I’ve included my slides from that session.  After a quick introduction including a framework for approaching pricing decisions and a quick review of pricing strategies, the discussion quickly centered on the real issue in pricing, which is understanding the value you bring to the marketplace.

When you clearly and consistently communicate the value you bring to customers and your channel partners, then price changes – or simply resisting price pressure – are far easier to deal with.

Understanding all the ways your product and your company deliver value answered many of the attendees questions:

• How much competitive assessment is enough?  Until you understand your value against other alternatives.
• How do you price across a product line?  Vary the product so that there are clearly-defined levels of value delivered, and price accordingly.
• How to manage mid-season price increases (from several sporting goods companies)?  Be transparent about your costs and how you add value to reseller’s business. 
• How to deal with price pressure from procurement teams?  Understand what your decision-makers value, and where you might give some lower-value and low-cost consessions to make Procurement happy. 
• Can you provide ‘unique’ pricing to each channel partner?  tailor product offerings to reseller’s value prop through core products plus combinations of add-on features and services.

Product Management’s job is to understand customer ( and channel partner) perception of value, and build the product so that it can fulfill those varying perceptions in a flexible way.  And then help your Sales team communicate it in a powerful way.  When is the last time you chatted with your sales team about their pricing concerns?

“What’s software debt?”  you ask.  You know that long list of bugs in the tracker?  That – and more.  All diagnosed, analyzed, and explained in Chris Sterling’s new book, Managing Software Debt – Building for Inevitable Change.

Here are some indicators we’ve experienced that show unmanaged or excess debt:

• Tweaking a feature ‘here’ breaks something ‘there’ – someplace that should be totally unrelated.
• The estimate for a simple feature is “That’ll take weeks – that section of code is a mess.”
• Nothing after your ‘code complete’ milestone stays on schedule (even the revised, updated, re-baselined schedule).
• Dev teams blow every schedule due to putting out production fires.

These all sound like technical or quality problems – so what should and can a Product Manager do about it?

We believe that anything a PM can do to improve product profitability falls in the scope of your job.  Addressing software debt decreases development effort and increases productivity, leading to more features for your money in each release.  Now are you interested?

Read Managing Software Debt.  While it’s written for developers, Product Managers will gain a good understanding of the causes of software debt and the role that you and other business stakeholders can play in reducing it.  In addition, you’ll get answers to some of your questions about how software design and architecture are addressed in an Agile environment.  Plus, you’ll find a great checklist of non-functional requirements on pages 184-185!

Organizations do this every day when they don’t bother to use consistent Product Management processes across the company. 

So what?

It might work OK except for one thing:  Product Management is a team sport. 

If the rest of the cross-functional product team doesn’t know what to expect from the product manager or the process, they waste their time waiting for direction, or dashing off in the wrong direction. 

Eventually they disengage – it’s just too hard to figure everything out, and they already have enough to do. 

And when that happens on a broad scale you find yourself in fire-fighting mode, with lots of surprises along the way.  Not a great place to be when you’re trying to set executive expectations.

How did it get that way? 

Maybe you recognize one of these situations:

• Product managers use whatever process they developed or were trained in at their last employer
• M&A activity allows the newly acquired group to “operate autonomously”, but requires product-level integration
• Product managers report to business unit managers, with no functional PM leadership (like a VP of Product Management) to direct PM activities
• Business unit leaders pursue different strategies or executive incentives drive different types of behavior, e.g. “Just launch it” vs. “build customer loyalty through the highest quality product”

The winning moves

• Identify the differences by mapping existing processes and comparing tools and deliverables.  The Stage-Gate model or the forthcoming AIPMM framework might provide a good baseline.
• Look for the differences that represent the greatest variation in results.  Which products are Sales and Support best/worst prepared for at launch?  Which products came out of development “on-time” vs. late?  At what point are weak ideas identified and killed?  Which products met their revenue/profitability expectations?
• Collaborate with cross-functional and cross-divisional stakeholders to evaluate problem areas, set target improvement goals that reflect business drivers, identify best practices based on both internal success and industry best practices, and propose new standard processes.
• If it’s unclear which process should become standard, consider running side-by-side tests of these parts of the product lifecyle, to identify which will be better to use across the organization.  Based on test results, select the better process.
• Train all Product Management team members and key internal stakeholders on the standard processes.  Provide access to refresher training and tools.

The Prize

With a defined process applied consistently across the organization, your company not only becomes more efficient, it gains business agility.  Employees can more easily transfer to different business units and not spend as much time learning “how it’s done here”. 

And when best practices are shared across the organization, product success rates go up, driving profitability and reducing risk.

Join us to identify your own best practices and learn a few more at our upcoming Product Management Intensive on November 17-18 .

Salary plus variable is the preferred form

Sixty percent of respondents indicated that a bonus based on product revenue, gross profit, or contribution margin is one component of an ideal comp plan.  But combinations of motivators vary depending on size or stage of company, time horizon, and perceived degree of control. Here are some of the comments:

“While revenue/margin/profit are the ultimate measurements  for many of us  especially if in an early stage  these results will not reflect your efforts until much later (probably the next fiscal year)  so it’s also good to base bonuses up achieving goals/metrics that we know are based upon best practices for achieving successful products.”

“The true value of the success of a product is the value (as expressed in $) that it brings to the company / shareholders.  There are many great products that don’t make money and terrible products that do make money – which one do you think a company prefers?”

“Motivation should be based upon factors within your control/influence. Unless you work for a very small company, the impact your actions play on company performance metrics will be miniscule and therefore a disincentive.”

“It provides bonus potential on the two aspects of product delivery; MBOs for getting product released  and revenue/contribution for making the right product.”

Another good way to sum this up is strategy vs. tactics.  MBO’s often force a short-term view, and result in a focus on tactics.  Revenue targets or other product performance metrics can result in a longer-term, strategic focus; or are sometimes very short term.  Why might that be?

Does product life cycle play into this?

While not explicitly mentioned in any comment, reading all the comments together points to one underlying factor:  your perception of the basis for variable compensation is probably influenced by the PLC stage of your product.  If you’re working on new product introductions – pre-revenue – then of course you’d like to be compensated on MBO’s and possibly company performance.  But if your product is in growth stage and successful, then it would be great to be comp’d on top line revenues or achieving market share targets.  And if you’re managing a mature product, compensation based on gross margin, profitability, or customer retention might be just the ticket.

“Bonus/Commission Only” – are these people crazy?

Or just really confident?  Almost 25% are willing to put it all on the line.  This comment says it best:

“Ultimately the Product Manager has the responsibility for the success of the product.  Your compensation should be tied to this success — you’re rewarded handsomely for achieving or exceeding goals (can be rewarded with 100%+ of your target bonus) but you’ll also lose compensation if your products fail to meet expectations.”

The Management take-away

If you manage a group of product managers, you’ll want to work with HR to create a structure for a compensation plan that can be applied consistently across the group, yet tailored to fit each team member.  Factors that can help you tailor the plan include focus on strategy vs. tactics, product life cycle stage, and short- vs. long-term objectives.

The right comp plan is one important factor in both a product manager’s and his/her product’s success. But make sure you support each team member with the skills to achieve that success. Send them to the next Product Management Intensive and watch performance soar!

Start/Finish, High/Low Are Covered

Like one of the firms we recently worked with, roadmapping is not a regular activity.  Both firms were working against a roadmap created 12-15 months ago.  They had pretty much executed everything, and realized that it’s time to do a new one. 

And how to set priorities?  “Well,” my friend said, “there are some pretty obvious things that have to be included.  And there are some pretty obvious things that shouldn’t be included.  And then there’s the stuff in the middle.”  I asked how they parsed those items.  “We don’t have a great method, we just kind of argue until we fill up the development bandwidth,” he said.

Sound familiar?  Both issues – the freqency of roadmapping efforts and the method of determining the content of the roadmap - somehow address the extremes but leave the stuff in the middle to opinion and politics, or completely unattended. 

A Strategic Process, Not an Event

Initiating a roadmapping effort takes strong leadership.  Key stakeholders in the process, those with strong influence, often don’t want a formal process.  They want the ability to change strategy and plan to meet their specific goals (watch those MBO’s, folks) and feel that a roadmap gets in the way of being ‘nimble’. 

So to get those folks on board, we’ve found it effective to revisit the roadmap quarterly and review any changes in the market that might need to be taken into account.  Up front, agree on what factors or metrics you’ll monitor that would cause you to reconsider. 

Prioritizing the actual product enhancements/inititatives can be a bit more complex.  It’s always a trade-off between business value and cost.  How you define business value is situational.  Sometimes competitive concerns drive it, sometimes customer retention or acquisition; sometimes cost savings. 

Using a formal scoring process doesn’t make the process totally objective, even though it may seem that assigning numeric values would be objective.  The real value in a scoring process is the conversation it enables, in which underlying assumptions and motivations can often be brought to the surface.  Data or the lack of data can be examined, and addressed.  But we also recommend that the “pretty obvious includes” be included in the scoring process – you may be surprised at the results. 

How do you deal with the “stuff in the middle”?  Leave us a comment!

OK, it’s not a coincidence that we’re offering our half-day Roadmapping Workshop later this month and again in October.  If it’s time for your organization to start or improve your roadmapping process, come join us!

Of course, you did that nine months ago, promising said enhancement requests would be delivered… um… last month.  Ahem.  “Yes, well, uh, we had to work in an enhancement for another important customer like you and then it took longer than we thought and then…”

Tired of moving boxes around on a PPT slide and calling it a roadmap?  Here are three keys to getting out of the graphics production business and back to real product management.

1.  Product roadmaps are based on product strategy.  If you can’t articulate your product strategy, then you will be forever creating tactically-driven roadmaps and making perpetual excuses to your customers, partners, and executives.

2.  Product roadmaps are not a commitment to ship.  They’re an indication of the direction you’re headed, the basic route you’ll take, and approximately when you’ll get there.  For commitments, use a Product Release Plan (e.g. 6 months).  Release plans have assigned resources and tracked progress, so your commitments have some weight behind them.

3. In switching to a strategy-driven roadmap, you may think that you’ll just increase your ‘key customer’ management burden.  Surprisingly, once your customers understand your strategy, many will agree with how you’ve incorporated their enhancement requests in the release plan and roadmap.  When no strategy is apparent, it’s just a head-to-head competition between customers for priority – and what makes one customer more important than another?  That’s a very hard question to answer in front of customers!

If you’re ready to transform your roadmap into a strategic management tool, join Product Arts and Pivotal Product Management on August 24 for our new action-packed workshop, “Creating Product Roadmaps for Market Impact”.  You’ll work on your own roadmap and determine what’s missing, how to fill in the gaps, and how to pull all the information together in a way that puts you out in front.  And we’ll prepare to you to communicate your roadmap to executive audiences.

Verbal Leadership - The Right Time to Speak Up

One of the ways that product managers make their leadership evident is by speaking up – it’s part of the job.  Good occasions to take the initiative include:

1. Communicating Status.  You need to communicate status in your product team meetings, but you also should do this in monthly or quarterly business reviews.  You also may have an opportunity to speak up via publishing and commenting on a dashboard that tracks the key business metrics.
2. Public Kudos to Team Members.  Be sure to speak up when good things happen on the product team.  And when you give kudos to a team member, make sure this information gets shared, both within your team, and outside it too!  Give people the recognition they deserve.
3. Making a Recommendation.  Speak up to pitch a new product idea, or to recommend a way to become more profitable.
4. Information for Execs.  You can “speak up” in a more individual way, by providing up-to-date market information to executives so they can make better decisions.

A good point to keep in mind: you want your entire team to be viewed as credible experts and leaders in their own right.  So let them speak – ask them to speak – when it will build their credibility.

The Leadership of Silence

There are lots of opportunities for product managers to show leadership by speaking up.  But sometimes it’s best to stay silent.  How do you know when silence is the right strategy?  Here are a couple of obvious occasions:

1. Managerial Issues.  Let the manager lead at all times.  Your manager takes precedence unless you’ve agreed in advance that you will take the lead.  And even then, if an unexpected issue comes up, you may need to check in with your manager before responding, especially if it’s a commitment.  Also, be aware of this when working with the managers of other groups – and let them speak for themselves and their teams.
2. Bad News.  Second, if there’s bad news to be delivered, never deliver it to the group until you’ve discussed it with the functional lead or leads that it impacts most.  Never “throw someone under the bus!”  Showing your support in difficult circumstances will help you earn the trust of your team members.

What’s the best course – to speak or not to speak?  Ask yourself:  “Is there someone else whose credibility depends on speaking up?”  If so, wait for them to take the lead.

Bringing Up the Unmentionable

But if nobody else will say it, there may be times when you have to be the one to mention the unmentionable.  You can be both straightforward and gentle about it.  One way to bring up the unmentionable is to start by saying something like: “I feel like there’s something that needs to be brought up and discussed, and it might not be a welcome topic, but here it is.”  Most people will be grateful that you had the courage to get the issue on the table in a professional but human way.

Go With Your Gut

Good leadership often means helping your team not to OVER-commit!  Sometimes silence is golden.  Our best tip is to go with your gut – watch for signals from peers and managers and learn when it’s best to speak up and when it’s best to let others take the lead in saying what needs to be said.

Product Management Coaching

Pivotal Product Management helps individual product managers to personally succeed throughout their careers, whether they’re new to product management, a seasoned professional who needs some mid-career acceleration, or a team leader whose goal is to make the entire product management function more effective within the organization.  Need help?  Consider setting aside time and budget for a monthly or weekly coaching session to boost your career.  For details, go to: Coaching.

In a recent post on Motivating the Cross-Functional Team, we offered a sure-fire technique for gaining credibility with your cross-functional team.  It’s called the “What’s In It For Me”  rule.  Product managers can use WIIFM to look at each individual’s point of view and truly understand their issues, helping to identify the chief WIIFM motivators.

WIIFM for Executives

The next step is building credibility with key executives.  WIIFM at the top is simple.  Always remember:  execs are “coin-operated.”  Find out how they earn their bonus, and show how you’ll help them get it.  If you need support from a senior manager or executive, find out what that individual must deliver to earn their bonus.  Then figure out how you can demonstrate your support of that goal.

The Bulls’ Eye of Executive Connection

Next, look at your connection with key executives – we call it the Bull’s Eye of Executive Connection.  The product manager is in the center of the diagram, titled “You.”

The innermost ring– the dark brown ring–represents a close working relationship, whether that means frequent contact or just a strong working rapport.  The middle ring represents a more casual working relationship – for example where there is only occasional contact, or not as strong a rapport.  It’s friendly, but not as connected.  The outermost ring represents relationships with only infrequent contact, or there might be some kind of conflict happening.  And outside the Bull’s Eye, there is no connection at all.

In this hypothetical scenario, it looks as though the Product Manager’s relationship with Mr. K is good (innermost ring).  Then, moving out, he has a good relationship with Ms. A, and that might be enough.  It depends on how much he needs her support, or her team’s help.  Moving to the outer ring, it looks as though our product manager has some work to do with Ms. Z, especially if he needs the help of anyone on her team.  And he’s not even on Mr. X’s radar.

What do you need this diagram to look like, in order to be more successful?  As a general rule of thumb, you want all executives who have any connection to your product to be in the inner two rings. For help with assessing your own situation, request a copy of our complimentary “Leading from the Middle” worksheet.  Email tools@pivotalpm.com.

Building Your Credibility – Next Steps

The action we recommend you take is to actually fill out this Bull’s Eye and use it to identify your gaps.  Next, think of a small step you can take to strengthen your relationships in the outer rings.  For example, ask for a meeting to get the executive’s feedback on an important product issue.  Use the opportunity to find out how you can better align with that executive’s goals.  Learn to think about your product from the executive’s point of view and relate it to their business objectives.  Finally, it helps to understand higher-level company goals from a Finance perspective.  So if you don’t have a good grasp of financial concepts, find an analyst in the finance group to help you get up to speed.

Leading from the Middle

Pivotal Product Management provides product management training, consulting, coaching and skills assessment.  For help with building your credibility with executives, request a copy of our complimentary “Leading from the Middle” worksheet. Email tools@pivotalpm.com.

They’re great because you get all those functional experts working together to make your product more successful.  But the bad news is that each person on your team already has a full-time job, and making time to work on your product team can be a challenge for them.

Identifying the Barriers

If you’re working in an organization that has recently adopted or revised the product management process, you might have people on your team who used to do part of what YOU’RE now doing.

It’s possible they’re not happy about handing off part of their job.  After all, we know that product management is the most fun job on the planet – so no wonder they’re cranky!  Plus, it may be that they were once “in charge,” and they might feel that the loss of responsibility is a sign of weakness.

On the other hand, you might have people who believe that “knowledge is power” and don’t believe in sharing.   Or, you might have people who feel under-appreciated – or just plain overworked!

WIIFM:  Sure-Fire Technique for Getting the Team on Your Side

Here’s a sure-fire technique for getting the team on your side:  the “What’s In It For Me” rule.  You can use WIIFM to overcome resistance by looking at each individual’s point of view and truly understanding their issues.  Then, give them what they need – and they’ll keep coming back for more!

Distributing the Information

Most important – how does your sales team relate best to reference information?  And in what medium do they spend most of their time?  Sales teams in manycompanies are often hanging out in a CRM system like SalesForce.com or Siebel.  If they’re already trained to spend most of their time in an online tool, then try to get all your product binder content included in that online tool. 

Failing that, there are hosted sales portals that will deliver your content securely, for your own sales team as well as channel partners.  Check out sites  like sharemethods.com, synegy.com, and direxxismarketing.com as examples (not an endorsement!).

Putting the content online somewhere provides easy access for sales people around the globe, and makes it easy to ensure that your sales team has access to the most up-to-date version of your pricing, messaging, demo scripts, FAQs, and collateral. 

But there are still lots of sales teams that aren’t online, and they need the information delivered in physical form.  Thus the origin of the “Product Information Binder“, which now sometimes arrives on a CD as a compromise. 

However you deliver it, this centralized reference for all your product information will save you time and interruptions.  But only if your sales force actually uses it! 

Getting Sales To Look It Up First

Can’t tell you how many times we’ve created elegant product info centers, only to hear “I never look there… “.  Why?  Well, you do need to keep the information up to date.  And organize it well.  If you do both of those things and still can’t get Sales to use it, try a contest.  Sales folks are nothing if not competitive.  Leverage this trait with a <your product name> scavenger hunt, for product facts that you know are in the portal, CRM, or binder.  Prizes for the first three to collect all the correct answers and provide the source of the information! 

But don’t forget to call your sales folks anyway… you both need to share info about the current market conditions, and they need to know they’re appreciated!

What tools do you use to get your product information into the hands of your sales teams?  And how do you get them to actually use it?