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)

1. Making Hard (Strategic)
Decisions about
Products and Portfolios
Rich Mironov
20 Aug 2015
©
Rich
Mironov,
2015

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
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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
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4. There’s
nothing
more
wasteful
than
brilliantly
engineering
a
product
that
doesn’t
sell.
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6. • 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)
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7. • 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?
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8. Commercial Software Failure Modes*
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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

9. Most
of
the
success
/
failure
of
a
product
is
determined
before
we
pick
our
first
developer
or
fill
out
our
first
story
card
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10. • 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
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11. • 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

12. • 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
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13. • 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
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15. Typical Commercial Software
Company’s Development Budget*
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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

16. 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)
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17. • 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
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18. Portfolio-Level Trade-Offs
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• 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

19. • 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
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20. Contact
Rich Mironov, CEO
Mironov Consulting
233 Franklin St, Suite #308
San Francisco, CA 94102
RichMironov
@RichMironov
Rich@Mironov.com
+1-­‐650-­‐315-­‐7394