Answer from Derek Britton of Microfocus: I imagine that if you ask 10 people this question, you will get 10 completely different perspectives! Such a diverse array of opinions has already been voiced across the ‘net and in published texts, which tells us this:

1. it’s a great question!
2. the answer is quite involved, but is difficult to describe

First, I would agree with the hypothesis that a product manager should be CEO of the product — that’s exactly the behavioral trait they must show to be truly effective and to lead those around them to help the product truly excel.

We must also consider that some “CEO type” activities are beyond the remit of a PM, such as interactions with shareholders, establishing management policies, process, culture, etc. The point here is that to be “CEO” of anything (even if you are really a PM) means you have to assume responsibility for things and lead or influence others to do the right thing for your product. So, for example, as a PM, you want hiring managers to bring in those with the right skills to sell and support YOUR products, you want the sales leaders to focus on YOUR product, you want your marketing team to put the right spin on the collateral, you want your organization’s other product managers to share your vision of the future so you can work together (and not steal resources from one another), plus a million other challenges. By being “the CEO” you will see it as your role, your responsibility, and your opportunity to solve each of them and more — usually through effective leadership, influence and persuasion… and usually by enlisting others in a shared vision, since you won’t achieve it with merely hard work — it must be a team effort.

That’s where this question gets interesting — defining what a CEO “does”. Certainly if we think that all they do is make the big decisions, sort out the funding, hire the VPs, fire the wasters, help on the big deals, then we are missing the role of the CEO entirely. You will notice most of this is just operational day-to-day routine stuff. This isn’t the key bit, though of course it is important. The CEO sets the strategy, establishes and monitors the culture, builds a vision, challenges the process, and (usually) lines everyone up to squarely support “the customer.”

Not much of this is about barking orders; it is about building consensus, establishing a pattern of leadership, and a culture of empowerment. It is about setting a pattern of behavior where others feel like they can and should make changes for the good of the company, of the product, and of the customers.

Not much of it either is about technology or technical prowess on the part of the “CEO.” It is about reaching out to those with those skills and utilizing them correctly. The same is true for a PM — you don’t necessarily need to know all the techie stuff, but you do need to know how it affects your clients, and you need to know who in your “team” you can refer to for the complex technology questions.

But mostly, for me, the CEO role is about understanding what the company exists for, and this is usually based on their customer. A company is nothing without its commercial lifeblood — its client-base.

I think because of this, effective CEOs almost always have a strong commercial background, and are salespeople by trade, and businesspeople and leaders in equal measure. All of these facets are also within a product manager’s remit, but I think the balance is tipped by the typical sales leader’s experience in getting genuine commercial results, which of course is the cornerstone of any organization doing well. Commercial experience also suggests a cost-management perspective too, which is equally important (and why many CFOs are also good candidate CEOs).

There are for sure thousands of other considerations, but an executive recruiter will usually look for evidence of commercial success in a direct capacity for a would-be-CEO to be a genuine candidate. PMs typically don’t have direct authority over revenue in the same way sales guys do, and that for me, boiled down, is the answer to this, because many organizations see revenue as vital and everyone else as secondary.

I would imagine that seasoned PMs with some specific commercial experience would be very much in the running though. The first step for any PM in becoming a full-blown CEO would be to “assume those responsibilities” in their current PM role. This is the acorn from which greater things can grow.

How is it that some products achieve huge customer loyalty and high usage (and therefore renewal revenues), and yet other products find it very hard to gain any long term traction? What are the key factors affecting “stickiness” and what can the PM do to move the needle?

Answer from Alain Breillatt of Picture Imperfect: How do I make my product sticky? If you worked for 3M then the answer would be to slap some low-tack glue on it and declare it a new type of tape, Post-It note, etc. Okay, so the joke isn’t helpful, though it does reveal the conundrum a Product Manager faces as they try to sort out the question of how to make a product a “need” in the regular work/life experiences of customers rather than simply another tool that sits in the bottom of the bargain bin.

But to answer your question, let’s dissect customer loyalty and high usage.

What drives customer loyalty? Generating loyalty is actually a very simple formula, but not one that is easily put in place by the Product Manager alone. Let’s address these briefly and then go into more depth below. Customers love your product / company because you:

1. Get the JOBS Done: Your product solves the problem that your target customers are trying to solve better than any other solution available. In fact, if properly developed, it is tightly aligned with only the dimensions of performance that are relevant to the job. Professional photographers, for instance, know they can rely upon Photoshop to get the job done when it comes to manipulating and finishing their photos properly.
2. Happily Engage with Customers: When your customers have questions about/issues with your product, they find an open, capable and interested organization that is willing to hear them and assist them. Try contacting Zappos.com with questions or concerns about a purchase – they do EVERYTHING possible to answer questions while ensuring that you are happy and they do it with a smile.
3. Understand your Market: Your Marketing Mix (i.e. the 4 P’s of Product, Placement, Pricing, and Promotion) creates a sense of value in the minds of your customers, is focused to best reach your ideal target, and generates a “need” to own/upgrade. Remember back in 1999 when VMware was just this little workstation tool which your testing, development, and support teams used to perform software testing against multiple platforms? The message was simple: we’ll cut your capital investment costs by 50 – 80% and you won’t have dozens of machines cluttering each team member’s workspace. They did the same thing with servers but added redundancy and quick recovery to the mix. Any wonder why they went from 0 to $1.9 Billion in revenues in 10 years?

What constitutes high usage? High usage is a relative term as it does not necessarily mean customers are opening your product on a daily or even weekly basis. What it does mean is that your product is a critical part of the workflow of a customer’s business or personal life. It saves them time. It makes them look good. It connects them to people they care about. It saves them money. It makes them money. Better yet, it saves their assets on a regular basis. They don’t even bother looking at competitive imitators because your product is the rock solid, go to the mattresses, gold standard.

So, as the Product Manager, which of these levers do you control in order to make your product sticky? That depends on how your role is perceived within the organization. Personally, I prefer to look at the PM as the CEO of their Product. You own it, you’re responsible for the revenues it delivers, and you can advocate for the changes that are necessary to make your product more successful. Not every company regards the Product Manager in this fashion, and if yours doesn’t then you will have to pull what levers you can and either wrest control of other levers or coax the owners into seeing things your way. Generally you will have to collaborate closely with the sales, support, and possibly marketing teams to ensure they have the same vision you do. Prepare to do a ton of evangelizing and sweet talking.

With that said, let’s examine the three sets of levers more closely. But let’s examine them in the inverse order from how they are listed above because this is typically the approach that unfortunately is often taken when organizations think about making their product a hockey stick graph of success. The conversation usually goes like this, “Hey, we built this cool piece of software, now how do we make it REALLY successful?” [cue crickets] That’s what the engineer or product manager is going to hear if they approach me with that question since it implies that none of the proper due diligence was done before going out and creating.

Understand your Market

The Marketing Mix is the first thing that comes up when you start asking questions about how to make your product wildly successful. This is because most people equate success with visibility, availability, and enticing pricing. Much of this failure comes from spending too much time in the aisles of the supermarket or in over-competitive markets where coupons and promotions reign supreme. But if you’re in this situation here are the potential approaches you could take.

1. Market the hell out of it. This generally implies throwing tons of money in advertising and promotional dollars at the product to ensure that you get glossy prints in all of the right periodicals, skyscraper ads on the major websites, booths at the major trade shows, and beautiful direct email and mail pieces to large lists of target customers. Supplement this with a PR blitz to all of the major influencers including major journalists, A-List bloggers for your market and – if your product targets IT – the streetwalkers in disguise (i.e. technology analysts) and end-user communities. Finally, you need great case studies and endorsements from a few big corporations (again if targeting IT) that may require you practically give the product away to these endorsers. This is called the “throw away money as fast as you can” or “the why the VCs lost so much money in 2001″ approach.You can scale this up or down and target your marketing activities according to the budget you’re able to wrest out of the pockets of your executive team. To be clear, you need to promote your product to gain visibility for it as well as credibility – especially if you are targeting organizations that will spend more than $1000 on your offering. But all of the advertising in the world isn’t going to generate loyalty and renewal revenues unless your product does the job your customers need it to do. (See “Get the JOBS Done” below for more on this topic.) I’ll just share one more example here because branding and marketing do make a huge difference. Ever heard of the Freedom Blanket? What about the Slanket? My bet is you immediately thought about the PATRIOT Act when I mentioned the first one and wondered if the second one was a new kind of venereal disease. Now, what if I told you these were both predecessors of the Snuggie? Ah yes, you know what a Snuggie is don’t you. Wonder why that is? Well, read this article and you’ll see that in this case it was ALL about marketing, good branding, and coming up with a quirky way that connected to customers to drive the Snuggie to become a cultural phenomenon.
2. Take it viral. You know how it works — create a quirky video or online game that creates a huge buzz and generates enormous visibility for your product. Of course, you still need to convert these people into customers, so make sure that your viral effort is engineered to connect with your target groups and that there’s a call to action that actually engages them with your product. Creating visibility is wonderful, but if you fail to attach a strategy or mechanism for capitalizing on that visibility, then why are you wasting your time?
3. Give it all away. So you’ve read Chris Anderson’s “Free” and you either scoffed at it or you’re a believer. Nothing generates faster visibility for a good product coming from an obscure background than making it free. But you need a strategy in place that is going to take advantage of the Freemium approach and turn it into money. It works — but again, you need to align mechanisms with a longer term strategy for capitalizing on the huge population now using your solution. A word to the wise though: it’s entirely possible to create what you think is a fabulous solution to a very real problem, make it freely available to all, and still watch your downloads / usage stagnate in the hundred or thousands when you expected it to hit millions like Twitter. Free does not guarantee widespread usage. In some cases, your timing may be off and your product may be well before its time as was the case for many MP3 players before the total Apple solution was delivered.
4. Align in with strong partners. Teaming up with the giants in your industry often makes complete sense when your solutions are highly complementary. Their sales team is always looking for additional tools to line up and increase the size of the sale, and you benefit by riding in on the coattails of their efforts. When InstallShield (now Flexera? – don’t ask me, I don’t work there anymore) decided we wanted to tackle the IT administrator market against an entrenched competitor in the application repackaging business, there was one clear path to generating fast growth and that was the Freemium model combined with aligning with heavyweight partners. We built customized solutions for Novell and Microsoft which were hosted on their websites and promoted to their user communities. Value to the customer came through making these products fully functional but limited in feature availability. An Administrator could accomplish the basic repackaging tasks with the toolset but advanced features which were visible required purchasing a license. We even integrated the online license acquisition to simplify the effort for a willing customer. Value to InstallShield came through the validation of aligning with the big partners as the “go to” solution and by requiring every user who installed to provide registration details in order to receive the installation key. I will admit that it took months for the solution to really take off and brought increasing scrutiny by executives who questioned whether we were simply giving away money rather than growing the potential revenues. But staying the course brought significant success to InstallShield as we eclipsed the competition, helped several of our partners terminate their own repackaging solutions, and become the default offering.
5. Create lock-in. Are there steps you can take to make it less favorable for a customer to consider other competitors after they invest in your solution? IBM and Microsoft do this all the time. Facebook even does it. Once you are on their solution and build up your investment in their solution, it can be quite costly to consider moving somewhere else. If you create advantages that come with loyalty (consider the airline loyalty programs back when they truly were highly valuable) you increase the costs to a customer considering leaving your solution. For example, if I use Wordpress for blogging, as I customize and take advantage of the many widgets available, my switching costs continually increase. Who wants to go through the pain of migrating years worth of content and struggle through rebuilding expertise in another solution when a large amount of content is involved? Lock-in is not evil if it creates significant advantages to the customer, including such benefits as strong community of users who collaborate and provide support / new tools. My parents are still on their old Juno email account — even though I set them up with a vastly superior Gmail account — simply because they don’t want to go through the switching costs of migrating all of their contacts and updating everyone with their new email address. The barrier CAN be that low.
6. Take advantage of network externalities. The mobile service providers have been cashing in on this for years with their “Friends and Family” programs or Fave 5 approach. If I can get my family on the same network then we can all talk to each other for free. And if they tell five friends, and they tell five friends… well, you get the picture. There are very real benefits to getting large populations. If you want to delve deeply into the economics of it, I suggest the following paper written by a good friend and professor with whom I worked at one time: “Snowball: A dynamic oligopoly model indirect network effects.” [PDF]

Happily Engage with Customers.

Does your company like its customers? That may sound like a funny question, but honestly, how many times have you sought to get help or ask questions of a company about their products and struggled to access a live person? Ever called up a tech support line and had the agent on the phone hang up on you? Have you ever sent an email to a company and never heard back from them? Has your company had discussions about how to reduce calls to your support line by obscuring the location of the contact details? Do you empower customer service or help line technicians to go the extra mile to ensure customer satisfaction? Look — managing costs is all fine and well, but if you want to turn disengaged customers into raving advocates for your product (word of mouth is the single best method of driving product adoption) then you need to think about how your customer touch points impact the end to end customer experience. Southwest Airlines and Zappos have at least one thing in common: they carefully consider the personality type of the people they hire to engage with their customers. Check out Zappos core values as a clear statement of what serving their customers means to them. And this interview with the President emeritus of Southwest gives a clear understanding of how their customer focused values have helped the company succeed. As a product manager, you may be asking, “Isn’t this something the CEO and HR team should be thinking about?” Well, yes, sure, but that doesn’t mean your product and your efforts can’t help make that happen if your culture is in the wrong place today.

Get the JOBS Done.

JOBS™ is a four letter acronym that refers to the new product development process outlined by Clayton Christensen – he of disruptive fame – and used liberally by his firm Innosight. The approach is standard fare for anyone who has studied the accumulated innovation literature from the last 15 years. I cite Christensen here because A) he’s earned his street cred in the tech industry, B) his approach tightly encapsulates the best practices you should be following, and C) like most writers I am lazy and would prefer not rewrite something if an appropriate source is available to provide the necessary reference material.

Allow me to explain the basics but then I would highly suggest you jump over to the Innosight website and explore their methodology. Of greatest interest is the article Christensen co-authored for MIT Sloan Management Review back in 2007 where he explores the concept of finding the job a customer wants to accomplish and aligning your product with that task. The simplest way to explain is that most likely you are segmenting your markets incorrectly if you are defining them

…by the characteristics of [your] products (category or price) or customers (age, gender, marital status and income level). Some business-to-business companies slice their markets by industry; others by size of business.

Surely this sounds familiar to most you reading this article. In fact, you may feel your hackles rise up as you growl, that’s the way everyone who knows anything about our industry does it. If that is your response then please go read the article now, before proceeding further.

Got it? Good, so let’s explain the concepts behind JOBS.

1. Jobs-to-be-done. The focus is understanding the problems your customer faces and the context in which they occur. Success at doing this means you can distill it down to a simple statement like this: Professional photographers want to refine their raw photos to create a finished image that matches the requirements of their client.

   Another simple statement would be: Parents want a brain-dead simple approach to share pictures of their children with friends and relatives.

   And finally a last statement would be: IT administrators want to deliver packaged software that is customized to their business and security specifications to the computers on their network without creating downtime for the network or their end users. Actually, this could be further resolved to clarify the true job: IT administrators desire to provide the software their users need without creating disruptions.

   Each one of these job statements conform to this format: [Customer] wants to [solve a problem] in [this context].

2. Objectives. What are the objectives or decision points your customer uses to evaluate potential solutions? This is not just about the functional aspect of product usage (i.e. use cases) but equally the psycho-social constraints that define the desired outcome of using the product.When you say, “Nobody ever got fired for buying IBM,” you’re exploring multiple objectives that the IT guy responsible for the purchase is trying to satisfy. There is the social impact of knowing that the new solution will make you look good to your boss and peers because you chose it and it just works. There’s the emotional impact of knowing that when things do go wrong, IBM has a staff of consultants who are on-call to smoke-jump in and help solve the problem quickly. And there is the functional consideration of how the product delivers the functionality necessary to satisfy your business intelligence platform requirements.Think about the Verizon Droid for a second — why would people purchase that phone over other smart phones? See how many objectives you can come up with that might drive a teenager to purchase that phone. Then consider the crackberry addicts out there in the business world and explore what objectives are driving their decisions.
3. Barriers. These are those characteristics, often functional in nature, that limit the ability of customers to use your solution. Typical barriers include cost, skill set, performance, available infrastructure, and business limitations.If your product requires customers to jump through new hoops and learn new skills, then there is definitely a barrier to adoption. The classic example is Microsoft Word developing extensive documentation, a detailed on-board Help, and conversion algorithms for dealing with WordPerfect documents to ensure ease of transition. Consider another example: ask the average kid driving a riced up Civic if they would prefer a Mercedes SL 65 AMG Black Series and they would probably rip the keys from your hand because few can pony up $300k to purchase that car, let alone the cash necessary to maintain it. And so they make do with lesser vehicles that they festoon with a variety of accessories to enhance the performance and simulate the look of the cars they admire.
4. Solutions. These include the various available offerings that customers consider when seeking a solution to their problem.  It’s important to realize that not every solution falls neatly into how you might categorize the problem space.  In fact, end users often create their own solution in MacGyver style retrofitting of products from diverse spaces in the marketplace. Especially in today’s evolving environment of “Makers” you will be surprised at how creative end users become when they are passionate about scratching a particular itch.There is much to be learned in examining how end users are making do or creating workarounds which leverage existing solutions in order to imperfectly solve their problems. Finding an area where imperfect solutions exist is an obvious key to driving rapid and significant growth.How does this differ from your product MRDs?  I’ve discussed this in other answers on this site and there’s a reason why. If you get this framework right, everything else falls into place. It’s not quite as simple as Kevin Costner’s “if you build, it they will come,” but the metaphor is not far off the mark.

So the point is that the formula to achieving wild success for your product has many levers. If you really want to succeed then the genesis of wild growth starts well before you begin thinking about a marketing plan. I’ll close with one pertinent point that Josh Kopelman from Redeye VC recently made: virality and a strategy for customer acquisition must be built in as drivers of the product development effort.  As Josh puts it when he asks entrepreneurs how they intend to acquire customers,

The most disappointing answer is when they say “Oh, we’ll just make it viral.”  As if virality is something you can choose to add in after the product is baked – like a spell checker.  Let’s imagine the conversation at the marketing department of the wireless phone companies.  “Let’s see.  Should we spend $4 billion on advertising this year…or should we just make it viral?”

Virality is something that has to be engineered from the beginning…and it’s harder to create virality than it is to create a good product.  That’s why we often see good products with poor virality, and poor products with good virality.  The reason that over $150 Billion is spent on US advertising each year is because virality is so hard.  If virality was easy, there would be no advertising industry.

We have a server-based software product and we are introducing a new desktop-based product. The products have the same features, they just differ in how they are installed. Rather than the new product replacing the existing one, we want both products to continue to exist in parallel, though obviously the goal is to increase revenue overall. What are some techniques and approaches to launch the new product without it having a negative impact on our sales?

Answer from Mara Krieps of Pivotal Product Management: This is an interesting question, and it has raised a bunch of follow-up questions, such as:

• Was there any customer request for the desktop version?
• If so, what problem were they trying to solve with this solution? (e.g. non-workable pricing levels with the server product; performance issues)
• Was the goal to broaden your market with the desktop product? In other words, are there customer segments that you’re not addressing with the server product?
• Or do your competitors have a desktop version and is your win/loss analysis showing that the competitive solution is stealing market share?

Bottom line: You’re likely to cannibalize the server version, unless there is a compelling customer need that will enable you to expand market share in your current segments, or target new segments.

Given the information you’ve provided, my best advice is:

1. Get really focused on what the customer’s problem is, and what they are asking for which points towards the need for a desktop version.
2. Once you’re really clear on #1, think about the 5 Ps of marketing as follows, and then apply the strategies that make the most sense.

Product: You’ve said that the features currently are the same between the two versions. But is there any way you can differentiate the two by thinking about the “whole product” (in the Geoffrey Moore sense)? For example, are there any additional consulting services, or support or documentation, that you can offer with one version or the other? Maybe some different reports, or an enhanced reporting package for one version, as part of the product roadmap?

Pricing: Pricing could be a possible way to differentiate. You could structure pricing so that the desktop product priced best for customers who need up to X copies, with pricing on the server version that represents a lower per-user price for companies that need more licenses. Experiment with different models, and think about the level of overlap you want to create for customers in the mid-range. Also, I strongly recommend doing some price testing, either in-market or as a research study.

“Place” (Distribution): Depending how your product is distributed, you may have an opportunity to offer the desktop version via a subset of current channel partners or sales teams – or possibly through a new and different distribution channels. Thinking about this possible strategy makes me go back to the question “Did your customers ask for this, and if so, which ones, and which distribution channels currently serve them?” The answer will help point you to the best distribution strategy.

Promotion and Positioning: This brings us back to the segmentation question. Do some market segments have a stronger need for the server product and others would benefit more from the desktop version? Structure your promotional messaging and offers to make one of the two products more attractive to the most applicable segment. Also, back to the comments re: product – differentiated promotion and positioning will be easier if you can create some real differences between the two versions.

Each of these possible strategies is promising, but do make sure that you’re clear about customer needs and requests before you make your plans. Best of luck to you, and please do comment back if you have additional questions!

Related questions: How can I avoid cannibalization with a new product?

Are your goals/objectives and tactics essentially the product strategy? If you’ve defined what you want to achieve (goals), the way that they can be measured (objectives), and then the plans for how to get there (tactics), isn’t this essentially your product strategy?

Answer from Janey Wong of brainmates: A product strategy does include goals, objectives, and tactics; however, what differentiates it from other strategic documents is the purpose and supporting content that explains — and perhaps even justifies — how the strategy will meet its goals. The product strategy will ultimately be the document that guides the Product Manager’s decisions through Product Management activities over a specific time period.

The product strategy’s overall purpose is to help your company achieve corporate goals and therefore should be aligned to the corporate strategy. The corporate strategy should direct the goals for the product strategy.

As the document is strategic, it should also include how the product strategy will be competitive. An assessment of the market should be conducted before you write your tactical plan and can consist of one or more of these elements:

• Competitor analysis
• Product comparisons
• Market and industry trends
• Customer insight
• Structure of current product/brand offerings

The information from this research will help you build a SWOT analysis, identifying areas where you might want to focus your product strategy to help you gain an advantage over your competitors’ products. If the strategy is for a completely new product, it’s often better to conduct your research and analysis using Porter’s Five Forces.

Sometimes, I do my research before I define my product objectives or at this point I go back to my objectives and refine or add to them. I also do a quick check to make sure the focus of my strategy is still in line with my goals.

A good reference tool to help you think through your product strateg(ies) is Ansoff’s Growth Share Matrix:

You can now start to draft your tactics and from this you should also start to think through what resources you will need to implement the strategy. The last section should be dedicated to how you would evaluate progression and the attainment of your goals and objectives throughout implementation. It can also include key milestones.

As a final note, remember that all strategies are living documents. They guide decisions but may also need to respond and change with the market so regular research is required to ensure your strategy maintains relevant.

I have an existing product that I am planning to introduce a new update version. The update version is needed due to competition.

My question is how to manage the new product planning so that it will not impact the sales of the existing product, or at least minimize impact on current sales.

For example: How late I should go to avoid letting sales and/or customers know about the new product? And what are the considerations to migrate existing customers to buy new product?

Answer from Bob Corrigan of ack/nak: There are a few questions here, but let’s explore the heart of the issue first before throwing any ideas around, shall we?

You have elected to respond to competitive pressures by releasing more product. I’m going to assume (danger danger) that this was the best approach, but I’ll come back to this later.

You’re concerned that customers will stop buying the old product as they wait for the new one.

You’re right. Once knowledge of a new version gets out into the wild, prospects will wait for it, slowing down sales cycles to evaluate the new version if these new features are truly core to its competitive position.

One challenge is that your sales folks and sales engineers are probably aware that there’s a new version cooking and have been telling prospects “that’s fixed in our next version” or “we add that in the next release.” It’s entirely possible they know this because you told them. This has the impact of slowing down sales. It also has the impact of putting your sales channels on the defensive.

If you’ve taken the extraordinary step of publicizing the features in this new release to a broader audience, this will also slow down sales. It will also aggravate buyers who are not on maintenance contracts who purchased your software prior to news of the new feature(s). And depending on how often you spring these new releases on the market in response to competitive pressures, you may earn the reputation of being a follower who isn’t anticipating customer needs.

So now let’s look at your question of “how to manage the new product planning so that it will not impact the sales of the existing product, or at least minimize impact on current sales.”

For planning purposes, the best way to address this by baking it into a rigorous roadmap process. When I was the product manager for InstallShield, we had a schedule for releasing new versions of the product in the spring and fall of each year — customers and prospects came to anticipate when new stuff would land, and we were able to structure our marketing (and revenue expectations) around that schedule.

In the absence of a regular release calendar, again I recommend a structured way of communicating new capabilities to the channel. I’m not suggesting you treat them like mushrooms (“keep them in the dark and feed them s__t”), but that you wait to publicize the full range of product capabilities to them — with associated sales enablement tools — until a fixed time before the launch, perhaps a month. It’s hard to control the flow of information, but it’s better to ramp up the channel once with comprehensive data than it is to dribble half-facts and non-actionable information to them over a long period of time. This helps reduce the impact on sales because it reduces the “freezing effect” of ersatz announcements on current sales cycles.

The second approach to minimizing the impact on current sales is to push maintenance harder or to offer some form of 30-day upgrade guarantee to buyers. This should be tuned to your particular type of software and the length of your sales cycle, but it helps buyers feel like they can buy now and still get the benefit of new stuff. Note that this works best if you’re doing a super job of controlling the flow of information and doing a good job of communicating with customers about new releases.

Without knowing more about your product and the problems you’re seeking to solve, it’s hard to be more specific. But I can offer the following universal truth: the best response to a competitive action is not always an equal and opposite reaction. Did you really need to respond to their capability with a similar one? It could be that they are working to redefine the problem in the minds of the customer to steer the solution closer to their core competency, not yours. It could also be that they are trying to throw you off your release cycle by putting a “must have” feature into the market and calling you out to respond to it immediately.

But the most insidious possibility is that the feature — while important to a vocal subset of the target audience — really isn’t that important in a strategic sense. Did you really confirm that the capability is necessary to solve the core problem at the heart of your product strategy? To put it in Pragmatic terms, does it help solve a problem that is “urgent, pervasive and which people are willing to spend $ to fix”?

You can’t assume (there’s that word again) that the competition is addressing a compelling need just because they took action. Sometimes you need to respond to a feature with words: “The competition thinks the problem you have is x, so they released feature foo. What we’ve learned from talking to companies like yours all over the country is that the problem is actually y, and here’s our strategy for addressing it. What’s unfortunate is that while feature foo doesn’t get you any closer to solving your problem, it is really appealing to some users. Here is how we address it with our current product with bar…”

Product management can’t solve every market problem with product. This leads me to the very brief answer to your last question: “what are the considerations to migrate existing customers to buy new products?”

The answer is “do a better job of solving their problems than the other guy, and do so in keeping with a strategy that they understand and value.” Selling software isn’t like gavage — give your customers a compelling reason to move and they will.

I have been a sales engineer for the past 10 years or so, and would like to move into product management. How can I best make the transition? Should I target specific sizes or types of companies? My thoughts are that a startup would want a seasoned professional, but perhaps a mid- to large-size company might be willing to hire someone who had not had a PM position before.

Answer from Steve Johnson of Pragmatic Marketing: Small companies seem more inclined to take risks; larger companies may tend to favor a candidate with experience. But I don’t think the issue is company size; I think the issue is the hiring manager. Some want to bring someone in who already knows the job and the industry and is willing to work for the same or lower pay. Fools! Instead the smart hiring manager should be looking for an SE rather than a product manager. My best source for product managers was in fact my competitor’s best SEs.

How does a SE become a product manager? Illustrate in some way your ability to see patterns in the market. Don’t be the guy who says “I’m in sales and I know what people need.” Be the guy who says “78% of our lost deals are because we don’t have this feature.” Those who attend Practical Product Management learn that opinions are cheap but market data is dear.

I suggest that you sit down with the VP of Marketing or the VP of product management to discuss what they’re looking for and how you can be on their short list for the next product management opening. Many folks start with the Pragmatic Marketing Framework at http://www.pragmaticmarketing.com/pragmatic-marketing-framework serving as a vehicle for discussion. Which of these activities are your best features? Which activities are driving the VP crazy? And let’s hope that your skills fit a void in the VP’s current staffing.

In the end, product managers come from many places: development, sales, marketing, support. But the best product managers are those who see patterns and create a consistent, repeatble method for defining products and working with other teams.

For more on the product management roles and compensation, see www.pragmaticmarketing.com/survey

I am developing an innovative product which is truly “new” to the industry. How can I determine the need and saleability of this type of product?

Answer from Alain Breillatt of Picture Imperfect: This is a question every product manager will likely face at some time in his or her career and it is one of the more complex challenges due to the multi-faceted answer it requires.

But let’s start at the most basic assumption: you know who your initial customers are and you’ve determined what problem your product solves for them. You do know this, right? Somewhere among your PRDs, MRDs, spreadsheets and extensive collection of feature defining Keynote decks is a single document with one short paragraph that describes:

[This group of customers] will use [my product] to solve [this problem] in [this context].

You have this right? Don’t feel bad if you don’t. But if you haven’t started actual production / development of your product, don’t go any further until you have this nailed to the wall of your boardroom with the signatures of all internal parties.

[Note, I'm not going to go into the details of what it takes to generate this target customer / product profile but if you want a good primer on this go read Innosight's write-up of their "JOBS™" methodology. Christensen didn't invent this concept of ensuring your product aligns with a real job a customer needs to do -- it's Marketing 201 (a.k.a. market segmentation by need states) -- but his team does a nice job of framing a successful approach for avoiding the all too common dilemma I'm about to describe. I'll just say you won't truly succeed until you learn the full meaning of the word ethnography.]

In my experience, especially when dealing with engineering-minded entrepreneurs developing “new to the world” products, there is a tendency to enthusiastically focus on developing the new product without stepping back to ask, “Who will want to buy this and why?” Some people call this the Mt. Everest Syndrome — we build because we can and because it is a very cool and extremely technical challenge. There’s nothing wrong with doing it this way, but the problem is that once you’ve reached the “summit” of developing this amazing, mind blowing new widget you suddenly look up and realize, “Wait a second, now what do I do?”

The natural response is to begin chasing after potential customers because you want to get paid for your work. But if you don’t have a clear conceptual model of the person and behaviors you’re targeting, then this will be a very frustrating endeavor because at every turn you will hear a different response from a different type of customer. The Director of IT at one of the still surviving major financial institutions will tell you that your solution would be perfect to audit their expenditures of TARP funds if it had an ITIL compliant server back end that could interface with their Exchange setup. At the same time, the “typical consumer” will tell you that your GUI is too complex and ask why yo ucan’t just dumb it down so that little Kylie can embed photos of her pet fish in her newsletter and easily send them out to the local family mailing list? And of course, the 3l33t programming types will just shake their heads and say, “Dude, where’s my command line interface so that I can link up to my headless virtual servers to manage my growing collection of torrents?!?!”

So, which one of those customer types or “personas” did you want to use for your pricing, sales growth, and marketing outreach planning purposes?

Skriiiiiitch! [mimicking the sound of a needle being yanked across an old LP].

Remember when I said there was nothing wrong with building the product first and then trying to figure out how to market and sell it? Please reach into your ears and yank out this piece of nonsense because in most cases it is absolutely wrong advice. What I haven’t said — and experience teaches — is that there is a strong possibility that you’re going to show your widget to every potential customer out there and people will shrug and say, “So what?”

Those two words should be among the most used words in a good product manager’s lexicon. “So what?” is the defining question for determining whether you have identified a solution that delivers a unique and valuable answer to a real job that an identified segment of customers want to accomplish and for which they would be willing to pay real money.

Unless you work for Microsoft Research or Los Alamos National Laboratory or some other well funded research tank, every single product idea you pursue needs to be latched onto a well-defined customer persona. That customer group is who you will target for your roll-out of the new product when it is actually released.

This is why a proper new product development effort would begin with identifying a problem or “job” that a target group of people need solved and determining:

1. Who are these target customers? (think demographics)
2. What existing solutions do they use and/or what work-arounds do they leverage against said existing solutions?
3. Where and when do they use these solutions; or, better yet, where and when would they like to use these solutions?
4. Why aren’t existing solutions solving their problem?
5. What are the key attributes a successful solution needs to provide? (this should be a very short list of probably no more than 3 attributes)
6. What value do these potential customers place upon such a solution?

See, here’s the thing; once you’ve identified the target customer and have some understanding of the value they place upon an optimal solution then you have completed 80% of the work required to answer your original question: how do I determine the need / saleability of a new to the industry product?

You should now know:

1. Your hypothesized initial target customer persona — when applied against the right demographic data this should enable you to identify a market sizing, which is a critical component for defining your growth model.
2. The value they place on the ideal solution — when combined with an understanding of the competitive landscape and your fixed plus projected variable production costs, this will help you determine pricing.

You still have to do the other 20%, but at this point it’s more a process of filling in the blanks than it is inventing something from whole cloth.

I know, you’re sitting there staring at the screen and thinking, “OK great, Alain, if you’re so smart, how do I accomplish that last 20 percent?”

Well, I’m glad you asked because that was my next point. When I worked in business development it was not unusual for someone from marketing or sales to send me a hurried email asking about a particular solution space and what our potential TAM was if we decided to expand in that direction. I always was quick to ask, “Are you looking to understand our Total Available Market or the Total Addressable Market?” Usually if I was talking face to face with the requestor I got a blank stare in response to that question.

Here’s the thing — if you want determine the potential opportunity for your product, you first need to know the size of the market you are considering entering / creating and what share of it you intend to own. That is the distinction between Available and Addressable. And this isn’t an easy effort. In the book, Marketing Metrics: 50+ Metrics Every Executive Should Master, the authors elaborate:

Market definition is never a trivial exercise: If a firm defines its market too broadly, it may dilute its focus. If it does so too narrowly, it will miss opportunities and allow threats to emerge unseen. To avoid these pitfalls, as a first step in calculating market share, managers are advised to define the served market in terms of unit sales or revenues for a specific list of competitors, products, sales channels, geographic areas, customers, and time periods….

Data parameters must be carefully defined: Although market share is likely the single most important marketing metric, there is no generally acknowledged best method for calculating it. This is unfortunate, as different methods may yield not only different computations of market share at a given moment, but also widely divergent trends over time. The reasons for these disparities include variations in the lenses through share is viewed (units vs. dollars), where in the channel the measurements are taken (shipments from manufacturers versus consumer purchases), market definition (scope of the competitive universe), and measurement error. In the situation analysis that underlies strategic decisions, managers must be able to understand and explain these variations.

So in defining your market the steps to follow include:

1. Define the boundaries of the target market and determine / estimate the number of consumers / business entities who would be buyers of any solutions that are or could become available. In this case we are considering a “new to the industry” product so, while an existing solution may not exist, there likely are substitutes available that customers are using. Back in the 1950’s before there was a handheld mobile phone, everyone who needed to communicate by voice used landline phones or two-way radios. Therefore, if you were Motorola developing your analog handheld mobile cellular telephone — of which the DynaTAC was the first US public commercial prototype in 1974 — you would have defined your Total Available Market as the entire population of people who seek to communicate by direct voice transmission. Because Motorola was a large successful company at the time, they likely projected against a global TAM. Of course, a true visionary might have said that the market was broader than just voice communication and included wireless and image communication as well and therefore broadened the TAM to include users of snail mail, telegraph, teletype, television, and messenger services.But where do you get the data to put an actual number to that projection? Well most industries have a trade association that annually reports the manufacturing numbers or revenue for each defined product space. For PC and software worldwide and regional numbers I always relied on data from International Data Corporation (IDC), Gartner, and Jupiter Research. Here’s an example of how Macromedia defined their TAM methodology which pretty much mirrors the approach I used to take for Macrovision. What’s interesting about their example is that they also leverage point of sale (POS) data from NPD. Nielsen, the company I work for now, provides this type of data for manufacturers and retailers in the Fast Moving Consumer Goods space. Using this level of data sophistication dramatically improves the accuracy of product growth projections, although access to this data is a costly option on the order of tens to hundreds of thousands of dollars.

   If you’re focused exclusively on the consumer space then census data is your friend and a good starting point. Typically you can search out additional descriptions by analysts that spring up in corporate quarterly reports, investor presentations and online repositories including blogs authored by sector experts.

2. Describe the competitive landscape including the type and size of competitors and the nature of their rivalry, threat of entry, threat of substitute solutions, bargaining power of customers, and finally bargaining power of suppliers. The astute among you quickly identified this as a five forces analysis as defined by one Michael Porter of Harvard Business School fame. I’m not going to dive into detail here other than to say, if you haven’t done so, go read his seminal article describing this model and how to effectively use it in defining a competitive market space. A critical component is building an expanded SWOT (Strength, Weakness, Opportunity, Threat) analysis for each primary competitor since it provides a useful characterization of their capabilities and product directions. You need to avoid becoming simplistic in building this analysis and you should clearly identify where your knowledge is factual vs. hypothesized.
3. Break the market into segments and estimate their size. Market segmentation here should really focus back on the jobs a customer is looking to accomplish when they use this solution. For instance, mobile phone users differ significantly between corporate users who are looking to stay in touch with the office and their professional network as they travel across the country and the globe as compared to heavy socially mobile consumers who want the latest games, ringtones, and to be able to share photos and texts with their wide group of close friends who probably live within the same metropolitan area. Each group has a defined set of requirements that you should ferret out and determine how valuable the opportunity is in pursuing them. Part of your consideration should include attitudes and speed of adoption. It is not always fair to assume that the best market is the 18-34 year old market in spite of what many on Madison Avenue believe. Age and socioeconomic status may not even be the appropriate characteristics for measuring the markets you are trying to define.Let that sink in for a minute.

   Your market segmentation is not necessarily based on age, income, or gender. It should be focused on people who highly identify with the problem your solution solves — whomever they might be and their likelihood for early versus later adoption.

4. Estimate market share of competitors in each defined segment. This is fairly straightforward — like I said, filling in blanks — but you should carefully consider who the competitors and how tightly they hold to your target customer base. Since this is a “new to the industry” solution you need to keep your definition broad until you have narrowed down the precise requirements. With your requirements in place you can effectively identify who plays in your identified target segment for initial launch.

So now what? Well, with all of this data in place, you need to create a market growth projection. There are a number of ways to go about this and in reality all of them are filled with guesswork, estimations, hypotheses, and at least a little gut based decision making. But no VC or CEO is going to accept that you’ve built this model based on your gut so you need some type of analytical model to back up your assertions. Let me introduce you to the Bass Diffusion Model of adoption. If you’re familiar with the Crossing the Chasm series then this graph should feel comfortable. If you’re not familiar with it then you really should just go read the book or at least a summary of it. Unless your product is completely lacking in analogous solutions that are already or historically have existed in the market place — it does occasionally happen — you should be able to use the Bass Model as a means of projecting your sales or unit growth over the next 1, 3, 10, or 20 years. The formula may appear daunting at first glance but the two key variables you need to worry about are the coefficient of innovation and the coefficient of imitation. As the folks over at smbZen BizJournal state:

The “coefficient of innovation” is the probability that an innovator will adopt the product and, in its calculation, includes the impact of awareness building efforts. The “coefficient of imitation” simply represents the probability that your friends will adopt the service if you did.

“But,” you say, “what if there is nothing analogous that I can project against?” Well, you need to be creative and figure out an appropriate analogy because this is to some extent how you will describe the solution to your target investors as well as your target customer. If it’s completely new to the world then they will be looking for an appropriate analogy and you should be the one to provide it to them.

In the consumer packaged goods world, brand managers typically will supplement this data with test market research that includes both panel and test market research. My employer, The Nielsen Company, has a strong lock on the former with our BASES studies methodology that leverages a very deep database of historical product introductions and actual sales performance as measured against advertising and promotional spending. We help clients like P&G build concept boards that describe the product in significant detail including imagery, branding, messaging, product SKUs, benefits, and pricing. These boards are then put in front of a few thousand consumers who fit the target customers’ characteristics and feedback is solicited through online surveys and webcasts. Depending on how the product performs, clients may decide to put actual prototypes of the product in the hands of the sample consumers and test out their experiences with the solution. All of the data gathered from this experience enables a more realistic projection for how the product will perform at launch time.

But if you’re not a P&G you can still go out and do some of this similar effort in alpha testing of screen shots and product descriptions either through online surveys or in-person focus groups. This in part is why Google takes their “Beta” approach to many of their solutions that evolve out of Google Labs.

Finally, it is possible that you can’t go out and do any of the research I have outlined. It is entirely possible that you have developed something like Twitter — a technology that was originally created because someone thought it would be a cool idea and it slowly evolves through constant iterations and significant stumbles into a true utility that consumers love and use ravenously. But unless you are already independently wealthy or have an understanding sponsor, or are willing to spend all of your free time outside of that you spend doing your day job, this is a very difficult path to pursue. Further, there’s no evidence at this point that Twitter is actually going to produce real revenue in the long run, so you may want to focus on developing a solution that pays the bills from day one.

I’m in my 40s now and have reached the Product Management Director level, managing enterprise software product lines and a handful of product managers and user interface designers. I’ve been successful in bringing products to market and generating over $30MM in product revenues over the course of my career. In today’s woeful economic climate and a desire to balance work and family life and possibly downsize one’s lifestyle and career aspirations, what alternative career paths do you see in a post-product management path that doesn’t include aspiring to VP or CEO levels?

Answer from Marty Cagan of Silicon Valley Product Group: There is no question that leading a product management team is one of the most demanding and high-stress jobs in a company. In a very real sense, this role drives the future success of the company. It’s not unusual for people to spend some time at this level and decide that they miss having a life. Fortunately, the experience in this role turns out to be very useful for other, less stressful positions:

Principle Product Manager – This is a very senior product manager, but the key is that they are no longer responsible for managing people. You might be given a particularly challenging product, or often your job is to provide that holistic view of product and help the other product managers. But as an individual contributor your stress level will be much lower.

Interaction Designer – If you have talent and skills in interaction design, or if you have the aptitude and desire for some more education, this role of interaction designer is in extreme demand and can be very rewarding without the pressure associated with being ultimately responsible for the product. There are some good programs ranging from as short as two-days to help provide training to product manager types in this area.

Product Marketing – You can certainly leverage your product management experience by taking your knowledge and helping the sales or marketing organizations to spread the word. Without the pressure of ultimate responsibility, you can spend your time sharing what you know rather than being responsible for coming up with the actual products.

Online Marketing – This is really where marketing meets product, and this is a rapidly evolving field where you can often make a big impact for your company (especially in lowering the customer acquisition costs). Your knowledge of product and the people required to get changes implemented will prove a big help.

While there are many other positions in the company that would benefit from your knowledge, these four are all individual contributor spots that will most leverage your value.

2009 has arrived and with it one of the bleakest outlooks for the economy in a long time. During recession, organizations typically take drastic measures and cut right back on anything that isn’t directly revenue generating. In these dark times, how does the discipline of Product Management maintain its “strategic value” in the eyes of the organization’s decision-makers? And, on a more personal level, how do you maintain your own personal profile and “strategic value”?

Answer from Brian Lawley of The 280 Group: The biggest strategic value that a product manager can add during tough times is to help the company decide where to focus limited resources. Most companies chop heads but don’t cut products or projects. Thus everything is still expected to get done but if it does the results are mediocre at best. If you can use the Boston Consulting Group matrix and map out your products in terms of growing markets and ability to capture them and then either kill the dog products or shift the resources and effort to the stars it will be very helpful to your company.

In terms of your own personal profile, the archived webinar on “How to recession-proof your PM career” has lots of good strategies and tips.

Answer from John Mansour of ZIGZAG Marketing: A software product manager and a brand manager are conceptually the same in that they both manage a product or product line. But their perspectives for managing products come from opposite ends of the spectrum.

Brand management is most often associated with consumer products, whereas software product management is most often associated with B2B software. Hence, the key differences between the two are rooted in the markets they serve. Some examples:

• Brand managers work for organizations that are wired to think market first whereas most software product managers think features or technology first. Here’s why. Margins for consumer products are far thinner than software, so the stakes are much higher for brand managers which forces them to run their product lines more like a business than software product managers.
• Consumer product companies generally have exponentially more products than software companies so they rely much more on brand management to drive the business. In contrast, software companies with fewer products rely on product management much less to drive the business because they can still experience reasonable growth without much discipline, but only to a point. One could argue that the lack of product management is a key reason many successful start-up software companies are short lived.
• Brand managers have to think about things like planned obsolescence, product line extensions, product line depth and width to make their living. These terms are generally not found in the software product management lexicon.

Brand management and software product management intersect in the larger B2C software companies like Intuit where you have brands like Quicken, QuickBooks and TurboTax. Product managers at Intuit function much more like brand managers because of the target markets they serve.

Software companies should view product management much more like consumer product companies view brand management. If they did, the industry may not have such a high failure rate at the company level. Unfortunately, the software industry is still driven more so by technology than by dynamics of the market, whereas consumer product companies are just the opposite.

The irony in this whole equation is the high failure rate in both consumer products and software. If only the market told us exactly what to do and didn’t change its mind so often.

Answer from Saeed Khan of On Product Management: These are two very interesting questions. Let me answer each one independently:

1. What is the best way to design a questionnaire/survey to get customer feedback? Surveys, in general are very useful tools, but have limitations that need to be understood. The first step is to decide whether a survey is the right medium to get the answers you want.
   • What are your objectives?
   • What questions do you want answered when you are done? And these aren’t necessarily the specific survey questions you intend to ask, but the key insights you want to get out of the survey.
   • Are these insights mostly quantitative, qualitative, or both?
   • Do you need an online survey, a phone survey or a paper-based survey?
   • How many completed surveys will you need to make the survey data useful?
   • What response rate will you need to get the amount of data you’re looking for?
   • What is the incentive for the survey participants to fill out the survey?

   This question bears more discussion. The participants are going to spend some of their time filling it out, but to what end?

   Will it just be information that you collect and use but don’t share with them? Is there some outcome from the survey that makes it valuable to them to fill out? And I’m not suggesting you offer monetary or other inducements to get customers to fill out the survey. The assumption is that you are surveying customers to gain some insights that will be used to benefit both yourself as well as them. If that is not the case, i.e. the benefits are only for you, then you’re going to have a harder time getting people to spend their time.

   One inducement is to agree to share the survey results with the participants. A lot of people like this as it helps them understand how their opinions and answers compare to those of the larger group. An added benefit is that it can help build a stronger relationship with them and you may be able to have follow up conversations with a subset of the survey participants and derive deeper insights on the subject at hand. Keep a few things in mind:

   • A lot of vendors run customer surveys. You’re competing with those vendors for your customers’ time and mindshare.
   • Make sure the survey topic is relevant and to the point. If the topic resonates with people, they are more likely to consider participating.
   • Web surveys have a notoriously low response rate. In my experience it has been around 5%-7% at best with customer surveys.
   • Your results may vary, but plan for the low end. If you want mostly quantitative data, then a focused web survey may suffice.
   • Phone surveys, while more effort per respondent, will provide better qualitative information than web surveys. They’re also good for quantitative research, so if you have a live person on the phone, why not go for both. If what you need is smaller amount of deep data, phone surveys work well.
   • Paper-based survey may sound so 20th century, but can be very effective tools for gathering large amounts of quantitative and some additional qualitative data. This is especially true if the people filling out the survey can be held “captive” for a while, such as at a user group meeting or other similar event. i.e. they have both the interest AND the time to fill it out.

   I’ve had very good success with paper-based surveys at company user group meetings, with a response rate approaching about 70%! This came with a commitment to share back the results with the user groups at subsequent meetings.

2. How do we know that we have the right questions and are getting the right answers? To begin, I’ll go back to the first couple of bullets that I mentioned in question 1:
   • What are your objectives?
   • What questions do you want answered when you are done? And these aren’t necessarily the specific survey questions you intend to ask, but the key insights you want to get out of the survey.

   The questions you ask must be aligned with the objectives of the survey. What are you going to do with data once the surveys are compete and tabulated? Ask yourself if the questions you are planning on asking will best serve those objectives? If not, then rephrase the questions or ask different questions.

   If there is a lack of confidence on whether the questions you are planning on asking are the right ones, then test out the survey with a small group and see if their answers give you what you need. If so, then you’re set. If not, then use the responses to help shape better questions. Keep in mind that survey results always have margins of error and levels of confidence associated with them. Combined, these are a measure of the statistical validity of the results. In general, the larger the sample size and # of respondents, the high the confidence level and lower the margin of error. I won’t go into the details of this as you can find more info on this on various sites on the web, but you should try to keep this in mind, in case someone decides to challenge the data you collect or the conclusions you draw from the data.

   Overall, you should keep a few things in mind: Surveys are simply one of many data and information collection tools at your disposal. They are not a panacea for gaining true insight and understanding. Use them to get a high level understanding of topics of interest and then, in many cases, drill down a bit deeper with some of the survey respondents to collect better contextual information around the responses. For a Product Manager, it is this contextual information combined with support quantitative data that will help you truly make the case for whatever initiatives you are championing.

Answer from Gopal Shenoy of Product Management Tips: This is a difficult question to answer because there is no one question that will help you choose the best company. Here are the questions I would ask:

1. Why are you hiring a product manager?
2. What does product management do today or what is it expected to do going forward (if you are going to be the first product manager in the company)
3. Who does product management report to?
4. Who determines the future direction of your products – marketing, sales or engineering?
5. How does the company manage customer interaction events such as customer visits, focus groups, customer surveys etc? How often is this done?
6. How would you best describe the company culture?
7. What are the company’s short-term and long-term challenges?
8. What could derail the company going forward?

The answers to above eight questions should allow you to get an overall picture on the role of product management within the company. For more details on how the answers will help you, read my blog article: Unearthing the product management landscape within a company

We are designing a product to run on top of a core platform. Some functionality can be built in to the product, and some can be built into the platform. How do you distinguish between what should be in the product vs. what should be in the platform?

Answer from Michael Hopkin of Lead on Purpose: My definition of a “core platform” is a base on which two or more (usually many) applications run. There are many different purposes for platforms, and there are many out there. In most cases their main purpose is to provide core functionality that some or all of the applications will use. Platforms include functionality such as printing, spell check, network communications, etc.

When developing an application, should you use all the functionality or services on the platform? That depends. The following questions will guide you in making your decision:

• What is the purpose for developing the application? Determine what benefits the platform provides and use the capabilities that are necessary to offer the functionality demanded by the market.
• What functionality does the platform provide? Determine the functionality the platform provides and use the options that will enhance the functionality of the application. Take advantage of the platform components that can add value to the application, if (and only if) implementing them does not exceed time or cost estimates.
• How is the platform received in the market? Many platforms exist on which you can develop applications. When you choose a platform for applications, be sure it’s well received in the market and it’s heading in the right direction. (If the platform is owned by your company you will likely need to use it regardless of its market acceptance.) Carefully compare the direction the platform is headed with the desired long-term outcome of the platform.
• Can you justify the cost? Perform a careful analysis of the cost of building on a platform vs. the cost of building comparable functionality yourself. Most often it costs a company much less to develop their applications on a platform than to develop the same functionality into the application. However, if the platform does not provide the necessary core functionality required by the application, you either need to find a different application or incur the cost to develop the functionality into the application.

When you develop an application on a platform you should use the functionality necessary to meet the application requirements, and if it fits within your cost and time estimates, implement additional functionality that will be useful to your market.

I am a product manager currently living in the United States. I would like to get international product management experience, though I have had trouble finding good resources. I am also not sure of the requirements to work overseas and not sure if the best way is to start with a big international firm or if smaller firms even hire from the US. Also, would I be able to get a job immediately as a product manager, or might it be better to look for a position that is more prevalent, like sales engineer?

Answer from Derek Britton of Micro Focus: The geographic location of the product management role is affected by several factors.

Product Management is a broad discipline and much of the go-to-market and product marketing side needs to be territory-focused, which suggests local geographic support (for multi-nationals) — that’s therefore always an option. The product (technical) side of it is often more closely tied to the centre of development and/or the corporate head offices. So this will affect what Product Management jobs are on offer in the UK, for example, and you will need to focus on organizations where much of the development and/or the corporate HQ is located.

To help you locate possible opportunities, there are some obvious areas to consider:

Frankly (and this is good news), there is very little difference in the PM discipline from a geo perspective. In fact, UK organizations use US-based suppliers for PM training, thereby showing a tendency to rely on US ideas. Additionally, membership of AIPMM and others is a global thing; your US-honed skills are definitely viable abroad.

Of course, we must accept that the US is dominant in terms of size of market, maturity of the discipline, and available jobs. It is probably fair to say that while the economies of Western Europe are significant, the sheer level of choice compared with the US is going to be modest by comparison in any other country. Even this site shows a bias towards US-based subscribers –- there are 3 times more visitors to Ask a Good Product Manager from North American than from Europe, for example. This statistical measurement might explain your lack of success so far in finding anything useful.

But, to reinforce the opportunity, there are huge organizations in EMEA with their own software products arm and therefore the discipline does exist. In UK software you can do a search and find the top firms easily enough. In services, there are some players which are UK based. Both of these categories will invest locally and therefore almost certainly have PM staff needs.

Additionally, the likes of Microsoft, HP, SAP, CA, IBM all have their own vertical, geo and segment specific product lines, all of which need managing – there’s probably some merit in checking out their UK job boards. In the end, your current role and your industry will shape what sort of job you are looking for, what industry it serves, and other attributes; I can only guess the specifics so there is no point me making any particular suggestions.

Perhaps one of the easiest ways to get a decent understanding of the market, however, is to get onside with one of the UK specialist recruitment agencies, many of whom will focus on IT niche skills. You might need to put some investment in to this though, but it will help you determine how serious your aspirations are, and will doubtless give you a better picture of the possibilities. I imagine that a good grounding in PM from a US perspective would be considered quite a marketable skill on a resume (by the way, a resume is called a “CV” in the UK).

How do we deal with budget cuts during hard times, while at the same time keep our ears open to the customers? What are great ways to get feedback of the product remotely?

Answer from Paul Young of Product Beautiful: When budgets are cut, Product Management is no exception. You’ll see less travel opportunities, which can mean less face time with customers and target customers. Keeping your ear to Market is even more important in lean economic times, because customers are less willing to spend on your solutions, and features that are “thrown in” to the product are more than just a waste of resources, they could be a danger to your product or company’s existence! Thankfully, it’s not hard to find very inexpensive ways to connect with the Market, it just takes work and patience.

If you just want feedback on an existing product, there are cheap/free options like GoToMeeting and WebEx that allow you to do webinars and demos. You can use Google Ads, an ebook or white paper to attract an interested audience. You can also tap your customer base. We all have our favorite top 10 customers that we call for feedback; treat them well and they will return the favor. Give them extra attention, expose them to advance betas, listen to their feedback and treat them as an early indicator of things to look for in the Market. Just remember that as your customers, they are going to give you feedback through the lens of the product they are buying from you: “I want a button on this screen,” or “I want feature X.” If you only build for your own customers, you risk missing out on trends in the Market. You need to be talking to target customers.

Depending on the type of product or service you manage, ask yourself – where can I find my target customer? If you’re selling consumer goods, you can probably go down to the local grocery store and observe your potential customers yourself. If you’re selling to IT managers or CIOs, it can be harder – there’s not a grocery store where you can watch these people work…or is there? I recently wrote a post on Product Beautiful about how you can use social networking to connect with your customers. There are millions of blogs out there, and some are being written by your target customers. There are throngs of people on LinkedIn, Facebook, Twitter, and other social networking sites who are putting details about themselves and what is important to them out there for you to see. Google for keywords that people may be writing about and then follow my tutorial for how to connect with them via email – it’s nearly free, only costs you a few minutes of your time, and can potentially connect you with some very valuable people willing to have a conversation.

Other ways you can connect with customers is by win/loss analysis. Keep a database of your win/loss analysis and follow up with the losses after 6-months. Usually by that time the deal is dead and Sales isn’t as uptight about you getting in their way. By now the customer has moved on to something else, which is a great time to talk to them and find out why. You may find out about a key feature that you didn’t think was important.

How do you do competitive & market research in a new market when the companies are private, do not publish prices, and there is little information on products?

Answer from Jeff Lash of How To Be a Good Product Manager: One of the big misconceptions about competitive intelligence is that it requires you to sift through dumpsters, make back-door bribes, and do other sorts of nefarious deeds. In fact, to paraphrase the The Competitive Intelligence Handbook by Richard Combs (sample chapter available), most competitive intelligence information is publicly available:

The percentage most practitioners place on this kind of public information varies from 80% to 90%. Given the amount of information available in our age, this 80% to 90%, if analyzed and presented carefully, can be more than adequate for most needs. The remaining % is insignificant.

So how do you find this information? There is an entire industry (and society) focused on this, so a short answer can not do it justice. Still, here are some simple tips:

• Customers: Customers are a great source of competitive intelligence. Depending on the nature of your product, your customers may use other products at the same time, or may have switched from a competitor. Often they will regularly get contacted by sales representatives for other companies or even evaluate other products.
• Trade shows: These are excellent opportunities to learn more about the competition. Exhibit floors let you mingle with vendors, partners, and customers. Many trade shows have busy periods and quiet periods, the latter occurring when there are associated presentations or speakers. These quiet periods are great for checking out competitor’s booths, making small talk, or gathering marketing materials.
• Personal networks: While companies are of course competitive by nature, in many industries it is common for employees from one firm to have connections to many competitors. In some cases, the major competitors are “revolving doors” where employees come and go on a regular basis. In addition to tapping friends and former colleagues, you can see if there are any connections to the competition through neighbors, relatives, service providers (lawyers, doctors, plumbers, and the like) and others in your extended network.
• Purchase competitive products: Depending on the industry and type of product, it may possible to purchase or use your competitor’s products. While this will not provide a lot of information on the company itself, it will at least allow you to get a good understanding of the product itself.
• Former employees: Similar to personal networks, it may be possible to contact former employees of a competitor. Social networks like LinkedIn and Facebook are excellent for identifying individuals from specific companies.
• Blogs, message boards, and other online forums: The proliferation of user-generated content and “community” sites online has provided a boom for competitive intelligence. There may be vast amounts of information about your competitors online, generated by their customers or even their employees. Besides blogs and discussion forums, venues such as LinkedIn Answers, Twitter, and Satisfaction can also be great sources of information.
• Industry analysts: Most industries have at least one organization providing analysis and consulting specific to the industry. Analysts are usually privy to information before it is publicly announced, and while they are restricted from sharing this with competitors, they can usually comment on general trends or offer analysis after the information is made public.

With all of these sources, normal ethical caveats apply — there are limits to what information people can share, and there are limits to what you can attempt to obtain from people. You never want to put anyone — former or current employee of a competitor, a customer, a friend or colleague — in a situation where they are asked to act unethically or illegally. Still, there is a large amount of information which people will gladly share and can do so ethically. I’ve gotten competitive information from sales reps at trade shows, from competitors on customer visits, from acquaintances at cocktail parties, and from many of the other sources listed above. These are all “fair game” if used properly.

Regardless of how you gather the information, and what information you gather, the important part of competitive intelligence is what you do with that information. Even when the companies are public, prices are widely known, and vast amounts of information is available on the products, the challenge is still the same — to read between the lines, try to figure out what the competition is doing (and is going to do), and use that to adjust your strategy as needed.

I am responsible for two products that use the same underlying code, but I have to plan out the new features. Should I try to get a few upgrades to each product or release upgrades for each product separately?

Answer from Ivan Chalif of The Productologist: Unless the two products are tied together (they interoperate or one requires the other), it’s best to focus on them as separate entities.

The scenario you described is similar to how companies split product development into two discrete functions: platform and application. The platform is the base technology that does all of the heavy lifting and provides the core functions of the software. One or more applications can sit on top of the platform and utilize its capabilities, but are tailored to the specific needs of a particular user.

From your question, it’s not clear if you really have a platform/application setup or if you just have two applications that share some of the code base, but are sufficiently different to be considered separate products. For the sake of this discussion, I’ll go with the latter, since the platform/application model of development is pretty common in enterprise software. Here are a few places to learn more about it:

http://en.wikipedia.org/wiki/Platform_(computing)
http://blogs.msdn.com/mikemill/archive/2007/06/27/what-is-an-application-platform.aspx
http://gigaom.com/2008/06/30/10-of-the-biggest-platform-development-mistakes/

For distinct products that share some or most of the same code base, you should treat each product as discrete and create separate product roadmaps for them. This will provide the appropriate focus and attention that each one deserves. If you keep them on the same roadmap, there will be a tendency to combine or merge them which, if that is not your plan, could hamper the success of one or both of the products. Keeping them together also increases the risk that you will make compromises between the two versions which will dilute the benefit of having distinct products.

By keeping them separate, you can plan for features that address the needs of the specific users of that version. New features and defects can be evaluated on their merits as they relate to the individual product, rather than as a component of the shared software. Tradeoffs will still need to be made, but your focus should be on solving the problems of the users rather than compromising between products.

As for release schedules, a lot depends on your Engineering and QA teams and your release process. One option is to alternate releases so that every X weeks or months you have one release that is focused on a specific product. This allows you to put in new features on a regular basis and puts some defect fixes in that benefit both products. You can fix more defects this way, but the cycles to get them into releases is longer. Another option is to make changes to the common code in one release and then have separate releases for new features to each of the product-specific code bases. This is similar to the platform/application model, and gives you the opportunity to have more frequent releases.

Don’t kid yourself, though. This is not easy and will require some sophisticated tracking by you and the development team to keep things from getting messy. Depending on the size of your organization and product sophistication, it may make sense to move to the platform/application paradigm. That model provides a clear delineation between the underlying shared code base and the application-specific code base.

Additionally, you should also evaluate whether you really want to keep the products separate in the future. It may turn out that keeping the products separate causes more problems than combining them. Using a licensing mechanism, you can have a single version of the software act like two separate products by controlling what features and functions are available in each version of the product. This adds complexity to the software, but makes it much easier to maintain and provides a greater level of flexibility in creating variations of the software for different users/verticals/markets.

We get a ton of suggestions for enhancements to our product. Some of these are legitimate ideas, some not so much. Right now, we don’t have a good way of managing all of these suggestions. Should we immediately throw out all suggestions that seem like bad ideas, or should we try to capture them somehow? And if we do capture them, how do we prevent ourselves from being overwhelmed by them? More importantly, how can we best use this customer input while at the same time not spend all of our time just responding to enhancement requests?

Answer from Roger Cauvin of Cauvin: There are two aspects to this question.

First, how should an organization digest and prioritize enhancement requests? Don’t take enhancement requests at face value. Always probe into what problem the customer wishes to solve with the enhancement. A customer support representative should start by capturing the request as the customer has stated it. But then she should ask the customer, and document, why the request is important to the customer. Later, a product manager may follow up with the customer to further probe the underlying reasons for it.

In the end, you shouldn’t directly prioritize the enhancement requests from the customer, but instead the underlying problems they are trying to solve. The enhancement requests themselves are merely a conduit to understanding the underlying problems and represent suggestions for how to solve them.

Second, what is the best way to capture and manage enhancement requests? Many tracking systems exist for managing bug reports and enhancement requests — some of them are listed on this Wikipedia page.

Don’t assume that a tracking tool will magically make managing enhancement requests easy. How you use the tool determines its effectiveness. Again, of paramount importance is tracing the enhancement requests to the underlying problems they are intended to solve.

We have decided to End of Life a Product from our portfolio as there is another improved product that does the same job and have an upgrade path from the old product. We are a channel driven organization and operate in B2B space. What are the things that we have to have in mind to EOL the product? We are also doing some government deals that take a long time to end/change which involve the product that we are trying to EOL.

Answer from Greg Cohen of 280 Group: There are really a number of factors to consider, such as whether

• the new product will cost less, more, or the same.
• the migration is very involved or relatively transparent to the customer
• there is a cost to migrating. (e.g. Does the customer have to pay the channel partner for migrating?)
• the customer needs to train their staff, rewrite interfaces or other customizations, change any processes.
• the company is willing to support the legacy product for an extended period of time.

Understanding the above would influence the approach. But there is one aspect I will assume and that is:

90% of the current customers are satisfied by the legacy product and do not consider the benefits of the new product worth the effort and/or cost of migrating.

With that, I would offer the following advice:

1. Brief the channel well in advance of any public or customer announcement. And arm them with everything they need to know to address any customer concerns.
2. Focus communications on customer and channel business benefits respectively. Don’t focus on features or benefits to your company. Having some reference customers could also prove beneficial.
3. Meet all contractual obligations and accept the fact that the govt accounts will require longer term planning and execution.
4. Work with each channel partner to manage the timing of each account migration. Thus, this will take dedicated account and project management time. Budget appropriately and develop a consistent and repeatable process. You need to provide the framework for your channel partners and the customer.
5. Depending on urgency of migrations and costs, you might consider offering incentives to all customers and channel partners who complete their migrations by a given date.

What do product managers do for commodity products like toothpaste, pens, pencils, staplers, coffee mugs etc. where customer needs have not changed for ages. How do you differentiate in an overcrowded market?

Answer from Alain Breillatt of Picture Imperfect: Ah, the age old question — how do you survive in a market with slim to zero margins because consumers see no difference between your brand and that provided by competitors A, B, through Y and Z?

The simplistic answer is to use the cheapest raw materials possible, offshore your manufacturing, go for scale in distribution, build tight relationships with your channels, and roll up your competition until you own the market. That used to deliver some success but in the world of Wal-Mart, Costco, private labels, and gads, a bazillion on-line stores, even that is not enough.

Why? Because year after year, for any product that is the same as what you sold them last year, Wal-Mart will say, “Here’s the price you gave me last year. Here’s what I can get a competitor’s product for. Here’s what I can get a private-label version for. I want to see a better value that I can bring to my shopper this year. Or else I’m going to use that shelf space differently.”

So what do you do? Innovate! And by that I don’t mean go brainstorm what the next new pencil or pen or stapler ought to look like. What I mean is you need to reconsider the market you compete in and more closely examine the consumers you are serving.

Let’s walk through one of the examples you outlined and consider how one might differentiate within that market.

Pencils

We’re talking about a writing implement that has been around for over 400 years, the basic form and construction of which hasn’t changed since originally designed back in the 1700s. This should be the ultimate manufactured commodity product! When we think of a pencil inevitably most of us think of the good old standard wooden yellow no. 2 lead pencil with a red (or maybe green) eraser held on top by a compressed aluminum or brass ferrule.

What’s the benefit of the standard pencil? Some people use pencils because they’re cheap and easy to replace if lost. A former boss of mine, a professor, would use pretty much nothing but a no. 2 pencil and by observation I would say that’s because he’s an old creature of habit who wants an erasable writing implement but who also loses them or leaves them behind everywhere he goes. Parents and teachers give children pencils because the impermanence of their marks makes them good for correcting mistakes as well as cleaning up stray scribbles on desks, clothes, and walls. Artists and architects prefer pencils for their ability to sharpen the point in the manner they like and the various textures this facilitates creating on paper. Obviously the lasting power of the wooden pencil is its ability to satisfy these needs and many others.

To put some numbers to that point, consider that in this era of modern technology where the pen followed by the typewriter followed by the word processor supposedly replaced the pencil, approximately 2.4 billion pencils of all types are still sold annually in the United States. The average cheapo private label yellow no. 2 pencil based on a quick check at the neighborhood Staples sells for 99 cents a dozen. In other words, the cheapest wooden pencil available sells for less than a dime a piece. And a pencil is a pencil, right? So how do you ensure consumers buy your brand at a premium price?

The intuitive product manager might think, let’s consider what’s wrong with the no. 2 pencil:

1. You have to keep sharpening it
2. You must have ready access to a sharpener
3. The pencil shortens with every turn of the sharpener
4. It’s a waste of natural resources because you never use the entire pencil (see #3)
5. The wood shavings are messy
6. The shape and diameter make it hard for young and aged hands to grasp leading to writer’s fatigue
7. You keep paying for the container (the wood) when all you really need is the lead
8. It doesn’t offer multiple lead diameters from very fine (.03 mm) to very fat (5.6 mm)
9. You have to carry multiple pencils for various weights of lead
10. The lead point is constantly exposed so the lead marks up whatever it rubs on or else it breaks easily

Given all of these problems the product manager might automatically determine that clearly there is a market for a mechanical pencil and they should start manufacturing those. Perhaps, but doing so requires completely new capabilities from the design to the manufacturing stage and if all you make is wood pencils, a shift like that represents significant capital investments to either build or acquire such specialization. And yet given the continued demand for wooden pencils, there are interesting ways to differentiate within the confines of the original product definition alone — consider special hardwoods, eco-friendly renewable forests, recycled woods, and specialty leads.

It’s important to frame this thought in the triangle of consumer values – sometimes called the Value Mix. Consumers evaluate the benefits they gain from a product across three variables as described below.

This is an important framework to consider since with a commodity product, the functional requirements (wood, graphite, eraser, shape, size) are fairly universally met across available competitive offerings and therefore manufacturers are forced to compete on either economic (a race to the bottom for lowest price) or psychological (appealing to a consumer’s particular desires for esteem or recognition). Ignoring price, this leaves us with a psychological approach that might be supported by functional attributes.

Let’s think about the three groups of consumers discussed above and consider how a pencil manufacturer might effectively target each one of them in a manner that would drive a price premium and brand differentiator.

Teachers

Educators who work in K-12 are a perfect segment for targeting given that pencils and school seem to go together like peanut butter and jam. Consider that in primary education (Grades K-4) and secondary education (Grades 5-12) respectively, women comprise 89% and 63% of the teachers respectively. If women are a primary target, then perhaps aligning your pencil with a cause that they are passionate about makes sense.

For example, selling a pencil that is pink or covered with painted pink ribbons and marketed with a campaign that states a percentage of the revenues for these pencils are contributed to supporting breast cancer research, might be appealing to this group. Dixon Ticonderoga sells just such a pencil and they retail at $4.29 a dozen. That’s a 430% increase just by painting a pencil a different color and aligning your product with a cause.

Children

Young children are going through the process of learning to write and doing so requires significant development of the fine motor skills in their hands. Teachers and parents look for ways to help the child improve those skills and one approach is to increase the diameter of the pencil, thereby making it easier to grasp during the earlier stages of the learning experience.

One way to accomplish this is with one of those rubber triangular sleeves that covers ¼ of the pencil. But an approach that plays to the pencil manufacturer’s existing capabilities is to simply increase the diameter of the wood encasing the pencil and the stick of graphite inside accordingly. Take it one step further and market the pencils as “My First Pencil” and suddenly you have a product that retails for $5.29 a dozen. Now considering that this pencil is 13/32” in diameter versus the typical ¼” diameter pencil, there is an increase in material costs but only by a factor of 2 while your retail price has jumped by a factor of 5.3! That means you’re still making ~300% more in profits on a simple wooden pencil.

Designers/Architects

When you think of this consumer group you realize that functionality is critical to them since the pencil is a key tool of trade and therefore an important part of their work product. But you also realize that their work is all about aesthetics so image has a strong impact as well in what they choose.

Two possible approaches here that both play on the same psychological dimension should be considered. Take a typical pencil, die the wood black, paint it a glossy black, add raised dots create a grip, get rid of the eraser, and suddenly you have a sleek black arrow that looks elegant on the desk or in the hands of the user. It reflects their style and sense of design. And it also sells for $24 a dozen as the Faber Castell “Black”. Even if the materials (graphite, wood, dye, paint) are 400% more expensive, you’ve realized a 2000% increase in profits where the pencil goes from less than a dime a piece to $2.00 a piece.

And if you think that is something, try creating “The Perfect Pencil” which is the combination of fine cedar pencil with SV-bonded anti-break lead in B grade and sporting a soft non-smudging eraser with an aluminum extender (for when the pencil shortens) with built-in sharpener with a high-quality sharpening blade and a sprung pocket clip. The price on this bad boy? Between $75 and $250 for the pencil (depending on where you buy it) gift set which includes the extender and three pencils. And then you can purchase pencil refills at 5 for $50. That’s $10 a pencil. Making it a 10,000% increase just connected to the prestige of a niche focused product. Now granted you won’t find many who are willing to pony up that kind of cash for the Porsche of pencils, but that’s what segmentation is all about.

Hopefully that helps you consider that there are always a variety of options available to the product manager even if they’re dealing with a commodity product. Dixon Ticonderoga and Faber Castell — as the two largest pencil manufacturers — have taken a targeted segmentation approach to their market that allows them to spread widely across their market and then benefit from deep opportunities where they are found.