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Making Hard (Strategic) Decisions about Products and Portfolios


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Software executives and software product managers should focus first on putting the right products into their portfolios -- since the primary drivers of market success are identifying the right markets, segments and customer problems to solve.
(For Product Tank San Francisco)

Published in: Business

Making Hard (Strategic) Decisions about Products and Portfolios

  1. 1. Making Hard (Strategic) Decisions about Products and Portfolios Rich Mironov 20 Aug 2015 ©  Rich  Mironov,  2015  
  2. 2. •  Veteran product manager / exec / strategist •  Business  models,  agile,  organizing  product  teams   •  Six startups, including as CEO/CPO/founder •  “The Art of Product Management” •  Product Camp, unabashed product management bigot About Rich Mironov 2w w w . M I R O N O V . c o m
  3. 3. 1.  Software profits are all about scale •  $M’s for first customer, $0 for next 1000 customers 2.  No company ever has enough development capacity •  Demands ruthless prioritization at every level 3.  You can’t outsource your strategy •  To spreadsheets or customers 4.  Segmentation is strategic art of choosing customers who want same solution Software Laws of Gravity 3w w w . M I R O N O V . c o m
  4. 4. There’s  nothing  more   wasteful  than  brilliantly   engineering  a  product  that   doesn’t  sell.     w w w . M I R O N O V . c o m 4
  5. 5. •  Users understand problems, but misdesign solutions •  Have we asked enough people / the right people? •  Watch for confirmation bias •  Prototypes and early versions •  …Before starting full-scale development •  $M burn rate creates its own momentum Intellectually Honest Validation (Lean Tools) 6w w w . M I R O N O V . c o m
  6. 6. •  Validation and strategy (should) precede development •  Organizational behavior shapes strategic decision-making •  IMHO, lean principles easiest to apply to features (or groups of like items), not portfolios What Does This Have To Do With Product/Portfolio Strategy? w w w . M I R O N O V . c o m 7
  7. 7. Commercial Software Failure Modes* w w w . M I R O N O V . c o m 8 Undifferen?ated   or  poorly   posi?oned   15%   Marke?ng/Sales/ Channel  failures   25%   Late   Delivery   15%  Poor  Quality   10%   Wrong  problem,   wrong  solu?on   or  product   35%   *In  my  personal  experience  
  8. 8. Most  of  the  success  /   failure  of  a  product  is   determined  before  we   pick  our  first  developer  or   fill  out  our  first  story  card   w w w . M I R O N O V . c o m 9
  9. 9. •  Business value error bars >> engineering error bars •  Blending of •  Promises of future revenue •  Promises of future operational savings •  Promises of future development efficiencies (tech debt) •  Quality forced onto a linear scale •  Simplistic models of buyer behavior •  Politicking •  Allocating our scarcest, most valuable resource •  Someone (some team) must force-rank programs •  Can’t delegate to spreadsheets or WSJF Business Value: Slightly Estimatable 10w w w . M I R O N O V . c o m
  10. 10. •  Limited development resources = household budget •  Too many expenses: rent, food, repairs, entertainment, college fund, property taxes, Girl Scout cookies… •  Kids Execs don’t remember what we spent committed to yesterday Portfolio Planning 11
  11. 11. •  Hard to attribute success / failure •  Sales teams paid to subvert corporate goals •  Revenue estimates have huge error bars •  Executives don’t believe in mutually exclusive development choices •  Shiny objects, confirmation bias, groupthink •  Politics and big swinging budgets Organizational Challenges To Product/Portfolio Thinking 12w w w . M I R O N O V . c o m
  12. 12. •  Hard to rank-order unlike items •  Where does this bug go versus minor features? •  A one-off customization versus more DevOps work? •  Instead, group similar requests •  Which two features will we put into v6.5? •  P0, P1, P2, P3… •  We can fund one audacious, long-term program: teleportation or synthetic petroleum •  Cross-bucket trade-offs reflect our biases Prioritizing Within Buckets 13w w w . M I R O N O V . c o m
  13. 13. 14w w w . M I R O N O V . c o m
  14. 14. Typical Commercial Software Company’s Development Budget* w w w . M I R O N O V . c o m 15 Features  for   current  release   50%   Quality   (refactor,  test   automa?on)   15%   Engineering   overhead,  10%   Big  future  bet,   5%   Sales  one-­‐offs,   non-­‐roadmap   20%   *In my personal experience
  15. 15. Varies with Growth Stage Current release 50%Quality 20% Eng overhead 5% Sales one-offs 25% Current releases/ features 35% Quality 35% Future bet (M&A) 5% Eng overhead 15% Sales one- offs 10% v1.0 Software startup Mature software (post-innovation) w w w . M I R O N O V . c o m 16
  16. 16. •  This quarter, how should we spend our precious feature-focused story points? •  70% on deployability, 20% on cost reduction? -or- •  60% on scaling, 30% on hardware reliability? •  What was our actual spending last quarter? •  What portion was “unplanned” or sales interrupts? Product-Level Strategy = Forcing Hard Trade-offs 17w w w . M I R O N O V . c o m
  17. 17. Portfolio-Level Trade-Offs 18w w w . M I R O N O V . c o m •  How many fully funded products/projects? •  Major opportunity gets new BU? •  Investment horizons (H1/H2/H3) •  Platforms, cross-product integration •  Corporate customers/ lifetime value Yardstick: $1M/year/developer
  18. 18. •  Can’t outsource product/portfolio strategy •  Bottom-up planning insufficient, esp. post-v1.0 •  Validation before full development •  A month of good market input might save $2M in pivots •  Set product-level and portfolio-level spending allocations •  One-off choices trend in same direction •  Deeply agile development is still critical Takeaways 19w w w . M I R O N O V . c o m
  19. 19. Contact Rich Mironov, CEO Mironov Consulting 233 Franklin St, Suite #308 San Francisco, CA 94102 RichMironov   @RichMironov   +1-­‐650-­‐315-­‐7394