Business Case Secrets at PMEC

About Pivotal Product Management © 2009 Pivotal Product Management, LLC All rights reserved. Improving product success through product management training, coaching, and process improvement Linda Merrick, CPM
Active product managers
AIPMM’s Excellence in PM Education award
(2006, 2007)
Mara Krieps, CPM Clients include: Amazon, Amex, AT&T, Bank of Bermuda, Cisco, Drugstore.com, Getty Images, Google, IDX, Microsoft, Railinc, Real Networks, Russell Investment Group, Thermo Fisher, T-Mobile
“ Top100 Women in Seattle Tech” (2009)

Learning Objectives
What executives do and don’t want to see in a business case presentation
How to align business cases with company strategic and financial objectives
How to construct a defensible financial forecast
Plus…
Your questions and learning objectives
© 2009 Pivotal Product Management, LLC All rights reserved.

What’s In A Business Case Presentation?
What is the most important information to include in a business case presentation?

Key Elements of the Business Case
Market analysis
Corporate objectives alignment
Customer problem
Positioning vs. competition
Customer feedback
Intellectual property
Financial analysis
Cost/Benefit
Wall Street analysis
Risks
Exit strategies
The “Ask”
Conclusions
Request and specific actions needed

Strategic Alignment
Company/Division:
objectives
strategy
resources

Problem Statements
Ideas are great, but what’s ‘THE PROBLEM’?
Is this a problem for a REAL and PAYING customer?
The problem definition…
leads to the “value proposition” – how beneficial the solution is
helps uncover all of the solution elements – beyond the simple “product”
© 2009 Pivotal Product Management, LLC All rights reserved. State the person’s role in business or life I am a… Describe just the problem This is my problem… List the benefits of solving the problem If I could solve this problem, this is how my life would be better…

Analyzing the Target Market
What’s a ‘Market?’
A set of actual or potential customers
For a given set of products or services
Who have a common set of needs or wants
Can be reached through affordable means
Market Segment:
All of the above, AND
Respond differently to some of the elements of the offering
Who reference each other when making buying decisions

Market Penetration © 2009 Pivotal Product Management, LLC All rights reserved. (enter data in shaded cells only) 2010 2011 2012 2013 Segment Data Total overweight or obese in USA 150,738,611 152,709,050 154,236,141 155,778,502 Smartphone penetration 12% 14% 17% 20% Total overweight or obese AND own a smartphone 18,088,633 21,806,852 26,209,656 31,501,385 Total Wally's Customers 2% 2% 2% 2% Total Non-Wally's Customers 98% 98% 98% 98% 100% 100% 100% 100% Total Market (units) Total Wally's Customers 419,656 505,919 608,064 730,832 Total Non-Wally's Customers 17,726,861 21,370,715 25,685,463 30,871,358 % of market available 77% 90% 93% 93% Adjusted Total Market (units) 13,964,425 19,626,167 24,374,980 29,296,288 Expected Penetration of Wally's customers 5% 6% 9% 14% Expected Penetration of Non-Wally's customers 0.5% 1.5% 2.5% 4% Total Wally's Customers penetration 16,199 28,458 53,016 95,579 Total Non-Wally's Customers penetration 68,426 288,505 597,187 1,148,415

Competitive Analysis
Who/what are competitors?
Don’t forget alternatives – what do customers do now to solve the problem?
Feature comparisons
Strategic comparisons
BE OBJECTIVE
Goal: Find key differentiators for your products and your company © 2009 Pivotal Product Management, LLC All rights reserved.

Value Proposition & Positioning
Value Proposition
Tells how the customer will benefit
Helps you identify the drivers of value
Suggests the metrics of measuring value
Leads to a business model
Positioning
“ Elevator statement” that includes:
Target customer statement
Pain/problem statement
Value proposition
Competitive differentiation/vision
“ If I could lose weight, I’d look better and feel better. I’d save money on clothes, food, and doctor bills. I might even get a better job! ” © 2009 Pivotal Product Management, LLC All rights reserved.

Positioning Template Geoffrey Moore, Crossing the Chasm © 2009 Pivotal Product Management, LLC All rights reserved. Identify a target market and their primary need For environmentally-conscious drivers who want to help reduce greenhouse gasses, Name the category Our product, the Toyota Prius, is a hybrid car Define how we solve the problem That delivers 2-3x the mpg of standard gas-only sedans. Name primary alternative and biggest differentiators Unlike other hybrids, our product i s engineered for the lowest environmental impact in both operation and at end of life.

Pricing for Early-Stage Business Cases
Pricing model
Pricing strategy
High, low, and assumed price
Pricing Models
Unit
Subscription
Per user
Per time period
Transaction
Product line
Good/better/best
Optional features
All-inclusive
Base plus variable
Captive product (razors/blades)
Bundles

Typical Pricing Strategies
Skimming
Start high with early adopters, reduce slowly
Recoup costs faster
Attracts competitors
Penetration
Start low to build volume/share
Not a guarantee that you’ll keep customers
Neutral
Price doesn’t lead in the market mix strategy

Analyze Financial Impact
Work with Finance to:
Understand how your proposal impacts company/division financials
Greatest strategic impact = Gross Margin
Calculate Time to Break Even, IRR, and NPV
© 2009 Pivotal Product Management, LLC All rights reserved. For more info on this topic, join us for the Business Case Secrets Distance Learning Series Year 1 Year 2 Year 3 Year 4 Year 5 Revenue Gross Margin Operating Costs

Q: What does your boss want to see in a business case?
A: Whatever helps achieve his/her bonus

Presenting Your Case: Top Success Factors
Do the Decision Maker’s job
Start with the big picture and let them drill down
Keep it at a grade-school level
Keep it brief
State the obvious
Get a sample of a past success
Know their information processing style (top down, bottom up)

Why Is the Business Case So Important? It’s Your Reputation
Every project that you put your name on becomes part of your reputation
Sanity-check the business case proposal for strategic fit and viability; if not, speak up
If it goes forward and you’ve done sloppy work...

Learning Objectives
What executives do and don’t want to see in a business case presentation
How to align business cases with company strategic and financial objectives
How to construct a defensible financial forecast

Resources
Business Case Secrets 3-part Distance Learning starts Feb. 24, 2010 – see pivotalpm.com to register
Business Case Presentation Template – info@pivotalpm.com
The Pivot Point Newsletter – give us your business card or sign up at pivotalpm.com
Contact us at info@pivotalpm.com

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Business Case Secrets at PMEC

by Pivotal Product Management, LLC on Dec 17, 2009

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