Tuesday, October 13, 2009

How Soon Do You Need a Product Manager? (Part 2)

I've kind of had a theme going on here over the last few posts. I started with How Soon Do You Need a Product Manager. Then I told the story of a company that failed to capitalize on its awesome technology because of a lack of market focus in The Influence of Tribes on Product Success. Finally, I pointed to some others who share my views on the importance of product management in early-stage companies in "Hire Product Management First". Now it's time to wrap this theme up (for the time being, anyway) by responding to my closing comment in How Soon Do You Need a Product Manager: "But, but, but, we are a start up. We can't possibly understand customers, market, and products until we release something. Then the market will tell us where we are wrong."

This way of thinking has been codified in many software entrepreneurs' minds by writings by Paul Graham, Eric Raymond, and, really, by the entire Agile movement, all of which is very good advice. Unfortunately, it is taken as a replacement for customer development instead of an important piece of it.

Starting Up Without a Product Manager

Founders are good at identifying gaps in existing markets and building new companies to fill those gaps. Customer development in a start-up is often nothing more than some vague impressions about the under-served markets defined by those gaps.

Now the company turns inwards for the next six to nine months, maybe a little less for those that really get release early, maybe a little more for those that don't. The features in the first release are all determined by anecdote, by socializing, or by fiat. Everybody in the company is convinced of how great the product is because they keep telling themselves that and there is nobody to disagree.

Now we are coming to release and the company starts looking outward, really for the first time. The company doesn't really know who its customers are, so, in order to find any customers, it needs to shout into the crowds. The goal being to get some subset of the under-served market the founder identified to self-select and become a customer. Depending on the size of the market and how well defined it is, that can be a lot of shouting.

Maybe some customers trickle in, maybe they don't. If they do, revision two of the software is all about pleasing them, and the company needs to move quickly. If they don't trickle in, then revision two is all about throwing another dart at the dartboard to see if it gets closer to the market's needs. The scary thing about this is that the product may be perfect; other factors, such as positioning, messaging, or any of a host of other non-technical reasons, may be keeping people from buying.

Starting Up With a Product Manager

The whole goal of starting up with a product manager is to ensure that, at release time, there are some customers excited for the product. She will do this through a series of activities, all of which are outwardly focused, but will be affecting activities internally.

  • Identify and define the subset of the market that will buy.

  • Identify their greatest pain points and ensure development solves those.

  • Identify who is competition, who is a potential partner, and who is irrelevant.

  • Understand what the minimum feature set is that will enable a customer to jump to your product.

  • Analyze what communications channels will get the potential customers' attention.

  • Determine a message that will resonate with potential customers.

  • Enlist the first customers to provide feedback prior to release.

  • Price the product.

The product manager will look at the under-served market the founders identified and determine specifically how it is under-served. Who is the competition and how are they not servicing those needs? How can your product be positioned relative to the competition?

The product manager will start with the under-served market the founder identified and segment that until she finds a small group of potential customers that can be communicated with directly.

Isn't the Founder the Product Manager?

Actually, the ideal is for a founder to be the product manager. The company would be in a great position if a founder, passionate and visionary, was also the one who was ensuring the company had customers ready for the product it was building. If that's your situation, run with it. You are in a good position.

Many times (most?), however, founders are technology, finance, or sales people. These are great people to have involved in a start-up, but rarely do they have the experience and knowledge of how to drill down from a market to customers and then build back up from a concept to a product that those customers will buy (as opposed to a product that they think is killer).

Release early, release often. It is one of the great strengths of a start-up. Don't waste that strength by needlessly spinning wheels trying to figure out what a customer might want. A good product manager, properly empowered, will give you strong hypotheses. At that point, releasing early and often is about optimization, not about feeling around blindly for the market.

Isn't it worth one person in your company to keep all of the developers, QA, marketing, and sales focused in the right direction?

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