Rich Mironov gave a presentation on making strategic choices in product portfolios. He discussed how validation and strategy should precede development. Organizational behaviors shape strategic decision making, and explicit portfolio allocations enable prioritizing features. Successful software companies focus on solving the right problems, have strong product management to validate solutions before development, and make strategic choices by allocating resources between current releases, quality, and future bets. Portfolio strategy requires forcing hard tradeoffs between competing initiatives.

1. #RallyON15
©2015 Rally Software Development Corp. All rights reserved.
Rich Mironov
Making the Right Strategic Choices in
Product Portfolios
Rich@Mironov.com

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
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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
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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
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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
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6. There’s
nothing
more
wasteful
than
brilliantly
engineering
a
product
that
doesn’t
sell.
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8. • 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
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9. Faster Cars Need Better Drivers
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10. Product Success Food Chain
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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)

11. 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%
*Within
engineering
scope
From
my
personal
experience

12. 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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13. • 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
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14. • 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

15. • 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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16. Typical Commercial Software Company
R&D 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

17. 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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18. • 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
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19. • “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
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20. • 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)
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21. • 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
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22. #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

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