Making The Right Strategic Choices in Product Portfolios

#RallyON15 ©2015 Rally Software Development Corp. All rights reserved.

Rich Mironov

Making the Right Strategic Choices in Product Portfolios [email protected]

•  Veteran product manager / exec / strategist •  Consult on organizing Agile product organizations •  Interim VP product management / CPO

•  Six startups, including as CEO / founder •  “The Art of Product Management” •  First product camp, Agile Alliance

product track chair

About Rich Mironov

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

•  How many of you report up through engineering, development, or IT?

•  …Marketing or product / portfolio management? •  …Are product owners or product managers? •  …Responsible for market / business validation? •  …Able to veto products or projects?

Audience Check


For revenue software and software-enabled companies: 1.  Validation and strategy should

precede development 2.  Organizational behaviors shape

strategic decision-making 3.  Explicit portfolio allocations

enable feature-level prioritization

Agenda

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•  Make money by shipping market-winning software •  Software profits are all about scale

•  $5M for first customer ship, $0 for the next 10,000 units

•  No company ever has enough development capacity •  Segmentation is strategic art of choosing similar

customers who want same solution (product) •  Can’t let any single customer’s opinion dominate

Revenue Software Companies and Software-Assisted Companies


There’s nothing more wasteful than brilliantly

engineering a product that doesn’t sell.


•  Too little agility at strategic / portfolio level? •  Annual budget, six-month project review cycle •  Full waterfall requirements / specs / designs •  Process-bound, uncompetitive, products always late •  Our mean time to decide > competitor’s mean time to ship

•  Too much (overused) agility? •  ADHD / shiny object: initiatives change monthly •  Weak validation, business case, pricing, competitive info •  Many projects abandoned late in cycle

•  First a product / business problem, then an engineering problem

Strategic Agility: Critical Product Management Issue


Faster Cars Need Better Drivers


Product Success Food Chain


Is this a good problem to solve? (product mgmt)

Do we have a good solu=on design?

(dev, UX, QA, support)

Can we implement efficiently, agilely? (program mgmt)

Can we go to market and bring in revenue? (marke7ng, sales)

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%

*Within engineering scope From 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


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

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

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

Organizational Challenges To Strategic Product Thinking


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

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

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

Portfolio Planning

14

•  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 R&D 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?

Portfolio Strategy = Forcing Hard Trade-offs


•  “QA and support teams can sort P1 / P2 bugs any way they like, using WSJF or any other method. Max 310 story points in Q3.”

•  “Performance improvement goal is 65% faster transaction processing. Architect leads story writing.”

•  But customer-visible features are heavily lobbied and highly political. Product management needs to be development’s heat shield.

Allows Decentralized Decision-Making


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

•  $2M+/year burn rate creates its own momentum

•  Then frequent prototypes and early versions

Intellectually Honest Validation (Lean Tools)


•  Must have product strategy / product management •  Hire for experience, not convenience

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

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

•  Build a deeply agile development capability

Takeaways


#RallyON15 ©2015 Rally Software Development Corp. All rights reserved.

My next three challenges / three big open questions: 1. Identifying full-time owners for portfolio strategy 2. How to (efficiently) grow market-facing skills 3. Justifying adequate product / portfolio headcount

Rich Mironov [email protected]

Thank you

Contact

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

RichMironov

@RichMironov

[email protected]

+1-‐650-‐315-‐7394

Technology

Making The Right Strategic Choices in Product Portfolios