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Lean Product Management
 The Value of Experiments




                                                   @DaveSharrock
                                             ProductCampVancouver 2013
Photo: ESA
http://www.nbcnews.com/id/50677062/ns/technology_and_science-space reserved. Copyright ©2007-2013
   agile42 | We advise, train and coach companies building software www.agile42.com | All rights
Assembly Line Manufacturing
    has a high cost of change




                   http://www.archives.gov.on.ca/english/on-line-exhibits/d-day/big/big_03_airline_assembly.aspx
                                       Archives of Ontario, Reference Code: C 190-5-0-0-21

agile42 | We advise, train and coach companies building software                 www.agile42.com |   All rights reserved. Copyright ©2007-2013
Inclusive thinking
                                                                                       Feature usage in
• In software development high
  cost of change leads to inclusive                                                   enterprise software
  thinking                                                                                                                              Never
                                                                                                                                        Rarely
                                                                                                                                        Sometimes
                                                                                                                                        Often
                                                                                                                                        Always
• Any and every idea has to be                                                                     7%

  captured in the first version of a                                                  13%
  requirements specification


• Creates waste - bloated                                                                                                      45%
  documents, unwanted features                                                        16%


  and entitlement thinking
                                                                                                    19%




                                                      Standish Group - CHAOS Report, 1995, 2002
agile42 | We advise, train and coach companies building software                           www.agile42.com |   All rights reserved. Copyright ©2007-2013
Cost of                                                                          Hypothesized
Change                                                                          Requirements




                                                                                       Capture all
                                                                                   possible needs




                                                                                     Detail of
                                                                                   Requirements
agile42 | We advise, train and coach companies building software   www.agile42.com |   All rights reserved. Copyright ©2007-2013
Software Development has
                                                                   commoditized cost of change
           Object-oriented
             languages
                                                                          jquery

                                  Ruby on Rails

                                                                   Coffeescript
   Continuous Delivery

agile42 | We advise, train and coach companies building software           www.agile42.com |   All rights reserved. Copyright ©2007-2013
Cost of                                                                                         Hypothesized
Change                                                                                         Requirements

                                                                     Evolving
                                                                   Requirements



                                                                                                      Capture all
                                                                                                  possible needs


                                                                   Emerging needs
                                                                   as development
                                                                     progresses




                                                                                                    Detail of
                                                                                                  Requirements
agile42 | We advise, train and coach companies building software                  www.agile42.com |   All rights reserved. Copyright ©2007-2013
Changing paradigms
• If change is cheap, requirements
  can change continuously


• We can evolve our thinking as
  we learn more about the product
  we are building


• Maximizing Return-on-
  Investment means validating new
  features early, before the total
  investment cost has been spent




agile42 | We advise, train and coach companies building software   www.agile42.com |   All rights reserved. Copyright ©2007-2013
Cost of                                                                                         Hypothesized
Change                                                                                         Requirements

                                                                     Evolving
                                                                   Requirements


                                          Validated
                                     Requirements                                                     Capture all
                                                                                                  possible needs


                                                                   Emerging needs
                                                                   as development
                                                                     progresses
                                          Lean Startup
                                           experiments


                                                                                                    Detail of
                                                                                                  Requirements
agile42 | We advise, train and coach companies building software                  www.agile42.com |   All rights reserved. Copyright ©2007-2013
Shifting Paradigms

                                                           B.G.|A.G.
“I know that half of
   my advertising
 budget is wasted,
  but I’m not sure
    which half”
                           Lord Leverhulme
          http://www.marketingprofs.com/charts/2009/3161/more-smbs-use-online-media-than-traditional
   http://marketing.blogs.ie.edu/archives/2011/01/trends-in-online-advertising-in-2011-in-the-united-states.php

agile42 | We advise, train and coach companies building software            www.agile42.com |   All rights reserved. Copyright ©2007-2013
Validated Learning




                                                                   • Understand the problem a
                                                                     feature will solve
                                                                   • Decide how to ask if your
                                                                     customer cares
                                                                   • Validate before investing
                                                                     complete cost
agile42 | We advise, train and coach companies building software          www.agile42.com |   All rights reserved. Copyright ©2007-2013
The Scientific Method

                                                                    Theory             Use the theory
                                                                                           to make a
                                                                                           prediction
        Modify or change
                your theory


                                      Observe                                   Prediction
                                                                                                       Design an
                                                                                                  experiment to
                                                                                                          test the
                                      Run the                                                         prediction
                                  experiment                       Experiment
agile42 | We advise, train and coach companies building software             www.agile42.com |   All rights reserved. Copyright ©2007-2013
The Theory of General Relativity
Gradual acceptance of
General Relativity over                                               Einstein’s Theory of
                                                                      General Relativity
   Newtonian Mechanics                                                                                 Einstein’s
                                                                                                      prediction
                                                                                                            (1907)

                               Observations validated
                                                                                           Light bends in a
                                 General Relativity
                                                                                           gravitational field


                                                                                                      Wait for 1919 solar
        Arthur Eddington                                                                               eclipse to observe
observed that Light did                                                                             whether or not light
   bend around the sun                                                                            bends around the sun
                                                                   Solar Eclipse of 1919
           http://thethoughtstash.wordpress.com/2011/01/03/how-eddington-demonstrated-that-einstein-was-right/
agile42 | We advise, train and coach companies building software                        www.agile42.com |   All rights reserved. Copyright ©2007-2013
Applied to an Online Experience

                                                                   User Model         Use the model
                                                                                          to make a
                                                                                          prediction
        Modify or change
          your user model


                                       Validate                                 Prediction
                                                                                                      Design an
                                                                                                 experiment to
                                                                                                         test the
                                      Run the                                                        prediction
                                  experiment                       Experiment
agile42 | We advise, train and coach companies building software            www.agile42.com |   All rights reserved. Copyright ©2007-2013
Designed by KISSmetrics




agile42 | We advise, train and coach companies building software   www.agile42.com |   All rights reserved. Copyright ©2007-2013
User Story (Journey) Mapping


                                                                      Elements of Customer Journey
    Different Customer




                                                                                                             Your model for
        Experiences




                                                                                                      customer interaction covers
                                                                                                       each step of the customer
                         Each row matches a different
                                                                                                                journey
                            customer experience




Story Mapping © Jeff Patton, all rights reserved, www.AgileProductDesign.com

   agile42 | We advise, train and coach companies building software                                  www.agile42.com |   All rights reserved. Copyright ©2007-2013
Vanity vs. Actionable Metrics
Vanity metrics (like web hits or number of
downloads) which only serve to
document the current state of the
product but offer no insight into how we
got here or what to do next.




                                                                   An actionable metric is one that ties
                                                                   specific and repeatable actions to
                                                                   observed results.

agile42 | We advise, train and coach companies building software           www.agile42.com |   All rights reserved. Copyright ©2007-2013
http://500hats.typepad.com/500blogs/2007/09/startup-metrics.html
agile42 | We advise, train and coach companies building software                     www.agile42.com |   All rights reserved. Copyright ©2007-2013
Depersonalize
Decision Making

• “HiPPO’s” rule the business world
• It is never about you, it can’t be
  about you
    • Benchmarking is awesome 
    • Leverage competitive analysis 
    • Experimentation / testing rock
• Execution strategy: 
    • Transparency, standardization,
      looking outside in 
    • Be a slave to customer
      centricity (its about your
      customers (internal & external))

agile42 | We advise, train and coach companies building software   www.agile42.com |   All rights reserved. Copyright ©2007-2013
“I can’t say it any better, HiPPO’s rule the world, they over rule
your data, they impose their opinions on you and your
company customers, they think they know best (sometimes they
do), their mere presence in a meeting prevents ideas from
coming up. 
The solution to this problem is to depersonalize decision
making, simply don’t make it about you or what you think. Go
outside, get context from other places. Include external or
internal benchmarks in your analysis. Get competitive data (we
are at x% of zz metric and our competition is at x+9% of zz
metric).
Be incessantly focussed on your company customers and
dragging their voice to the table (for example via
experimentation and testing or via open ended survey
questions). Very few people, HiPPO’s included, can argue with a
customer’s voice, the customer afterall is the queen / king! : )”

                                                                   Avinesh Kaushik, kaushik.net
agile42 | We advise, train and coach companies building software          www.agile42.com |   All rights reserved. Copyright ©2007-2013
Interaction Model                          Backlog             Validation                              Execution
                                              To Do             Doing        Observation   Validated?        Doing         Deployed
  For <target group>
  Who <has a specific need>                                                                                  Idea
                                                                                                             #1.1
  The <product name>
  Is A <product category>
  That <key benefit>
                                                                                              Idea
  Unlike <primary competitors>                                                                 #1.2

  Our Product <additional
  advantages>
                                                                                  Idea

                                  Idea                                             #1.3
                      Idea
                                   #1.5
     Pathway           #1.4

        #1
                          Idea                                    Idea
                           #1.6                                    #2.1


                                  Idea
     Pathway                       #2.4
                       Idea                    Idea
        #2              #2.3                    #2.2




                                             Level of Detail / Close to done
•Visualize your User Interaction Model         •Always revisit validation tests for size   •The execution board is equivalent to
and adjust it as you learn                                                                 the team’s task board, but at the Idea
•Come up with ideas for each pathway                                                       Card level
•Prioritize experimental testing
•Spend time on measurement
infrastructure (a test without ability to
measure = an unvalidated feature)
How Much Effort on Validation
                                                                                    Feature usage in
• In 2009, Google ran
  approximately 12,000                                                             enterprise software
  experiments, of which about                                                                                                           Never
                                                                                                                                        Rarely
  10% led to business changes                                                                                                           Sometimes
                                                                                                                                        Often
                                                                                                                                        Always
                                                                                                   7%

• Linus Pauling famously said,                                                       13%
  "The best way to have a good
  idea is to have a lot of ideas."

                                                                                                                               45%
• Focus on minimizing the                                                             16%


  incremental cost of testing ideas
  with your customers/users
                                                                                                    19%




                                                      Standish Group - CHAOS Report, 1995, 2002
agile42 | We advise, train and coach companies building software                           www.agile42.com |   All rights reserved. Copyright ©2007-2013
Feedback loops make
all the difference
 In 1940, the chance of an
American being killed by
lightning was about 1 in
400,000.
Today it’s 1 in 11 million.
                                                                   In November 2007,
                                                                   economists in the Survey of
                                                                   Professional Forecasters —
                                                                   examining some 45,000
                                                                   economic-data series —
                                                                   foresaw less than a 1-in-500
                                                                   chance of an economic
                                                                   meltdown as severe as the
           http://www.nytimes.com/2012/09/09/
            magazine/the-weatherman-is-not-a-
                                                                   one that would begin one
                       moron.html                                  month later.

agile42 | We advise, train and coach companies building software          www.agile42.com |   All rights reserved. Copyright ©2007-2013
Lean Product Management
 The Value of Experiments

 • Validate requirements trump everything
 • Incremental cost of validation is falling
 • Feedback means nothing without a model




                  The race doesn’t go to the one with the best idea,
                      but to the one with the most tested ideas
Photo: ESA
http://www.nbcnews.com/id/50677062/ns/technology_and_science-space reserved. Copyright ©2007-2013
   agile42 | We advise, train and coach companies building software www.agile42.com | All rights
“Coming together is a beginning.
  Keeping together is progress.
  Working together is success.”
          Henry Ford


                                                                      thank you

                                                              dave.sharrock@agile42.com
                                                                  skype: dave.sharrock
                                                                 twitter: @davesharrock
                                                          slides: slideshare.net/davesharrock
agile42 | We advise, train and coach companies building software        www.agile42.com |   All rights reserved. Copyright © 2007 - 2009.

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ProductCamp Vancouver 2013

  • 1. Lean Product Management The Value of Experiments @DaveSharrock ProductCampVancouver 2013 Photo: ESA http://www.nbcnews.com/id/50677062/ns/technology_and_science-space reserved. Copyright ©2007-2013 agile42 | We advise, train and coach companies building software www.agile42.com | All rights
  • 2. Assembly Line Manufacturing has a high cost of change http://www.archives.gov.on.ca/english/on-line-exhibits/d-day/big/big_03_airline_assembly.aspx Archives of Ontario, Reference Code: C 190-5-0-0-21 agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 3. Inclusive thinking Feature usage in • In software development high cost of change leads to inclusive enterprise software thinking Never Rarely Sometimes Often Always • Any and every idea has to be 7% captured in the first version of a 13% requirements specification • Creates waste - bloated 45% documents, unwanted features 16% and entitlement thinking 19% Standish Group - CHAOS Report, 1995, 2002 agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 4. Cost of Hypothesized Change Requirements Capture all possible needs Detail of Requirements agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 5. Software Development has commoditized cost of change Object-oriented languages jquery Ruby on Rails Coffeescript Continuous Delivery agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 6. Cost of Hypothesized Change Requirements Evolving Requirements Capture all possible needs Emerging needs as development progresses Detail of Requirements agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 7. Changing paradigms • If change is cheap, requirements can change continuously • We can evolve our thinking as we learn more about the product we are building • Maximizing Return-on- Investment means validating new features early, before the total investment cost has been spent agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 8. Cost of Hypothesized Change Requirements Evolving Requirements Validated Requirements Capture all possible needs Emerging needs as development progresses Lean Startup experiments Detail of Requirements agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 9. Shifting Paradigms B.G.|A.G. “I know that half of my advertising budget is wasted, but I’m not sure which half” Lord Leverhulme http://www.marketingprofs.com/charts/2009/3161/more-smbs-use-online-media-than-traditional http://marketing.blogs.ie.edu/archives/2011/01/trends-in-online-advertising-in-2011-in-the-united-states.php agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 10. Validated Learning • Understand the problem a feature will solve • Decide how to ask if your customer cares • Validate before investing complete cost agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 11. The Scientific Method Theory Use the theory to make a prediction Modify or change your theory Observe Prediction Design an experiment to test the Run the prediction experiment Experiment agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 12. The Theory of General Relativity Gradual acceptance of General Relativity over Einstein’s Theory of General Relativity Newtonian Mechanics Einstein’s prediction (1907) Observations validated Light bends in a General Relativity gravitational field Wait for 1919 solar Arthur Eddington eclipse to observe observed that Light did whether or not light bend around the sun bends around the sun Solar Eclipse of 1919 http://thethoughtstash.wordpress.com/2011/01/03/how-eddington-demonstrated-that-einstein-was-right/ agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 13. Applied to an Online Experience User Model Use the model to make a prediction Modify or change your user model Validate Prediction Design an experiment to test the Run the prediction experiment Experiment agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 14. Designed by KISSmetrics agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 15. User Story (Journey) Mapping Elements of Customer Journey Different Customer Your model for Experiences customer interaction covers each step of the customer Each row matches a different journey customer experience Story Mapping © Jeff Patton, all rights reserved, www.AgileProductDesign.com agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 16. Vanity vs. Actionable Metrics Vanity metrics (like web hits or number of downloads) which only serve to document the current state of the product but offer no insight into how we got here or what to do next. An actionable metric is one that ties specific and repeatable actions to observed results. agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 17. http://500hats.typepad.com/500blogs/2007/09/startup-metrics.html agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 18. Depersonalize Decision Making • “HiPPO’s” rule the business world • It is never about you, it can’t be about you • Benchmarking is awesome  • Leverage competitive analysis  • Experimentation / testing rock • Execution strategy:  • Transparency, standardization, looking outside in  • Be a slave to customer centricity (its about your customers (internal & external)) agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 19. “I can’t say it any better, HiPPO’s rule the world, they over rule your data, they impose their opinions on you and your company customers, they think they know best (sometimes they do), their mere presence in a meeting prevents ideas from coming up.  The solution to this problem is to depersonalize decision making, simply don’t make it about you or what you think. Go outside, get context from other places. Include external or internal benchmarks in your analysis. Get competitive data (we are at x% of zz metric and our competition is at x+9% of zz metric). Be incessantly focussed on your company customers and dragging their voice to the table (for example via experimentation and testing or via open ended survey questions). Very few people, HiPPO’s included, can argue with a customer’s voice, the customer afterall is the queen / king! : )” Avinesh Kaushik, kaushik.net agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 20. Interaction Model Backlog Validation Execution To Do Doing Observation Validated? Doing Deployed For <target group> Who <has a specific need> Idea #1.1 The <product name> Is A <product category> That <key benefit> Idea Unlike <primary competitors> #1.2 Our Product <additional advantages> Idea Idea #1.3 Idea #1.5 Pathway #1.4 #1 Idea Idea #1.6 #2.1 Idea Pathway #2.4 Idea Idea #2 #2.3 #2.2 Level of Detail / Close to done •Visualize your User Interaction Model •Always revisit validation tests for size •The execution board is equivalent to and adjust it as you learn the team’s task board, but at the Idea •Come up with ideas for each pathway Card level •Prioritize experimental testing •Spend time on measurement infrastructure (a test without ability to measure = an unvalidated feature)
  • 21. How Much Effort on Validation Feature usage in • In 2009, Google ran approximately 12,000 enterprise software experiments, of which about Never Rarely 10% led to business changes Sometimes Often Always 7% • Linus Pauling famously said, 13% "The best way to have a good idea is to have a lot of ideas." 45% • Focus on minimizing the 16% incremental cost of testing ideas with your customers/users 19% Standish Group - CHAOS Report, 1995, 2002 agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 22. Feedback loops make all the difference In 1940, the chance of an American being killed by lightning was about 1 in 400,000. Today it’s 1 in 11 million. In November 2007, economists in the Survey of Professional Forecasters — examining some 45,000 economic-data series — foresaw less than a 1-in-500 chance of an economic meltdown as severe as the http://www.nytimes.com/2012/09/09/ magazine/the-weatherman-is-not-a- one that would begin one moron.html month later. agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright ©2007-2013
  • 23. Lean Product Management The Value of Experiments • Validate requirements trump everything • Incremental cost of validation is falling • Feedback means nothing without a model The race doesn’t go to the one with the best idea, but to the one with the most tested ideas Photo: ESA http://www.nbcnews.com/id/50677062/ns/technology_and_science-space reserved. Copyright ©2007-2013 agile42 | We advise, train and coach companies building software www.agile42.com | All rights
  • 24. “Coming together is a beginning. Keeping together is progress. Working together is success.” Henry Ford thank you dave.sharrock@agile42.com skype: dave.sharrock twitter: @davesharrock slides: slideshare.net/davesharrock agile42 | We advise, train and coach companies building software www.agile42.com | All rights reserved. Copyright © 2007 - 2009.