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Best Practices in 
Product Management 
for V1 Web Products
Dan Olsen, CEO, YourVersion

Silicon Valley Product Managemen...
What I’m Covering
What is product management?
Understanding customer needs
Prioritization and maximizing ROI on 
My Background
  BS, Electrical Engineering, Northwestern
  MS, Industrial Engineering, Virginia Tech
  MBA, Stan...
Quick Poll of Audience
Job function
  Product Management
  Other business role
  Technical (Develop...
What is Product Management?

               6    Copyright © 2010 YourVersion
Product Management is
    Critical Link in Value Creation

Market            Product    Development 
• Current       Ma...
A Product Manager by any Other 
   Name Would Smell as Sweet
Product managers are sometimes called
  Product marketing man...
A Process View of Product Management
Overlap in PM and UI Design Roles
                        Prospective                        Existing
The Product Manager’s Job:
       A Successful Product
Be the expert on the market and the customer
Translate business obj...
Understanding Customer Needs

               12   Copyright © 2010 YourVersion
For a V1 Product,
   Which is More Important?


 Qualitative          Quantitative 
Information?    ...
How is developing a v1 Product Different 
from developing a Later Stage Product?
With a v1 stage product, you have
What’s the Formula
       for Product‐Market Fit?
A product that:
  Meets customers’ needs
  Is better than other alternat...
Problem Space vs. Solution Space
 Problem Space                  Solution Space
   A customer problem,            A specif...
Problem Space vs. Solution Space
         Product Level
Problem Space       Solution Space
 (user benefit)       (product)...
Problem Space vs. Solution Space
           Feature Level
Problem Space              Solution Space
 (user benefit)       ...
How Do You Prioritize User Benefits 
     and Product Features?
Need a framework for prioritization
  Which user benefits ...
High Importance + Low Satisfaction =
Importance of User Need
Importance vs. Satisfaction
       Ask Users to Rate for Each Feature
              100                                   ...
Kano Model: User Needs & Satisfaction
              User Satisfaction
                                  Delighter (wow)

Olsen’s Hierarchy of Web User Needs
       (adapted from Maslow)
    Customer’s Perspective                               ...
What is Your Value Proposition?
 Which user benefits are you providing?
 How are you better than competitors?
Prioritization and Scope
Customer value is only half the equation
How much engineering effort will it take?
Need to consid...
Prioritizing Product Ideas by ROI

Return (Value Created)

UI Design and Ease of Use

              27    Copyright © 2010 YourVersion
User Benefits vs. Ease of Use
Q: If two products equally deliver the exact 
same user benefits, which product is better?
The Design Gap in Many Teams

Level       Define      Design      Code

 1       Product Mgmt            Engineering

 2  ...
The UI Design Iceberg
  What most
  people see
  and react to                       Visual
Elements of User Interface Design
Consists of Three Distinct Elements:
  Information Architecture
     Structure and layou...
Learning from Customer Feedback

                 32   Copyright © 2010 YourVersion
Iterating Your Product Vector Based on 
    User Feedback in Solution Space
      Problem Space                   Solution...
Persevere or Pivot?

Product-Market                        Product-Market Fit =
      Fit                    ...
What Are You Getting Feedback & 
       Learnings About?
 Problem Space            Solution Space
(your mental model)   (w...
What Can Solution Space Objects
  Can You Test with Customers?
Range of solution space options:
  Wireframe: low‐fidelity ...
The Value of User Feedback Sessions
Critical to talk with customers 1‐on‐1
Gain better understanding of
  Customer needs a...
“Ramen” User Feedback for Startups
Anyone can do it!
  Solution‐space product/mockup to test
  1 customer (wi...
Typical Format for Customer Session
5 ‐ 10 min: Ask questions to understand user 
needs and solutions they currently use
Dos & Don’ts of Conducting Usability
  Explain to the user:
     Their usability test will help improve the product
Case Study on Product‐Market Fit:

                  41    Copyright © 2010 YourVersion
Product‐Market Fit Case Study:
My consulting client, CEO of TrustedID, 
had an idea for a new pr...
Product‐Market Fit Case Study:
    Developing Product Concept
Product Concept was “marketing report” that let 
consumers c...
Clustering Potential User Benefits to 
        Create Product Concepts
“Shield” Concept                 “Saver” Concept

Product‐Market Fit Case Study: 
        Recruiting People
Telephone recruit of prospective customers
  Wrote phone‐screen ...
Product‐Market Fit Case Study:
  Findings on Concepts &User Benefits
“Shield” Concept                 “Saver” Concept

Product‐Market Fit Case Study:
      Learnings from Research
Learned that “Shield” (anti‐junk mail) concept was 
stronger ...
50   Copyright © 2010 YourVersion
Product‐Market Fit Case Study:
4 weeks from 1st meeting to validated 
product concept
Cost $1,500 to ta...
Getting Quantitative:
Optimization Using Metrics

              52    Copyright © 2010 YourVersion
Approaching Your Business as an 
     Optimization Exercise

Given reality as it exists today,
optimize our business resu...
Define the Equation of your Business
          “Peeling the Onion”
Advertising Business Model:
Profit = Revenue ‐ Cost

Equation of your Business
          Subscription Business Model
Profit = Revenue ‐ Cost

   Paying Users x  Revenue per Pa...
How to Track Your Metrics
Track each metric as daily time series
           Unique     Page       Ad      New User 
Sample Signup Page Yield Data
                                                Daily Signup Page Yield vs. Time
Identifying the  “Critical Few” Metrics
  What are the metrics for your business?
  Where is current value for each metric...
Metrics to Validate Product‐Market Fit
 Survey results
   Importance & Satisfaction
   Net Promoter Score

      60   Copyright © 2010 YourVersion
Adding Metrics and Optimization to 
             your Product Process
Optimization through Iteration:
  Continuous Improvement
                  the metric

Product Management for V1 Products
           Cheat Sheet
Clarify problem space by iterating in the 
solution space & gett...
‐“Pandora for your real‐time web 
                         ‐Aggregates latest news, blog...

             Copyright © 2010 YourVersion
Best Practices in Product Management for V1 Web Products
Best Practices in Product Management for V1 Web Products
Best Practices in Product Management for V1 Web Products
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Best Practices in Product Management for V1 Web Products

Talk to SVPMA on June 2, 2010 on best practices in product management with a focus on Version 1 web products

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Best Practices in Product Management for V1 Web Products

  1. 1. Best Practices in  Product Management  for V1 Web Products Dan Olsen, CEO, YourVersion Silicon Valley Product Management  Association (SVPMA) June 2, 2010 Copyright © 2010 YourVersion
  2. 2. What I’m Covering What is product management? Understanding customer needs Prioritization and maximizing ROI on  engineering resources Validating your product concept UI design User feedback / usability testing Will post slides to Copyright © 2010 YourVersion
  3. 3. My Background Education BS, Electrical Engineering, Northwestern MS, Industrial Engineering, Virginia Tech MBA, Stanford Web development and UI design 19 years of Product Management Experience Managed submarine design for 5 years 5 years at Intuit, led Quicken Product Management Led Product Management at Friendster PM consultant to startups:, YouSendIt, Epocrates CEO & Cofounder of YourVersion, startup building  “Pandora for your real‐time web content” Copyright © 2010 YourVersion
  4. 4. Quick Poll of Audience Job function Product Management Marketing Other business role Designer Technical (Developer, QA, Ops) Company size Small < 50 people Mid‐size 50 – 500 people Large > 500 people Consumer vs. B2B Copyright © 2010 YourVersion
  5. 5. What is Product Management? 6 Copyright © 2010 YourVersion
  6. 6. Product Management is Critical Link in Value Creation Market Product  Development  • Current  Management Team customers • Prospective customers • Competitors Copyright © 2010 YourVersion
  7. 7. A Product Manager by any Other  Name Would Smell as Sweet Product managers are sometimes called Product marketing manager Program manager Project manager Label and definition of role can vary Based on industry or company Based on B2C (consumer) vs. B2B (enterprise) Based on stage of company Can be area of responsibility vs. actual position Copyright © 2010 YourVersion
  8. 8. A Process View of Product Management “Inbound” Product “Outbound” Management Product Long Business Product Management Term Strategy Strategy Market/ Sell Short Business Product Product Term Objectives Objectives Development Service/ Support Copyright © 2010 YourVersion
  9. 9. Overlap in PM and UI Design Roles Prospective Existing Customers Customers External Marketing Listening to customers Product  UI Interface Management Design Support Engineering QA Internal Copyright © 2010 YourVersion
  10. 10. The Product Manager’s Job: A Successful Product Be the expert on the market and the customer Translate business objectives and customer  needs into product requirements Be the clearinghouse for all product ideas  Work with team to design & build great product Define and track key metrics Identify, plan & prioritize product ideas to  maximize ROI on engineering resources Copyright © 2010 YourVersion
  11. 11. Understanding Customer Needs 12 Copyright © 2010 YourVersion
  12. 12. For a V1 Product, Which is More Important? or Qualitative  Quantitative  Information? Information? “When you’re Small,  start with Qual!” Copyright © 2010 YourVersion
  13. 13. How is developing a v1 Product Different  from developing a Later Stage Product? With a v1 stage product, you have WAY MORE uncertainty about: Who your target customers really are Which customer needs you should address How to best meet those needs What product design works best These are qualitative learnings/decisions Quantitative is also valuable (later) Copyright © 2010 YourVersion
  14. 14. What’s the Formula for Product‐Market Fit? A product that: Meets customers’ needs Is better than other alternatives Is easy to use Has a good value/price Simple, right? It’s easy to understand conceptually  what we want to achieve HOW to achieve it is the hard part Copyright © 2010 YourVersion
  15. 15. Problem Space vs. Solution Space Problem Space Solution Space A customer problem,  A specific  need, or benefit that the  implementation to  product should address address the need or  A product requirement product requirement Example: Ability to write in space  NASA: space pen (zero gravity) ($1 M R&D cost) Russians: pencil Copyright © 2010 YourVersion
  16. 16. Problem Space vs. Solution Space Product Level Problem Space Solution Space (user benefit) (product) Pen and Prepare paper my taxes TurboTax File my taxes TaxCut Copyright © 2010 YourVersion
  17. 17. Problem Space vs. Solution Space Feature Level Problem Space Solution Space (user benefit) (feature) Gmail Make it easy importer to share a link with my friends Design Design Design #1 #2 #3 Preview with  User can edit  Allow me to Design checkboxes before import reuse my email #1 No No contacts #2 Yes No #3 Yes Yes Copyright © 2010 YourVersion
  18. 18. How Do You Prioritize User Benefits  and Product Features? Need a framework for prioritization Which user benefits should you address? Which product features to build (or improve)? Importance vs. Satisfaction Importance of user need (problem space) Satisfaction with how well a product meets the  user’s need (solution space) Opportunity = High Importance need with low Satisfaction Copyright © 2010 YourVersion
  19. 19. High Importance + Low Satisfaction = Importance of User Need Opportunity High Competitive Opportunity Market Not Worth Going After Low Low High User Satisfaction with Current Alternatives Copyright © 2010 YourVersion
  20. 20. Importance vs. Satisfaction Ask Users to Rate for Each Feature 100 98 Great 95 84 87 90 Bad 86 85 79 84 55 70 80 Importance 80 75 72 80 70 75 65 60 55 41 50 40 50 60 70 80 90 100 Satisfaction Recommended reading: “What  Customers Want” by Anthony Ulwick Copyright © 2010 YourVersion
  21. 21. Kano Model: User Needs & Satisfaction User Satisfaction Delighter (wow) Performance  (more is better) Need Need not met fully met Must Have Needs & features  migrate over time User Dissatisfaction Copyright © 2010 YourVersion
  22. 22. Olsen’s Hierarchy of Web User Needs (adapted from Maslow) Customer’s Perspective What does it mean to us? How easy to use is it? Usability & Design Satisfaction Increasing Does the functionality Feature Set meet my needs? Does the functionality work? Absence of Bugs Dissatisfaction Decreasing Is the site fast enough? Page Load Time Is the site up when I want to use it? Uptime Copyright © 2010 YourVersion
  23. 23. What is Your Value Proposition? Which user benefits are you providing? How are you better than competitors? Competitor A Competitor B You Must Have Benefit 1 Y Y Y Performance Benefit 1 High Low Med Performance Benefit 2 Low High Low Performance Benefit 3 Med Med High Delighter Benefit 1 Y ‐ ‐ Delighter Benefit 2 ‐ ‐ Y Copyright © 2010 YourVersion
  24. 24. Prioritization and Scope Customer value is only half the equation How much engineering effort will it take? Need to consider value and effort (ROI) Ruthlessly prioritize: rank order Be deliberate about scope & keep it small It’s easy to try to do too much Strategy = deciding what you’re NOT doing Break features down into smaller chunks Smaller scope → faster iterations → better Copyright © 2010 YourVersion
  25. 25. Prioritizing Product Ideas by ROI ? Return (Value Created) 4 Idea D 3 Idea A Idea B 2 Idea C 1 Idea F 1 2 3 4 Investment (developer‐weeks) Copyright © 2010 YourVersion
  26. 26. UI Design and Ease of Use 27 Copyright © 2010 YourVersion
  27. 27. User Benefits vs. Ease of Use Q: If two products equally deliver the exact  same user benefits, which product is better? A: The product that’s easier to use “Ease of use” provides benefits Saves time Reduces cognitive load Reduces frustration UI Design can be differentiator Olsen’s Law: “The less user effort required, the  higher the percentage of users who will do it” Copyright © 2010 YourVersion
  28. 28. The Design Gap in Many Teams Level Define Design Code 1 Product Mgmt Engineering 2 Product Mgmt Engineering Product Mgmt Engineering 3 PM Eng UI 4 PM Eng Copyright © 2010 YourVersion
  29. 29. The UI Design Iceberg What most people see and react to Visual Design What good product people Interaction think about Design Information Architecture Conceptual Design Recommended reading: Jesse James Garrett’s “Elements of User Experience” chart, free at Copyright © 2010 YourVersion
  30. 30. Elements of User Interface Design Consists of Three Distinct Elements: Information Architecture Structure and layout at both site and page level How site is structured (sitemap) How site information is organized (site layout) How each page is organized (page layout) Interaction Design How user and product interact with one another User flows (e.g., navigation across multiple pages) User input (e.g., controls and form design) Visual Design “How it looks” vs. “What it is”, often called “chrome” Fonts, colors, graphical elements Copyright © 2010 YourVersion
  31. 31. Learning from Customer Feedback 32 Copyright © 2010 YourVersion
  32. 32. Iterating Your Product Vector Based on  User Feedback in Solution Space Problem Space Solution Space (your mental model) (what users can react to) Help user Help user book travel plan travel Mockups / Code Customer Feedback Copyright © 2010 YourVersion
  33. 33. Persevere or Pivot? Increasing Product-Market Product-Market Fit = Fit Getting enough data to validate that you’re climbing up the Pivot right mountain Pivot Copyright © 2010 YourVersion
  34. 34. What Are You Getting Feedback &  Learnings About? Problem Space Solution Space (your mental model) (what users can react to) Feature Set Customer Understanding  (needs &  preferences) UI Design Messaging  Copyright © 2010 YourVersion
  35. 35. What Can Solution Space Objects Can You Test with Customers? Range of solution space options: Wireframe: low‐fidelity graphics Mockup: high‐fidelity graphics Prototype: interactive graphics or code Alpha product: production code Graphics usually quicker/cheaper to  change than code Goal is to gain learnings quickly Copyright © 2010 YourVersion
  36. 36. The Value of User Feedback Sessions Critical to talk with customers 1‐on‐1 Gain better understanding of Customer needs and problems Issues with your feature set, UI, messaging What alternatives customers are using, pros & cons of each, customer preferences QA: use cases & bugs you haven’t seen Really a “user learning” session Make test as real for user as possible Copyright © 2010 YourVersion
  37. 37. “Ramen” User Feedback for Startups Anyone can do it! Ingredients: Solution‐space product/mockup to test 1 customer (with laptop if testing code) 1 desk 1 person to conduct the session Pen and paper Optional note‐taker and observers Copyright © 2010 YourVersion
  38. 38. Typical Format for Customer Session 5 ‐ 10 min: Ask questions to understand user  needs and solutions they currently use 30 ‐ 50 min: User feedback Show user product/mockup Non‐directed as much as possible When necessary, direct user to attempt to  perform a specific task 5 ‐ 10 min: Wrap‐up Answer any user questions that came up Point out/explain features you want to highlight Ask them if they would use the product Copyright © 2010 YourVersion
  39. 39. Dos & Don’ts of Conducting Usability Do Explain to the user: Their usability test will help improve the product Not to worry about hurting your feelings “Think Aloud Protocol” Ask user to attempt the task, then be a fly on the wall Ask non‐leading, open‐ended questions Take notes and review them afterwards for take‐aways Don’t Ask leading questions “Help” the user or explain the UI (e.g., “click over here”) Respond to user frustration or questions (until test is over) Get defensive Blame the user Copyright © 2010 YourVersion
  40. 40. Case Study on Product‐Market Fit: 41 Copyright © 2010 YourVersion
  41. 41. Product‐Market Fit Case Study: My consulting client, CEO of TrustedID,  had an idea for a new product Team: me, CEO, head of marketing, UI design consultant Goal: Validate product‐market fit quickly, cheaply  without writing a single line of code Determine if their was a business  opportunity here Copyright © 2010 YourVersion
  42. 42. Product‐Market Fit Case Study: Developing Product Concept Product Concept was “marketing report” that let  consumers control the direct mail that they receive Concept was fuzzy with various components, so we  broke it into 2 different “flavors”: #1 “Marketing Shield”: Service to reduce/stop junk mail #2 “Marketing Saver”: Opt in & receive money‐saving offers Each product concept consisted of several modules that  each mapped to a specific user benefit Worked with UI designer to create paper mockups of  pages for each flavor concept (5 pages each) Copyright © 2010 YourVersion
  43. 43. Clustering Potential User Benefits to  Create Product Concepts “Shield” Concept “Saver” Concept Reduce Find out what Money Compare Social Junk Mail “they” know Saving Yourself Networking about you Offers to Others Save Marketing Trees Report Marketing Marketing Score Profile Copyright © 2010 YourVersion
  44. 44. Product‐Market Fit Case Study:  Recruiting People Telephone recruit of prospective customers Wrote phone‐screen questionnaire to create rough  target customer segmentation Wanted users who work full‐time & use internet Fit for opt‐in concept: use coupons, Costco membership Fit for anti‐junk mail concept: use paper shredder, block  caller ID Scheduled 3 groups of 2 or 3 people to discuss  each product concept for 90 minutes Moderated each group through the paper  mockups to hear their feedback Copyright © 2010 YourVersion
  45. 45. Product‐Market Fit Case Study: Findings on Concepts &User Benefits “Shield” Concept “Saver” Concept Reduce Find out what Money Compare Social Junk Mail “they” know Saving Yourself Networking about you Offers to Others Save Marketing Trees Report Legend Marketing Marketing Score Profile Strong appeal Somewhat positive Low appeal Copyright © 2010 YourVersion
  46. 46. Product‐Market Fit Case Study: Learnings from Research Learned that “Shield” (anti‐junk mail) concept was  stronger than “Saver” People didn’t like many of the “Saver” concept  components Learned users’ concerns / questions about “Shield” concept Refined “Shield” concept: Removed irrelevant components Improved messaging to address user concerns / questions Validated revised “Shield” concept with quick 2nd round of tests No customer concerns Clear willingness to pay Copyright © 2010 YourVersion
  47. 47. 50 Copyright © 2010 YourVersion
  48. 48. Product‐Market Fit Case Study: Summary 4 weeks from 1st meeting to validated  product concept Cost $1,500 to talk with 20 users ($75  each) 1 round of iteration on product concept Identified compelling concept that users  are willing to pay $10/month for Trimmed away non‐valuable pieces You can achieve similar results Copyright © 2010 YourVersion
  49. 49. Getting Quantitative: Optimization Using Metrics 52 Copyright © 2010 YourVersion
  50. 50. Approaching Your Business as an  Optimization Exercise Given reality as it exists today, optimize our business results subject to our resource constraints. Copyright © 2010 YourVersion
  51. 51. Define the Equation of your Business “Peeling the Onion” Advertising Business Model: Profit = Revenue ‐ Cost Unique Visitors x  Ad Revenue per Visitor Impressions/Visitor x  Effective CPM / 1000 Visits/Visitor  x  Pageviews/Visit  x  Impressions/PV New Visitors + Returning Visitors Invited Visitors + Uninvited Visitors # of Users Sending Invites  x  Invites Sent/User  x  Invite Conversion Rate Copyright © 2010 YourVersion
  52. 52. Equation of your Business Subscription Business Model Profit = Revenue ‐ Cost Paying Users x  Revenue per Paying User New Paying Users +  Repeat Paying Users Trial Users x  Conv Rate Previous Paying Users  x  ( 1 – Cancellation Rate ) ( SEO Visitors + SEM Visitors + Viral Visitors )  x  Trial Conversion Rate Copyright © 2010 YourVersion
  53. 53. How to Track Your Metrics Track each metric as daily time series Unique  Page  Ad  New User  … Date Visitors views Revenue Sign‐ups 4/24/08 10,100 29,600 25 490 4/25/08 10,500 27,100 24 480 … Create ratios from primary metrics:  X / Y Example: How good is your registration page? Okay: # of registered users per day Better: registration conversion rate = # registered users / # uniques to reg page Copyright © 2010 YourVersion
  54. 54. Sample Signup Page Yield Data Daily Signup Page Yield vs. Time New Registered Users divided by Unique Visitors to Signup Page 100% 90% 80% Daily Signup Page Yield 70% 60% 50% 40% 30% Started requiring registration 20% Changed Added questions messaging to signup page 10% 0% 1/31 2/14 2/28 3/14 3/28 4/11 4/25 5/9 5/23 6/6 6/20 7/4 7/18 8/1 8/15 8/29 9/12 9/26 10/1 0 Copyright © 2010 YourVersion
  55. 55. Identifying the  “Critical Few” Metrics What are the metrics for your business? Where is current value for each metric?  How many resources to “move” each metric? Developer‐hours, time, money Which metrics have highest ROI opportunities? Metric A Metric B Metric C Good ROI Bad ROI Great ROI Return Return Return Investment Investment Investment Copyright © 2010 YourVersion
  56. 56. Metrics to Validate Product‐Market Fit Survey results Importance & Satisfaction Net Promoter Score “How would you feel if you could no longer use Product X?” Very disappointed, Somewhat disappointed, Not disappointed User behavior Prospects sign up (high conversion rate) They keep using it (high retention rate) They use it often (high frequency of use) Copyright © 2010 YourVersion
  57. 57. Continuous Improvement 60 Copyright © 2010 YourVersion
  58. 58. Adding Metrics and Optimization to  your Product Process Site Level Business Product Prioritized  Plan Objectives Objectives Feature List Scoping Feature  Level Requirements  Design & Design Code Test Launch Develop Metrics & User  Optimize Feedback Copyright © 2010 YourVersion
  59. 59. Optimization through Iteration: Continuous Improvement Measure the metric Analyze Learning the metric Gaining knowledge: • Market Identify top  • Customer opportunities to improve • Domain • Usability Design & develop   the enhancement Launch the enhancement Copyright © 2010 YourVersion
  60. 60. Product Management for V1 Products Cheat Sheet Clarify problem space by iterating in the  solution space & getting user feedback Revise feature set, UI design, and  messaging to improve product‐market fit Ruthlessly prioritize based on ROI Define equation of your business Identify and track key metrics Launch, learn, and iterate Copyright © 2010 YourVersion
  61. 61. ‐“Pandora for your real‐time web  content” ‐Aggregates latest news, blogs, twitter, etc. tailored to your  specific interests ‐Free iPhone App, browser tools ‐Intimate, all‐day workshop  on Product Management,  Design, & Marketing ‐Sat June 12th in Palo Alto ‐Use discount code ‘svpma’ Copyright © 2010 YourVersion
  62. 62. Questions? @danolsen Copyright © 2010 YourVersion

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Talk to SVPMA on June 2, 2010 on best practices in product management with a focus on Version 1 web products


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