One of the biggest lies in product management is agile.
That may sound like heresy, but hear me out…
I actually love agile. It’s a great approach to reducing the risk of developing and shipping software. It’s a better software development methodology.
But on its own it doesn’t solve the problem of providing a capital efficient method for discovering, validating, delivering, and growing a marketable product.
Which is EXACTLY what product management is all about.
Many product managers are like this:
I love this cartoon because it describes where so many product managers are stuck. And it resonates with me personally, because it describes where I was as a product manager many years ago when I was still trying to figure out what the heck was this product management thing I was apparently doing!
So many product managers are struggling to make a meaningful impact. They’re hustling, they’re busy in the trenches writing stories, managing backlogs and releases, worrying about SCRUMs and sprints and story points…
Of course, these are important activities. But they’re not the things that REALLY create impact producing business results.
In other words, if you ONLY focus on those tactical activities all the time, you won’t be doing the things that truly create and deliver customer value.
Over the years, I’ve worked on a number of different types of software and digital products and services, and have also been fortunate to have worked with and mentored 100s of product innovators.
And so I’ve learned a few things. And what I’ve learned is actually surprisingly pretty simple.
Because the most impactful product managers all follow a similar pattern for how they align product strategy with company goals and deliver business value time and again.
In order to understand this — to understand the true value product managers bring — we need to understand what is product management.
What is product management?
There have been many attempts to define what is product management and what a product manager does.
Most are all pretty good. But they tend to be convoluted (at least to me), and not easily explained.
Over time, I’ve come around to a simpler, but far more powerful, definition of what is product management, and what it means to be a strategic product manager.
And to understand what product management is about, we need to talk about what is product innovation.
Innovation is, of course, what fuels a company’s growth long-term. So in a for-profit company, any innovation must create growth for that company.
Growth comes from creating value for customers. Customers who find value in what the company has to offer, pay for that value. (Or generate value for the company in such a way that a 3rd party will offer to pay for it.)
So, in other words, quite simply, product innovation is about creating monetizable customer value.
Now, that’s not just a bunch of MBA-speak. Those three words are very important: “monetizable customer value”.
Or said differently: creating customer value that can be monetized, i.e., that results in creating value for the business.
In his book, Scaling Lean, Ash Maurya talks about two conditions that must be met for in order for any product to succeed represented as follows:
The first is called the Value Equation. This means you must create more value for customers than you capture back, because if your customers don’t perceive to be getting back more value than they pay for your product or service, they won’t keep coming back, and you won’t have a business.
Said a different way: creating customer value seems obvious enough. But it’s not enough to just create customer value — you need to create enough value that customers are willing to pay for some or all of it. Or the customers themselves represent a valuable commodity that someone else is willing to pay for the value they represent.
And in a profit-making enterprise, this is typically in the form of revenue.
Now, the first equation is important, but not enough. The second condition to satisfy is the Monetization Equation.
Quite simply this means your ability to deliver that value must cost less than your ability to capture it.
Or, to put it even more straightforwardly, revenue — cost = profit!
(I guess you could also call this the profit equation.)
So product innovation is not just about the next shiny new object or sexy new app for the sake of it. True product innovation — one that creates value for your customers AND for your business — is one that creates so much value for your customers that you can monetize it in some fashion, preferably with customers paying you at a price point that exceeds your ability to deliver that value.
THIS is what we mean by creating monetizable customer value…
Every product needs to satisfy these two equations, which means product innovation is about solving both these two equations.
And in fact, savvy product leaders and teams will want to institute some sort of methodology or process around this — a repeatable and sustainable innovation process to constantly uncover new opportunities to create customer value that can fuel business growth for the company. In other words, an ongoing customer value monetization process that’s constantly looking at maximizing both the value equation and the monetization equation.
So if we think about the tactical activities a product manager does, like writing stories/requirements, managing backlogs and releases, user testing, etc…
Or if we think about the more strategic things product managers may do, like communicate the product strategy and roadmap, monitoring KPIs, pricing, go-to-market, etc…
Those are all means to an end — that end being creating customer value that can be monetized.
This leads us to a nice, concise definition of what product management is about:
Product Management is about sustainably managing and growing the customer value monetization process
What this means is that the BEST product management teams and the BEST product managers are continuously working on maximizing BOTH these equations — the value equation and the monetization equation.
At the highest level, these are the TWO THINGS that you, as a product manager, need to be focused on to drive innovation and deliver business results.
As such, the best product managers think and act beyond tactical activities like backlog grooming, sprints, requirements and stories, releases, user testing, etc.
Again, these activities are important, but in and of themselves they don’t drive innovation and don’t deliver business results.
The best product managers think strategically:
- They think about monetizable market opportunities.
- They think about tying their activities to business results that matter — acquiring new customers, increasing LTV or ARPU, speeding time to market, etc.
- They think about the “whole product” — not just the core software app itself, but also how to market, sell, deliver and support that product to customers
This 1-page Product Canvas succinctly captures all the key elements of a product strategy. And this is what the best product managers, and the best product management teams, for that matter, are constantly thinking about.
This is what’s meant by the “whole product” — that is, the overall product strategy, not just the bits and bytes that make up the core product itself.
The best product managers are thinking strategically about every aspect of the product strategy. And even when they’re managing an existing product:
- They’re continuously re-visiting the value proposition, making sure the product is delivering on its promise to customers…
- They’re making sure the product is delivering ROI and constantly measuring success…
- And when they’re considering new features to enhance the existing product, they’re looking at the same critical elements — who’s it for, what problem is it solving, what’s its value proposition and competitive differentiation, and how will it deliver ROI.
The best, most strategic, most impactful product managers are able to be strategic while executing tactically, proactively define their roles and the value they bring to their companies rather than wait for it to be defined for them, and align product strategy with company goals to deliver business value time and again.
They do this by focusing relentlessly on creating customer value that can continuously deliver benefits to the business.
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