Product Management Tutorial - Vector: Software · PDF fileProduct Management Tutorial © 2016, ... Huawei, Hyundai, IBM, Lufthansa, Munich RE, ... This training stimulates good product

© 2016, Christof Ebert, www.vcs.com. All rights reserved. Any distribution or copying is subject to prior written approval by Vector. V1.0 | 2016-09-13

Dr. Christof Ebert, Vector Consulting Services

Product ManagementTutorial


… supports clients worldwide in improving their product development and IT and with interim management

… with clients such as Accenture, Audi, BMW, Bosch, Daimler, Ford, Huawei, Hyundai, IBM, Lufthansa, Munich RE, Porsche, Siemens, Thales, Toyota and ZF

… offers with the Vector Group a portfolio of tools, software components and services

… is as Vector Group globally present with 1500 employees and well over 300 Mio. € sales

www.vector.com/consulting

Vector Consulting ServicesWelcome

Railway

IT & Finance

Automotive

Aerospace

Industry

Medical

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Dr. Christof Ebert is managing director at Vector Consulting Services.

He supports clients around the world to improve product strategy and product development and to manage organizational changes. Prior to that, he held global management positions for ten years at an IT and systems market leader.

A trusted advisor for companies around the world and a member of several of industry boards, he is a professor at the University of Stuttgart and at Sorbonne in Paris. He authored several books including the most recent “Global Software and IT” published by Wiley.

Instructor, Author: Dr. Christof EBERTWelcome

[email protected]

www.vector.com/consulting3/63

© 2016, Christof Ebert, www.vcs.com. All rights reserved. Any distribution or copying is subject to prior written approval by Vector. V1.0 | 2016-09-13Christof Ebert, www.vcs.com. © 2016, Christof Ebert, www.vcs.com. All rights reserved. Any distribution or copying is subject to prior written approval by Vector. V1.0 | 2016-09-13

Welcome

Motivation and Concepts

Product Management – Strategy

Product Management – Concept

Product Management – Development

Product Management – Market Entry

Product Management – Evolution

The Successful Product Manager

Examples and Case Studies

Summary

Outlook

Agenda

You miss 100 percent of the shots you don't take.

—Wayne Gretzky4/63


… Understanding MarketsMotivation and Concepts

What do customers really expect?

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… Delivering ValueMotivation and Concepts

Always7%

Often13%

Sometimes16%

Rarely19%

Never45%

Quelle: Ebert 2012; Standish Group Study Reported in 2003 Chaos Report.

How many of delivered features are seen as valuable?

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Products need to continuously improve Innovation, value orientation and customer benefits

Optimal usage of limited resources

Competition, globalization, commoditization

But: Too often we think technology and too seldom business

1. Insufficient value orientation

2. Unclear strategy

3. Lack of discipline

Why Do We Need Product Management?Motivation and Concepts

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A deliverable which creates a value and an experience

A bundle of benefits: Customers don’t buy products, they seek to maximize benefits

Can be a combination of systems, solutions, materials and services delivered as is or as a component for another product

What is a Product?Motivation and Concepts

Goods

Services Ideas

Competences

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The iPhone is a mobile phone with appealing design and a secured supply chain for applications, content and payment.

Product management excellence:

New business model. Redefine an already existing market with many incumbents. Create an ecosystem. Premium for apps and content downloads. Profits are immediately used to innovate and thus generate new needs in short timeframes.

Reliable technology. It is not about new technology but about improving of what is already around.

Innovative marketing. Make the product cult. Based on continuously updated fashionable devices.

What Is a Winning Product?Motivation and Concepts

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Factors that CEOs consider relevant for business success

What Makes a Winning Product?Motivation and Concepts

Source: Koenig, Study on business success with 107 companies; McKinsey 2009

Very important Irrelevant1 2 3 4 5

Product qualityPerception of novelty

Market needs

Customer focusPrice

Marketing

Market introductionSales

Channel managementCollaboration R&D and Marketing

Innovation controllingGovernment funding

Budget

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Value orientation: Ca. 50% of all functions in a product are not used; only 20% of all functions actually deliver value

Improved quality: 80% of all defects detected in test and 43% of all defects in field result from insufficient requirements.

Cost reduction: Typically 5% of effort goes into product management. Doubling this effort reduces life-cycle cost by 20-40%.

Benefits of Product ManagementMotivation and Concepts

Product Management is a key success factor.Sources: Ebert 2014, Standish Group 2009, Univ. Karlsruhe 2005, IAG Business Analysis Benchmark 2008 (103 companies, avg. 3 Mio US$ project volume)

Project time

Target

Professional

Insufficient

20-40% efficiencyimprovement

potential

Projectcost

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ChallengesMotivation and Concepts

“Competition already has it.”

“We Need it NOW!”

“Reduce cost!”

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“Bermuda Space” Sales

“Sell today and cash in the bonus – agree it tomorrow.”

Marketing“We know what our customers want! We told ‘em so.”

Engineering“If the others would just be quiet. Our technology will sell itself.”

Product management“I am the only one understanding all details – and that‘s how it should be.”

Reasons for FailureMotivation and Concepts

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Lack of strategy (markets, customers, products, technology).

Insufficient understanding of the market (customer needs, competitors, market mechanisms, supply chain, service).

Poor marketing ("product will sell by itself").

Unclear roles and responsibilities.

Ad-hoc communication and open conflicts.

No knowledge and pursuit of the benefits and ROI.

Inadequate project management, no control.

Missing or fragmented decisions (e.g., capacity, project start)

Typical Failure PointsMotivation and Concepts

Source: Vector Consulting Services own data. R. G. Cooper: Winning at new products. Perseus Books, New York, 2001.

Too often we reduce product management to technology

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Product management is the management of a product (incl. solution or service) over its life cycle with the objective of generating the biggest possible value to the business.

The product manager acts as a “business manager of a product” Takes accountability for the product’s success end to end Understands market needs and positions the product Defines business case, gets money to invest and delivers ROI Launches and oversees various projects Positioned in middle management Exhibits strong strategic and operational skills Reaches his objectives without direct line organization

What is Product Management?Motivation and Concepts

The Product Manager is the champion who wants the product's success and will reach it.

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The success of any product depends on skilled and competent product managers.

It means implementing a winning business case. Product management includes strategy planning, requirements development, release planning, lifecycle management and leading an effective multi-functional product team.

Product management is complexThere are many stakeholders, many responsibilities, tons of information to gather and analyze, and no formalized education or body of knowledge.

Product Management: ScopeMotivation and Concepts

Our ambition: Make product managers successful. 17/63


Product Management in the Enterprise


Objectives,

policies,

alignment

Results, adjustments

Results

Enter-prise

Businessunit

Product line / department

Projects

Strategic management

Project management

Product management

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Success = Right products

(solutions) at the right moment for the right markets.

Good product management will gradually develop. Do not wait until all conditions are perfect. They will never be.

Success as a Product ManagerMotivation and Concepts

This training stimulates good product management.The implementation requires initiative and willingness

to proactively drive necessary change.19/63


Value CreationMotivation and Concepts

Value

Understandneeds and

buying criteria

Create and communicate

value

Develop and deliver value

Sustain and improve value

Sales,Marketing

CustomerMarketing, Sales

Product Management,R&D

R&D,Product Management

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Product Management and ProjectsMotivation and Concepts

Development project(time-bound)

Execution

Maintenance project(time-bound)

Product management(without a finite time limit; includes many projects)

Strategy Concept EvolutionMarket entry

Development

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Dedicated champion for the product and its interfaces

Strategic focus for product and technology evolution

Internal competition of products with clear rules

Pool of excellent managers in the enterprise

Better performance …

The Benefits of Product ManagementMotivation and Concepts

Sources: Ebert, C.: The Impacts of Software Product Management. The Journal of Systems and Software. 2007. Cooper, R.G. et al: Benchmarking Best NPD Practices: Research - Technology Management; Part I: Jan. 2004, pg. 31, Part II: May 2004, pg. 43; Part III: Nov. 2004, pg. 43. Accessible via: www.apqc.org.

Good product management Accelerates market introduction by 20-30% Reduces defects and delays by up to 80% Improves customer satisfaction by 20% Reduces cost of rework and repeated agreements cycles

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Product A product (lat.: produco = to create, deliver)

is an economic good (or output), which is createdin a process that transforms product factors (or inputs) to an output.

It creates a value and an experience to its users. A product can be a combination of systems, solutions, materials and

services delivered internally (e.g., inhouse IT solution) or externally (e.g., SW application) as is or as a component for another product (e.g., IP stack).

Service Intangible, temporary product that is the result of co-creating value by at

least one activity performed at the interface between the supplier and customer and that does not imply a change of ownership.

Examples: Consulting, installation, training, maintenance, customer-specific adaptations.

Service as a product lifecycle phase encompasses all types of activities intended to maintain or improve the value of a product.

Terminology – 1Motivation and Concepts

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Product managementProduct management is the management of a product (incl. solution or service) over its life cycle with the objective of generating the biggest possible valueto the business.

Project managementThe goal-oriented and systematic application of knowledge, skills, tools, and techniques to project activities in order to meet or exceed stakeholder needs and expectations from a project.

Program managementAchieving a shared objective with a set of related projects. Historically related to a set of projects for a single customer.

Portfolio managementA dynamic decision process aimed at having the right product mix and performing the right projects to implement a given strategy. It evaluates all projects in their entirety with respect to their overall contribution to business success.


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Business CaseAn assessment of the costs and benefits associated with a proposed initiative. As opposed to a mere profit-loss calculation the business case is a "case" which is owned by theproduct manager and used for achieving the objectives.

Business PlanPlan that details the strategy of a product or an entire enterprise. It describes the execution of a product vision in a defined operational scenario. The business plan includes the business case.

Return on InvestmentThe tangible outcome or profitability of an investment measured in business measurements (e.g., money).

Sunk CostAll expenses incurred before the decision at stake will be made. A paradigm that prevents the bias of decisions due to past expenses, which are of no future value.

Net Present ValueCurrent value of all future expense and income considering a realistic interest rate with the today's ("present") date as a common reference point.


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The successful product manager...

Is responsible for the product and creates value –in the own company and for the customers

Develops a vision and implements it successfully

Does not sell, but helps the customer to buy

Understands and defines the product, its market, and what value the product brings to the customer

Speaks the language of the customers, the competitors, the engineers, the designers and its management

Knows the relevant technologies, data, methods and tools

Knows when and how to say "No" in order to successfully implement its strategy and objectives

SummaryMotivation and Concepts

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Welcome









Summary

Outlook

Agenda

Begin with the end in mind.

—Steven Covey27/63


Understand the real needs (business case of the customer), the environment and the user on the client side. Develop solutions to these needs Commercial analysis (competition,

pricing, segmentation) Technical Analysis (feasibility,

solutions) Identify critical success factors

Results: Strengths, weaknesses,

opportunities and threats are understood.

Important customers, markets and competitors are identified.

Key deliverables: Business plan, product vision, marketing plan

StrategyProduct Management – Strategy

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The assessment of market attractiveness helps in competition analysis (e.g., nightmare situations, scenarios)

Competition and Market AttractivenessProduct Management – Strategy

Rivalrysmall high

Competitors, domain

1 2 3 4 5

Risk of substitutionsmall high

Alternative products,new solutions

1 2 3 4 5

Threatening potentialsmall high

External factors, society, laws

1 2 3 4 5

Negotiation powersmall high

Suppliers

1 2 3 4 5

Negotiation powersmall high

Clients

1 2 3 4 5

Risk of market entrysmall high

New entrants

1 2 3 4 5

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SWOT of Your CompetitorsProduct Management – Strategy

Strengths Weaknesses

Opportunities Threats





Competitor A Competitor B



Competitor C

Consolidation(Your own SWOT for your company or product)

Goals:Attack instead of being attacked, offer added value, introduce new rules, force your competition into defense mode.

Attackplan, addedvalue

New rules Defense plan

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How Do Buyers Decide?Product Management – Strategy

The purchase decision is taken PRIMARILY based upon an expected FEELING (experience)!

No, but:

FunCoolWay of living

No, but:

FamilyExcursionsSafety

No, but:

AdventureIndependence

A sports vehicle?

A Pick-up Truck?A Mini Van?

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Welcome









Summary

Outlook

Agenda

Plans are nothing.Planning is everything.

—Dwight D. Eisenhower32/63


The product needs an ambitious but realistic plan. Competitive advantage, profitability Less surprises

Speed should not happen at the expense of good design. Balance between business goals,

estimation and planning Do not shorten critical activities;

rather optimize the critical path. Too much time pressure will reduce

quality and productivity.

Results: Business Case Product definition, requirements Committed planning (aggressive but

realistic; concrete responsibilities)

ConceptProduct Management – Concept

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Requirement A condition or capability needed to solve a problem or achieve an

objective There are different types of requirements; applicable recursively

Requirements and SolutionsProduct Management – Concept

Market requirements /Customer / user / businessrequirements / goals / needs

Product requirements /Features / SLA / service and system requirements

Component requirements /Software requirements

Problem space

Solution space

Why?

What?

How?

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Goal: Optimized scope of all requirements (Kano model)

Approach: Base factors should be

evaluated on their value. „Me too“ requirementswithout tangible value make no sense.

Performance factorsshould be individually evaluated. This is what customers pay for.

Excitement factors are determined per market and target segment. They directly impact the buying decision.

Clarify the Value of a Requirement with the Kano ModelProduct Management – Concept

Basic factors

Performancefactors

Excitementfactors

Completion of features

Customersatisfaction

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Welcome









Summary

Outlook

Agenda

Most companies don't really believe they can make a better product.

—Ely Callaway36/63


Product management needs a reliable and disciplined product development.Strengthen ownership and reliability.

Success factors: More understanding of the business,

less love of technology Delegation, discipline and

responsibility Efficiencies and customer business

processes are understood Transparent project and risk

management - without micromanagement

Solid understanding of technology, in order to decide

Results: Motivated team Reliable results

DevelopmentProduct Management – Development

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Welcome









Summary

Outlook

Agenda

I cannot give you the formula for success, but I can give you the formula for failure – which is:

Try to please everybody.

—Herbert B. Swope38/63


The market entry influences the perceived benefit.The value of a product depends on the correct market entry.

4 +1 P: product, place, price, promotion, performance

Solution orientation: The product must solve customer problems.

External influences: market shifts, new competitors, changes in laws constraints, new technologies.

Results: Successful market launch of the

product Coordinated communication Optimized pricing and financial

management Preparation for evolution, i.e.,

service, partners and networks

Market EntryProduct Management – Market Entry

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Welcome









Summary

Outlook

Agenda

If we don’t take care of our customers…somebody else will.

—Anonymous40/63


Evolution increases and gets the value of a product. Evolution typically consumes 70-

80% of the life-cycle costs. Plan carefully and in advance.

Service is a product. Consider service to create value and worth as a conservation measure.

Check how to use services to tie existing customers and how to attract new customers?

Consider legal aspects (accounting, tax, governance, risk management, product liability).

Results: Service plan for market entry and

during the evolution Roadmapping and detailing of the

product evolution Improved customer loyalty and

customer satisfaction

EvolutionProduct Management – Evolution

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Welcome









Summary

Outlook

Agenda

Leadership is the process of creating an environment in which

people become empowered.

—Gerald M. Weinberg42/63


Roles with Clear ResponsibilitiesThe Successful Product Manager

• Asks what to make and how to make it

• Ensures it will make business sense

• Understands how it fits customer needs as a solution

• Defines roadmap (be-yond a single release). Determines what to innovate or kill.

• Responsible for all aspects (value chain) of a product or solution following the life-cycle

• Leads teams with various functions during the life-cycle

Product Management

• Asks how to best sell it• Ensures it will make

market and customer business sense

• Understands the market architecture and influencing factors

• Understands the customer need

• Communicates content, functionality as a value proposition

• Drives the project plan for sales and marketing

• Closely cooperates with sales to assure adoption

Results champion,embedded CEO

Market champion

ProductMarketing

• Asks how to best execute a project or contract

• Ensures project is executed as defined

• Agrees technical details, mitigates risks and resolves conflicts

• Business and customer responsibility for a commercial project

• Selects processes to best fit the business model

• Leads various technical, supplier, and service teams to achieve a shared goal

ProjectManagement

Implementation champion

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Welcome









Summary

Outlook

Agenda

Unless you try to do something beyond what you have already mastered,

you will never grow.

—Ronald E. Osborn44/63


Environment Major supplier of communications solutions. Product management had been formally introduced by building the

competence, training, coaching and carefully reviewing progress. Introduction happened per business division but always following the same 3-phase approach.

This study takes result from the first business unit that had fully finished this introduction process. Data taken from project and PLM reporting in the corporate history database.

Change management approach Phase 1: Foundations Phase 2: Pilot Phase 3: Roll-Out

Case Study: Growing the Product Management CompetenceExamples and Case Studies

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Case Study: Product Manager Sample Competence ProfileExamples and Case Studies

0%

50%

100%Strategy

Leadership

Collaboration

Self management

Communication/Negotiation

Maturity

Technology capability

Innovation/Change

Marketing

Entrepreneurial Acting

TargetIndividual

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Case Study: Data PointsExamples and Case Studies

Product management deployment phase

# Pro-jects

Min size [PY]

Max size [PY]

Average delay

Average duration

Average defects

(1) Foundations 47 0.1 346 100% 100% 100%(2) Pilot 55 0.1 84 25% 87% 30%(3) Roll-Out 76 0.1 91 15% 64% 18%

Source: Data from 178 industry projects from telecommunication industry over a period of three years throughout which the product management role and competency was defined, deployed and improved. Note that the graphs show regression lines based upon least squares and not averages.

Delays vs. deployment phases

0%

100%

200%

300%

1 2 3

Delays (% of duration)

Deployment phase

Duration vs. deployment phases

0%

100%

200%

300%

1 2 3

Duration (Baseline = 100%)

Deployment phase

Defects vs. deployment phases

0%

100%

200%

300%

1 2 3

Defects (Baseline = 100%)

Deployment phase

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The stepwise introduction of a product management competence yielded substantial performance improvements.

Cycle time in the business unit was reduced by 36% compared to the initial baseline.

Delays and quality at handover improved by over 80%.

Observations from the change: The techniques can be incrementally introduced to business units, thus

reducing the change impact (i.e., no big bang).

Product managers and their product core teams (notably engineering and marketing) accepted the clarified and strengthened product management role.

They have more impact and see better results.

Case Study: ResultsExamples and Case Studies

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Welcome









Summary

Outlook

Agenda

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1. Begin with the end in mind

2. Drive your product like a „Mini-CEO“

3. Lead the core team

4. Understand markets and customers

5. Create needs

6. Deliver value

7. Optimize top line and bottom line

8. Manage innovation

9. Institutionalize clear and lean processes

10. Never be satisfied

Critical Success FactorsSummary

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Quote from a ClientSummary

Source: BU VP from ICT, Systems industry who had successfully introduced a standardized role and business process for product management. She faced a big business benefit from this change.

“Product Management has a pivotal role for us. They are the glue that brings together Operations, Marketing and Engineering. Product Managers must have a 360-degree view of their company's operational activities while keeping a strategic view on product opportunities and strategy.

“Given these responsibilities, product manager skills sets are diverse, comprehensive and challenging. And the investment to development of these skill sets is a priority.

“We have placed a high value on identifying and communicating the role and then develop our product management teams.

“We have seen a clear return on investment in product management, which is concretely documented in a growing and profitable revenue stream. We have seen the benefits of product management in terms of reduced delays and faster product acceptance in the market.

“The benefits of investing in our product managers competence building has far outweighed the cost.

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Welcome









Summary

Outlook

Agenda

Sometimes you have to stop and smell the roses.

—Dogbert52/63


Global Software and IT

Christof EbertSecond extended Edition, Wiley, 2011 Pre-order discount: http://bit.ly/cSjZgD

Summary of the author’s first-hand experience and expertise, this book offers a proven framework for global software engineering.

"This book stands out as the best source of information on distributed software development. Seldom do we see a book with the concepts completely backed by industry experiences and views. Software developers and managers benefit from the broad case studies."S M Balasubramaniyan, Vice President, Wipro Technologies

Global Software and ITOutlook

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Competitive Strategy

Michael E. PorterFree Press, 1998 (continuously reprinted)ISBN: 0684841487

The single best introductory book to strategy and strategic management. The book offers help in stating the right questions and therefore understand markets, behaviors and competitors. Most relevant, it shows how to successfully compete. The only disadvantage is that examples are not easily portable to new domains.

Strategy and MarketsOutlook

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Strategy Safari: The Complete guide through the wilds of strategic management

Henry Mintzberg, Bruce Ahlstrand, Joseph LampelFinancial Times, 2001ISBN: 978-0273656364

An overview on the contemporary topics and thoughts in strategic management. The authors try to summarize thoughts, structure and relate them to each other and therefore help readers to identify which approach is most suitable to individual needs. Lots of useful benchmarks.

Strategy OverviewOutlook

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Blue Ocean Strategy

W. Chan Kim, Renee Mauborgne McGraw Hill, 2005ISBN: 978-1591396192

A book that goes beyond what we are used to. Instead of the traditional approach of identifying weaknesses of competitors and then fight them (so-called “red ocean strategy”), the authors offer insight how to develop fully new business proposals and products. It is about idea generation, bringing innovative products and identify market segments that had not been approached so far.

Competitive Advantage Without the WarOutlook

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The Future of Competition. Co-Creating Unique Values with Customers: Co-creating Unique Value with Customers

C. K. Prahalad, et al McGraw Hill, 2004ISBN: 978-1578519538

Lots of useful ideas on identifying new business concepts within established markets. This book is on understanding customers or potential customers and how their values and needs drive behaviors. The authors explain how to derive a business plan from such insight.

Co-CreationOutlook

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Marketing Management

Philip KotlerPrentice Hall, 12. edition, 2005ISBN: 0131457578

For many years Marketing Management by Philip Kotler is the “bible” for all marketers and those studying the field. Each new edition is reworked with new examples, improvements and indicating recent trends in marketing. Lots of examples and case studies provide useful guidance to the reader.

MarketingOutlook

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The Product Manager's Hand-book: The Complete Product Management Resource

Linda GorchelsMcGraw-Hill, 4. Auflage, 2011ISBN: 978-0071772983

A good and thorough introduction to the product management discipline. Though it has a marketing bias it offers useful guidance. Based on many case studies it tries to offer insight for very different domains. Templates and a CD-ROM complete this introductory book.

Product ManagementOutlook

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Managing Research, Development and Innovation: Managing the Unmanageable

Ravi Jain, Harry C. Triandis, Cynthia W. Weick

Wiley, 3 edition, 2010ISBN: 978-0470404126

A very well done and thought provoking work to allow the reader to gain insight on the challenges and opportunities of managing research and development in a fast-paced technology world. Lots of insight to world class examples.

InnovationOutlook

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Winning at New Products

Robert G. CooperPerseus Books Group, 4. edition, 2011ISBN: 978-0465025787

Cooper offers the standard introduction to product development. Based on a broad data repository that Cooper and colleagues has collected from survey and consulting. Though the data is sometimes dated, he provides useful success factors for value generation, introducing new products and for managing innovation.

New Product IntroductionOutlook

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Software MeasurementEstablish, Extract, Evaluate, Execute

Christof Ebert and Reiner DumkeSpringer, 2007.

The book on performance management with lots of benchmark data, case studies and industry experiences.

“Few organizations have really institutionalized measurement of their products and processes. This book is bang up-to-date in both fields and packed with practical advice. For every software engineer."

- Charles R. Symons, Inventor of Function Points

Performance ManagementOutlook

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Author:Dr. Christof EbertVector Consulting Services

For more information about Vector Consulting Servicesplease visit

www.vector.com/consulting

Christof Ebert, www.vcs.com. © 2016, Christof Ebert, www.vcs.com. All rights reserved. Any distribution or copying is subject to prior written approval by Vector. V1.0 | 2016-09-13

Passion. Partner. Value.Phone +49 711 80670-0 www.vector.com/consultingFax +49 711 80670-444 [email protected]

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Product Management Tutorial - Vector: Software · PDF fileProduct Management Tutorial © 2016, ... Huawei, Hyundai, IBM, Lufthansa, Munich RE, ... This training stimulates good product