Disrupting in the digital era: key traits of an evolution of disruptive innovation
Product management in an era of disruptive innovation
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Product Management in the era of Disruptive Innovation Krishnan & Nag at SP Jain, Aug ‘12
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[Made at SP Jain, Mumbai. Aug 2012] We live in an era of massive disruptive innovation. More than at any other time in history of industry, we are witness to the massive upheaval of established incumbents – and their replacement by aggressive upstarts. Depending on your point of view this sea change provides massive opportunity – or a terrifying existential threat. This new reality places substantial burdens on managers. Historical tools of product management are obsolete – and there is an attendant critical need for new practices. Product management doctrine was based on a core principle best described as “Big up-front design”. The assumption was of a predictable future that could be analyzed – and planned for. Emphasis in this paradigm was on executing according to the plan. However, an analysis of the historical success rates for new business innovation has demonstrated that this process has been, at best, an abysmal failure. New practices have emerged to enable product managers to adjust to a world of uncertainty. These are based on the premise of fast response to change rather than big up-front planning. They are predicated on documenting business models and conducting focused experiments to validate key assumptions. New practices and concepts have emerged: Customer Development, Business Model Canvas, Lean Startup, and Minimum Viable Product. In this presentation, we introduce these new concepts – and describe how they can be integrated into new practices of product management that are effective in dynamic and disruptive environments. We provide an overview of the structure and application of these practices and their associated tools.
Transcript of Product management in an era of disruptive innovation
Product Managementin the era of
Disruptive Innovation
Krishnan & Nag at SP Jain, Aug ‘12
The product manager is the product’s CEO
ProductManagementR&D
Sales (+ Marketing)Markets + Customers
Executives
The product manager is the product’s CEO
ProductManagementR&D
Sales (+ Marketing)Markets + Customers
Executives
budgets staff
targets
strategy forecastscommitmentscompetitive intelligence
segmentation, messagespricing, roadmap, demos
market feedback
product
MRD, roadmap, priorities, personas
Source: Rich Mironov
Once upon a time in Product Management land…
Product Management (‘70s-’00s)
Develop conceptGet funding
Build product Alpha / beta test
Customer Shipment
Write business plan
Build the product Test / fix Ship / fix
Planning / collateral PR / plan launch Launch / Demand gen.
Initial sales rep Build sales team / selling
Build product and offering
Alpha testMarket test
Big-BangLaunch after
3-5 years
Cautionary tale
Source: Steve Blank
1987: Iridium founded
1990: Spun out
of Motorola
1997:Launch
1998:Bankrupt
$5.2b investment15 rockets
72 satellites
1987: Iridium founded
1990: Spun out
of Motorola
1997:Launch
1998:Bankrupt
$5.2b investment15 rockets
72 satellites
Target price: $7/minTarget users: 42million
Viable price: $0.5/minActual users: 30,000
Develop conceptGet funding
Build product Alpha / beta test
Customer Shipment
Build product and offering
Alpha testMarket test
Unbridled enthusiasm
Rude awakening
False sense of security
Resettingexpectations
Predictable disaster
“Big Up Front Design”
Big-BangLaunch after
3-5 years
Disruptive change is becoming commonplace
Dramatic change of fortunes
Source: Innosight – “Creative destruction whips through Corporate America”
Source: Innosight – “Creative destruction whips through Corporate America”
Agony and Ecstasy
Launched: 2007$22b / qtr
Founded: 1975$17b / qtr
Reasons for increasing pace of disruptive change
90-95% of new ventures fail to meet projections
The old ways of Product Management aren’t working
Adaptive Product Management
Limited planning, more experimentation and exploration
Develop conceptGet funding
Build product Alpha / beta test
Customer Shipment
Build product and offering
Alpha testMarket test
BUFD
Front-end planning & design
Back-end execution
Big-BangLaunch after
3-5 years
Existing market New marketE
xist
ing
p
rod
uct
New
p
rod
uct
Highest success rate
Lowest success rate
When does BUFD work?
BUFD is unlikely to work for…
Start-up companies
New products in established companies
Major new features/markets for established products
Visionaries
Steve BlankCustomer Development
Martin FowlerAgile Methods
2 stages of Customer Development
Search Scale
Source: Steve Blank
Focus on Experimentation
Focus on Execution
Iterative model – with checkpoints
Customer
discovery
Customer
validation
Customer
creation
Business
expansion
Pivot / Course correct
Search Scale
Source: Steve Blank
Search Principle # 1: Business Model Canvas
VALUE
PROPOSITION
CHANNELS
CUSTOMER
RELATIONSHIPS
CUSTOMERSEGMENTS
REVENUE STREAMS COST STRUCTURE
KEY
PARTNERS
KEY
RESOURCES
KEY
ACTIVITIES
Source: “Business Model Generation”, Osterwalder & Pigneur
iTunes market place
Search Principle #2: Minimum Viable Product
Minimum
Viable
Too-basic products no one wants
Incumbentproducts
Minimum + ViableFertile area for new
products
Source: Start-up Chronicles
• Demonstrate value• Gather feedback
If you’re building an Excel competitor, what’s the MVP?
Minimum Viable ?
Minimum Viable ?
Minimum Viable Product for Google Docs
Value prop
Learn
Ideas
Build
OfferingMeasure
Data
Minimise the total time through the
loop
Search Principle #3: Focus on exploration
How it all fits together
Agile software development
Predictive (BUFD) | Adaptive
If da Vinci was an adaptive painter…
Source: A Series of Tubes
