PM Essentials: Roles, Pricing and Roadmaps

Tech Product Management Essentials: Roles, Pricing & RoadmapsRich Mironovrich@mironov.com7 Jan 2010 for Prof. Sarangee, Marketing 572

An Unapologetic Product Guy
Agile product management consultant
Business models, pricing, roadmaps
Customer needs and market analysis
Interim executive
Repeat offender at product mgmt/marketing
Tandem, Sybase, four software startups
“The Art of Product Management”
Chaired Agile 2009 PM/PO track
Founded P-Camp

Agenda
What does a product manager do?
Basics of pricing software
Roadmapping: process vs. artifact
Take-Aways

Product
Management
Executives
Development
What Does Product Management Do?
strategy, forecasts, commitments, roadmaps,competitive intelligence
budgets, staff,
targets
market information, priorities,
requirements, roadmaps, MRDs,
personas, user stories…
Field input,
Market feedback
Mktg & Sales
Markets & Customers
software
Segmentation, messages, benefits/features, pricing, qualification, demos…

Product Mgmt Planning Horizons
many years
Exec
Strategy
years
Portfolio
many mons
PM
Product
2-9 mon
Release
Dev
Team
Sprint
2 wk
Daily

Pragmatic Marketing® Framework
Less Technical
BusinessPlan
MarketingPlan
Positioning
Pricing
Market Problems
Customer Acquisition
BuyingProcess
Market Definition
Buy, Build or Partner
Win/Loss Analysis
Customer Retention
Buyer Personas
Distribution Strategy
Product Profitability
Distinctive Competence
Program Effectiveness
UserPersonas
Product Portfolio
Tactical
Strategic
Business
Market
Programs
Planning
Strategy
Support
Readiness
Business
Market
Programs
Planning
Strategy
Support
Readiness
Innovation
Competitive Landscape
LaunchPlan
Require- ments
Product Roadmap
Presentations & Demos
SalesProcess
Technology Assessment
Thought Leadership
UseScenarios
“Special”Calls
Collateral
Lead Generation
Status Dashboard
EventSupport
SalesTools
Referrals & References
ChannelSupport
Channel Training
More Technical
© 1993-2009 Pragmatic Marketing, Inc. All rights reserved

Pragmatic Marketing® Framework
Dir, Prod Strategy
Prod Mktg Mgr
Tech Prod Mgr
BusinessPlan
MarketingPlan
Positioning
Pricing
Market Problems
Customer Acquisition
BuyingProcess
Market Definition
Buy, Build or Partner
Win/Loss Analysis
Customer Retention
Buyer Personas
Distribution Strategy
Product Profitability
Distinctive Competence
Program Effectiveness
UserPersonas
Product Portfolio
Business
Market
Programs
Planning
Strategy
Support
Readiness
Business
Market
Programs
Planning
Strategy
Support
Readiness
Innovation
Competitive Landscape
LaunchPlan
Require- ments
Product Roadmap
Presentations & Demos
SalesProcess
Technology Assessment
Thought Leadership
UseScenarios
“Special”Calls
Collateral
Lead Generation
Status Dashboard
EventSupport
SalesTools
Referrals & References
ChannelSupport
Channel Training
© 1993-2009 Pragmatic Marketing, Inc. All rights reserved

Nature of PM Role
No natural sequence for PM
Must work all aspects in parallel
Planning onion as simultaneous equation
Bottoms-Up shapes Top-Down
Top-Down shapes Bottoms-Up
Product Management provides strategy, judgment and integration as well as execution
Owning market success is an unbounded problem

Product As Simultaneous Equation
Market Needs
Roadmap
Customers with
real needs
Truly differentiated
products
Product /
solution
Economic valueto capture
Business Plan
Most product concepts fail.
Most products fail to thrive.

Start With a Bill of Materials
What non-product elements do I need?
Which group is responsible for each?
Where have other products gotten into trouble?
SKUs, packaging, shipping
Installation
Support, help, registration
Upgrades and end-of-life

Agenda
Take-Aways

“Pricing is almost neverabout the number. It’s about the model.”

Start with Customer View
Customers buy most products to make money or save money
How do they describe value?
Quantify it for them
They won’t spend time to fully analyze your product
Assume you can capture a fraction of value
B2B: often 5% to 15%
Consumers often driven by fashion, not analytics

Hard Cost Savings Example
“By using our tech support knowledge automator, you can reduce your support time per call by 30%.”

Pricing Your Start-Up
Why will customers buy?
Tell a story in customer’s own language
What’s the natural unit of exchange?
How do they derive value? What does the competition do?
Can you split off a profitable segment?
How much of customer value can you capture?
Test, trial-close, get your hands dirty

Business Model Framework
Customer Value Analysis
Identifies Value
Licensing
Terms and Conditions of Use
Type of Value Exchange
The way you make money
Pricing
How much money you make
Profit Engine
Causes More Money Making Events
Enforcement
Protection of Rights
Customer ROI Model
Quantifies Return
A framework of interrelated choices that help you create offerings that provide maximum value.
® 2009 Enthiosys

Software Value Exchange Models
Time-based access (e.g. unlimited/month)
Transaction (stock trade)
Metered (seats, CPUs, named users)
Hardware (appliances, dongles)
Service (virus updates, support)
Percentage of incremental revenue/savings
Data-driven insights
Charity?

Support the Business Model
Pricing drives customer behavior
What do you want core customers to do?
No-brainer renewals (small monthly fees)
Big up-front license (lock up marketplace)
Lust for upgrades (cool features are extra)
Freemium model (1% upsold into paid services)
Install latest version (free updates, increasing service fees)

Customer Commitments
“by the drink”
“by the month”
No commitmentHigh variable costs
Lower volume
Uncertain usage
Optional
Actively manage costs
NEED CONTINUOUS MARKETING
Big commitmentLow/no variable costs
Higher volume
Predictable usage
Required (cost of business)
Low cost control effort
HARD INITIAL SELL

Workshop Exercise: Teleportation
Founders: Stanford physicists with local VC
Software plus expensive custom hardware
Some arbitrary product limitations
Inanimate objects only (no people)
Under 40 pounds, under 18” diam
2000 mile limit, arrival +/- 3 inches
High power requirement (15 kW)
15 second recharge time
Non-military, non-government

Not Yet a Product or Service…
No target application or audience
No go-to-market strategy
No pricing model (how we will make money)
No infrastructure/operations/support plan
No marketing or sales staff
Lots of blue sky discussions

How Will People Cheat?
If I want to rip you off, how could I do it?
Licensed software…
Per-seat SaaS…
Hardware token…
Licensing versus enforcement
Who are the cheaters?
How much are we willing to spend?
Diminishing returns
Easier to exploit complex pricing models

Agenda
Take-Aways

Class Roadmapping Experience
Who has a roadmap?
What timeframe does it cover?
Successes, failures?

Benefits of a Solid Roadmap
Identify/clarify tactical and strategic intent
Internally
Becomes a filter for prioritization
Ensures “ship is headed in the right direction”
Avoids the “last/loudest” priority problem
Externally
Near-term commitments and long term view for customers
Binds best customers to your company

Roadmaps are Scary
Articulate when things should arrive
Describes what you are not going to build
Forces open discussion among functions
Makes you commit to an uncertain future
Dirty secret: most companies do not have a workable roadmap process
Jump right from vision/portfolio to release

Typical Roadmap Failures
No visible logic
Created unilaterally
Lack of buy-in
Poor technical and market inputs
Static
No plan for internal or external sharing

Successful Roadmap Creation…
Active participation of key constituents
Engineering (architects), perhaps Marketing, next-level product strategists or Support
Extended in-person meetings
Time to research issues
Reviews every 1-2 quarters
Clear (written) distribution plan
Easy to say, hard to do

Creating the Strategic Roadmap
Market Map
Market Events & Rhythms
Feature/BenefitMap
Release Map
Tarchitecture
Map

Key Questions
Who are my desirable markets/market segments? What do they care about?
When / how often should I serve them?
What technologies can I leverage?
How must my current product change?
What are the external factors that I must address to deal with these issues?
What external events drive my timing?

Build Strategically, Iteratively
Time Horizon -- Quarters work well…
Small Office
Market Map
Biometric
Id
Managed Service
Feature/Benefit Map
What technology should we use?
Linux
Tarchitecture
Roadmap
Market Events
/ Rhythms
The Real
Schedule

Low-Tech Speeds Collaboration
Formal results transcribed into high-tech tools
(Visio…)

Agenda
Take-Aways

Take-Aways
Tech product management is critically important but loosely defined
Pricing is strategic, creative and behavior-focused
Roadmapping is a process, not just a deliverable
Someone must beresponsible every day for long-term thinking

Q & A
rich@mironov.com
http://www.mironov.com/articles/
http://www.linkedin.com/in/richmironov
@RichMironov

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PM Essentials: Roles, Pricing and Roadmaps

by Rich Mironov on May 10, 2010

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PM Essentials: Roles, Pricing and Roadmaps — Presentation Transcript