1. Product Management Certificate Program
Week 2 - Intro to Strategy and Product Mgmt Frameworks

2. Agenda Current events + Math Lab (15 min) Where are we? (5 min)
Roadmap for Fall
Plan for tonight
Team breakout activities
(30 min)
Team resume
Discuss Week 1 homework
Today’s Topic
(80 min)
What is strategy?
Suggested frameworks & examples
Breakout activity (20 min)
Group discussion
Possible share-out
Homework assignment (10 min)

3. Current events

4. A look back… to October 2013

7. Math lab

8. How big is the US diaper market, in terms of annual volume and revenue?
Breaking down the steps:
Start by defining the scope of the problem
Document the essential facts
In absence of information, make reasonable assumptions
Structure the problem so you can adapt if your facts change (i.e., peanuts)
Don’t lose track of the original question

9. Where are we?
Intro to Strategy & PdM Frameworks

10. Fall 2014: Where are we? Intro to Strategy & Research Target Customer
Introduction to strategy and PdM frameworks (Week 2)
Customer research (Week 3)
Situation analysis (Week 4)
Competitive analysis (Week 5)
Intro to Strategy & Research
Market segmentation (week 6)
Defining target customer (week 6)
Target Customer
Define problem to be solved (Week 7)
Define competitive positioning (week 7)
Problem Statement & Competitive Positioning
Developing a release theme/driver (week 8)
Release Theme/Driver
Sales Channels and Pricing Strategy (week 8)
Creating Business Value (week 9)
Business Value

11. Sit with your study group
Learning Objectives
Explain how product lifecycle and strategy impact product decisions.
Sit with your study group

12. Tips for structuring team activities
Appoint three roles:
Timekeeper:
knows how much time is allocated to the activity
keeps the team aware of the passage of time.
Scribe: records the team’s results
Facilitator:
understands the goal of the activity
keeps the team focused on the goal
Ensures all team members participate

13. Group Resume Work with your study group
Use the flip charts/white boards
Create a group resume:
Employers
Roles
Focus of education
15 minutes

14. Homework Review Discuss your answers to the Week 1 Homework
You have 15 minutes
What information was factual – easy to agree on the answer? Which was based more on opinion?
What questions do you have about the homework?

15. Homework Review
Complete the following assignment, post to the team site, and be ready to discuss in class:
Identify a company with an established product that currently enjoys success, but is at risk of losing its dominant position unless it makes a disruptive change to its existing business or product. (e.g. Facebook)
Draft a general statement of the basic need that this product fulfills (e.g., helps you stay in touch with your friends and family)
Now, identify at least 3 competing products (e.g., Twitter, US Postal Service, Skype)
For each of these products (established product, plus each competing product), where do their customers sit in the technology adoption lifecycle?

16. Products: Spotify Redbox Yahoo Dish Network Fitbit Force Canon Digital Camera Western Union Comcast Cable/TV Windows OS/Devices MSFT Office Monster.com Internet Explorer Square Netflix Polycom Starfish GoPro iPad Firefox Uber Instagram PayPal Garmin eBay Groupon Pinterest iPhone
Edgard

17. Example #1: Redbox

18. Example #2: Fitbit Force

19. Today’s Topics
Intro to Strategy & PdM Frameworks

20. What are the tools & resources?
Strategy & PdM Frameworks
Why is this needed?
What are the tools & resources?
Product Lifecycle
Tech Adoption Lifecycle
Strategic frameworks
Discuss Examples
Team breakout activities
Strategic frameworks (Kotler, Tong & Zagula, Porter, Ansoff)

21. Why is this needed?
Understanding essential business context: Strategy plays a critical role in guiding how a business decides what goals it should set, and how it should work to achieve them. This informs (and limits) product decisions.
Identifying the necessary conditions of a successful product: What are the objectives for a product, and how will the product make it happen?
Aligning product strategy to market realities: Who will use it? Buy it? Sell it? Compete against it?
Reducing the likelihood (and magnitude) of failure: What are the key challenges/risks, and how should they be managed?

22. Product Life Cycle Management
Last week we looked at this PLC model – with a focus on process.

23. Technology Adoption Life Cycle
Product Management Intensive®
Do a whiteboard exercise for a couple of category examples:
Payment systems
Social networks
Communication tech
Computing hardware
Transportation
Technology Adoption Life Cycle
Revolutionary breakthrough for competitive advantage
The Chasm
Price sensitive, low risk
“Safe” choices, evolutionary change
Relative % of customers
Try it!
Early adopters, visionaries
Status quo
Early majority pragmatist
Late majority conservatives
Innovators, technology enthusiasts
Laggards, skeptics
1. It’s based on the Diffusion of Innovation model, but with an important difference: It specifically identifies the challenge in getting a market to adopt new technologies.
The challenge is called the “Chasm”, which many technology companies fall into when they fail to make their product appeal to a group of “early majority” customers and start seriously climbing the “growth” part of the curve.
This model helps guide technology company product managers in what features to include, how often to revise the product, what areas of the solution to focus on building vs. partnering, how to market and distribute products, and what groups internally to build out to obtain and retain customers.
Time
Customers want solutions and convenience
Customers want technology and performance
Source: Geoffrey Moore, Crossing the Chasm 23

24. What is Strategy?
Intro to Strategy & PdM Frameworks

25. Strategy: begin with three questions
Product Management Intensive
Strategy: begin with three questions
Where are we?
Where do we want to be, and why?
How should we get there?

26. However, strategies are always evolving
Product Management Intensive
However, strategies are always evolving
Underlying assumptions may change
Competition evolves/shifts
Consumers can be fickle
Laws change, lawsuits happen
Technologies evolve

27. Product Management Intensive
Discussed tonight
A few models to help you think about it
Thought starters
Structure your thinking
You may use one, many or none of these strategy models to solve a problem

28. Table Topic
Intro to Strategy & PdM Frameworks

29. Strategy in everyday life…
This table topic to be an open discussion of examples of strategies in everyday life, current events. Emphasize the following:
Strategy comprised of 3 basic questions: Where are we? Where do we want to go? How should we get there?
Distinguish strategy from tactics
Set up the notion for Competitive Strategy and how it relates to PdM/product strategy

30. break

31. Overview of Tools & REsources
Intro to Strategy & PdM Frameworks

32. Technology Adoption Life Cycle
Product Management Intensive®
Do a whiteboard exercise for a couple of category examples:
Payment systems
Social networks
Communication tech
Computing hardware
Transportation
Technology Adoption Life Cycle
Revolutionary breakthrough for competitive advantage
The Chasm
Price sensitive, low risk
“Safe” choices, evolutionary change
Relative % of customers
Try it!
Early adopters, visionaries
Status quo
Early majority pragmatist
Late majority conservatives
Innovators, technology enthusiasts
Laggards, skeptics
1. It’s based on the Diffusion of Innovation model, but with an important difference: It specifically identifies the challenge in getting a market to adopt new technologies.
The challenge is called the “Chasm”, which many technology companies fall into when they fail to make their product appeal to a group of “early majority” customers and start seriously climbing the “growth” part of the curve.
This model helps guide technology company product managers in what features to include, how often to revise the product, what areas of the solution to focus on building vs. partnering, how to market and distribute products, and what groups internally to build out to obtain and retain customers.
Time
Customers want solutions and convenience
Customers want technology and performance
Source: Geoffrey Moore, Crossing the Chasm 32

33. Basic Product Life Cycle
CPM/CPMM Certification Topic Review
Apply to a real-world example for discussion (e.g., landline phone)
Basic Product Life Cycle
Introduction
Growth
Maturity
Decline
Time
PLC Stage
Sales
Profit
Volume (Revenue or Units)
Here’s a basic PLC model. The basic shape of this model is a bell curve.
It often represents how categories grow and mature, as well as the individual products within a category.
The value is looking at where you’re spending a majority of time, and how the money flows. Many products, post-launch, are still down in the red zone. Awareness of this, and tracking performance of the product against this typical model, is a good thing.
The top line tracks sales over time. So in the introduction period, sales grow rapidly from zero. As the product catches on, it sells more but the sales growth rate begins to flatten out. Once the product is established in the marketplace, revenues stabilize and the growth rate remains fairly flat. And when a replacement product is introduced, the revenue from this product begins to decline.
At this saturation stage, the need to develop new strategies becomes more pressing:
Searching out new markets:
Linking to changing fashions
Seeking new or exploiting market segments
Linking to joint ventures – media/music, etc.
Developing new uses
Focus on adapting the product
Re-packaging or format
Improving the standard or quality
Developing the product range
This curve also applies if you’re looking at adoption and use rates. They ramp quickly in the beginning, level off, and then begin to decline as users find a better solution.
This representation also includes a curve for Profit. Often, product experience a period of “pre-profitability” due to up-front production costs. Once the product reaches maturity, it’s company reaps the profit from the product. However, competition may reduce profits in the form of price pressure; products may also experience a decline in profits at the end of the life cycle due to declining volumes.

34. CPM/CPMM Certification Topic Review
PLC Stages & Strategies
Introduction
Growth
Maturity
Decline
Time
PLC Stage
Sales
Profit
Volume (Revenue or Units)
Customers
Innovators
Early Adopters
Middle Majority
Laggards
Customer Goal
Competitive edge via risk
Safety, pain avoidance
Safety, pain avoidance and a good price
Don’t want it, regardless
Marketing Objective
Awareness/
trial
Market share
Maximize profit
Retire/replace
Product
Basic
Extensions
Full line
Best sellers
Price
Intro/skimming
Penetration
Competitive
Maintain profit
Distribution
Selective
Broaden
Extended
Profitable only
Promotion
Targeted; educate
Broader; differentiate
Sustaining; loyalty
Minimize
Considerations and strategies that apply to the different PLC stages:
From Kotler, Marketing Management

35. Variation: Cycle-Recycle (a.k.a. Upgrade Pattern)
CPM/CPMM Certification Topic Review
Variation: Cycle-Recycle (a.k.a. Upgrade Pattern)
Sales
This pattern reflects a product that has cyclical sales. The product experiences a peak in sales early in its life cycle, then declines. Then, because of market forces or product decisions, revenues increase again during maturity. They may repeat the cycle many times before the product goes into decline.
What are some examples of this Product Life Cycle? Many innovative software products are cyclical. They may experience high revenue during introduction and growth, before competitive pressures cause price reductions. A product upgrade is released, generating another peak in revenue – but not as high as the initial release. This cycle can be repeated until the product is replaced. Microsoft Office Suite is a good example of this cycle.
Another example: pharmaceuticals – initial uptick in sales, then as the drug is approved for more uses, sales increase again.
Products may also exhibit this pattern due to advertising and promotional investments during the maturity phase.
Primary Cycle
Recycle
Time
Stage of product life cycle

36. Treacy & Wiersema Value Disciplines Model
Product Management Intensive
Treacy & Wiersema Value Disciplines Model
Apply to a real-world example for discussion
Three ways to create value and differentiation:
Operational excellence
Customer intimacy
Product leadership
For more reading: The Discipline of Market Leaders (Treacy and Wiersema). Their main argument is that any company must pick one value discipline in which to excel, and ideally be the best. Other two should not be disregarded but “OK” is probably sufficient.
Three ways to create value for the customer and differentiation from the competition:
Operational: Superb operations & execution. Often by providing a reasonable quality at a very low price. Efficiency, streamlined operations, SCM, volume. Metrics critical.
Dell, WalMart
Customer Intimacy: customer attention & customer service. Tailors products & services. Large variation in product assortment. Lifetime value concept, reliability, partnering with customers.
Amazon? Starbucks? Nordstrom?
Product leadership: strong in innovation and brand marketing. Operates in dynamic markets. Focus on development, innovation, design, time to market, high margins in a short timeframe.
Apple? Samsung? Google?
For further reading: The Discipline of Market Leaders, by Treacy and Wiersema.

37. CPM/CPMM Certification Topic Review
Kotler Model
Apply to a real-world example for discussion
Market Leader
Market Challenger
Market Follower
Market Nicher
Coke
McDonalds
Google
WalMart
Pepsi
BK, Subway
Bing
Amazon
Dr Pepper
Food trucks
AOL
(many)
Jolt Cola
Dick’s
Wolfram Alpha
Groupon
Leaders: Google, Microsoft, P&G, McDonalds, Coke, WalMart, Starbucks
Challengers: Colgate, Burger King, Pepsi, Amazon
Market Follower: Store brands; knock-offs; “me-too”. Anyone know the brand name of a Follower? Dr. Pepper, Tully’s
Nichers: Jolt Cola, Micro-brews, vertical software applications (accounting, supply chain, etc for particular markets, like automotive or not-for profits), specialty shops. Lots of ways to define the niche (see segmentation later). Great strategy for mid-sized companies operating in a dominated market.

38. Boston Consulting Group Growth-Share Matrix
Product Management Intensive®
Boston Consulting Group Growth-Share Matrix
Portfolio example: Google
Category example: Google wallet
High
3. Cash Cow
2. Star
Keep costs low
Control business relationships
Hold share & margins
Identify customers & requirements
Innovate to meet market requirements & differentiate
Market Share
The Boston Group Growth-Share matrix is a good model for looking at portfolio management (managing a group of products).
Companies that manage more than one product always have strategic decisions to make about which products get the resources and which don’t, and should be killed or retired. The Boston Matrix helps you categorize products and decide what needs to be done.
What this examination of strategies and lifecycles leads to is that strategy changes depending on what stage your product is at.
Here’s a generalized model of how strategy interacts with life cycle.
4. Out to Pasture
1. Question Mark
Improve profit by cutting costs &/or gaining customers
Low innovation, plan for retirement
Product & process development
Customer segmentation, ID, communication
Low
High
Market Growth
Low 38

39. What’s a Category, and why do I care?
Sometimes we call categories “markets”
Defined by the competitive set – products/services that solve the same problem
If in doubt, find out how Gartner/Forrester/IDC defines it
You’ll be tracking competition in your category

40. Team Breakout Activity
Evaluate your case scenario: Identify the product category, and competing/existing products.
Choose where competing/existing products fall on the Tech Adoption Lifecycle and the BCG Matrix
Be prepared to report your results to the class in 15 minutes
15 minutes activity
15 minute report-out (3 min per team)
What’s next? Now that you have an idea where you are, you need to know where you can go!

41. Ansoff’s Product-Market Expansion Grid
CPM/CPMM Certification Topic Review
Ansoff’s Product-Market Expansion Grid
A portfolio-planning tool for identifying growth opportunities through market penetration, market development, product development, or diversification
Improve existing products or introduce new products in existing market segments 
Increase sales of current product lines to existing markets without changing the product
Existing
Products
New
Products
Existing
Markets
Market
Penetration
Product
Development
New
Markets
Market
Development
Diversification
Market Penetration example: “Shampoo, Rinse, Repeat” “Not just for breakfast anymore”
Market Development example: Baking soda in the refrigerator; nylon, polyesters, most industrial materials; pharmaceutical approved uses, Rubbermaid (food, garage/closet storage)
Product Development: the entire software industry
Diversification: Beatrice Foods, Altria (Kraft & Philip Morris), GE (capital, energy, plastics, appliances, water filters…), 3M
Find and develop new market segments for existing product range
Buy or start up new businesses outside current product lines & segments

42. Discussion: Choose Ansoff Quadrants
Which quadrant (or two) of the Ansoff model will guide your search for opportunities for your case scenario?

43. Market Strategies Tong & Zagula’s 5 Go-To-Market Plays
Product Management Intensive
Market Strategies Tong & Zagula’s 5 Go-To-Market Plays
Drag race: pick one competitor at a time and race to win
Platform: gather allies and defenses to protect your leadership position
Stealth: capture edge segments where competitors are weak; keep doing it until you’re strong enough to win a drag race
Best of both: collapse two ends of a market by appealing to key needs of each part
High-low: split the category, with offerings for elite and for masses
Preview for Spring, and to provide more context for Fall.
Within the context of company strategies, you may also benefit from picking a strategy for each market or business unit.
Here are five strategies, as practiced by two ex-Microsoft executives who are now working in the venture community.
Drag Race: In some circumstances, your best bet calls for singling out one competitor and putting the pedal to the metal racing against them to win the category. This can be quite exciting, so it’s a really tempting choice. But you better have what it takes to beat them over the finish line. (Money?)
Platform: Success can be hell. Once you’ve secured a lead in your category, you have to hold on to it and make the most of it. Standing on your platform at the top of the category, you need to be on the lookout. You must gather allies and defenses. Sounds kind of boring. But it’s essential. Success begets envy and you never know from where a new challenger is likely to emerge. (SharePoint?)
Stealth: Just because you’re not strong enough yet to win the battle doesn’t mean you can’t win the war. In this play, you undermine the status quo in your market by whittling away at the incumbent’s weak points. And maybe even by making them look foolish. But remember, you still have to stay out of their way and survive. Big, dumb, slow competitors can still squish you. (WordPerfect, Lotus)
Best-of-Both: Go ahead, have your cake and eat it, too. While in many cases the smart decision is to focus, requiring a trade-off at the high end or the low end of the market, in the right circumstances you don’t have to. With this play, instead you gain dominance over the whole of a category by collapsing these two ends. If you appeal to the most important needs of each part of the market, you can win them all. (Live and Office Ultimate)
High–Low: Compromise is for weaklings. With this play, you try to close out the competition by splitting the category and owning both halves. It takes a lot of finesse, but when you need to keep a competitor from establishing a Best-of-Both foothold, you need to appeal to the distinct prejudices of both the elites and the common folk, the high end and the cheap. This is the hardest play to manage, but if it’s done right, you’ll achieve high volumes and high margins at the same time. (Dynamics?)
Transition: Knowing your approach to the market will help you shape the strategy for a specific product or product line.
John Zagula & Richard Tong, The Marketing Playbook

44. Product Management Intensive
Strategy in Context
Treacy & Wiersema
Ansoff, TALC
Leverage Core
Competencies
Vision
Corporate Strategy
Divisional Strategy
Product/Market Strategy
Product Objectives
Marketing Tactics
Customer Sat
Ansoff, TALC, BCG, Tong & Zagula
The key to managing up is to stay in alignment with the strategies of the organization above you.
You must be able to articulate how your current product objectives support your product and market strategy, and how that strategy supports your divisional/company strategy.
If you set this piece correctly, your tactics are less likely to be shot down.
The ultimate test of whether your tactics are working is Customer Satisfaction.
But what if the strategy isn’t clear?
Focus on
Customer Needs
Source: Linda Gorchels, The Product Manager’s Handbook, p 66.

45. Product Strategy
Intro to Strategy & PdM Frameworks

46. Product Strategy Statement
Product Management Intensive
Product Strategy Statement
Establishes a framework for the product roadmap: how we will get from “A” to “B”
Explains why the company should invest in the product
Gives Product Team a clear sense of what the product means to the company and to them: effort and reward
Key criteria for prioritization
Pull up Concept Document here and review the first sections
Product strategy needs to fit within the context of the company strategy.
For example, if the company strategy is revenue growth, it might be unwise to undertake a large, long development effort that won’t result in revenues for 24 months.

47. Elements of a Product Strategy Statement
Primary objective
Key strategy for achieving the objective
Target segments
Target competitors
Positioning
Marketing mix (4Ps)
Required resources and functional programs
Among our favorite reference books on Product Mgmt & Marketing is either of Philip Kotler’s books on the subject. He lists these 7 elements of product strategy.
4 P’s = product, price, place, promotion –> target intersection
Notice that there are several “targets” to help define where the strategy is aimed:
Objective
Target segment
Target competitor(s)
And notice that there’s an indication of what it will take to employ the strategy, since strategy is all about spending money!
Transition: let’s look at how you might together a strategy statement.

48. Strategy Statement Format
Product Management Intensive
Strategy Statement Format
Why this product is being developed
How it fits with company mission & strengths
Target market and size of opportunity
Why it will be successful
Competitive target and positioning
How the company will make money (business model, pricing strategy)
Marketing and channel strategies
Delivery approach and decision drivers, for example:
Address key market segments first
Solve particular problems first
Fast iterations vs. longer and fewer cycles
Target price, margin, cost
Note that the Concept doc includes product vision, fit with company mission, general size of opty, and proposed advantages. You’re encapsulating this information and including a delivery approach.

49. Strategy Statement Example
Agile Advantage Portfolio Manager provides portfolio-level insight into Agile team performance, supporting adaptive planning and maximizing return on software development budget investment. It forms the core of a product line that provides metrics for the company’s value proposition, and drives professional services revenue streams. Agile Advantage offers products and services to more than 10,000 software development organizations whose budgets are $10M or greater.
Agile Advantage products are priced based on a small percentage of the portfolio value under management, similar to the way that financial planners charge for their services. The company sells its products and services directly and through major ADM tools vendors such as Rally and VersionOne, where Agile Advantage products complement their existing offerings.
For 2012, the competitive target is Serena Software. Agile Advantage contains deep enterprise Agile expertise, and historically Serena has not been successful in adapting their products or their own practices to Agile.
We will target large digital media companies, as software development and agility are critical to their success. In 2012, we will focus on delivering Demand Management capabilities.

50. Homework for next week
Uncover the strategy that is being implemented at the product line/product level in your case scenario
What’s the next likely strategic move, and how soon?
Write your findings in a few paragraphs (~500 words) and post on the team site; read others’ posts