Managing a Market-Driven Product Portfolio
By Mike Marfise
Managing a product portfolio involves more than just balancing resources for existing products. Product managers must help maintain a full pipeline of new products and product enhancements. For many companies, this part of the process is driven internally, with a focus purely on allocating resources, ROI, and risk/return. But the increasing pace of business change and increasingly higher expectations from customers is compelling companies to re-think how they manage their suite of offerings. This article discusses the evolution from an internally-driven portfolio mindset in favor of one that focuses on delivering market value, and how making that transition can shorten the product release cycle while improving product-to-market alignment.
From Market Data to Product Requirements
In the rush to get products out to market faster, or to meet highly-aggressive product development schedules, many companies begin building future products or product enhancements before any significant product planning has been completed. This “development for development’s sake” is highly disconnected from actual customer or market needs. Companies must understand the business problems they’re trying to solve before they start to build products.
The most logical place to begin is with your customers and other business contacts. Be sure to touch all audiences – customers, analysts, sales prospects, partners, etc. Spend as much time as possible finding out about your buyer’s unique challenges. Reach out to customer stakeholders for product feedback, ranging from market input on use cases and feature priorities to requests for enhancements and new features. This feedback instantly becomes part of the planning environment.
Also, leverage the wealth of customer and product feedback that may already exist within your organization. This data could reside in documents, surveys, bug-tracking systems, spreadsheets, e-mails, your CRM database, etc. – perhaps even sticky notes.
When you’ve gathered as much information as possible, spend time analyzing through the data you accumulate. Use themes to validate that release goals were consistent with product strategies. Categorize and prioritize your information in multiple ways, such as:
- Customer preferences
- Market segment and micro-segment preferences
- Competitive gap
- Whether and how much requested features support product/planning themes
Identify consistencies, and begin incorporating all of this information into your product planning.
Also, don’t forget to take yourself out of the equation. This can be difficult to do, but it’s important to remember that you are not your customer – your customer is your customer. Concentrate on accumulating market and requirements data, understanding customers, understanding priorities, and then formulate a vision for what the product could look like. With this information at your ?ngertips, you can then analyze the impacts to real customers with real data.
Finding Solutions to Assist With the Market-Driven Product Portfolio Process
When you look for product planning and portfolio management solutions, consider ones that not only serve as a database for organizing requirements, but that also integrate decision making and analysis, voice of the market data capture, and provide you with views across your entire portfolio. The tool you decide upon should enable you to tie products to markets, customers, and business strategies. Among other things, good enterprise product planning technology should enable you to:
Linking Market Data and Corporate Strategy
Individual customer needs should be viewed in the larger context of your business, allowing you to analyze whether the improvements you’re targeting are consistent with the strategic goals and objectives of your organization as a whole.
Here are some techniques for using this data to develop, model and analyze product strategies and market strategies against corporate goals and objectives, product objectives, and market conditions.
- Use “what-if” scenarios to compare and contrast alternative plans using cost, payoff, and alignment analyses, and compare them to your overall corporate objectives
- Perform competitive analyses to see how alternative releases would position you against your competitors in the marketplace
- Examine how planned features support product planning themes
- Look strategically at how you should be laying out each release, and examine the alignment between each release and your corporate strategies: Are the enhancements you’ve prioritized consistent with where your company wants to be in the marketplace? How quickly will they help you get there?
Integrating Market trends into the Requirements Process
An important consideration to factor in is understanding market trends. Market trends are amalgams of data points that can come from a variety of sources: analysts reports, evolving competitive products, new technologies shaping the market, shifts in attitudes or customer buying habits, etc. When capturing this “voice of the market” you should have a process to tie it into specific product requirements, and then weight those requirements. For instance, you may base a potential new feature on a need identified in an industry analyst report; you’d weight that new feature differently depending on how much respect and influence that analyst wielded. Then you’d need to link that requirement to that analyst report, so you can always trace this feature back to its original source. Weighting can be even more critical when working with customer and other stakeholder data as well.
Once you’ve created a comprehensive product roadmap based on this data, you won’t likely have the resources to build every requirement to meet every trend. You must be able to weigh the resources vs. the market impact tradeoffs by performing scenario and alternative planning, so you can see how different combinations of requirements best help you address the trends you’ve identified as most significantly affecting your business.
The “Voice of the Customer” in the Portfolio Assessment Process
Market-driven portfolio management requires ongoing – not periodic – research, and customer feedback is no exception. The key to practicing an effective “voice of the customer” program is to generate ideas and input from your customers continuously – not just centered on the current release – then enter their feedback directly into a database and share that information externally as well as internally.
You may need to use several different methods to capture continuous feedback from the customer. Recruit your implementation and sales teams to gather suggestions from the customers and prospects with whom they engage. (A side benefit: Your sales team can also indicate the value of a speci?c idea or feature, i.e. “If you build in these features, I can close these deals.”)
Even more importantly, create “communities of social innovation” out of your customer base. Some of the ways you can do this:
- Consider building an online forum for customers to communicate with each other
• Assist with the formation of customer focus groups and summits
- Think about creating a self-service idea portal where customers can submit suggestions and ideas, and also view and rate each other’s ideas
Getting customers to identify what’s important to them in this manner not only generates a sense of community and sharing amongst users, but also leverages the customer touch point to generate feedback on features that have been logged in the past. You can demonstrate how you’re listening to your customers, and reinforce their participation, by enabling them to log in to track and view what happened with their idea, including any progress in the development cycle.
Dynamic Portfolio Management
The frequently-changing business environment should always be considered when managing your product portfolio. Identify and model alternative approaches to changing market forces in order to understand the implications of change before you make adjustments to strategic and tactical product plans. Track market and customer preferences, trends in competitive landscape, and technologies in order to identify the need for (and timing of) product replacement. Create detailed generational product roadmaps that account for product evolution. Finally, maintain a product feature "inventory" against which future product releases and product replacements can be compared to ensure appropriate compatibility.
Reducing Time to Market
What about the payback for all this time and effort spent gathering and analyzing data? What effect does a market-driven portfolio have on the product lifecycle and management process?
In fact, a market-driven portfolio can lead directly to a range of improvements. You’ll improve time-to-market through faster, more effective product planning. You can achieve greater accuracy in anticipating customer and market preferences to launch more successful products. Through effective planning, you can eliminate product waste such as:
- Duplicate efforts between teams or business units who do not know they are working on the same problem
- Costly design and engineering changes late in the development cycle due to poor definition of a particular feature or requirement
- Work on products doomed to commercial failure due to poor timing, not understanding competitive offerings, or failure to meet customer needs
- Investing in features that are irrelevant to a product’s overall success
Finally, the intimate understanding of customer and market preferences you develop will in general help you shorten the product planning process and lead you to develop higher-quality products that are embraced both swiftly and enthusiastically by the market.
The key to good product development is building the right features in the right product at the right time. Market-driven portfolios are a crucial component of good product development. They compel you to understand your market, link products to business strategy, prioritize requirements, and understand alternatives and impacts of decisions. If you do that, ultimately you’ll deliver a product your customers love that generates a profit for the business.