Product Management Class #1

Mulyadi Oey Jul 6, 2015

Who are Product Managers?

•  Many moved from Engineering to Product Management. – And, also popular, from general business

(MBA, management consulting) and social sciences (psychology, linguistics).

•  People who “manage” product(s) or product portfolio. – Decide how the product looks and feels like

today, and in the future. – Mini-CEO

•  But, really, what do they do?

What do Product Managers do?

Innovation Cycle: A Learning Process

Synthesis (How?)

Abstract Conceptualization

Concrete Experience

       TRANS-FORMING

Insight Generation

Customer Empathy

Idea Generation / Combining and Refining Ideas

Experimentation and Learning

Analysis (Why?)

What do Product Managers do?

•  Sensing: – Understand strategic environment – Evaluate business model – Assess customer and user needs

•  Seizing: – Create new business models – Plan & manage product portfolio – Manage product life cycle – Set pricing strategy

What do Product Managers do?

•  Transforming: – Test options – Lead product teams – Negotiate strategically and influence

Do I Need a Product Manager?

•  Who is (or, are) “owning” the product(s) in your company?

•  After a product / iteration release, who is closely monitoring whether it satisfies your users’ or customers’ needs?

•  Who is leading the process to improve your product(s)?

•  What stage is your company currently in? •  Hiring: “What are my job descriptions?”

Product Management 4 Summary Points

1.  You’re not managing a product. You’re managing the problem it solves.

2.  Your product is only as good as a user’s perspective of it.

3.  Product Managers are neither designers nor engineers.

–  Expert on whether the design & functionality meet the user needs.

4.  It’s not about being a star. It’s about managing a universe.

What Product Management is:

•  Being the heart, mind, and voice of users. •  Facilitating cross-functional teamwork. •  Making product trade-offs. •  Meeting an end-goal with fixed time and

resources. •  Leading people along a product journey.

What Product Management is *not*:

•  Being the most important voice. •  Being the only idea-generator. •  Being a designer. •  Being a programmer. •  Managing QA. •  Optimizing websites.

Product Management: Another View

7 Traits of Successful Product Managers

1.  Communication skills. 2.  Leading without authority. 3.  Learning skills. 4.  Business acumen. 5.  Love for products. 6.  Eye for details. 7.  “Routine” product management skills.

–  MRDs & PRDs, competitive analysis, product roadmaps, defining user experience, etc.

Business Model Language

http://asburyandasbury.typepad.com/blog/2011/03/1000-words-paint-a-picture.html

A business model describes the rationale of how an organization

creates, delivers, and captures value  (economic, social, or other forms of value)

A tool that helps teams describe, challenge, design and invent business models more visually and systematically.

Business Model Canvas

Business Model Canvas: Agenda

•  9 blocks of Business Model Canvas – 20m •  Explore examples of BMC – 10m •  Exercise: build your own BMC – 20m •  Exercise discussions – 10m •  What’s next? – 10m

Business Model Canvas: Agenda

•  9 blocks of Business Model Canvas – 20m •  Explore examples of BMC – 10m •  Exercise: build your own BMC – 20m •  Exercise discussions – 10m •  What’s next? – 10m

Business Model Canvas: The 9 building blocks

Customer Segments (CS)

1. Customer Segments

•  Might be grouped into segments. •  Hopefully, profitable customers. •  Choice of number of segments depends

upon: competition, heterogeneity of customer needs, technology.

–  Mass market, niche market, micro market, mass customization.

Value Propositions (VP)

2. Value Propositions

•  The reason why customers turn to one company over another.

•  Solves a customer problem or satisfies a customer need.

•  A bundle of products and/or services that caters to a specific customer needs.

Channels (CH)

3. Channels

•  Customer touch points. •  Serve important functions such as:

–  Raise awareness about a company’s products and/or services.

–  Help customers to evaluate a company’s value propositions.

–  Allow customers to make a purchase. –  Deliver a value proposition to customers.

•  E.g. direct (sales force, web sales), indirect (partner stores, wholesaler).

Customer Relationships (CR)

4. Customer Relationships

•  Describes the type of relationships with specific Customer Segments.

•  Driven by 3 motivations (might occur at different period:

–  Customer acquisition –  Customer retention –  Boosting sales (upselling)

•  E.g. personal assistance, self-service, communities, co-creation.

Revenue Stream (R$)

5. Revenue Stream (R$)

•  Cash that a company generates from each Customer Segment.

•  “For what value is the customer willing to pay?”

•  E.g. asset sale, usage fee, subscription fee, lending / renting / leasing, licensing.

Key Resources (KR)

6. Key Resources

•  The most important assets to make a business work.

•  Depends on the type of business. •  E.g. physical, intellectual, human, financial.

Key Activities (KA)

7. Key Activities

•  The most important things to do to make a business work.

•  Depends on the type of business. •  E.g. production, problem solving, platform /

network.

Key Partners (KP)

8. Key Partnerships

•  The network of suppliers / partners to make a business work.

•  4 different types: –  Between non-competitors. –  Between competitors (coopetition). –  Joint ventures to build new businesses. –  Buyer-supplier relationship.

•  E.g. optimization & economy of scale, reduction of risk, resource acquisition.

Cost Structure (C$)

9. Cost Structure

•  Describes the most important costs incurred to operate a business.

•  2 broad classes: cost-driven vs. value-driven. •  Might fall into these 4 characteristics:

–  Fixed costs –  Variable costs –  Economies of scale –  Economies of scope

Business Model Canvas: Agenda

•  9 blocks of Business Model Canvas – 20m •  Explore examples of BMC – 10m •  Exercise: build your own BMC – 20m •  Exercise discussions – 10m •  What’s next? – 10m

BMC: Freemium Pattern

Infrastructure development

& maintenance

Platform

Fixed cost Cost of

service for free users

Free basic service

Free users (large base)

Cost of service for *premium*

users

Premium service

*Premium* users (small

base)

Free basic services

Paid *premium* services

BMC: Skype

Software development

Software development

Free internet & video calling

Global Internet

users

Cheap calls to phones

(SkypeOut)

People who want to call

phones

Free

SkypeOut pre-paid / subscription

Software

Software developers

Complaint management

Payment providers

Distribution partners

Skype.com

Self service

BMC: Bait & Hook Pattern

Production and/or service delivery

Patents brand

Production & services

Subsidizing of “bait” product

“Bait” product

Customer segment

“Hook” product / service

1x purchase of “bait”

Repeat purchases of “hook”

BMC: Multi-Sided Platform Pattern

Platform

Platform management

& development

Subsidizing of “bait” product

Value proposition

#1

Value proposition

#2

Revenue flow #1

Revenue flow #2

Service provisioning

Platform management

Customer segment #1

Customer segment #2

Value proposition

#3

Customer segment #3

Revenue flow #3

Business Model Canvas: Agenda

•  9 blocks of Business Model Canvas – 20m •  Explore examples of BMC – 10m •  Exercise: build your own BMC – 20m •  Exercise discussions – 10m •  What’s next? – 10m

Exercise: build your own BMC

•  Divide into 2 groups: –  Group 1: People who is currently working

together in a same company / organization (max. 3 people).

–  Group 2: Not currently in a same company (max. 2 people):

•  Have a business idea. •  Don’t have a business idea. It’s OK!

•  “Coaches” are welcome.

Business Model Canvas: Agenda

•  9 blocks of Business Model Canvas – 20m •  Explore examples of BMC – 10m •  Exercise: build your own BMC – 20m •  Exercise discussions – 10m •  What’s next? – 10m

Exercise discussions

•  Group 1: Did your peers have the same understanding about the business?

•  Group 2: Did you discover more clarity about your business? Can you explain / pitch better?

•  Use colors to represent segments.

BMC Example: Wireless service provider

Hi-volume data users

Phone only users

Engineer-ing

Retail stores

Ease of integration

and support

Low cost, always works, phone service

Other phone operators

Applica-tion providers

Engineers

Salespeopl Customer

service reps Engineer-ing Bundled

monthly fee Prepaid

Direct Salesforce

24/7 support

Sales, customer service

Phone vendors

Tell me about this business (strategy) #1

Tell me about this business (strategy) #2

Tell me about this business (strategy) #3

Tell me about this business (strategy) #4

Business Model Canvas: Agenda

•  9 blocks of Business Model Canvas – 20m •  Explore examples of BMC – 10m •  Exercise: build your own BMC – 20m •  Exercise discussions – 10m •  What’s next? – 10m

The value of using BMC

•  Understand the essence –  Visual language, capturing the big picture,

seeing relationships. •  Enhance dialogue

–  Collective reference point, shared language, joint understanding.

•  Explore ideas –  Idea trigger, play.

•  Improve communication –  Create company-wide understanding, selling

internally / externally.

What’s next?

•  Share your BMC. –  Depending on your situation, you might want

to “re-package” your BMC.

•  Success stories? E.g. Provisi Education (Indonesia)

Share your BMC

Share your business model canvases with your peers / colleagues Identify issues, opportunities, gaps in knowledge Fix colors as you share, if needed

Thank You!

•  Connect on LinkedIn: – https://www.linkedin.com/in/oeymulyadi – Write a recommendation, for Indonesia

Product Management Consortium.

•  Fill out the 3-minute feedback form / survey. •  Spread the words, share what you’d learnt

today.