In this episode:
Steve Johnson walks u through “What is Product Management” and helps us figure out how to start small to get to success.
Tom Cooper: So just to kind of get started, at the highest level what is product management?
Steve Johnson: Well, product management is delightfully ill-defined, certainly in the technology industry and many others. But ideally product management is what a lot of developers call the “one throat to choke.” There’s one place to go to get the answer to everything. I remember reading an interview years ago with Bill Campbell at Intuit and he said that if you are a start-up the second hire would be a product manager. Because the product manager figures out the rest of it.
We often come up with hey, let’s build a thing. But what the customer really wants is that thing wrapped up in services and delivered in multiple pieces, for instance. The product manager’s job is really to be the president’s representative at the product level looking at it from soup to nuts. Is there a business to be had here? Is there a market need that we can address? When we talk about product we don’t just mean software or hardware. We mean the whole product.
I was talking to somebody just an hour ago about the Nest thermostat which is big right now. I have one and it’s just beautiful. It seems to me that there was clearly a product manager looking beyond the thermostat. I mean, there are plenty of thermostats out there. You can buy one from Home Depot or Lowes and they’re all generically the same with very difficult to understand user interfaces. So the Nest thermostat is very easy to use, but more than that it’s an entire product.
When you hook it up it verifies that the wiring is correct. When you get it working it says, “Hey, can I hop on the Internet for you?” And it synchronizes the thermostat behavior with the weather in your city. It sends me an email once a month telling me about my power consumption and some things I might choose to do to improve my performance.
It has an iPhone app that allows me to manage the thing remotely. It has a motion sensor that says, “You know what? Nobody has walked by this thermostat in 24 hours so I’m going to set the temperature to something reasonable since apparently you’re away.” That wasn’t just what the other guys did which was we have a programmable thermostat that you can program and it will do thermostat. They’ve created an entire product.
Tom Cooper: That’s really interesting because you’re looking at the need even if the consumer doesn’t understand that need. I’ve never thought that I want my thermostat to email me. I’ve thought that I’d like my thermostat to help me save money, but I never thought that I’d like to get an email or recommendations about what I could do. That’s really interesting. I’ve worked in a number of tech companies and I’ve worked with a ton of tech companies and a lot of them don’t do anything that they call product management. But don’t all companies actually use product management?
Steve Johnson: Well, yes. What every company is doing is managing products. The question is whether there is a person with a title. In a start-up the president is the product manager. It means, what products are we going to build? What revenue can we forecast over time? And in a start-up capability you’re probably looking at it in the context of how is this cash flow going to make sure that I make my house payment?
But then multiply that times a bunch in a regular business that has a track record and somebody said, “Hey, I have an idea for a product”. Well, everybody has ideas. The question is, which one should we pursue? Is there one here that we should fast track? Is it targeting a market full of customers or is it one sales guy talked to one customer who had one need and I’m never going to be able to sell this again?
Tom Cooper: Right, so really what you’re talking about is a methodology or a process to prioritize future requests?
Steve Johnson: Exactly. Ideas come from everywhere, right? The executives have ideas. Sales guys have ideas. Customers have ideas. Product managers have ideas. Developers have ideas. The first step of the process or the method around product management is a vetting process that says that we can’t do everything. So we need to be able to pick carefully which ones we do allocate resources to. Once we’ve done that we have to break the idea down into the deliverables.
And if we started from, “I want to build a thermostat” then you would build a thermostat. If we started from customers are extremely passionate about smart energy and let’s build an energy management solution, then you end up saying not just that you need to do some circuit boards in a round box for a thermostat. It’s the bigger thing that I talked about earlier. So the idea becomes, what are the parts that we need to build and we keep breaking that down into constituent parts.
The same thing is true for, “I have an idea for an existing product. I want the iPad to do this. I want my Android phone to do that.” You have to look at all of those ideas and say, “Which one affects the most people with the most benefit?” Beyond that, that’s all product part.
Guess what? Marketing that product often involves product management. People who are doing go to market say, “I need some help understanding how this tool is used or what features it has and how I explain those to the market.” Otherwise you end up with what David Meerman Scott calls industry gobbledy gook. And we just say that we’re the market leading discontinuous innovation deliverer with proven results.
Tom Cooper: Wait, I’m writing that down. That’s so good.
Steve Johnson: There’s not even a TM on that. So we have this product idea. We are taking it to market. Guess what? We also have to figure out what is the right price point for this, or do we just throw it to the sales team and say “Take a shot. Sell it for as much as you can.”
Tom Cooper: Wait a minute. You’re talking about a huge area of responsibility if you’re talking about establishing pricing, looking at the market, marketing communications, feature development, working with the product creation team that’s actually going to implement the ideas. That sounds like your product managers need to have a lot of different types of expertise. What types of things should you be looking for from product managers?
Steve Johnson: Very good point. I think it’s important to separate these things. There are a lot of activities that need to happen in order that we can manage and market a product. Often that is given to the title product manager. But it may be director of products marketing or it may be a senior executive team. But there are a bunch of things that happen between the idea and revenue. Somebody has to have oversight of that.
Real quickly, I talked to a guy yesterday who posted for a director, I think, of product management and marketing. He said that 98% of his resumes were from marketing communications people. When you say marketing everybody in this industry seems to say, oh yes, that’s the creative types who build sales tools and go-to market materials. He said, “So I ultimately took the name marketing off of the job description so that I could get some product people in here.”
But that’s really the point isn’t it? In terms of expertise 42% of product managers have an MBA which means that they have strong business skills. That’s one thing that people look for. But increasingly a lot of the teams that I work with have pulled product managers so far into the product creation process that they’re really using the product managers for their technical expertise rather than for their business expertise.
Furthermore, as I indicated in the director story a lot of people have marketing expertise, but more important than that is an understanding of market. For example, we want to market our product in Brazil. We want to market our product in higher education. We want to market our product in anti-virus or fraud detection. So these are markets where we need to have somebody who is an expert in the way those markets talk to one another.
The fourth expertise is domain expertise. I have a story about a vice-president from a bank came up with a fraud detection method. He came to a company to turn it into a product. Because he had both domain and market expertise the company misused him. He came to the company to leverage his domain expertise to create a product. But because he came from the world of banking every sales guy on the planet called and said, “I need you to come talk bank with one of my buyers.”
And so he was on the road for nine months until he finally threw up his hands in despair and said, “Now I’m going to go to another company who doesn’t need me to come and talk bank, but wants me to develop my fraud detection algorithm.” So those are the four expertises. There’s business, there’s domain, there’s technology, there’s market. It’s really hard to find all four of those in one person.
Tom Cooper: So do you think of it in terms of a team delivery? How do you solve that then if you can’t find necessarily all four of those in one person?
Steve Johnson: Indeed. If I were organizing a product management team today I would look for at least one person in each of those areas. I mentioned higher education earlier. I went to college a long time ago. I wouldn’t say I know much about the world of university. I do know costs have gone up a lot lately, but that’s about what I know. So I would hire somebody who has a deep domain knowledge in higher education. What are the trends in the industry? That would be the person that I would use for all of my thought leadership pieces rather than talking about product and talking about trends in the industry.
I would hire a technical person to work with development and turning the ideas that we’re finding into the development deliverables. I would hire a market specialist. If we chose to sell to universities in the Americas, universities in Asia and universities in Europe, I’m guessing those are different.
I remember one of my vice-presidents/colleagues years ago did a little presentation from the context of non-U.S. thinking. He put up dates where the numbers were in the wrong order. He used commas instead of periods. He put “U”s in words that didn’t deserve them. He talked about summer. We thought, “Wait a minute. You’re right. If you’re in Australia, summer is different.” So what does it mean launching this summer?
And the fourth thing, I don’t know if I mentioned, as I’m talking this through I’m thinking of a fifth one. I would certainly want somebody on staff who had strong analytical skills with a business background who can turn ideas into spreadsheets. What’s our financial road map down the road?
And yet, often what I’ll do is if I don’t have that business skill on staff I’ll send a market person, probably, over to finance and say, “Can you guys help us with a three to five year revenue and costing breakout?” The VP in finance is delighted to help and generally assigns you to one of his experts and they’re delighted to help because they haven’t done anything meaningful since college. This isn’t what they thought they were going to be doing. Instead they are just checking expense reports against policy. That was kind of rude.
Tom Cooper: The one thing about working with you, Steve, is that you know exactly where you stand.
Steve Johnson: Yes, subtly is my strength.
Tom Cooper: So now in this space, what you’ve covered is a huge amount of territory here. I hear CEOs saying, “This costs too much. I can’t even think about doing that because it’s so darn expensive.” But really, I think what you’ve said to me before is that it’s really about investment for seeing a return. You should be able to see a return on all of the money you spend on this.
Steve Johnson: Exactly. And furthermore, people are doing this anyway. There are people in your company today who are saying, “I don’t really have deep domain expertise, but I need to know whether I should do it this way or that way.” So they guess. The real challenge to me is, sure everybody wants to do everything on ROI, but for me it’s thinking what’s the cost of doing it wrong?
Tom Cooper: That’s a really good point. I think we tend to think that whatever we’re doing today is okay and it’s risky to do something different. It’s that myth of risk that there’s actually risk associated with even current state.
Steve Johnson: Exactly. So when we talk about product management, it’s happening in your company today. The question is, who’s doing it? Is it the president? Is it the VP of sales? Are the sales individuals saying, “Well, we don’t have anything but I decided to partner with that guy over there and bundle my own thing and offer it at a price that’s 10% above our costs”? That’s an interesting initiative on the part of the sales guy, but is that the business that we even want to be in? And is 10% enough money to make it worthwhile? Those are the questions that aren’t being asked. And as a company looks at their limited resources they need to make sure that they are putting their limited resources on the thing that has the best value to the company in the long run.
Tom Cooper: That’s fantastic. I appreciate that kind of perspective because it’s a different one. People don’t necessarily think of it in that way. I appreciate you bringing that perspective to us today. So tell me a little about under 10 templates. Why under 10 templates?
Steve Johnson: Better than that, there’s under 10 templates. But anyway, I worked with a team a while back and they said, “Well, we formalized our product planning process.” They handed me a three ring binder that was three or four inches thick. It was delightfully comprehensive, but completely unrealistic.
I reflected back in my first job 20 to 30 years ago as a product manager. I had a printed notebook that I kept with me all of the time. What happened was people would ask me questions and I couldn’t answer them. So I started carrying these pieces with me. And I said that people ask me about pricing a lot. Let me keep the price list with me. People asked me about positioning a lot. Let me keep the positioning with me.
Over time I developed six or seven or eight living documents that I referenced probably daily. That became my product plan. Instead of having a 45 page business plan that nobody, including the author, has ever read, why don’t we just identify the smallest number, preferably fewer than 10, of living documents that make sense to the executive team?
For instance, the kinds of documents that I’m talking about are a road map of where we are going down the road. A list of features that we want to build that the [inaudible 18:29] call a back log, a price list, a positioning document so that we can inform our marketing people and our branding people and our outside agencies of the product’s message. How many of those could replace some of these heavy dead documents that more established companies are still creating?
Tom Cooper: That’s a really interesting point and I think it’s helpful to have a framework to move forward. I think that you said that you’re going to offer up a planning canvas as a resource for folks who are interested in learning more about this. Is that right?
Steve Johnson: Yes indeed. Canvas is the right word. It is a place for you to articulate all of the different steps between idea and revenue and, for that matter, post-delivery retrospective. Who should be doing this step and what are the minimum set of artifacts that we need to articulate that step? You start with, what business are we in and what market do we serve? What products are we going to build? How are we going to market them? How are we going to sell them? How are we going to support them after the fact? The part that I think most young companies completely forget about is after the sale saying, “What did we do right? What did we do wrong? Is this even a good customer?”
Tom Cooper: You’re really talking about product strategy and even can lean into corporate strategy type things which most organizations kind of struggle with. That’s fascinating.
Steve Johnson: My dentist fires 10% of his customers every year because he looks at a post-customer retrospective and says that these customers are annoying. And it’s not that they don’t brush their teeth and floss, it’s that they don’t show up on time and they argue about the bill or they have a difficult insurance carrier. He says, “I have better things to do than to try and sell the same hour two or three or four times.” And I think that most companies don’t take that after the sale retrospective saying, “What is a good customer for us and what isn’t? Maybe we should fire some of our customers because they don’t move us forward strategically.”
Tom Cooper: That is definitely a kind of radical thing. I think it is worth consideration, for sure. So if folks want to dig in and know some more about Steve Johnson and what you’re doing, where can they find more information about you?
Steve Johnson: Please come to under10templates.com. You will find lots of stuff there. I have a description of the under 10 planning template that I’m going to share with people who listen in on this. I am blogging there. I have a bio there. I think of it really as my online resume. My belief is that companies want the smallest amount of process that helps them mitigate their risks. A lot of times they have too much or, frankly, a lot of companies have too little. Do we have more time for one more quick story?
Tom Cooper: Sure.
Steve Johnson: You can’t say no to that. I worked for a huge company, a billion dollar software company. There was so much process we couldn’t get anything done. So I got recruited into a start-up and employed with 25. I got there and thought that this is going to be great. There’s no process and we can get stuff done. Then a week later I was pulling my hair out because there was not process. You want to find that fine line between process that helps move you forward and find that balance for what makes sense in your organization. That’s the kind of stuff that I work with teams on today.
Tom Cooper: That’s great. I appreciate that idea and wrapping it in that way because I think a lot of times we find ourselves caught in that middle place where we need process but we have too much process and we can’t actually get anything done. Steve, thank you so much for joining us today.