The Hiddens Skills of Product Development

Is B2B product development a skill or an art?


It's a little bit of both but in this short article I'm going to show you how to make it more skill than art. Here's a couple of things you need to perfect as you move your product from concept to launch.


First Things First - Develop a Project Plan

Here's a good place to start because the best product development project can become derailed quickly if you don't know how to properly plan. My motto is THINK, PLAN, DO. Follow this and you will never go wrong. Over the years I've personally witnessed companies that have jumped to DO bypassing the other two steps and have found themselves unable to react during the development and incubation stages.


If you are familiar with any of the popular project software, like Microsoft Project, feel free to use it. Don't be intimidated though if you are not familiar with any of these. You don't need sophisticated software to prepare a project plan. Remember, it's not the equipment, it's the player.


OK, so you know the devil is in the details so be as specific as possible. It's OK if you miss steps but every project plan should cover processes (steps), people, and time required. The more plans you write the better you will get at it; promise.


Prepare a Budget

I'm often asked, within what margin should the budget be. It may take a while to get a feel for this so be patient and pay attention to what it costs to build your products. Whether you have to use an outside company for development or are being cross charged from an internal department, know your products, the components, and make sure you stick to your plan. Remember my motto, Think, Plan, Do. I guarantee you will overrun your budget if you go straight to DO.

The next question is should you account for the people time. Some of my larger clients who have mature product development departments are capable of allocating full time resources so it is easy to account for the cost of their time. Otherwise, these are sunk costs and trying to account for time other than x% is not worth the effort.


Translating Needs into Requirements

I use a proprietary approach I developed that allows product development teams to quickly identify the stakeholders and map to their needs. Once you know the needs of your target base it's easy to figure out what features need to be built that the customer wants, will keep you within budget, and can be launched within your time frame. Remember, you don't have to build everything in the first phase. I'm a big believer in launching the basic requirements and phasing in new features in future releases that can be publicized. The key is getting the first set right. Too many companies release products that do to much and end up confusing the target market and can't be priced correctly. My Marketing Optimization Grids ensures this never happens.


The Battle for Customers' Minds (Value Prop)
I want to spend just a second talking about value proposition. Here's my definition. I want the customer to do something different than what they do today at a cost (lower, the same or more) that will provide some added utility versus their current product or process. So you see if you add in a lot of features it makes it hard for the customer to understand how this may fit into their current process. The customer may be open to new solutions but if you make the comparison too hard it inertia takes over. And, as I always say, "you can never underestimate the power of inertia".

I'd love to know your product development stories. Write me here or visit me at Stages of Innovation.

Rob Goldberg 2009

When the past no longer predicts the future

What are managers to do when past trends no longer predict the future?


We have done our budgets for years looking at past trend lines adding in seasonality and hoping variability is similar to the past. When results are good we as managers have a tendency to push aside bottom up budgets. The question every manager needs to ask about their business is. "am I seeing a structural change in my marketplace." A structural change is defined as a long-term widespread change of the fundamental structure.


Does this describe your industry?


For those of you brave enough to tackle this or those of you are struggling right now to get a better handle on this let me provide a possible structure. This will help you streamline the budget setting process by validating the underlying assumptions in the budget, developing strategies for growth, and setting objectives to close the gap between your budgeted trend line and the forecasted trend line. Some of you might be asking yourself what does this have to do with innovation. If you have read my blog you know that I believe innovation happens in the gaps. Those gaps exist between what is actually happening and the expectation of what should happen and innovation is how you get back to the high growth.

Here's an approach that should help. For more information go to my web site.


Step 1 Determine Budget Drivers and Sensitivity
Identify and test sensitivity on each budget driver. Budget drivers are a set of key factors that drive the business. Start with the P&L. Identify which items have the biggest impact on the P&L.

Step 2 Test Assumptions

Determine if the drivers you chose are leverageable by testing them with customers and further modeling. Will it be something that we will ask respondents directly, segment later during the database work, or derive through some other means. This step requires some research. It doesn't mean you have to spend a lot of money but it does require you to go out and talk to customers. When you are testing expense assumptions it will require you to talk to internal people.

Step 3 Map Learnings

Analyze data and develop trend lines. Compare against the budget trend lines. You will need a good financial modeller to rebuild your budget models with the new forecast. After you are done try graphing the results and the gaps will be obvious.

Step 4 Action Planning (The Innovation Gap)
Determine which assumptions we want to work on. This is a prioritization exercise as much as it is a action planning exercise. I'll post a prioritization method that works for my clients in another article. By now you understand the sensitivity of the assumptions and the individual impact they have on the P&L. Remember some of the assumptions are dependent on others. For example, service revenue may be dependent on renewal and new customers. The underlying assumptions that need to be worked on then would be retention and new customer acquisition.


Step 5 Objective Setting
Each strategy is broken down into a set of activities that will be used to set specific objectives throughout the organization to close the gap between the trend lines.


Step 6 Measurement / Strategic Architecture
The final step is to put in place a measurement tool to ensure the gap is closing.

Good luck and remember you can always email us for more information on how we can help your company or check our web site.



Rob Goldberg 2009