In the context of my Executive MBA master thesis, I have read the HBR article “The New Corporate Garage” from September 2012. Explaining the four eras of innovation, I realized that the fourth era is perfectly applicable to want I strongly believe in.
My favorite quote of the article:
“Indeed, they empathize with the stereotypical garage-based entrepreneur. Their garage just happens to be stocked with amazing tools.” (p. 52)
My passion comes from building products that “customers love” (Marty Cagan) combined with EMBA enabled amazing corporate tools. Looking forward to the challenges on my path forward…
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.
“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…
Reading about supply chain management educates me that there are basically two dimensions to look at it: risk in supply vs. risk in demand. As long as you can accurately predict the demand of your products, you can optimize your production capacity and therefore reduce costs. But as soon as you have to take risk on the demand side, it will become more important to react quickly to changes in demand. Speed over costs!
And this stuff is not about agile development. It is part of our lecture “Operations Management” @HEC Executive Education. Those concepts are not new. Companies like P&G, Zara and others have optimized their value chains giving good example cases.
I am writing about this because I was very often in the situation where the Executives wanted me and my team to innovate and at the same time precisely forecast the demand and save costs. Intuitively I was reluctant to even try this. Working agile means being able to react to changes in demand. When you are building, measuring and learning this is exactly the same challenge. You need to be able to read the signal of your customers as soon as possible in the process and to adjust the “production” accordingly.
In the traditional supply chain model this would be described as “speed to react upon changes in demand”. There would be a business case for heavy investments – as long as your products don´t fall into the commodity space. Then you won´t achieve high margins. But what else than achieving greater margins is innovation about?
So, companies, believe in your ability to innovate. The reward will be superior margins!
Impressions from the Best of Both 2013 in Berlin
Create a new conference format that goes clearly beyond investment pitches by start-ups to get funding. Bring people together who would normally only meet occasionally, but not necessarily discuss with each other about what is really important to them. Hope that they meet on peer level. Hope that they discuss content and go beyond clichés like start ups are faster and bear higher risk.
This is what I would hope for if I organized a conference like this year’s Best of Both in Berlin. Hosted by SWAB, a German foundation focussing on bringing the two worlds together, it gathered more than 200 people from the old and new economy respectively.
A lot of interesting speeches and statements, but beyond “vision, sales and leadership” there was not so much concrete input. On the other hand, the representatives of the new economy also focused on things one would expect them to say (e.g. ” watch out, the social wave is coming” or ” we are just at the beginning”). As very often in similar situations, it felt like them creating fear and leaving behind uncertainty among the more traditional folks. Just as @Ibo put it: “there is a lot of uncertainty around digital. But nearly no one dares to admit it.”
The good news wasn’t discussed: that there are ways to deal with the challenge of transformation. Social or big data are much more than technology. It is a fundamental change of behavior of customers. I was happy to hear Cafer Tosun from SAP Innovation talk about Design Thinking. This focus applies the same way to an old economy company trying to deliver a world class service to its customers as it applies to a startup that is trying to build products that customers love…
Finally, Burkhard Schwenker, the CEO from Roland Berger Consulting was also trying to identify the common ground of old AND new economy: good entrepreneurship. And with that speech the conference ended.
All together this type of content only represented a small share of the whole program. I personally believe this is a missed opportunity for a conference with its legitimate ambition to bring together both worlds that are facing similar challenges. But thank you to SWAB for hosting this event and to Caspar von Gadow & Team for organizing it. Keep it up!
Yesterday I stumbled upon a book with the title “Wer wir sind und was wir wollen – Ein Digital Native erklärt seine Generation“ by Philipp Riederle (@Phipz). In English this means “Who we are and what we want – a digital native explains his generation”. This is an amazing book for a “Digital Immigrant” like me, I can only recommend it. Unfortunately it is in German only, and I don’t know whether there is plan to publish an English version soon. Could also imagine German Execs needing a book like this more than US Execs.
Philipp portraits the “Digital Natives” in a very comprehensible way, and I am absolutely sure many Designers will use his descriptions to describe their personas even better.
And for those who are still reluctant to listen to a 19yr old man: if you don’t seize this opportunities, I am sure, others will…
What is Your Product Strategy?
Important aspects for entrepreneurs in a nutshell via Kim Flynn.
Favorite quote: “Listen to your clients and create an efficient product strategy.”
Crash Dev: Software eats the organization.
Especially liked this one: “The ideas are free and the tools are cheap, but the ability to build an organization that survives and thrives in a software-powered future is priceless.”