Making The Right Strategic Choices in Product Portfolios

2. •  Veteran product manager / exec / strategist •  Consult on organizing Agile product organizations •  Interim VP product management / CPO •  Six startups, including as CEO / founder •  “The Art of Product Management” •  First product camp, Agile Alliance product track chair About Rich Mironov 2w w w . M I R O N O V . c o m

3. •  How many of you report up through engineering, development, or IT? •  …Marketing or product / portfolio management? •  …Are product owners or product managers? •  …Responsible for market / business validation? •  …Able to veto products or projects? Audience Check 3w w w . M I R O N O V . c o m

4. For revenue software and software- enabled companies: 1.  Validation and strategy should precede development 2.  Organizational behaviors shape strategic decision-making 3.  Explicit portfolio allocations enable feature-level prioritization Agenda w w w . M I R O N O V . c o m 4

5. •  Make money by shipping market-winning software •  Software proﬁts are all about scale •  $5M for ﬁrst customer ship, $0 for the next 10,000 units •  No company ever has enough development capacity •  Segmentation is strategic art of choosing similar customers who want same solution (product) •  Can’t let any single customer’s opinion dominate Revenue Software Companies and Software-Assisted Companies 5w w w . M I R O N O V . c o m

6. 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 6

7. •  Too little agility at strategic / portfolio level? •  Annual budget, six-month project review cycle •  Full waterfall requirements / specs / designs •  Process-bound, uncompetitive, products always late •  Our mean time to decide > competitor’s mean time to ship •  Too much (overused) agility? •  ADHD / shiny object: initiatives change monthly •  Weak validation, business case, pricing, competitive info •  Many projects abandoned late in cycle •  First a product / business problem, then an engineering problem Strategic Agility: Critical Product Management Issue 8w w w . M I R O N O V . c o m

8. Faster Cars Need Better Drivers 9w w w . M I R O N O V . c o m

9. Product Success Food Chain w w w . M I R O N O V . c o m 10 Is this a good problem to solve? (product mgmt) Do we have a good solu=on design? (dev, UX, QA, support) Can we implement eﬃciently, agilely? (program mgmt) Can we go to market and bring in revenue? (marke7ng, sales)

10. Commercial Software Failure Modes w w w . M I R O N O V . c o m 11 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% *Within engineering scope From my personal experience

11. 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 12

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 Strategic Product Thinking 13w w w . M I R O N O V . c o m

13. •  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 14

14. •  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 15w w w . M I R O N O V . c o m

15. Typical Commercial Software Company R&D Budget w w w . M I R O N O V . c o m 16 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) w w w . M I R O N O V . c o m 17

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? Portfolio Strategy = Forcing Hard Trade-offs 18w w w . M I R O N O V . c o m

18. •  “QA and support teams can sort P1 / P2 bugs any way they like, using WSJF or any other method. Max 310 story points in Q3.” •  “Performance improvement goal is 65% faster transaction processing. Architect leads story writing.” •  But customer-visible features are heavily lobbied and highly political. Product management needs to be development’s heat shield. Allows Decentralized Decision-Making 19w w w . M I R O N O V . c o m

19. •  Users understand problems, but misdesign solutions •  Have we asked enough people / the right people? •  Watch for conﬁrmation bias •  …Before full-scale development starts •  $2M+/year burn rate creates its own momentum •  Then frequent prototypes and early versions Intellectually Honest Validation (Lean Tools) 20w w w . M I R O N O V . c o m

20. •  Must have product strategy / product management •  Hire for experience, not convenience •  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 •  Build a deeply agile development capability Takeaways 21w w w . M I R O N O V . c o m

21. #RallyON15 ©2015 Rally Software Development Corp. All rights reserved. My next three challenges / three big open questions: 1. Identifying full-time owners for portfolio strategy 2. How to (efficiently) grow market-facing skills 3. Justifying adequate product / portfolio headcount Rich Mironov Rich@Mironov.com Thank you

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

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