Making Hard (Strategic) Decisions about Products and Portfolios

Making Hard (Strategic) Decisions about

Products and Portfolios

Rich Mironov 20 Aug 2015

© Rich Mironov, 2015

•  Veteran product manager / exec / strategist •  Business models, agile, organizing product teams

•  Six startups, including as CEO/CPO/founder •  “The Art of Product Management” •  Product Camp, unabashed

product management bigot

About Rich Mironov

2 w w w . M I R O N O V . c o m

1.  Software profits are all about scale •  $M’s for first customer, $0 for next 1000 customers

2.  No company ever has enough development capacity •  Demands ruthless prioritization at every level

3.  You can’t outsource your strategy •  To spreadsheets or customers

4.  Segmentation is strategic art of choosing customers who want same solution

Software Laws of Gravity


There’s nothing more wasteful than brilliantly

engineering a product that doesn’t sell.

w w w . M I R O N O V . c o m 4

•  Users understand problems, but misdesign solutions •  Have we asked enough people / the right people? •  Watch for confirmation bias •  Prototypes and early versions •  …Before starting full-scale development

•  $M burn rate creates its own momentum

Intellectually Honest Validation (Lean Tools)


•  Validation and strategy (should) precede development

•  Organizational behavior shapes strategic decision-making

•  IMHO, lean principles easiest to apply to features (or groups of like items), not portfolios

What Does This Have To Do With Product/Portfolio Strategy?


Commercial Software Failure Modes*


Undifferen?ated or poorly posi?oned

15%

Marke?ng/Sales/Channel failures

25% Late

Delivery 15% Poor Quality

10%

Wrong problem, wrong solu?on or product

35%

*In my personal experience

Most of the success / failure of a product is determined before we

pick our first developer or fill out our first story card


•  Business value error bars >> engineering error bars •  Blending of

•  Promises of future revenue •  Promises of future operational savings •  Promises of future development efficiencies (tech debt) •  Quality forced onto a linear scale •  Simplistic models of buyer behavior •  Politicking

•  Allocating our scarcest, most valuable resource •  Someone (some team) must force-rank programs •  Can’t delegate to spreadsheets or WSJF

Business Value: Slightly Estimatable


•  Limited development resources = household budget •  Too many expenses: rent, food, repairs,

entertainment, college fund, property taxes, Girl Scout cookies…

•  Kids Execs don’t remember what we spent committed to yesterday

Portfolio Planning

11

•  Hard to attribute success / failure •  Sales teams paid to subvert

corporate goals •  Revenue estimates have huge error bars •  Executives don’t believe in mutually

exclusive development choices •  Shiny objects, confirmation bias, groupthink •  Politics and big swinging budgets

Organizational Challenges To Product/Portfolio Thinking


•  Hard to rank-order unlike items •  Where does this bug go versus minor features? •  A one-off customization versus more DevOps work?

•  Instead, group similar requests •  Which two features will we put into v6.5? •  P0, P1, P2, P3… •  We can fund one audacious, long-term program:

teleportation or synthetic petroleum

•  Cross-bucket trade-offs reflect our biases

Prioritizing Within Buckets



Typical Commercial Software Company’s Development Budget*


Features for current release

50%

Quality (refactor, test automa?on)

15%

Engineering overhead, 10%

Big future bet, 5%

Sales one-‐offs, non-‐roadmap

20%

*In my personal experience

Varies with Growth Stage

Current release

50% Quality 20%

Eng overhead

5%

Sales one-offs

25%

Current releases/features

35%

Quality 35%

Future bet (M&A)

5%

Eng overhead 15%

Sales one-offs 10%

v1.0 Software startup

Mature software (post-innovation)


•  This quarter, how should we spend our precious feature-focused story points? •  70% on deployability, 20% on cost reduction?

-or- •  60% on scaling, 30% on hardware reliability?

•  What was our actual spending last quarter?

•  What portion was “unplanned” or sales interrupts?

Product-Level Strategy = Forcing Hard Trade-offs


Portfolio-Level Trade-Offs


•  How many fully funded products/projects? •  Major opportunity gets new BU? •  Investment horizons (H1/H2/H3) •  Platforms, cross-product

integration •  Corporate customers/

lifetime value Yardstick: $1M/year/developer

•  Can’t outsource product/portfolio strategy •  Bottom-up planning insufficient, esp. post-v1.0

•  Validation before full development •  A month of good market input might save $2M in pivots

•  Set product-level and portfolio-level spending allocations •  One-off choices trend in same direction

•  Deeply agile development is still critical

Takeaways


Contact

Rich Mironov, CEO Mironov Consulting 233 Franklin St, Suite #308 San Francisco, CA 94102

RichMironov

@RichMironov

[email protected]

+1-‐650-‐315-‐7394