Creating value for customers through product management – Dan Olsen
How the right product management leads to satisfied customers and better return on investment.
The goal of every company is to make money, and they do that by creating value for customers.
The responsibility of a product manager is to make sure the company is creating value for customers, by creating new products, improving satisfaction with existing products and improving on existing products.
At the 2016 Leading The Product Conference, Product Management Consultant and author of The Lean Product Playbook Dan Olsen described how a Product Manager can work to create that all-important value.
Whose job is it to make sure that your company is creating value for your customers? The answer is Product Managers. “The problem with this role … it’s a bit like herding cats!” says Dan.
“The motto for product management “With great responsibility comes no power”. This is the life of a product manager.”
Put it this way – you and your product team are on a boat together. You aren’t steering the boat or propelling the boat. The developers have the oars in their hands. You’re the coxswain and it is your job to get people rowing in sync and in the same direction.
However, to achieve product market fit as well as creating value for customers, you and your crew don’t always know where they’re headed.
The Lean Product Framework
Dan developed a pyramid which creates a detailed framework on how to achieve product market fit.
At the bottom of the pyramid is the market and the people who have a need. Your target market are people with a set of underserved needs that you can fulfill. At the top – the value proposition, the features and functions of your product and user experience which brings the features to life.
How do the top layers resonate with the bottom layers? This depends on the decisions YOU are making.
Dan created a process to follow the framework that starts with getting clear on your target customers.
“What are their high level needs?” asks Dan, explaining that while most people need to drive cars, there is a big difference between the needs of a soccer mum and a young guy who wants to impress his friends with his wheels.
By creating personas you give yourself a better chance at defining the exact needs of the audience you want to serve.
Identifying underserved customer needs
This is where the problem space vs the solution space come into play.
The problem space is a customer problem that you should address. The solution space is a specific implementation to address customer need.
As an example, Dan shares the story of astronauts in space. Millions of dollars was spent on creating a pen that would write in space. It still exists today.
… The Russians gave their astronauts a pencil, obviously requiring a LOT less expense.
The pen is the solution to the problem of needing a pen that writes in space. But was the problem really ‘we need to be able to write in space’?
Dan believes that many products fail due to poor problem space thinking. “When we’re building products we have to design and develop in the solution space, but as Product Manager, your main value add is to discover target customers, to find out their needs and define how your product should address those. Thus the ‘why’ vs the ‘what’ is helpful and important to you as a product manager.”
Defining the problem
Now comes the next challenge – which problems do you address and solve?
To decide this, Dan describes how you can talk to users to define firstly what’s important to them and secondly where they’re not satisfied.
“You can find something that is of importance, but if the problem has already been solved you need to do it ten times better. Think about taking on Google as an example, they already have the search space ‘solved’.”
Map your survey answers on an axis, taking into account importance and satisfaction. From there you will be able to identify the ‘easy wins’, of highly important needs that aren’t currently being met.
“Uber launched itself right into this space if you consider this method. They’re popular because cab rides, while necessary, were terrible before Uber came on the scene. They were unreliable and expensive.” explains Dan.
Defining your value proposition
As a product manager, you need to ask yourself – Which user benefits are you providing? How are you better than your competitors?
When developing your product, list out must-have benefits, performance benefits and delighters. List columns for your competitors as well as yourself. You can use this to see how you can pick your product strategy to gain the edge over the competition.
Specifying Your MVP
You don’t want to spend too many resources building a product that nobody wants. Dan reminds that you have to break your products down into features and chunks so you can prioritise for your minimum viable product.
Dan is a big fan of interactive prototypes. “Test a basic MVP with customers in small groups.”
Case Study: Applying the Lean Product Framework
One of Dan’s clients had a new business opportunity but needed to validate the opportunity.
The idea was a marketing report that let people control the junk mail they got. The CEO had come from the credit industry and wanted to create something of a junk mail ‘credit score’, that changed how people received junk mail and made it more relevant to them.
The envisaged user was people who receive junk mail and the hypothesis that this large group wasn’t satisfied with the experience.
Solution ideas – a marketing report and a marketing score, similar to a credit report. People would be able to find out the information companies had about them and junk mail could be targeted to them via their marketing report, which would help vendors target on a needs basis.
An executive suggested building on the initial idea by allowing people to opt in for money saving offers to arrive in their mailbox. Another executive recommended reducing people’s junk mail and the using initiative to be green and save trees.
Dan and his team created a basic prototype for user testing. It was a mini site with a few features that people could look at. They tested a couple of hypotheses, first of a marketing shield that blocks email and secondly allowing people to opt-in to receive certain types of mail.
The feedback raised lots of red flags but there were enough positive responses to see potential value in the idea. It turned out that reducing junk mail, saving trees and allowing people to save money were the main points of interest for customers. Nobody cared about the idea of a marketing score so Dan and his team cut that value out of the product offering. They also cut the opt-in idea, as it would have been expensive to set up from a sales perspective at the company’s end.
They pivoted to a new product – Junkmail Freeze.
In the USA, pre-approved credit card offers are a pain. They can also cause identity theft. Dan’s product now focused on stopping this type of junk mail.
Dan asked if people would pay for a junk mail freeze. At first they said no, then they said they’d like a free trial, then they said they would pay $10 per month, providing it worked.
Even when the product was in testing people wanted to use it straight away, validating the (now quite evolved) hypothesis about there needing to be a change in junk mail distribution.
The Lean Product Playbook
Dan’s talk at the Leading The Product conference was a brief intro to his book, which was given to all attendees in 2016. You can buy a copy online to read his insights into Agile methodology, user experience and more.
Dan Olsen is a product management consultant, speaker, and author. He is the author of Amazon bestseller The Lean Product Playbook, published by Wiley.
At Olsen Solutions, Dan works with CEOs and product leaders to build great products and strong product teams, often as interim VP of Product. His clients include Facebook, Box, Microsoft, Medallia, and One Medical Group. Prior to consulting, Dan worked at Intuit, where he led the Quicken product team. He also led product management at Friendster and was the cofounder and CEO of TechCrunch award winner YourVersion, a personalized news startup. He earned engineering degrees from Northwestern and Virginia Tech and an MBA from Stanford.