Product Management Class #1
Mulyadi Oey Jul 6, 2015
Who are Product Managers?
• Many moved from Engineering to Product Management. – And, also popular, from general business
(MBA, management consulting) and social sciences (psychology, linguistics).
• People who “manage” product(s) or product portfolio. – Decide how the product looks and feels like
today, and in the future. – Mini-CEO
• But, really, what do they do?
What do Product Managers do?
Innovation Cycle: A Learning Process
Synthesis (How?)
Abstract Conceptualization
Concrete Experience
TRANS-FORMING
Insight Generation
Customer Empathy
Idea Generation / Combining and Refining Ideas
Experimentation and Learning
Analysis (Why?)
What do Product Managers do?
• Sensing: – Understand strategic environment – Evaluate business model – Assess customer and user needs
• Seizing: – Create new business models – Plan & manage product portfolio – Manage product life cycle – Set pricing strategy
What do Product Managers do?
• Transforming: – Test options – Lead product teams – Negotiate strategically and influence
Do I Need a Product Manager?
• Who is (or, are) “owning” the product(s) in your company?
• After a product / iteration release, who is closely monitoring whether it satisfies your users’ or customers’ needs?
• Who is leading the process to improve your product(s)?
• What stage is your company currently in? • Hiring: “What are my job descriptions?”
Product Management 4 Summary Points
1. You’re not managing a product. You’re managing the problem it solves.
2. Your product is only as good as a user’s perspective of it.
3. Product Managers are neither designers nor engineers.
– Expert on whether the design & functionality meet the user needs.
4. It’s not about being a star. It’s about managing a universe.
What Product Management is:
• Being the heart, mind, and voice of users. • Facilitating cross-functional teamwork. • Making product trade-offs. • Meeting an end-goal with fixed time and
resources. • Leading people along a product journey.
What Product Management is *not*:
• Being the most important voice. • Being the only idea-generator. • Being a designer. • Being a programmer. • Managing QA. • Optimizing websites.
Product Management: Another View
7 Traits of Successful Product Managers
1. Communication skills. 2. Leading without authority. 3. Learning skills. 4. Business acumen. 5. Love for products. 6. Eye for details. 7. “Routine” product management skills.
– MRDs & PRDs, competitive analysis, product roadmaps, defining user experience, etc.
Business Model Language
http://asburyandasbury.typepad.com/blog/2011/03/1000-words-paint-a-picture.html
A business model describes the rationale of how an organization
creates, delivers, and captures value (economic, social, or other forms of value)
A tool that helps teams describe, challenge, design and invent business models more visually and systematically.
Business Model Canvas
Business Model Canvas: Agenda
• 9 blocks of Business Model Canvas – 20m • Explore examples of BMC – 10m • Exercise: build your own BMC – 20m • Exercise discussions – 10m • What’s next? – 10m
Business Model Canvas: Agenda
• 9 blocks of Business Model Canvas – 20m • Explore examples of BMC – 10m • Exercise: build your own BMC – 20m • Exercise discussions – 10m • What’s next? – 10m
Business Model Canvas: The 9 building blocks
Customer Segments (CS)
1. Customer Segments
• Might be grouped into segments. • Hopefully, profitable customers. • Choice of number of segments depends
upon: competition, heterogeneity of customer needs, technology.
– Mass market, niche market, micro market, mass customization.
Value Propositions (VP)
2. Value Propositions
• The reason why customers turn to one company over another.
• Solves a customer problem or satisfies a customer need.
• A bundle of products and/or services that caters to a specific customer needs.
Channels (CH)
3. Channels
• Customer touch points. • Serve important functions such as:
– Raise awareness about a company’s products and/or services.
– Help customers to evaluate a company’s value propositions.
– Allow customers to make a purchase. – Deliver a value proposition to customers.
• E.g. direct (sales force, web sales), indirect (partner stores, wholesaler).
Customer Relationships (CR)
4. Customer Relationships
• Describes the type of relationships with specific Customer Segments.
• Driven by 3 motivations (might occur at different period:
– Customer acquisition – Customer retention – Boosting sales (upselling)
• E.g. personal assistance, self-service, communities, co-creation.
Revenue Stream (R$)
5. Revenue Stream (R$)
• Cash that a company generates from each Customer Segment.
• “For what value is the customer willing to pay?”
• E.g. asset sale, usage fee, subscription fee, lending / renting / leasing, licensing.
Key Resources (KR)
6. Key Resources
• The most important assets to make a business work.
• Depends on the type of business. • E.g. physical, intellectual, human, financial.
Key Activities (KA)
7. Key Activities
• The most important things to do to make a business work.
• Depends on the type of business. • E.g. production, problem solving, platform /
network.
Key Partners (KP)
8. Key Partnerships
• The network of suppliers / partners to make a business work.
• 4 different types: – Between non-competitors. – Between competitors (coopetition). – Joint ventures to build new businesses. – Buyer-supplier relationship.
• E.g. optimization & economy of scale, reduction of risk, resource acquisition.
Cost Structure (C$)
9. Cost Structure
• Describes the most important costs incurred to operate a business.
• 2 broad classes: cost-driven vs. value-driven. • Might fall into these 4 characteristics:
– Fixed costs – Variable costs – Economies of scale – Economies of scope
Business Model Canvas: Agenda
• 9 blocks of Business Model Canvas – 20m • Explore examples of BMC – 10m • Exercise: build your own BMC – 20m • Exercise discussions – 10m • What’s next? – 10m
BMC: Freemium Pattern
Infrastructure development
& maintenance
Platform
Fixed cost Cost of
service for free users
Free basic service
Free users (large base)
Cost of service for *premium*
users
Premium service
*Premium* users (small
base)
Free basic services
Paid *premium* services
BMC: Skype
Software development
Software development
Free internet & video calling
Global Internet
users
Cheap calls to phones
(SkypeOut)
People who want to call
phones
Free
SkypeOut pre-paid / subscription
Software
Software developers
Complaint management
Payment providers
Distribution partners
Skype.com
Self service
BMC: Bait & Hook Pattern
Production and/or service delivery
Patents brand
Production & services
Subsidizing of “bait” product
“Bait” product
Customer segment
“Hook” product / service
1x purchase of “bait”
Repeat purchases of “hook”
BMC: Multi-Sided Platform Pattern
Platform
Platform management
& development
Subsidizing of “bait” product
Value proposition
#1
Value proposition
#2
Revenue flow #1
Revenue flow #2
Service provisioning
Platform management
Customer segment #1
Customer segment #2
Value proposition
#3
Customer segment #3
Revenue flow #3
Business Model Canvas: Agenda
• 9 blocks of Business Model Canvas – 20m • Explore examples of BMC – 10m • Exercise: build your own BMC – 20m • Exercise discussions – 10m • What’s next? – 10m
Exercise: build your own BMC
• Divide into 2 groups: – Group 1: People who is currently working
together in a same company / organization (max. 3 people).
– Group 2: Not currently in a same company (max. 2 people):
• Have a business idea. • Don’t have a business idea. It’s OK!
• “Coaches” are welcome.
Business Model Canvas: Agenda
• 9 blocks of Business Model Canvas – 20m • Explore examples of BMC – 10m • Exercise: build your own BMC – 20m • Exercise discussions – 10m • What’s next? – 10m
Exercise discussions
• Group 1: Did your peers have the same understanding about the business?
• Group 2: Did you discover more clarity about your business? Can you explain / pitch better?
• Use colors to represent segments.
BMC Example: Wireless service provider
Hi-volume data users
Phone only users
Engineer-ing
Retail stores
Ease of integration
and support
Low cost, always works, phone service
Other phone operators
Applica-tion providers
Engineers
Salespeopl Customer
service reps Engineer-ing Bundled
monthly fee Prepaid
Direct Salesforce
24/7 support
Sales, customer service
Phone vendors
Tell me about this business (strategy) #1
Tell me about this business (strategy) #2
Tell me about this business (strategy) #3
Tell me about this business (strategy) #4
Business Model Canvas: Agenda
• 9 blocks of Business Model Canvas – 20m • Explore examples of BMC – 10m • Exercise: build your own BMC – 20m • Exercise discussions – 10m • What’s next? – 10m
The value of using BMC
• Understand the essence – Visual language, capturing the big picture,
seeing relationships. • Enhance dialogue
– Collective reference point, shared language, joint understanding.
• Explore ideas – Idea trigger, play.
• Improve communication – Create company-wide understanding, selling
internally / externally.
What’s next?
• Share your BMC. – Depending on your situation, you might want
to “re-package” your BMC.
• Success stories? E.g. Provisi Education (Indonesia)
Share your BMC
Share your business model canvases with your peers / colleagues Identify issues, opportunities, gaps in knowledge Fix colors as you share, if needed
Thank You!
• Connect on LinkedIn: – https://www.linkedin.com/in/oeymulyadi – Write a recommendation, for Indonesia
Product Management Consortium.
• Fill out the 3-minute feedback form / survey. • Spread the words, share what you’d learnt
today.
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