Sunday, November 03, 2013

Competitive Mindshare Maps

Why You Need a Competitive Mindshare Map

The core of your product strategy lies in your product's positioning and unique value proposition (UVP). It should drive nearly all product decisions, including the roadmap, feature prioritization, marketing messages, and sales approaches.




A sound unique value proposition depends on:
  1. Value. It should convey the value of your product. Value is rooted in the problems your product solves.
  2. Competitive landscape. It should differentiate your product from available alternatives.
  3. Perception. It should acknowledge perceived weaknesses of the product and perceived strengths of competing products.
Surprisingly, most companies take the value of their products for granted and don't bother to explicitly formulate a unique value proposition. For others, determining a unique value proposition is haphazard, with little or no process guiding the decision. At best, they focus on the value and pay insufficient attention to perceptions and the competitive landscape.

Enter the competitive mindshare map. A competitive mindshare map helps you determine a unique value proposition for your product and ensures it properly accounts for the competitive landscape and market perceptions.

What is a Competitive Mindshare Map?

A competitive mindshare map is a visualization of how products are positioned in the competitive landscape. The competitive landscape, however, is not a set of line items or numbers in a spreadsheet or chart. The competitive landscape is the mind of the prospect.

The fourth law among Ries and Trout's 22 immutable laws of marketing is the Law of Perception.  It states:
"Marketing is not a battle of products, it's a battle of perceptions."
A competitive mindshare map divides the mind of the prospect into territories and places each offering into the territory it occupies. Just as a country, no matter how great its military might, can't occupy an entire continent, your product can't occupy every territory in the prospect's mind. You must acknowledge the perceived strengths of competing products and the perceived weaknesses of your product. You must cede the territory your product can't realistically occupy.

Positioning your product is a matter of fortifying and defending the territory it already occupies, invading weakly-defended territory, or capturing uncontested territory your product can hold.



Composing a Competitive Mindshare Map

To compose a competitive mindshare map, you start with an image of a head and a brain (you can get a template below). I suggest using Google Drawings, but you can use any drawing tool, even a white board and markers if you like. For your product and each competing product, you then:
  1. Place a logo in a distinct region of the brain. You carve up the brain into any size, shape, and number of regions. Typically, you can extract logos from competitor web pages.
  2. Provide a short (no more than three major words) category name or theme that conveys the perceived strength the product "owns" in the minds of prospects.
  3. Provide a terse explanation of the product's perceived strength.
Depending on the tool you're using to compose the map, you can make the logos hyperlink to web pages with more information (such as actual product pages or more detailed competitive intelligence documentation).

After your first draft, take a step back and ask yourself:
  1. Does the map include the major competitors, including in-house solutions that customers might build themselves?
  2. Does your category name or theme convey a promise that your product actually delivers (or will deliver in the future)?
  3. Do the category names (or themes) and descriptions of competitors accurately represent their perceived strengths?
Positioning Guidelines

Positioning your product doesn't have to be "black magic". A number of concrete factors should guide the positioning of your product and the selection of a unique value proposition. This article will help you take a methodical approach to positioning as you compose your competitive mindshare maps.

Above all, keep in mind that the more focused the category, the more powerful and easier it is to defend. Indeed, the Law of Focus states:
"No matter how complicated the product, no matter how complicated the needs of the market, it's always better to focus on one word or benefit than two or three or four."
Your brand gains power from sacrifice.  As Al Ries and Laura Ries state in the Law of Expansion (from The 22 Immutable Laws of Branding):
"The power of a brand is inversely proportional to its scope."
and in the Law of Contraction:
"A brand becomes stronger when you narrow the focus."
You'll face strong pressure to extend and expand the territory your product occupies. As a general rule, it's best to resist it. Ironically, the power gained by narrowing the brand's focus has a halo effect that increases - not decreases - its reach into the minds of prospects.

Get the Template

The easiest way to start is to get the template. Click one of the options below. Simply create a copy of the template in Google Drawings or download the template in PNG image format.


Next Steps

To the extent you didn't collaborate with others to compose the competitive mindshare map, schedule sessions to review it with the executive team, marcom, sales people, and customers.

If you're torn between two value propositions, you can devise experiments (such as A/B tests with landing pages) to test how they resonate with prospects.

Incorporate the unique value proposition into the business model canvas for your product. (Go here for an overview and downloadable model of these and other lean startup concepts.)

Monday, October 07, 2013

Lean Startup Concepts

Now that you've had a largely buzzword-free introduction to lean startup methods, you may be interested in a bit deeper understanding of the concepts and terminology.  Lean startup methods incorporate scientific methods and principles of agile development to help practitioners learn markets quickly and reliably and deliver successful products.  But lean startup enthusiasts and practitioners throw around a lot of terminology and concepts that may seem alien or not particularly meaningful to you.

Let's examine and demystify the basic lean startup terminology with a rich and concise conceptual model. To view the model of lean startup concepts, click the image below:


Lean startup concepts fall within four different clusters: hypotheses, learning, market, and product.




Hypotheses

Forming hypotheses is a component of lean startup methods. The business model represents the strategy driving more tactical product decisions, and it consists of a set of hypotheses. These hypotheses are rooted in the market problems the product is intended to solve. The product serves as a set of solutions to these problems.

Prospects and customers typically have existing alternatives to at least partially address or work around the same problems. The unique value proposition conveys an overarching theme of addressing the problems, and it leverages the unfair advantage the company possesses relative to any competition. A high-level concept summarizes the unique value proposition using a metaphor likely to be familiar to members of the targeted customer segments.

Metrics measure the key activities from which the company and customers derive value, such as adoption, usage, and purchases. Customer segments represent the target market for the product, and sales and marketing channels reach these customer segments. Revenue streams come from such sources as product purchases and advertising, and they offset the cost structure for the product.




Learning

Lean startup methods are first, and foremost, about efficient learning. We conduct interviews of subjects, which include prospects and existing customers, to uncover initial insightsHypotheses rest on assumptions. These assumptions entail predictions that we can test with purposeful experiments. The results of these experiments yield further insights that we use to adjust our assumptions and hypotheses.




Market

We sell products to prospects who face problems, and those prospects become customers. Early adopters are initial customers that can be key partners in helping lean startup practitioners form, test, and refine hypotheses.





Product

The business model outlines the strategy for a successful product. Developing a minimum viable product (MVP) enables us to minimize the amount of time needed to deliver value to customers, to determine whether prospects will pay to solve their problems, to determine whether the product satisfactorily addresses those problems, and to determine whether the product is usable.


Parting Thoughts

Most lean startup concepts aren't new. Taken as a whole, however, they incorporate and enhance the common ways that companies make product decisions in a manner that can accelerate, and improve the reliability of, learning and implementation. The scientific and agile approach fosters a greater likelihood of product success.

Is your company incorporating all or most of these concepts in the ways it makes product decisions? If so, what sorts of successes and challenges have you had? If not, why not?

Monday, September 23, 2013

What Is Lean Startup? Here's What You Need to Know

You've probably heard a lot of buzz about "lean startups".  You may wonder if it's mere hype, applies just to tiny bootstrap ventures, or if adopting some lean startup methods might actually benefit your company.


One of the top problems companies face as they make product decisions
is that the process of learning the market, and learning what makes the product successful, is slow and unreliable. Sometimes they suffer analysis paralysis, swerve from one big deal to the next, allow conventional industry wisdom to stifle innovation, or squabble over uninformed personal opinions. In other cases, they make decisions quickly but fail to learn from their inevitable mistakes until after they've invested exorbitant amounts of time and money.

If you find that your organization is facing this problem, it's worthwhile to consider lean startup methods.


Just as scientists use the scientific method to learn how the universe works, your product team can apply lean startup methods to learn what business model for your product will work in the market. Lean startup practitioners:
  1. Collect data. Practitioners observe and interview prospects to gain qualitative insights into their situations, challenges, and the ways they operate. They also examine quantitative data for further insights.
  2. Form hypotheses. Based on their observations and insights, practitioners form and capture hypotheses about the business model for their products. These hypotheses include the problems to solve, the key elements of the solution, the unique value proposition, the buyer and user personas, key metrics or user activities, costs, and revenue streams. Hypotheses may also include measurable predictions of the impact of various marketing or sales tactics.
  3. Conduct experiments. Recognizing that at least some of their initial business model hypotheses are likely to be wrong, practitioners design and run experiments to test the hypotheses. Often these experiments confront prospects with real-world choices (such as functional product) and measure how prospects behave when confronted with these choices.
  4. Learn and adjust. Having conducted experiments to test hypotheses, practitioners analyze the results and adjust their hypotheses.
These activities often occur in parallel and not necessarily in this sequence. For example, entrepreneurs commonly think of product ideas prior to formally collecting market data.

Applying these methods in an iterative or continuous fashion enables product teams to confront product strategy risks and quickly and reliably learn markets with more targeted - and ultimately, less wasteful - business investments.


Lean startup practitioners essentially apply agile methods to the entire business for a product. Most software companies have adopted at least some agile development practices. But unlike companies that iterate merely on the development of the product, lean startups iterate on the requirements, the positioning, the target markets and personas, and sales and marketing tactics.  They monitor and optimize the sales and usage funnels. They emphasize the delivery of working product and prospect-touching experiments over exhaustive planning and documentation devoid of external feedback.

Summary

Learning markets reliably and expeditiously, and learning what will make products successful, is one of the primary challenges many companies face, whether those companies are startups or large, established corporations. By applying scientific practices and agile principles across the entire business for a product, lean startup is designed to address this challenge.

How does your company currently make product decisions?  How would you know it's time to add new approaches or practices to the mix? The next blog entry will explain how you can begin to put some lean startup methods into practice right away, once your team is ready for some change.

Thanks to Koen Bosma, Ash Maurya, and Emiliano Villareal for providing helpful feedback on this blog entry, and for their thought leadership on the topic of lean startup methods.

Tuesday, September 03, 2013

5 Ways Companies Make Product Decisions

In the last blog entry, we reviewed the four problems that companies face, or are trying to overcome, as they make product decisions.  Now we'll look at the ways that most companies make their product decisions.

Companies that develop, market, and sell products and solutions make strategic and ongoing tactical decisions.  They decide what features to include in their products, what messages they will use to communicate the value of their products, what marketing tactics they will use, what prospective customers they will target, and many day-to-day choices. Whether or not these decisions are deliberate or ad hoc, most companies use some combination of the following ways of making product decisions.

(A downloadable "map" that summarizes the product decision landscape is included at the end of this article.)

Customer Wants
Product decisions based on feature requests, focus groups, and what prospects and customers say they want.


Companies are selling products to make money by creating happy customers.  With the “customer wants” model of making product decisions, you reach out to prospective and existing customers, since they’re the ones who will ultimately be buying your product.  If you are able to deliver what prospects want, they are much more likely to buy your product.

To gain insight into what they want, companies listen to what prospects say during sales and customer support calls, tally up feature requests, monitor support and discussion forums, and conduct focus groups and surveys.  A conversation with a customer might include explicitly asking her what she thinks of a particular feature idea, or she might offer her own feature ideas.

Pros:
  1. Incorporates direct feedback from prospects and customers rather than speculation from inside the company about what they may want.
  2. Can lead to prospects becoming customers once you’ve implemented the requested features.
Cons:
  1. Customers are experts on their own situations and challenges but don't know what they want, so you end up implementing features that don't provide value.
  2. Research shows that customers' hypothetical predictions about what they would buy are not reliable.

Deal Driven
Product decisions driven by the next big deal in the sales pipeline.


The ultimate measure of a successful product is how much money it makes. At any particular time, sales may be working on a deal that could bring in a large amount of revenue for the company.  The prospect in such a deal often has particular needs that the product could address with some additional development.  In the deal-driven approach to product decisions, the needs of prospects in these major deals drive the product decisions and priorities.




Pros:
  1. Increases the likelihood that revenue-producing deals will convert.
  2. Ties product decisions and priorities to revenue potential.
Cons:
  1. Leads to scattered, incoherent value propositions for the product.
  2. Causes abrupt swings in product direction, eroding the morale of the product team.

Intuition
Product decisions based on common sense and what's cool.



Disruptive and innovative products often come from visionaries who incorporate cool technologies and have an intuitive sense for what consumers want.  Executives and members of the product team are themselves consumers and thus have their own personal opinions about the most effective ways to market and sell a product. Developers on top of the newest technologies see how they can apply the technologies to implement innovative product features.  Since everyone in the company is a potential user of the product, they all chime in on what the best design and user interface is.  In many organizations, these sorts of intuitions drive product decisions.

Pros:
  1. Anticipates needs that prospects don't yet realize they have.
  2. Leverages internal knowledge and avoids expensive market research.
Cons:
  1. Effective marketing often defies common sense. Despite the fact that we're all consumers, most members of the product team probably haven't studied marketing principles.
  2. Personal preferences and intuition often don't reflect those of the target market.

Industry Experience
Product decisions based on prior industry experience and accumulated wisdom.



Some companies rely on employees with prior experience in a domain or industry to guide product decisions.  Experience provides wisdom about a market and what works and doesn't work in an industry.  Based on industry background, such as knowledge of the competitive landscape, customer needs, and existing technologies and practices, members of the product team make judgments about what features to include in the product and how to market and sell it.



Pros:
  1. Reduces or eliminates the learning curve for understanding the customers, technology, competition, and needs in an industry.
  2. Brings industry connections and relationships that sales and development can leverage.
Cons:
  1. May inhibit innovation and outside-the-box thinking. Most companies emphasizing industry experience in their hiring practices do not, as a general rule, innovate well.
  2. Provides no guidance for tackling risks and unknowns outside the prior industry experience.

Left Brain
Product decisions based on analyses such as Kano and A/B testing and documented as detailed product specifications.



To take the intuition and guesswork out of making product decisions, team members with a left-brained bent employ a variety of rigorous approaches and analytical tools to determine and document product priorities and marketing tactics.

For example, a member of the team may maintain a spreadsheet with candidate market problems to solve, or with all the proposed enhancements to the product, and rate them on various criteria.  They base product decisions on the items with the highest ratings.  Some more sophisticated product managers analyze customer preferences using Kano analysis, rating features in terms of the extent to which they evoke surprise and delight, satisfaction, dissatisfaction, indifference, or an erosion of overall perceived value.

In some cases, business analysts, product managers, or product owners will then compose detailed product specifications.  Often, the individuals with analytical instincts will go far beyond writing epics and the basic user stories, and will delve into interaction design.

For determining the most effective marketing tactics, the team may use A/B tests and other data, seeing which ones work best in practice.

Pros:
  1. Brings transparency and rigor into the process of making product decisions.
  2. Distills disparate data into actionable information. 
Cons:
  1. Can lead to products with incoherent and scattered value propositions.
  2. Ignores timeless marketing principles.
  3. Biased to product decisions with available data and to tactical alternatives that are easiest to measure.


Monday, August 26, 2013

4 Problems Companies Face in Making Product Decisions

Introduction

Why is product management important?

Whether or not they employ product managers, companies make daily decisions about how to develop, market, and sell their products. As they make these decisions, companies typically face - or are trying to overcome - four general problems.

The Problems



 

Products don't provide value to prospective buyers and users.




Products that don't deliver value generally don't succeed in the marketplace. Value comes from solving problems that prospective customers face. "Cool" technologies and feature-laden products, if they don't help customers solve or avoid compelling problems, don't provide value that lead to usage or sales.

Effective product management identifies a set of prospect problems that drive an overarching value proposition, and it empowers the entire product team to deliver and communicate that value.




 
Developers don't know what to build, and why.





Developing a great product requires a shared understanding, not only of what the product should do, but why it should do it.  In some cases, developers field varying - even conflicting - feature requests from sales and other colleagues and aren't equipped to prioritize them in a sound manner. Moreover, when developers don't know the motivating reasons for implementing product features, they are unable to fill the "gaps" and make the best judgment calls when questions about appropriate product behavior arise. Some developers aren't as motivated to work on products or features unless they recognize the value to buyers and users.

Great product management works with designers and developers to create a shared understanding of the product requirements, which are the least stringent conditions that must hold to solve or avoid the problems.





Sales and marcom can't consistently
articulate the value of products.


When sales and marcom don't have a thorough understanding of buyers and users and the problems they face, it makes it difficult for them to generate and convert leads. In such an environment, sales and marketing messages lack the clarity and consistency needed to foster brand awareness and perception of value.

The best product management develops crisp value propositions, consistent with timeless marketing principles, that sales and marcom can use in messaging prospects.




 
The process of learning the market is slow and unreliable.




The initial business model for a product is a set of hypotheses. For any particular product, some of these hypotheses almost invariably turn out to be wrong. Guesses about what will appeal to the market may reflect our peculiar personal preferences and not rest on a solid foundation. In other cases, prospects themselves lead us astray, requesting features they'll never use.  The marketing tactics or sales channels we thought would be the most effective don't meet our expectations. 

Companies learn these lessons over time, but often in a painful and expensive manner.  Great product management immerses itself in markets and employs iterative feedback loops to test and modify business model hypotheses, thereby producing more educated hypotheses and quickly discovering mistakes.



Final Thoughts
  
These problems have many manifestations.  Moreover, as with all problems, we can ask "Why?" and determine problems further up the problem chain.  These four problems ultimately lead to less revenue, wasted time and money, and frustration.

In the next entry, we'll explore the ways that companies make product decisions as they experience, or attempt to address, these problems.

Thursday, August 01, 2013

Talents of Great Product Managers

The Responsibilities

Product managers lead the process of making strategic decisions about what should go in a product and how to market and sell it. Ideally, they base these decisions on in-depth knowledge of the market - prospective buyers and users, the problems they face, and the competition - and apply sound marketing principles to make the decisions. They build a shared understanding of the market, the business model, and the strategy among members of the team.

Talent, not Industry Experience

But how can a hiring manager identify a product manager that will excel at performing these duties?  As Buckingham and Coffman advise, the most successful managers select candidates based on talent, and not so much for experience.  Thus the typical product manager job posting that lists experience in the industry as a prerequisite is misguided.  Read more on the topic of industry experience and product management.

What Is Talent?

According to Buckingham and Coffman, a talent is “a recurring pattern of thought, feeling, or behavior that can be productively applied”.  Unlike a skill, a talent spans every aspect of a person's life and doesn't manifest itself merely in a particular field or professional environment.

The Talents

Acquisitive and emergent learner.  The primary talent of a great product manager is that she pro-actively acquires knowledge, learns without direction, and constructs new knowledge from the patterns she observes.  Researcher Martin Rayala distinguishes among four types of learning: transmission, acquisition, accretion, and emergence.  The most talented product managers don't rely on learning through instruction (transmission) or on learning through experience (accretion).


Principled.  Great product managers align activities and details with larger goals and principles.  Acquiring market knowledge is necessary but not sufficient for making sound product decisions.  A great product manager is relentless in applying timeless marketing principles (which are often counter-intuitive) and in asking how activities and decisions help the company and the customer.


Disciplined.  Great product managers impose structure on work and life.  They aren't satisfied with "unconnected dots" and, in their professional lives, are constantly striving to make sense of market data and synthesize it into a coherent overarching model and strategy.  This characteristic is closely tied to emergent learning.



Adaptable.  Great product managers adjust beliefs and actions in response to new information.  While relentless in adhering to principles, they know market realities determine product success, and they recognize that up-front hypotheses about the market require testing through build-measure-learn feedback loops.



Facilitative.  Great product managers recognize, cultivate, and activate talents and opportunities.  They exhibit leadership by identifying and activating the talents in team members.  They uncover challenges that prospects face, recognize opportunities, and facilitate the people and processes to nurture and pursue them.



How to Identify Talent

Resumes are a poor way of identifying and evaluating talent.  Instead, conduct brief interviews of product management candidates, probing into their passions and approaches to life, work, and solving problems.  As a general rule, you'll gain the most reliable and important insights into candidates' talents from what they say about everyday life situations, not how they describe their work-specific skills.  Using these methods and identifying these talents, a hiring manager can find a promising product manager candidate who hasn't even previously played the role.

Monday, July 15, 2013

Join Me at ProductCamp Austin 11

Join me Saturday, July 20th, 2013 for ProductCamp Austin 11.  ProductCamp is an "unconference" where product management and marketing professionals teach, learn, and network.

Two years ago, John Milburn, Scott Sehlhorst, Paul Young, and I led a session on "The Future of Product Management". We noted that the "lean startup" movement was on the rise and would soon become a focus of product management discussion and debate. Sure enough, "lean startup" is all the rage these days, or at least talking about it is.

Yet to the extent product managers have embraced lean startup concepts, most of them have barely put them into practice.  They've done little more than compose a business model canvas or used the "minimum viable product (MVP)" buzzword a few times.  How can product managers move beyond these basics, put lean startup methods into practice, and derive real value from them?

I've proposed a session called "Let's Get Nekkid: Applying Lean Startup Methods":
You've heard about lean startup, and you may have even gone through the exercise of composing a business model canvas. Let's move beyond the theory and hype and examine the practical tips, tools, and guidelines you can use to apply lean startup methods to your company's product management and marketing efforts.

We'll briefly cover business model canvases, but we'll also look at the real-world application of customer development interviews, minimum viable product (MVP), funnel metrics, experiments to test and revise assumptions, instrumenting products to gain insight into what users are actually doing, and the pitfalls of applying lean startup methods.
The full list of proposed sessions is here.

WHAT: ProductCamp Austin 11
WHEN: July 20, 2013 from 8:30 AM to 4:30PM
WHERE: AT&T Conference Center @ 1900 University Ave., Austin, TX 78705
COST: Network, volunteer, pitch a session idea, or just make new folks feel welcome.

You must register (free) to attend.

You can get transit directions to the event by visiting the Capital Metro trip planner and filling in your starting location. If you choose to drive, parking is available for a fee in the AT&T Center underground parking lot.

Saturday, February 09, 2013

Join Me at ProductCamp Austin 10

Join me Saturday, February 16th, 2013 for ProductCamp Austin 10.  ProductCamp is an "unconference" where product management and marketing professionals teach, learn, and network.

I've attended almost every ProductCamp Austin event since I and others helped founder Paul Young organize the first one, which took place June 14, 2008. I'm looking forward to seeing some fresh faces such as Hilary Corna, Jessica Tunon, Chris Hample, as well as catching up with old friends like Colleen Heubaum, John Milburn, Prabhakar Gopalan, Scott Sehlhorst, Joshua Duncan, Elizabeth Quintanilla, Devin Ellis, Mike Boudreaux, and Amanda McGuckin Hager.

This time, I hope to lead a session called "Trouble with Tribbles: The Dos and Don'ts of Prospect Interviews":
Prospect interviews are a critical part of product management and lean startup methods. But most people take the wrong approach, leading to unreliable or misleading market learnings. In this session, we'll examine the top five mistakes product managers and entrepreneurs make when conducting prospect interviews. There will be a brief presentation followed by an open discussion about best practices for prospect interviews and how they can inform the business model for your products.
The full list of proposed sessions is here.

WHAT: ProductCamp Austin 10
WHEN: February 16, 2013 from 8:30 AM to 4:30PM
WHERE: AT&T Conference Center @ 1900 University Ave., Austin, TX 78705
COST: Network, volunteer, pitch a session idea, or just make new folks feel welcome.

You must register (free) to attend.

You can get transit directions to the event by visiting the Capital Metro trip planner and filling in your starting location. If you choose to drive, parking is available for a fee in the AT&T Center underground parking lot.