Brenda rushed over from her desk in the sales pit. She was clearly excited. She’d uncovered an opportunity to partner with a local firm that would distribute our free demo to a few thousand of their customers and she was convinced it would be an easy way to generate a lot of new business quickly. Printing demo discs was cheap and she just wanted my ok to get some co-branded materials made to package them with, and maybe we could do a seminar together, and dedicate some telesales resources to following up on the leads. It was nearly free marketing, right?
I said no. I also helped Brenda understand why this didn’t fit with our strategy, and where she could more profitably focus her sales efforts. The company had been using a free demo disc for a couple of years to bring in small business customers. We’d run the numbers and it really wasn’t a profitable go-to-market approach. We weren’t ready to phase out the SMB business all together, but it was clear we needed to go up-market.
I work with a lot of companies that are, like this company was, just coming out of the startup phase. They’ve been acquired, or gotten funding, or reached profitability and are looking to add to their product line or expand their market. A lot of them suffer from a lack of focus. Either they have 100 number-one priorities that the CEO somehow magically thinks they can pursue in parallel, or the priorities shift from day to day, or even hour to hour. What the startup CEO sees as responding with agility to opportunity, the product team secretly refers to as “shiny object syndrome.”
They are both right, of course, but the crucial difference between a death spiral of increasingly desperate shifts in direction and a focused process of pivots in response to market needs is a disciplined approach to prioritization based on best-guess ROI.
Prioritizing solely on gut is one of the Dirty Dozen Roadmap Roadblocks I’ve been writing about recently. It’s a killer for team productivity and morale, and it usually results in high turnover, low productivity, and subpar results.
Bad ways to set priorities include:
- Your CEO’s Gut (no longer in touch with the market)
- Analyst Opinions (mostly backward-looking)
- Popularity (most of your customers are small)
- Sales Requests (change every week)
The Role of Product Management
I redirected Brenda’s efforts that day (and for the next year) by sitting down with her and showing her our prioritized list of initiatives and (this is the important part) the underlying strategic goals that informed it. Everything on the list was ranked as to how much we estimated (guessed) it would help with those goals vs. how much effort we estimated it would take.
I put her idea through this model and, although the effort was small, it didn’t contribute to our new strategic goal of capturing larger customers, it would probably hurt our conversion rate, and it was unlikely to make much of a dent in our overall revenue picture. Brenda seemed happy to be heard, but being a smart salesperson she also absorbed the changed goals of the company and refocused her prospecting efforts.
A year later, Brenda became our first national accounts salesperson and the highest-paid person in the company. Our move toward larger customers doubled the company’s revenue and improved the company’s eventual acquisition price not long after.
As the product manager, I felt it was a key part of my leadership role to communicate and get buy-in on these priorities. I once worked for a boss who called this part of the job "being the adult in the room." Brenda was just one example, but consistently applying these priorities across departments and initiatives is what drove our success as a company.
A Simple Formula
ROI is the basis for the simple formula I use for prioritization. You can’t do everything at once, so you should do the most leveraged things first, the things that have the most bang for the least buck. There’s room in this model to define both “bang” and “buck” however you like (see my piece on setting goals), but the math is simple and intuitive.
Value/Effort = Priority
I’ve used this model for years to set priorities based on relative ROI. I’ve used it successfully to prioritize features, projects, investments, lean experiments, acquisition candidates, OEM partners — even which car to buy. It never fails to support both the right decisions and (often just as important) the right conversations. (See my piece on getting buy-in on your roadmap.) And at the right time, it provides the necessary ammunition for your business case.
Companies that consistently prioritize and focus on a few highly-leveraged initiatives invariably learn faster, grow larger, and become successful by getting everyone pulling in the same direction.
Struggling to set priorities?
If your company suffers from shiny object syndrome, and you're struggling to set priorities for your product or business, grab a half-hour slot to chat with me. I'm happy to help.
Use your product powers for good.