In modern software processes, prioritization is at the core of what we do.
We prioritize because we don’t like waste. Waste:
If you’re wasting one of them, you’re probably wasting all of them.
Prioritizing is variously simple, complicated, demanding, exhausting, and strangely emotional.
In this series, we introduce some tools that can help you successfully navigate prioritization on your product, at every level and every phase of product definition and development.
At the start of a project, I want to know two things. OK, I want to know lots of things, all the things. But these two will be enough:
I don’t just want to know these because they’re some amorphous “mission”. I want to know them because otherwise, I cannot do my job.
We’ll get to user goals in some of the other posts in this series. Today, let’s focus on business goals, and on how you turn them into a strategy.
Planning a product requires making a product strategy. Depending on your product, it might be a little mini strategy, and that is fine.
So, what’s a strategy exactly?
A strategy is a set of principles that guides decisions.
That’s it. A strategy is not a mission. A strategy is not a plan (not even a “strategic plan”). It’s not a roadmap. It’s not a goal.
I love strategy because it’s so beautifully simple in concept, and so brutally complex to get to.
The point of strategy is that it supports people to make decisions that will serve the objectives of the business. If your strategy doesn’t do this, consider the possibility that it is not, in fact, a strategy.
What follows is a pretty quick and dirty approach to getting at strategy. This is the strategy work you do when there is no strategy and you’re blocked. There are more formal and thorough ways to do strategy; check out some reading at the end of this post.
This step is so easy. Right? Write down the goals. Done.
If this is easy in your organization, that is fantastic. Go give your leadership team a high five. (I really mean that – they did something rare and awesome.)
If it’s not easy, don’t worry. Your organization is completely unremarkable.
If your business is small, or you’re a founder, you can use something like the Lean Canvas as a first step to understanding your business goals.
If there’s a team of people whose job it is to set the company direction, you may need to get this information out of their heads.
As a product manager, you need to understand the business goals in order to answer the question: Why does our business need this product?
You might get some unsatisfying answers. Like these:
These may all be true, but they’re not the answer that helps you. If you’re getting answers like these, dig deeper. Why do you need first-mover advantage? Why do you need to compete in this space?
You’re looking for an answer that will help you make decisions about your product. You’re looking for an answer you can measure.
Maybe you need to compete here so you don’t lose market share. Your goal is about growing or maintaining market share.
Maybe you need first-mover advantage because historically those products have always “won” in your industry. Great, but that doesn’t answer why you need this product to win. What will your specific product deliver? A higher volume of users? A new revenue stream? Repeat business?
One trick: you don’t necessarily need to know the numerical value associated with a goal. For example, say your executives tell you there should be $n million in sales. The value of n doesn’t matter (at this point). What you needed to know is that they care about the total value of sales. They’re not worried about the value of each sale, or about repeat business. Your product is about getting revenue in the door. That goal is important.
Let’s throw in a mini case study here so we can work through something tangible.
Let’s say we’re a healthcare startup. Our core product is a service for doctors to manage their appointments. It’s doing really well, but our forecasts indicate that sales of that product alone won’t enable us to meet our growth targets. We have a revenue goal we need to hit. Let’s call it our Big Revenue Number. So now we need ….
We’re here. We’re going to make a strategy!
Why do we need a strategy? We know our goal; why can’t we just go make some more $$$?
Our strategy is going to help us prevent waste – we hate waste, remember? There are lots of ways we could make more money. We could:
If we just tell our teams, “go make more revenue!”, which one will they pick? Will we still have Aeron chairs tomorrow? Will key people find themselves torn between doing due diligence on proposed acquisitions or supporting product teams? WILL WE IMPLODE?
We might implode. Let’s not implode. Let’s pick some things.
Now, this blog post is not going to detail all the things you might need to do in order to get to a reasonable strategy. The more complicated your business, the more complicated this could get. There are lots of other things you should read about that (see the list at the end for a starting point). But let’s say that your executive team has done what’s needed, and as a company you’ve decided that you don’t want to buy other companies and you don’t think that expanding the core product will deliver what you need. And you definitely still like the chairs. You’re not going to do any of those things.
You’re going to build a new product, and sell it to existing and new customers. Congratulations! You have a strategy. Now WRITE IT DOWN and SHOW IT TO PEOPLE.
Why is sharing so important? You might have a single story about what you’re doing that seems self-evident. And that may be fine, especially if your business is tiny. But as soon as anyone else has to make a decision about how to spend your company’s time, money, and human labor, ask yourself this: do they know what we decided NOT to do? Because if the answer is no, and they start selling chairs, is it their fault? Or is it yours?
Oh that wasn’t a real question. It’s definitely your fault.
How you write it down and where you put it will depend on all kinds of things, like:
Some things that companies do:
At Carbon Five, each project gets a room where we can externalize our work. It’s amazing how effective simply sticking an artifact on the wall can be.
Keep the information succinct and digestible (bullets are good) and consider including or circulating a brief rationale of your decisions so that people have some context.
OK, we’ve made our decision – we’re making a product! Yay! I’m going to skip over the part where the business has to decide which product to make, not because it’s not important, just because it’s beyond the scope of what we’re trying to do here. Because really, we’re trying to understand how you use all of this to prioritize.
Let’s return to our healthcare startup. Luckily, you have lots of existing customers you can learn from. And it turns out that you know that the same doctors who have a problem with their scheduling also have problems preparing for patient visits when they arrive at those appointments. You decide to build a second, complementary product to support doctors in preparing for patient visits.
Now that you have a clear business goal, and a product area, how does this help you make decisions about the direction of your product?
First, you know your goal is going to be about increasing revenue. It’s not about brand awareness, or customer retention, or customer satisfaction. Not that you should ignore those things, but we’re prioritizing, so you have to keep your eyes on the prize.
As you plan your new product, what will be the most important features? You’re going to be asking questions like “will we make more revenue if we sell to existing customers, or target new customers?”
That leads to a whole cascade of questions. Like: what’s our pricing strategy? Do existing customers get a discount? Do new customers get a free trial? How much will customer acquisition cost for new customers? And many more.
Once you answer those questions, you can tailor your roadmap to the most important group of people. Let’s say you’ve worked with your sales team and concluded that existing customers are going to offer the highest conversion for the lowest cost. Now, as you move into product definition, those customers will become your personas. Every feature should be planned with their needs in mind.
But it’s not just who you’re building for that will lead to questions. There will be lots of things they want. But you need to focus on the things that will increase your revenue. That means prioritizing the parts of the product that will increase conversion (conversion is how we’re getting our Big Revenue Number).
Every feature, every story, should be anchored back to these goals. Ruthless prioritization takes discipline. Part of that discipline is critically assessing every decision against your goals. Ask yourself, “How is this feature helping us convert existing customers to use our new product?”. Even your process should be tailored to achieve your goal. If you have existing customers, it might not be efficient to start with a customer development process using lightweight prototypes. You can probably leverage what you already know to get an MVP out to a small group of people.
If you have identified your goals and created a strategy, you have a powerful tool for prioritizing at even the most granular level of your project. Faced with two user stories, two customer requests, two stakeholders, you can ask the question: which one of these will deliver more revenue?
Again, there are things we don’t ask. Those things include:
These questions may be valid, but they are not useful for the purpose of ruthless prioritization.
Let’s visit our healthcare startup one last time. We’re all the way down in the backlog now. Let’s say our sales team has one existing client who is really excited about being able to see some charts that summarize their patient data. They say they want the new product, and they’re holding out for charts. Your developer has a beautiful D3 visualization she’s been itching to get into the product. But all your research shows that the majority of your existing users have an acute need for a calendar integration that will give them a pre-filled patient visit template to complete. Your sales strategy is focused on the time they will save, which is a problem that came up in your interviews over and over again.
Question: What do you do?
Your sales exec has an individual client relationship he wants to protect. Your dev has a passion project. Neither of them, at this moment, has their eyes on the goals. You have to keep your eye on the goals, even if it means making a hard decision that your team won’t love.
Answer: You prioritize the template.
If you did your job earlier and got buy-in around your goals, you’ll be able to communicate your rationale for that decision. That doesn’t mean you’ll never make that beautiful chart. It just means that you won’t make it right now. That’s why we call it “ruthless prioritization”.
Prioritization is difficult. But doing some disciplined work around your strategy and getting organizational buy-in will make hard choices just a little easier.
Good Strategy/Bad Strategy: The Difference and Why it Matters, Richard Rumelt
Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant, W. Chan Kim and Renée A. Mauborgne
HBR’s 10 Must-Reads on Strategy