Assessing Product Opportunities
Recently I have written about reinventing the product spec, and the reasons to move from a heavy-weight PRD to a light-weight high-fidelity prototype as the basis for your product spec. But where do these ideas come from, and how do you decide if you even want to build a product in the first place?
Opportunities for new products exist all around us, in every market, even mature markets. This is because what is possible is always changing. New technologies are constantly emerging, new people with new talents join your company, and competitors come and go. The product manager must be able to quickly evaluate opportunities to decide which are promising and which are not, and for the ones that look appealing, which ones should be pursued, which are best left for others, and which ideas are not yet ready for productization.
In many companies, it just comes down from above that we really need to do this product. In other companies, the marketing organization determines what products are needed.
In either case, too often the process of deciding whether or not to build a product is left to intuition (or worse, a large customer will offer to fund a special and this becomes the basis for a product effort).
Typically someone on the business side or in marketing will create some form of a Market Requirements Document (MRD) that is intended to describe the problem to be solved, and usually includes a business justification as well. The purpose of the MRD is to describe the opportunity, not the solution. At least that IS the theory. In practice, many companies don’t really do MRD, or if they do, they are essentially product specs that are called MRD. When true MRD are done, they suffer many of the same problems as PRD they take too long to write, they aren’t read, and they often don’t answer the key questions they need to.
The result is that many product managers ignore the MRD. But the problem with not doing anything and just jumping right into the product is that it is generally a good idea to look before you leap. The challenge is to do this in a quick, lightweight, yet effective manner.
I consider this product Opportunity Assessment as I prefer to call it, an extremely important responsibility of the product manager. The purpose of a good product opportunity assessment is either to a) prevent the company from wasting time and money on poor opportunities; or b) for those that are good opportunities, to understand what will be required to succeed.
Fortunately, it is really not that hard to do a useful product opportunity assessment. I ask product managers to answer ten fundamental questions:
- Exactly what problem will this solve? (value proposition)
- For whom do we solve that problem? (target market)
- How big is the opportunity? (market size)
- What alternatives are out there? (competitive landscape)
- Why are we best suited to pursue this? (our differentiator)
- Why now? (market window)
- How will we get this product to market? (go-to-market strategy)
- How will we measure success/make money from this product? (metrics/revenue strategy)
- What factors are critical to success? (solution requirements)
- Given the above, what is the recommendation? (go or no-go)
The hardest question to answer is usually the first, which surprises people because it sounds like the easiest. But ask most product managers what problem their product is intended to solve, and you usually get a rambling list of features and capabilities, rather than the a crisp, clear and compelling statement of exactly the problem that is solved.
Another difficult problem can be in assessing the size of the opportunity. You can get thoughts on this from industry analysts, trade associations, your finance staff, and from your own bottom up calculations. This is a topic in itself, but for now just remember to be conservative and realize that not every opportunity needs to be a billion dollar market.
The go-to-market strategy is especially important as that describes how this product would be sold, which can have very significant impact on the product requirements.
The solution requirements refer to any special needs or requirements that were identified during the investigation. Again, we are not describing the product here but rather making clear any dependencies or constraints. For example, if this is a product that will be sold through system integrators, then these types of partners have requirements around extensibility of the products they deliver. Similarly, there may be branding or partnership requirements.
A product organization is all about pursuing good opportunities and providing great product solutions. Opportunities for new products are everywhere, and it is important that the product manager be able to effectively evaluate new opportunities and identify those that have the most potential for the company. It is just as important that bad product ideas get identified at this stage, before significant time and cost is lost chasing them. Choosing the right set of products to pursue is among the most important decisions a company will make.
It is important that the results of the product opportunity assessment be presented and discussed with senior management, and that the company make a clear go or no-go decision on whether to pursue a product to meet this opportunity. If you do decide to proceed, you will be much better informed as to what you are getting yourself into and what it will take to succeed.
So what do you do if the CEO tells you that this is what we are doing, so just get to work on the product? First, realize that there are sometimes strategic reasons for doing a product, so you might need to pursue a product even when it is unlikely to succeed in the market. That said, I have found that doing this lightweight, quick product opportunity assessment is still valuable in that I become much better informed about what this product involves. It is possible that what you learn will change your CEO opinion, but more likely it is a good opportunity, and your CEO was right to want to pursue it, but at least now you know what you are up against if you are to succeed.