Bringing compelling and unique products to market requires a blend of art and science.  The art is the vision of what might be; the stirring promise of something that might change our lives or make it easier, faster or less costly to perform some function or task.  The science is the practical implementation of that vision; the profitable development, manufacturing and deployment of the product in a manner that is accretive to shareholders.  In our world, product vision embodies the art of what’s possible the science of the practical is defined by architecture, design, discipline and execution. 

Sometimes the intersection of what’s possible and what is practical is narrow or non-existent.  In the case where it’s nonexistent we should run, not walk, away from the idea as very often it is destructive to shareholder value.  Where that intersection exists but is small we should tread carefully to build something that can create shareholder value and hope that the foothold we create can expand once technology advances giving us a first mover advantage. 

But what about when there is a larger intersection?  Which is more important, the art or the science?  While there are many people who will take one side or the other, and while I have my own opinion, the best answer is that you need both.  Rarely is it the case that you will find someone with a compelling product vision and incredible execution skills as these two things seem to sit on opposite sides of a spectrum. It is much more likely that you will find someone who sits in the middle of the spectrum.  These people can paint a vision and execute against it, but they aren’t Steve Jobs on the vision side or Jack Welch on the execution side.

We think some of the best teams are built with two people and potentially two organizations embodying the art and the science.  A natural conflict occurs here, but it needn’t be an adversarial conflict.  Assuming the appropriate company culture and a healthy respect for each other’s abilities and value-add to the company, it is possible for these people or organizations to work together and for the healthy tension to accelerate the creation of shareholder value.  The “science” tethers the “art” and keeps it from wondering off aimlessly with no clear implementable path to value.  The art buoys the science and keeps it from sinking and being mired for a lack of product differentiating vision.

As chief executives, it is our responsibility to attract and retain “the best of the best” within both the art and the science and to create a culture where both are valued.  We should reward the folks who think and appear to be lost in the clouds to the same level as those who are attempting to keep them anchored to the practical.  Neither should be seen as less or more important and the debates between them should be cordial and filled with mutual respect.

We have for far too long relied on a “make to stock” model for the automobile industry. In essence, car companies attempt to predict user demand when scheduling cars to be built through their factories and then shape the resulting user demand to what is actually in stock at the auto dealers.

If our automobile companies had instead relied upon a build to order model, they may not have found themselves asking for billions in bailouts or on the brink of bankruptcy. They would not, for instance, have overproduced the large gas guzzling SUVs that have remained piled up at dealers. When gas prices increased, orders for these vehicles would have fallen and the car companies would have shut down production on them. Jobs would likely have been lost much earlier, but the companies likely would have been in a better position to weather the financial storm.

A 2002 Forrester Research report indicated that “The auto industry’s failure to align production with customer demand costs billions each year”. Why don’t we demand a fundamental shift in business model with some of our taxpayer money? Some things are just too obvious…

Detroit – here’s an idea: Hire a couple executives from Dell and use some of the bailout money to switch from demand forecasting and factory planning systems to built to order “configurator” systems. Dealers can still stock some cars for people to test drive and maybe even purchase, but most sales can happen electronically. Everyone wins. You stay in business, dealer margins increase (they need to stock fewer cars), customers get what they want – not what they are sold, etc. Yes, we might need to wait a couple extra months to get that new car but maybe, just maybe, you’ll be in business for another 10 years.

Success is a function of focusing on the right market opportunities, building the right product for that market opportunity and building that product the right way.  In our experience, the area that fails to get the right attention most often is “building the right product”.  Companies very often do not seek the right inputs, perform the right analysis or have the right discussions to select the product and feature set with the greatest value to their users.  Very young companies tend to ping between several ideas of the day, resulting in lost opportunity as product initiatives are started and abandoned before completion.  Without product management, these ideas result in disjointed and loosely related features getting bundled into a product offering that is not well understood by the end user.  Oftentimes, especially in SaaS environments, feature enhancements such as scalability, availability and performance are abandoned without being evaluated for their impact to profitability and strategic fit when compared to feature enhancements. 

Our recommendation to help resolve some of these issues is for companies to introduce a process that forces critical thinking about the product feature set, allows for open discussion amongst the business and technology leaders and prioritizes opportunities based on costs, benefits and strategic fit.  The process that we recommend most is a process called the product council.  The product council should include the GM or P&L leader of the product/business in question, senior engineering executives for the product and the appropriate product manager and product management leadership.  The meeting should be held at least monthly, but your company’s release frequency and average time of development might suggest more frequent meetings.

The purpose of a product council is to ensure that the company is choosing the right product features to build given the following: the competitive landscape, customer needs and wants, the need for scale and availability, and company/product profitability.  To this end, the company should create a living list of all the features and product ideas that have been generated within the company and its extended community (shareholders, end users, and other stakeholders).  This list should be analyzed by the product council for strategic fit, financial benefit and risk. 

In analyzing strategic fit, the requests/features are evaluated in order to determine the degree to which they are aligned with the business objectives and strategic direction of the company.  A Maslow’s hierarchy approach to identifying strategic fit is a good way to help prioritize product requests:
• Which features are necessary to complete a base product offering?
• Which features add significant benefit but aren’t absolutely necessary?
• Which features are simply nice to have? 
Debate as to the strategic fit of each of the initiatives should happen within the product council meeting to help ensure that the product initiatives with the greatest fit are prioritized appropriately.

The activity is to perform a lightweight financial analysis.  The financial analysis might be as simple as determining rough cost to build and expected business benefit.  As the company matures it should consider maturation of this process into something that looks more like a probabilistic equation with percentages allocated to each possible financial outcome.  The intent here is to measure impact to profitability.  Product council should return to this analysis after launch to determine if the expected benefits were achieved.

Finally, we recommend evaluating risk as measured through customer impact, potential impact to availability or scalability, and the actions that competitors might take. A simple method of risk analysis can be accomplished by using the Failure Mode and Effects Analysis framework that we shared in a previous post. 

The result of the strategic, financial, and risk analysis should be a prioritized list of product initiatives.  We urge the inclusion of this well defined but easy to manage process as part of your product management practices.  Let us know if you use or prefer something else to ensure you are working on the right products.