1. DRAFT V0.3 Customer-Focused Product Management Geoff Huckleberry September 3, 2003

2. DRAFT V0.3 Discussion Topics My Profile My Profile Value of Customer Research Value of Customer Research Key Success Factors Key Success Factors – How to Get Most Value Out of Research You Do?

3. DRAFT V0.3 My Profile 11 Years of Product Management Experience with Software Products and Services 11 Years of Product Management Experience with Software Products and Services 15+ Years of High Tech Experience 15+ Years of High Tech Experience Blend of Fortune 500 Experience (Intuit, CCH Incorporated, American Express) and Startup Experience (ChemConnect, Instill) Blend of Fortune 500 Experience (Intuit, CCH Incorporated, American Express) and Startup Experience (ChemConnect, Instill) Success Launching New Products and Driving Revenue Growth (566% growth in 18 mos. at Intuit, 200% growth in 12 mos. at ChemConnect) Success Launching New Products and Driving Revenue Growth (566% growth in 18 mos. at Intuit, 200% growth in 12 mos. at ChemConnect) MBA (UCLA Anderson) + BSEE (UC San Diego) MBA (UCLA Anderson) + BSEE (UC San Diego)

4. DRAFT V0.3 Product Manager Profile Lots of Accountability but No Authority Lots of Accountability but No Authority Must Convince People with Lots of Authority but Limited Accountability to Support Your Decisions Must Convince People with Lots of Authority but Limited Accountability to Support Your Decisions Accountability Includes: Accountability Includes: – Product Success (# Customers, Customer Satisfaction, Revenue, P&L) – Making Important Tradeoff Decisions with Incomplete Information – Translating Customer Needs into Executable Requirements

5. DRAFT V0.3 Customer Knowledge is Product Manager’s Key Success Factor The Better Your Customer Knowledge, the Better You Can: Focus Development on Product Attributes that Will Most Significantly Impact Product Success Focus Development on Product Attributes that Will Most Significantly Impact Product Success Convince Others of Your Product Decisions Convince Others of Your Product Decisions Predict Product Performance Predict Product Performance Identify New Product Opportunities Identify New Product Opportunities Stay Ahead of Competition Stay Ahead of Competition

6. DRAFT V0.3 You Have Deep Customer Knowledge When… You Can Consistently Predict What Target Customers Will Say Before They Do You Can Consistently Predict What Target Customers Will Say Before They Do How to Develop Customer Knowledge: Understand User Profile Understand User Profile – Function (What Trying to Accomplish) – Education Level – Affinity for Technology – Prioritization of Activities, Benefits – Pain Points (General and Related to Your Product) – Environment Understand How Product or Substitute is Being Used Today Understand How Product or Substitute is Being Used Today – What Works/ Doesn’t Work and Why

7. DRAFT V0.3 Key Success Factor #1: Begin with the End in Mind Create Customer Research Plan Including: Create Customer Research Plan Including: – Objective (Key Findings) – Decisions to Be Made Based on Research – Target Profile and Sample Size – Methodology – Key Questions to be Asked Benefits Include: Benefits Include: – Clarity of Goals, Target, Decisions Leads to Superior Results – Buy-in from Peers, Execs Cost of Not Doing It: Cost of Not Doing It: – Trite or Useless Feedback

8. DRAFT V0.3 Key Success Factor #2A: Plan for Research Even Under Tight Deadlines Benefits: Benefits: – Greatly Increases Chance of Success (small percent of new products succeed) – Improved Customer Response to Launch – Focus Development on Key Value Drivers Cost of Not Doing It Cost of Not Doing It – Increased Likelihood of Product Failure –  90% of Effort Follows Definition Phase and is Potentially Wasted – Opportunity Cost of Mis-applying Resources – Support and Training Costs

9. DRAFT V0.3 Product Development Timeline – Errors in Definition are Multiplied True Customer Need Definition Needs Assessment Concept Testing Development - Usability Testing - Beta Testing Testing Sales/Marketing Rollout Implementation & Support Range of Possible Error Product Launch/Re-launch is Expensive (Time/Money/Opportunity Cost)

10. DRAFT V0.3 Key Success Factor #2B: Avoid Relying on 2 nd Hand Feedback in Place of Research Benefits: Benefits: – Your Decisions Are Not Exclusively Based on Other People’s Interpretations – You Can Directly Translate Customer Need to Engineering Requirement – You Are Capable of Detailed Tradeoff Analysis Because You Experienced Customer Need and Prioritization of Needs – Role Bias – Client Services, Sales, Support will bias data based on their perspective/filter Cost of Not Doing This: Cost of Not Doing This: – Suspect Information. 2 nd Party Probably Was Not Aware or Diligent about seeking right targets and asking the questions in proper context. – Loss of Control Case Study: Any Case Study: Any

11. DRAFT V0.3 When Using 2 nd Hand Research Always Ask… What is profile of interviewee. Are they part of the target? What is profile of interviewee. Are they part of the target? How many people actually requested this? Recent mentions often get over-stated so best to be clear. This is especially true of Support, Client Services, and Sales. How many people actually requested this? Recent mentions often get over-stated so best to be clear. This is especially true of Support, Client Services, and Sales. What specifically did they say? What specifically did they say? How did you specifically state the question? How did you specifically state the question?

12. DRAFT V0.3 Key Success Factor #3A: Tightly Define Your Target Benefits: Benefits: – Useful Feedback That’s Predictive of Market Response to Product – Opportunity to Correlate Feedback Cost of Not Doing This: Cost of Not Doing This: – Irrelevant Feedback – Product Failure (impossible to optimize for unknown customer) Case Study: CCH Case Study: CCH

13. DRAFT V0.3 Key Success Factor #3B: Include Target User in Research Benefits: Benefits: – Greatly Increases Likelihood of Product Being Used – Increases Customer Satisfaction Cost of Not Doing This: Cost of Not Doing This: – Focus on Irrelevant Issues (purchaser/influencer often doesn’t know user issues) – Poor Penetration of User Community – Negative Impact on Renewal Rate and Pricing Power Case Study: Instill Case Study: Instill

14. DRAFT V0.3 Key Success Factor #4: Focus on Delivering Value Not Technology Benefits: Benefits: – Higher Likelihood of Product Success Since That’s Often All Customer Cares About – More Intuitive Solution Costs: Costs: – Poor Usage and Customer Satisfaction Case Study: Instill Case Study: Instill

15. DRAFT V0.3 Key Success Factor #5: Focus on “Lowest Cost Denominator” User, Then Power User Benefits: Benefits: – Broader Market Penetration and Appeal – Superior Financial Performance – Usually Satisfies 80% of Needs With 20% of Effort Cost of Not Doing This: Cost of Not Doing This: – Developing product that misses broader market – Poor financial performance Case Study: CCH Case Study: CCH

16. DRAFT V0.3 Key Success Factor #6: Don’t Get Defensive - Seek Actionable Learnings! Benefits: Benefits: – Opportunity for Significant Product and Financial Improvement – Negative Vocal Leaders Can Become Best Advocates Cost of Not Doing This: Cost of Not Doing This: – Lost Opportunity to Improve Product – Vocal Leader Getting More Negative Resulting in Lost Customers and Negative Press Case Study: Instill Case Study: Instill

17. DRAFT V0.3 Key Success Factor #7: Be Customer Focused Not Customer Compelled Benefits: Benefits: – Understand Customer Needs and Priorities so can Optimize Solution for Maximum Customer and Company Benefit. – Financial and Customer Satisfaction Improves. Cost of Not Doing This: Cost of Not Doing This: – Sacrificing your company’s needs for customer’s desires. – Inferior solution and financial performance. Replacing your team’s expertise in applying technology to solve problems with that of someone less skilled (customer). Case Study: Southwest Air, Intuit Case Study: Southwest Air, Intuit

18. DRAFT V0.3 Successful Products Satisfy the Value Proposition Triangle Company Objectives Customer Objectives Delivery Team Objectives

19. DRAFT V0.3 Key Success Factor #8: Include Your Competitor’s Customers Benefit: Benefit: – Understand Your Perceived Weaknesses Relative to Competition and How to Overcome – Understand Your Competitor’s Weaknesses and How to Position or Build Product to Exploit Them Cost of Not Doing This: Cost of Not Doing This: – Miss Valueable Perspective – Susceptibility to Competitor Product Case Study: CCH Case Study: CCH

20. DRAFT V0.3 Additional Research Techniques If Possible, Avoid Bringing Sales, Client Services or Anyone Who Might Want to Cover Weaknesses (you want the dirt!) If Possible, Avoid Bringing Sales, Client Services or Anyone Who Might Want to Cover Weaknesses (you want the dirt!) Disarm Participant by flagging the discussion as being research, to get them to open up Disarm Participant by flagging the discussion as being research, to get them to open up Define Questions in Advance that Meet Your Objectives Define Questions in Advance that Meet Your Objectives Ask them to prioritize, rate and quantify where possible and explain answers Ask them to prioritize, rate and quantify where possible and explain answers

21. DRAFT V0.3 Unique Application #1: Using Customer Research to Improve Product Sales Case Study: Intuit Case Study: Intuit