Lead on Purpose

Promoting Leadership Principles in Product Management


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How do you reduce the customer churn rate?

Guest post by Ryan Harrison

SaaS (software as a service) sales teams often focus on bringing in new clients; however, they often miss the key fact that existing clients pay more dividends in the long run. The blog ForEntrepreneurs.com reports that 5-30 percent of a business’ revenue comes from the initial sale. Renewals and upsells account for the other 70-95 percent. Businesses that struggle with a high churn rate lose out on these compound dividends.

Churn rate measures the number of customers leaving a business over a specified period of time. For any business with a subscriber-based service model, churn rate can mean the difference between profit and bankruptcy. Continue reading


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Technology is not enough

Just because you port or transition your product (software, hardware, etc.) to a model that is new/up-and-coming/exciting/proven/<fill in the blank>/ you have no guarantee it will succeed; technology is not enough to make a mediocre idea succeed. You must understand the market. If your product or idea is not what potential customers are looking it does not matter what technology you use to roll it out. If the market you are seeking to service has no need for what you are rolling out, the technology irrelevant.

Software-as-a-Service (SaaS) is now a proven way of providing software to companies. SaaS is gaining increasing acceptance and viability for many software companies, and customers appreciate the fact that much of the work and worry of software management  is now handled by the vendor. However (and this is a BIG however), if the ideas you are promoting and selling as software are not needed in the market — i.e. if the software is not market-driven — porting it to SaaS (or any other model/technology) will not save it; in fact it will complicate it.

Last year Steve Johnson wrote an excellent article called Stop Perfuming the Pig that goes in-depth on this topic. Steve says: “No amount of perfume can overcome the stench of a technology product that people don’t need.” Amen. You have to understand the market and make sure the market needs what you are building.


The Product Management Perspective: These ideas fit squarely in the realm of product management; after all, the product manager is the voice of the market. One of (if not THE) most important responsibilities of a product manager is to have a profound understanding of the market, customers and potential customers his or her software targets. If you are not spending time doing market sensing, take a close look at where you are spending your time, clear up your calendar, and schedule time to understand the market. There are many effective ways to do this and they vary by industry, so you will need to figure out what works.The important thing is that you do it.


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Communicating product vision

Communication has changed significantly in the past several years. Twitter, Facebook and other social media have driven personal interaction to short, succinct statements that force us to be brief and to the point. One of my colleagues on the engineering team recently told me “if you can’t write your spec in 140 characters, I can’t implement it.” Though I’m sure he said it in jest, he got me to thinking about effective communication. Effective communication is the key to creating great products (and services).

One of the best books on creating great products is Inspired: How to Create Products Customers Love by Marty Cagan. He covers pretty much every aspect of product management with compelling stories and examples. One of my favorite chapters is Reinventing the Product Spec; the subtitle is R.I.P. PRD (product requirements document). Cagan points out that “most specs take too long to write, they are seldom read, and they don’t provide the necessary detail, don’t address the difficult questions, nor contain the critical information they need to.” He further states that a product spec (specification) can serve as a false indicator to management and the product team that everything is proceeding to plan.

Cagan states (and I agree) that “the central responsibility of the product manager is to make sure that you deliver to the engineering team a product spec that describes a product that will be successful.” The spec must not only communicate the product vision but also the details of how to build the successful product. Cagan asserts that the only form of ‘spec’ that can deliver everything required is a high-fidelity prototype. While I agree that a high-fidelity prototype is the preferred method to communicate the product vision, most product teams do not have the time or resources to create complete, high-fidelity prototypes for every product.

Recognizing that the old-style PRD is largely ineffective in today’s agile world, but that a prototype is also out of reach for most product teams, here are four attributes that will help you communicate product vision in your specs:

  1. Visual: In the absence of a high-fidelity prototype, at a minimum your product spec must have high-resolution images (mock-ups or screen shots) of how the pages in the product will look. These images need to be written in a way that UI developers can create “pixel perfect” pages in the product that identically match the spec images. The ideal scenario is to have a user experience (UX) designer (or team of designers) that creates these images.
  2. Clear: Your product spec should link the visual representations to descriptions that detail what needs to happen. The spec needs to tell a story. I’ve started using a simple HTML template that shows the descriptions on the left pane with an indicator that points to the high-res images on the right. I attach the spec(s) to the applicable story in the dev sprint.
  3. Simple: Keep to the main points. Never add elements in your product spec that are not necessary to creating your product. Be clear and concise in your descriptions and visuals.
  4. Complete: Your spec needs to completely describe the new product (or version) the engineering team will build. It needs to describe the full user experience. It needs to represent the behavior of the software your engineering team will build. Keep it clear and simple, but make sure it’s complete.

Creating effective product specs requires a lot of work. You will have to iterate frequently and keep an open line of communication with the team. If you keep your specs visual, clear, simple and complete, you can communicate your product vision effectively and create great products.


The Product Management Perspective: Cagan makes the following statement: “The central responsibility of the product manager is to make sure that you deliver to the engineering team a product spec that describes the product that will be successful.” Take a look at your current processes and determine what you can do to improve the way you communicate your successful product to the engineering team.


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Three practices of successful product managers

At the most basic level, a product’s success is measured by how well it sells in the market and the profit it brings to the company. A company’s success is ultimately a roll-up of all products and services selling for a profit. This seems straight forward, and yet in my experience company leaders too often lose track of this important goal. They focus on this marketing campaign or that new technology, and lose track of what’s most important. Granted, sometimes they focus too much on profit at the expense of other important directives, but that’s a topic for another post.

In most companies product managers have a lot of products and significant responsibilities. It’s easy for them to get bogged down in the countless tasks that are thrown their way every day. With all the meetings, floods of email, and requirements to manage, the thought of focusing on a product’s profitability can be illusive. It’s not impossible, however. By focusing on three simple, yet powerful, practices, product managers can channel their products toward profitability:

  1. Know your market: Get a clear understanding of the market where your products compete, and work diligently to stay in front of new trends and technologies. Make customer calls and customer visits often. Work with the sales team; understand how they sell your products. Know what works. Know the weaknesses of the products (and take action to correct them). Understand why people pay (or don’t pay) for your products. Be the voice of the customer to your company.
  2. Provide clear direction: One of the key directives for products managers is to provide clear direction to the engineering/development teams. Good product managers write understandable and timely requirements and prioritize them effectively. They provide solid product design (most effectively with the help of good designers). A key to giving clear direction is for product managers to project their confidence and full support to the work engineering is doing. Earn their trust. Inspire them to do great things, especially when developing your products.
  3. Launch successfully: A successful product launch depends on a coordinated launch plan involving many different groups. Product managers are in a unique position to facilitate successful product launches. Start with a tight, focused beta program; learn from the testers and change accordingly. Help product marketing set the proper tone for the launch by understanding the new product’s strengths. Work in tandem with the customer support teams to monitor product acceptance and make changes where necessary. Work with the sales team to make sure they understand the new product and hit the ground running when it releases. After a successful launch, monitor the product’s uptake and financials and make sure it continues to succeed. This, of course, loops back to knowing your market and making sure your product meets the needs of the people in your market.

These three practices cover the most important bases for creating successful products. You should plan time to focus on these elements on a daily and weekly basis. If you are in a leadership position in product management, take time to evaluate your team and make sure they are focusing on these key practices that will lead to profitable products.


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Book Review: Here Comes Everybody

“Revolution doesn’t happen when society adopts new technologies–it happens when society adopts new behaviors.” Clay Shirky, author of the book Here Comes Everybody: The Power of Organizing Without Organizations, provides an eye-opening look at how technology is changing the way we think, work and live. The book helped me understand more clearly how the Internet has changed the way we interact and get information. Here are several ideas I found incredibly insightful:

  • “The tools that a society uses to create and maintain itself are as central to human life as a hive is to bee life.”
  • “The basic capabilities of tools like Flickr reverse the old order of group activity, transforming ‘gather, then share’ to ‘share, then gather.'”
  • The Internet is allowing amazing things to happen: “Large decreases in transaction costs create activities that can’t be taken on by businesses, or indeed by any institution, because no matter how cheap it becomes to perform a particular activity, there isn’t enough payoff to support the cost incurred by being an institution in the first place.”
  • “The Web didn’t introduce a new competitor into the old ecosystem, the Web created a new ecosystem.”
  • “In the same way you do not have to be a professional driver to drive, you no longer have to be a professional publisher to publish. Mass amateurization is a result of the radical spread of expressive capabilities, and the most obvious precedent is the one that gave birth to the modern world: the spread of the printing press five centuries ago.”
  • Regarding Wikipedia: “If even only a few people care about a wiki, it becomes harder to harm it than to heal it.”
  • On forming groups: “The net effect is that it’s easier to like people who are odd in the same ways you are odd, but it’s harder to find them.”
  • “The most profound effects of social tools lag their invention by years, because it isn’t until they have a critical mass of adopters, adopters who take these tools for granted, that their real effects begin to appear.”
  • “What is likely to happen to society as a whole with the spread of ridiculously easy group-forming? The most obvious change is that we are going to get more groups, many more groups, than have ever existed before.”
  • “The dramatic improvement in our social tools, by contrast, means that our control over those tools is much more like steering a kayak. We are being pushed rapidly down a route largely determined by the technological environment.”
  • “Anything that raises the cost of doing something reduces what gets done.”

Changes are happening at a breakneck pace; we can either embrace them and use them to our advantage, or ignore them to our peril. If you want to gain a much deeper understanding about how society adopts new behaviors, Here Comes Everybody is a must-read.


The Product Management Perspective: What can you say when your boss walks in and throws a new book on your desk? My answer was something like “sure, I’ll read it when I have some time.” And soon after I started, I found the time. Shirky’s book is an excellent read for product managers. He challenges assumptions such as how you make money on products: “If a large enough population of users is trying things, then the happy accidents have a much higher chance of being discovered.” He causes you to dig a lot deeper to find answers to your perplexing product problems: “In business, the investment cost of producing anything can create a bias toward accepting the substandard.” He tells us (something we already know of course) about our product: “it must be designed to fit the job being done, and it must help people do something they actually want to do.”

This last quote sums up nicely the role of product manager: “Because of transaction costs, organizations cannot afford to hire employees who only make one important contribution–they need to hire people who have good ideas day after day.” That’s our job…good ideas day after day.


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Social media summit

This past week I had the pleasure of attending a social media summit. This half-day event included three speakers: Mitch Joel, author of Six Pixels of Separation and Julien Smith and Chris Brogan, co-authors of Trust Agents. The presentations were excellent. I had the privilege of spending a few minutes talking with Chris; he was an absolute gentleman. Though the talks were fast and furious, I wrote as fast as I could on Twitter and wanted to share some of my thoughts with you:

From Chris’ talk:

  • @chrisbrogan giving a new presentation: mindset (babymind), business, currencies, trust
  • People who grew up on the “will click anything” web are poised for success – they’re not afraid of breaking things
  • most of us are in relationship businesses but we don’t know it
  • @chrisbrogan “community is my favorite business tool”
  • tell stories, use human interaction to get your message out
  • “stories sell things in a way your stupid copyright never will”
  • @chrisbrogan promotes others twelve times more than he promotes himself; when he needs help from others it comes immediately
  • blogging is @chrisbrogan ‘s way of letting people get into his head
  • One of the biggest mistakes we make on the web is we forget to ask about the ‘other person’
  • from @chrisbrogan “small, private communities are where some really cool things are going to happen in the next few years”
  • The real opportunity is to switch from “recipes” to “restaurants” – take the info you’re learning and put it to work to gain
  • 3 things to pay attention to: 1) mobile (not just a “Foursquare” checkin)
  • 3 things to pay attention to: 2) private networks/communities (cermo, others) – not Farmville
  • 3 things to pay attention to: 3) Social CRM – a real opportunity to get closer to both the dollar and the customer
  • a question to ask yourself: “how can I be helpful faster” @chrisbrogan
From Julien’s talk:
  • Quotes from @julien “The channel is forever” “controlling you future means controlling the channel”
  • “Build a network *before* you need it” “A network doesn’t just help you with jobs, it makes you happy”
  • Networks dissipate over time; you need to be consistently working to improve them over time
  • “Building a tribe is critical” you need to offer people a place where people gather and care – @julien
  • “pattern breaking” every time you create an emotional response people remember you
  • the Internet is the best (only?) place where you can convert social capital to monetary capital … @julien
  • @julien recommends the book Connected – http://amzn.to/aFCKU7
  • More from @julien: “be the lead goose” if you become the lead goose, everyone will follow you; you will help your network #leadership
Unfortunately I didn’t start taking notes during Mitch’s talk (he went first).

My #1 takeaway from the conference was this: the more you give to others and look out for their best interests, the more you’ll get back in return.


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What matters in 2010?

With just a few weeks left in 2009 you have no-doubt spent time thinking about the events of the past year and the growth and changes that have resulted.

What matters in 2010? Seth Godin, marketing guru and thought leader, did a cool project where he brought together more than seventy “big thinkers” to write the ebook What Matters Now. His purpose: “Now, more than ever, we need a different way of thinking, a useful way to focus and the energy to turn the game around.” Here are a few of the thought-provoking ideas:

“If you make a difference, people will gravitate to you. They want to engage, to interact and to get you more involved.” -Seth Godin

“Leadership is more than influence. It is about reminding people of what it is we are trying to build—and why it matters. It is about painting a picture of a better future. It comes down to pointing the way and saying, ‘C’mon. We can do this!'” -Michael Hyatt

“Here’s the final measure of your success as a speaker: did you change something? Are attendees leaving with a new idea, some new inspiration, perhaps a renewed commitment to their work or to the world?” -Mark Hurst

“The road to sustainability goes through a clear-eyed look at unsustainability.” -Alan M. Webber

“After a decade of truly spectacular underachievement, what we need now is less management and more freedom – fewer individual automatons and more autonomous individuals.” -Daniel H. Pink

“The future belongs to people who can spread ideas.” -Guy Kawasaki (read Guy’s ‘ten things to remember’)

“You can earn attention by creating something interesting and valuable and then publishing it online for free.” -David Meerman Scott

“You’re probably trying to change things at home or at work. Stop agonizing about what’s not working. Instead, ask yourself, ‘What’s working well, right now, and how can I do more of it?'” -Chip Heath & Dan Heath

“You grow (and thrive!) by doing what excites you and what scares you everyday, not by trying to find your passion.” -Derek Sivers

“Winning businesses have a common trait, an obvious and divisive point of view. Losing businesses also have a common trait, a boring personality alienating no one and thus, sparking passion from no one.” -John Moore

“My eyes have been opened to the value of regularly closing them.” -Arianna Huffington (on the value of sleep)

“The secret learned by technology providers is to spend less time providing services for citizens, and to spend more time providing services to developers…This is the right way to frame the question of ‘Government 2.0.’ How does government become an open platform that allows people inside and outside government to provide better services to each other?” -Tim O’Reilly

“Declare war on passivity. Hush the inner voice that insists you’re over the hill, past your prime, unworthy of attaining those dreams. Disbelief is now the enemy, as is the notion of settling. Get hungry — hyena hungry. Get fired up. Find your backbone, and your wings.” -J.C. Hutchins

Seth and his coauthors are trying to get five million downloads of the ebook. Help them out; you will be the beneficiary. Read Seth’s post about the ebook here.

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