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Prioritization for Product Managers

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Prioritization is the most important task product managers do. This presentation looks at different frameworks for prioritization, steps back to examine how products create value, and then offers practical tips to prioritize well.

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Prioritization for Product Managers

  1. 1. Copyright © Mike Chowla 2018Copyright © Mike Chowla 2018 PRIORITIZATION & PRODUCT MANAGEMENT Mike Chowla Twitter: @mchowla Silicon Valley Product Camp March 31, 2018 Slides available at https://www.slideshare.net/mchowla
  2. 2. Copyright © Mike Chowla 2018 My Background • Education • BS, Electrical Engineering and Computer Science, UC Berkeley • MBA, Wharton • Experience • 10 years as software engineer and architect building high performance infrastructure • Previously product roles at AOL, StrongView, Aeris, Rubicon Project • Currently Director of Product Management at PubMatic
  3. 3. Copyright © Mike Chowla 2018 Why care about prioritization? • It’s the most important thing product managers do • Build the wrong things and your product fails • Gets asked about a lot in PM job interviews
  4. 4. Copyright © Mike Chowla 2018 Agenda • Definitions • Frameworks • How Do We Create Value • Practical Prioritization
  5. 5. Copyright © Mike Chowla 2018 Definition According to Websters: prioritize: to list or rate (projects, goals, etc.) in order of priority priority: a preferential rating; especially : one that allocates rights to goods and services usually in limited supply
  6. 6. Copyright © Mike Chowla 2018 Definition Part 2 • In the short run, prioritization is what the engineering should work on next • In the long run, your prioritization choices are your strategy. If you say X is important, but keep doing Y, Y is your strategy • Scope of any given effort is NOT fixed. A core part of prioritization for PMs is deciding how far to go in each area
  7. 7. Copyright © Mike Chowla 2018 FRAMEWORKS
  8. 8. Copyright © Mike Chowla 2018 Revenue Feature A 50,000 Feature B 75,000 Feature C 100,000 Feature D 60,000 Revenue Revenue Feature A 50,000 Feature B 75,000 Feature C 100,000 Feature D 60,000 Revenue Feature A 50,000 Feature B 75,000 Feature C 100,000 Feature D 60,000
  9. 9. Copyright © Mike Chowla 2018 Revenue Feature A 50,000 Feature B 75,000 Feature C 100,000 Feature D 60,000 Revenue Revenue Feature A 50,000 Feature B 75,000 Feature C 100,000 Feature D 60,000 Revenue Feature A 50,000 Feature B 75,000 Feature C 100,000 Feature D 60,000
  10. 10. Copyright © Mike Chowla 2018 Revenue vs. Effort Revenue Effort Ratio Feature A 50,000 25 2000 Feature B 75,000 30 2500 Feature C 100,000 50 2000 Feature D 60,000 20 3000
  11. 11. Copyright © Mike Chowla 2018 Revenue vs. Effort Revenue Effort Ratio Feature A 50,000 25 2000 Feature B 75,000 30 2500 Feature C 100,000 50 2000 Feature D 60,000 20 3000
  12. 12. Copyright © Mike Chowla 2018 Limitations of Revenue • Desired outcome is high profitability not high revenue • Error in estimates is huge for new features or products1 • How well can your company predict revenue on existing products? • Add in all the uncertainties of anything new and a revenue estimate has a huge confidence interval • Revenue for asks for particular customer may be more reliable • Sales still over estimates likelihood of closure and amounts • Biases towards short-term & well-known items which does not lead to differentiated product offering 1 Borrowed from Rich Mironov Four Law of Software Economics, Part 4. https://www.mironov.com/4laws4/
  13. 13. Copyright © Mike Chowla 2018 Weighted Scoring • Multiple factors and weights beyond revenue Source: https://www.productplan.com/how-to-prioritize-product-roadmap/
  14. 14. Copyright © Mike Chowla 2018 Weighted Scoring • Pros: • Considers multiple factors • Acts as a checklist to consider important factors • Cons: • Scores are arbitrary • No strategic coherence • Assumes feature value is independent of other features • Being really good for one segment usually involves multiple features • Biases towards chasing competitors
  15. 15. Copyright © Mike Chowla 2018 Voting or Buy A Feature • Give stakeholders (internal and/or external) a number of votes or a budget and let them vote on what should be done • Pros: • Gathers input from stakeholders • Stakeholders feel heard • Cons: • Stakeholders expect you honor the winner • No strategic thinking • Focuses on short term needs • Biases towards chasing competitors
  16. 16. Copyright © Mike Chowla 2018 Kano Model Customers ask for performance features Diagram Source: https://www.productplan.com/strategies-prioritize-product-features/
  17. 17. Copyright © Mike Chowla 2018 Kano Model • Categorizes product attributes based on how consumers perceive them • Threshold Attributes: Product must have these but do not provide differentiation. • Example: a smartphone must be able to make phone calls • Performance Attributes: More is better, less is worse. Customer asks often fall into this category • Example: smartphone battery life • Excitement Attributes: Unexpected and drive high customer satisfaction. Often latent needs. • Example: Orignal iPhone web browser • Customers can not ask for something they do not expect • Attributes shift overtime based on customer expectations. Today’s excitement attributes are tomorrow’s threshold attributes
  18. 18. Copyright © Mike Chowla 2018 3 Buckets Approach (Consumer) Created by Adam Nash • Metrics Movers: Engagement. Growth. Revenue. • Customer Request: Customers are actively requesting • Customer Delight: Literally delight them when they see them Source: https://adamnash.blog/2009/07/22/guide-to-product-planning-three-feature-buckets/ Fun Fact: I went to high school with Adam. We would have been the same year but Adam had skipped two grades
  19. 19. Copyright © Mike Chowla 2018 3 Buckets Approach (Enterprise) • Strategic Goals, North Star, Differentiators: What we want our product to be in 1-2 years • Sales Friction Points: These are the items that make it hard for the sales teams to win. Often competitive gaps • Customer Requests and Pain Points: Ignoring causes low customer satisfaction and churn
  20. 20. Copyright © Mike Chowla 2018 Why are consumer and enterprise different? • For the enterprise, primarily business motivators • Help get more revenue • Help save costs • Individual motivations are either will look good from one of the above or will save time so I can go home to my family sooner • For consumer, many possible motivations like entertainment, social connection, status • Delight for consumers can be an end in itself but the enterprise delight is from creating business value
  21. 21. Copyright © Mike Chowla 2018 HOW DO WE CREATE VALUE
  22. 22. Copyright © Mike Chowla 2018 Source of Value • Differentiated solutions create above average value • If your offering is the same as your competitors you can not create more customer value than them • You can not capture more value than you create • A couple of features will not create a differentiated offering • Too easy for competitors to copy • Ad hoc selecting features for short term revenue will not get you to a differentiated offering • A differentiated offering takes concerted effort over long period of time & deep understand of your customer’s needs
  23. 23. Copyright © Mike Chowla 2018 Prioritization Requires A Strategy • To prioritize your way a differentiated offering, you need to be crystal clear what that offering is, otherwise known as your strategy • If you do not know where you are going, you can not prioritize effectively • You’ll trade off short-term needs against each other and chase your competitors
  24. 24. Copyright © Mike Chowla 2018 Jobs to be Done • What “job” does your customer hire your product to do? • Often not what the vendor things they are selling • First approximation: people don’t buy drills, they buy holes in their walls • Contextual factors are important and products often have multiple jobs • Example: Milkshakes making a long boring commute more interesting • Why are “jobs” important for prioritization? • Hones in on what customer value you are creating • In enterprise software, guidance from vendor is often a key part of the job the customer is hiring for
  25. 25. Copyright © Mike Chowla 2018 Jobs To Be Done Resources • For an in-depth treatment, read the book: Competing Against Luck by Clayton Christensen • There are also multiple HBR articles such as https://hbr.org/2016/09/know-your-customers-jobs-to-be-done
  26. 26. Copyright © Mike Chowla 2018 Segmentation • Groups of your customers have different sets of needs • Breaking them in segments is crucial for figuring out what problem you are solving for who • In jobs terminology, different segments are hiring your product to solve different jobs • To achieve high satisfaction in a segment, often requires groups of related features • Not thinking in segments leads an bloated and incoherent product as you try to satisfy everyone
  27. 27. Copyright © Mike Chowla 2018 PRACTICAL PRIORITIZATION
  28. 28. Copyright © Mike Chowla 2018 Figure Out Your Effort Ratio • What percentage of engineering resources do you want to spend on each bucket? • Strategic Initiatives • Features • Maintenance and Tech Debt • Moonshots / Innovation • This bucket rarely produces anything of value. You are probably better off doing a hackathon • Propose at the beginning of each quarter, get buy in from stakeholders, and then measure • Shifts over time. Sometimes strategic initiatives take a bigger share, other times it’s core features
  29. 29. Copyright © Mike Chowla 2018 Thematic Groups • Human brain can keep track of between 4 to 7 things at a time • Not possible to accurately rank order a list of 50 or 100 items • Your stakeholders are not interested in whether their story is ranked 20 or 22 • Exec management wants to understand the big picture • Grouping like items together gives you fewer items to compare and makes your priorities understandable to stakeholders
  30. 30. Copyright © Mike Chowla 2018 Priority Lists • Keep an ordered list of near-term engineering priorities • At the feature or initiative level (not the story level) • Not more than 5-7 items • Helpful for planning sprints • Even more helpful for explaining why you are not doing asks X, Y, & Z now • Makes it clear if as executive asks to do X, it will lower the priority of everything else on the list
  31. 31. Copyright © Mike Chowla 2018 Focus Narrowly or Bet Widely? • Most organizations default to bet widely • Any new initiative has the siren song of the possibility of great success • The obstacles are unknown • Competition is under estimated • This is the organizational version of the Dunning-Kruger effect
  32. 32. Copyright © Mike Chowla 2018 Focus Is Better “People think focus means saying yes to the thing you've got to focus on. But that's not what it means at all. It means saying no to the hundred other good ideas that there are. You have to pick carefully. I'm actually as proud of the things we haven't done as the things I have done. Innovation is saying no to 1,000 things.”
  33. 33. Copyright © Mike Chowla 2018 How to Achieve Focus (Product Team) • Be willing get C grades • In the areas of your product where you want to compete, you want A grade functionality • In areas which are necessary but not critical, be willing to be just good enough • For new functionality, PM often push towards an A grade • For non-differentiators, engineering effort better spent elsewhere • PM leaders need to stress engineering resource efficiency.
  34. 34. Copyright © Mike Chowla 2018 How To Achieve Focus (Stakeholders) • Stakeholders will push you to add one more thing • Ways to push back: • Frame the discussion that the question is not whether their idea is good idea or not but rather whether it’s higher return than other options • Is this more important than the X, Y & Z we have on next quarters roadmap? • Note: there’s lots of evidence that deciding Yes or No leads to poor decision making and looking at multiple options improves outcomes • https://hbr.org/ideacast/2016/05/make-better-decisions.html
  35. 35. Copyright © Mike Chowla 2018 How To Achieve Focus (Stakeholders) • Ways to push back • Can you test the idea with an MVP? A real MVP that’s NOT stripped down version of the intended product and takes 6 sprints to build
  36. 36. Copyright © Mike Chowla 2018 Prioritize on Customer Value • Corporations focus on revenue because it’s close to end goal of profit • Revenue is the share of the value we capture • Assessing customer value is much more reliable • Does it solve a real customer problem? • Does the customer really care about the problem? • How many customers have this problem? • If your product drives a huge amount of customer value, you’ll be able to figure a way to capture it • Look for reasons why value capture would be difficult but focus on value created
  37. 37. Copyright © Mike Chowla 2018 Summary • A solid product strategy is must to able be prioritize effectively • Products create above average value by being differentiated and serving the needs of one or more customer segments better • To create a differentiated offering understanding your customers is crucial • Drive focus by saying no to good ideas • Prioritize on primarily on customer value and not unreliable revenue estimates
  38. 38. Copyright © Mike Chowla 2018 QUESTIONS? mchowla@gmail.com Twitter: @mchowla www.linkedin.com/in/mchowla

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