.
If you take a look into the different MBA syllabuses you will rarely find content that is related to product management or to design thinking. I have found an interesting article by Sameer Kamat recently here. It talks about content that Product Managers need to learn.
An MBA is by its nature a business degree. So it seems to add the “business” side to more design or technology oriented people. I don´t believe this is the complete picture. It must also go the other direction: business thinkers need to reach out to design thinkers. There is a gap between both.
A while ago I have read an article about the usage of brain when working on different tasks. Also the brain activity of highly strategic people have been analyzed. Interestingly those very good at strategic thinking have shown high brain activity in the right hand side brain hemisphere and in the left hand side brain hemisphere. In other words, people good at strategy also use their creativity, emotion and intuition to come to new findings.
I found this really fascinating: if you leave the ground of immediate actions and focus on longer term thinking, you will be the more better the more “intuitive” you get. Listening to users and understanding them is also very intuitive. Anticipating their behaviors of the future is even more highly intuitive.
Business thinking and design ambition meet if both come with a reasonable portion of right hand side brain thinking. Whether a MBA helps this process might depend more on the individual than one might think beforehand. But it is definitely more than a “business blessing” for Product Managers with career ambitions.
In this week´s session about Information Systems and outsourcing @HEC we have discussed what to think about when considering outsourcing. One quote was “don´t outsource the problem, but outsource the solution”. This is interesting from a Product Manager´s point of view.
One thing I keep talking about, is that one should refrain from jumping to solutions too quickly. Before that step, a Product Manager needs to understand the problem to be solved for the users. And this requires going deep on the needs of users and thinking about their mental model. So, if you are thinking all day long about potential solutions you might start on the wrong foot. Actually, you might even consider not to outsource your product development at all nor to trust your own product development teams to come up with the right solutions.
I am sure that some readers of this post will even doubt the necessity to understand the needs of the users. This is a core competence and not peripheral. Outsourcing the solution is legitimate, but outsourcing your problem (aka understanding the needs of your users) is not an option.
If you see your own product development team as a vendor, what are you doing to direct them? What is the “contract” between you and them? Do they know enough about the problem to be solved so that they can operate on their own? Considering your own product development teams as “external vendors” might help you refrain from micro managing the solutions they come up with. You need to focus on your core competency: understanding the “problem space”.
“Show me the product, I will decide to give it a go or not!” – this is a more than a legitimate request from an Executive. There is nothing wrong about it. But in reality, the very same person might be saying something like this: “Show me that you have invented something really new. Something that outperforms everything I have seen so far. Something that obviously will be very successful. I don´t want to take any risk, you know. If it doesn´t convince me now, you have done a bad job, I am afraid.”
And later, in another discussion, she/he might say something like this: “They showed me their ideas. It went no where. It is good that we are not pushing too hard into this new direction. I could have told you before. Why are we even exploring this direction?”
In product management we name the one solution that nails it the “Silver Bullet”. Unfortunately they rarely exist. Especially in digital. And sometimes, people might have it in front of them – and they literally don´t see it. It is as if you showed a car with a fuel consumption of only 1 litre per 100 km, and the reaction would be: “Well, this is nothing new. It has wheels and doors.”
I believe, there are two main reasons for this attitude: one is avoiding risk and uncertainty and the other one is not looking beyond the obvious. Both are common on Executive level. Those not only following, but also really driving change are a marginal species. Only very few embrace the opportunities and don´t shy away from risk. Getting the Silver Bullet means no risk. It is as simple as that. One could start printing money on a Silver Bullet concept. How often are we in situations like this?
The other one is more subtle. Looking beyond the obvious requires unbiased thinking. Requires abstraction from one´s own character and learning curve. The more experienced we get, the more we believe we “do know already”. Do we really? How about the digital transformation – do we have a clear feel for what it means for my company?
I frankly admit that I don´t know much. But I am curious and do have tools at hand how to tackle the challenge. Welcome to our joint journey…
Have you ever observed a bunch of fans watch a soccer match in a pub? They all seem to know best what strategy to follow, what to do next etc. Now go into a product related meeting with managers at a company and look what is going on there. Listen to the comments people are making, the thoughts they are having and to what extend they are listening to the experts in the room.
I often do experience this. Product management is a little bit like marketing creatives: everyone has an opinion. Even the consumer out there has an opinion. Actually, some executives suggest to run product management by surveys. The majority of asked users decide about the next feature. The rest is project management only. It is as easy as that. Is it as easy as that? For sure not. I do see at least three dimensions where this thinking is falling short:
- Users don´t know what might be the best solution for what they need (you know the story about the faster horses, do you?)
- Listening to users today only partly gives the needed answers for tomorrow´s products. (There is anticipation of technology developments needed. Think of the tablet phenomenon or the touch screen.)
- Users only see their part of the delivery system (aka the user interface). Actually they don´t have to understand the complexity of delivering the service to them. And they shouldn´t. But this doesn´t prevent us from having to go beyond the obvious.Think of a service like a flight. It is much more than the airplane and the stewardess serving us. There is a whole machinery behind delivering the service to customers. (“Nonstop you” is a nice Lufthansa slogan that describes this pretty well.)
So, Product Managers need to make their points in discussions. Going beyond the obvious means elevating the discussions to a different level. Refuse to discuss only visuals for example. A couple of times I experienced situations where people didn´t listen to the results of my qualitative user interviews. They didn´t want to know about the personas created. The mental model was too abstract for them, etc. They only woke up when I started sharing screens. Then suddenly everybody had something to contribute. But they were not able to reference their input back to the framework introduced before. So it became generic without adding any value.
Soccer coaches are typically hired for at least an entire season. And I am sure they don´t always listen to the fans. What counts is coaching a winning team. Let your Product Managers build winning products. Input welcome, but decisions stay with your product coaches.
During the last couple of months and countless inspiring talks with very diverse people, it is becoming more and more obvious that there a many great opportunities for your company. And some of those are around product management and its function in the corporate world. Let´s call out the most important ones:
- Good product management is the answer to your strategic challenge. If you get it right, you will manage your company in a way that it produces the right products. And if you produce the right products, then there is a much higher likelihood of success. Don´t get lost in all those IT and business discussions. Be consequent!
- Don´t make the mistake to believe all product managers are more or less the same. There are huge differences. I think I should write a separate blog post on how to assess the quality of product managers.
- Product Managers listen to customers. And executives should listen to (good) product managers. Why am I writing this? Well, because in most cases there is at least one executive who says: “believe me, I am more senior than you. And I know what needs to be done.” If this person is good at product management (aka listening to customers), then it is ok. If not, your company will get into trouble – sooner or later.
- Product management is the leading function. Why? Because it ensures that your company is building products “customers love” – enabled by IT and by business. It is the function that helps to pave the way into uncertainty and how to deal with it.
- Don´t believe product management is mere tactics. If you do it right then it becomes very strategic. Let me give you an example: changing from a static website to a data driven app (which is increasingly the case) requires not only investments in IT, but also a fundamental rethinking of business modeling. You need to anticipate future user behavior and align your company deliverables to leap frog your competition. This doesn´t happen over night and requires focus of the entire company.
So, when are you prepared to really focus on the needs of your customers? Good Product Managers can help you with that. But you have to give them the empowerment they need. And bet on the right candidates
By Jörg Malang