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Bruce McCarthy is Founder and Chief Product Person at UpUp Labs, where he and his team are at work on Reqqs - the smart roadmap tool for product people.

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Sunday
Sep222013

Product Priorities Start With Strategic Goals

This is the second article in a series called The Dirty Dozen Roadmap Roadblocks. In the first entry, I stated:

“A roadmap is your vision for how a product (or product line) will help achieve your organization's strategic goals.”

This next article is about setting the strategic goals that should guide the product roadmap and keep development on course. As a product manager, you need to establish an understanding between you and the executive team on the destination you are driving the product toward. Otherwise, how do you know when you've arrived?

Why are we doing this product again?

I have a psychiatrist friend who treats a lot of product managers. He says a lot of them end up frustrated in their work because they feel their executive team doesn't "get it" when they explain what their product needs. Product managers are generally a smart, analytical and strategic-thinking bunch, and my friend says they often come away thinking they are smarter than the executives that hire them.

Great CEOs are disarmingly direct and specific about the goals of the company, but often executives simply fail to explain the company strategy to their product team. Shame on them for that, but also, shame on the product manager who doesn’t ask at the outset why the company wants to do this product in the first place. What is it expected to do for the company?

Agreeing on these goals is essential in determining product strategy. Without this kind of explicit agreement, product people will naturally assume they should seek to maximize the sales of their product. This lack of direction can be disastrous for the company.

The problem with maximizing revenue

I remember a company with two new products. One product was getting traction much faster than the other, partly because it was simpler and easier to sell, but partly also because the product manager assigned to it was a stronger personality, had the confidence of the sales and development teams, and was able to direct more attention and resources to this product to ensure its success.

This was a problem because the other product was more strategically important to the company's long-term success. The first product was in a crowded marketplace with well-funded competitors and downward price pressure. It was approved by management as a short-term cash generator.

The other was unique, and more of a strategic differentiator for the company. This product could make or break the company, and it really needed more resources and attention -- but no one had told the product team (or the development or sales teams) that. Fortunately, a (belated but) unequivocal message from the C-suite set things back on course.

What is a strategic goal?

Product goals are all about solving market problems -- like improving gas mileage to reduce fuel expenses. But is solving that market problem n line with your company's strategic goals? Does it solve your company's business problems?

Wikipedia says, "a strategic military goal is used in strategic planning to define the desired end-state of a war or a campaign." In business, a strategic goal is what you want to happen as a result of meeting product goals. Revenue growth is likely to be on the list, but being more specific will provide critical guidance to the product team.

Examples 

  • Grow revenue 25% in the next 12 months -- This will focus the team on features that will drive sales opportunities in the product's core market where the sales and marketing teams are equipped to execute right away.
  • Increase renewals to 80% by year end -- This will focus the team on the largest causes of churn and on fulfilling customer requests.
  • Achieve #1 market share in the next 3 years -- This will focus the team on providing more value for less cost than the competition and makes sense if you can afford thinner margins for a while, hoping to reap the benefits later.
  • Generate profitable revenue over 5 years -- This will limit investment to critical items intended to maintain revenue. It makes sense for a mature product in a stable market while you invest resources elsewhere.
  • Gain 5 referenceable customers prior to launch -- This is a frequent unspoken goal for a new product. It should be an explicit part of any beta program.
  • Increase revenue in the education market to $15 million over 18 months -- This will focus the team on understanding and meeting the needs of a market that management thinks may be a source of growth in the future. It's useful in preventing the team from focusing on optimizing things in a mature market with less potential.
  • Generate 10 "strategic" meetings this year -- This will focus the team on attention-grabbing capabilities that will interest potential investors or acquirers. It's what executives usually mean when they say they want to "generate buzz."
  • Position us to generate $100 million over the next 3-5 years -- This will move the focus away from short-term money makers toward providing a unique value proposition in a large under-served market. It's what executives mean when they say they want "disruptive," "transformative," "or "paradigm-shifting" innovation.

Choose 2-4 goals

These are very different (and sometimes incompatible) goals. Have an explicit conversation with your executive team on which of 2-4 of these (or others like them) apply to your product. This will make your job as a product person much easier by providing criteria for setting priorities. Specific goals are great argument-enders.

Product managers and other product people have a huge influence on the entire organization. Make sure you agree with your executive team on where you are driving your team, and you can be sure you are using your powers for the good of the company. (It might also help keep you off the psychiatrist’s couch.)

Trouble setting strategic goals?

If your organization’s progress toward its strategic goals is slowed by any of these roadmap roadblocks, feel free to set up a time to chat with me during my free office hours. You may also be interested my popular roadmapping presentation from ProductCamp Boston, or in Reqqs, the smart roadmap tool for product people.

Use your product powers for good.

Reader Comments (5)

For more on strategic planning, check out Virtual Strategist's excellent (and quick) set of videos on Youtube.

September 22, 2013 | Registered CommenterBruce McCarthy

Good stuff. The key here is product management and executives having that conversation about product priorities and strategic goals.

In some cases, the product priorities drive the strategic goals for the company, rather than vice versa. Product team members who immerse themselves in markets identify market opportunities. Those opportunities can determine the strategic goals that are achievable for the company.

For example, executive leadership may initially be thinking they'd like to grow revenue in the next year. But once confronted with a market opportunity that requires a longer time horizon, they might alter that goal to align with the opportunity and the associated product priorities.

September 22, 2013 | Unregistered CommenterRoger L. Cauvin

Great point, Roger. Good PMs may also discover new and unexpected markets for their product that, with small modifications, may drive a lot of revenue. THis also could change the priorities of the company.

As you say, the key thing is having the discussion and coming to agreement.

September 22, 2013 | Registered CommenterBruce McCarthy

Great points' to go though Bruce. As the discussion is the key, any recommendations to the approach.

September 22, 2013 | Unregistered CommenterVeeravenkata Atmakuri

Good question, Veeravenkata. I prefer to approach individual stakeholders one at a time with a draft set of goals. I ask for their input and advice on what I have so far. This allows them to give me candid feedback without worrying about the politics of other execs in the room. It also means they get to bring up any pet issues of their own. Then, when we have a larger meeting with other stakeholders, each feels a sense of ownership of the plan because they actually had a hand in developing it.

That means I have to do some pre-work to develop some draft goals. Depending on how long I have been with the company and my level of expertise in the chosen market, I may come in with more data to back up my initial conclusions. Or I may really be looking for some guidance from the execs.

Either way, I want to come away with agreement on the goals or on additional information that's needed to get there.

Does that help?

September 22, 2013 | Registered CommenterBruce McCarthy

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