Post on 17-Feb-2017
Magical Thinking
“CEO says it’s really important.”“We already promised it to a big prospect.”“How hard could it be? Probably only 10 lines of code.”“We’ve been talking about this for months.”“We’ve gone agile, which gives us infinite capacity...”“My neighbor’s kid could do this in an hour.”
85% Loading Beats 100% Loading
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• At 120% loading, even less gets done
• Stretch goals usually counter-productive for Engineering
• Stable whole teams twice as productive as pooled resources
• “Busy” vs. “effective”
#1Law of Ruthless Prioritization
• AND requests but EXCLUSIVE-OR decisions• We succeed by finishing a few critical things
Executive’s Job• Make hard trade-offs• Battle magical thinking and one-offs
4 Laws of Tech Product Economics
1. Your development team will never be big enoughLaw of Ruthless Prioritization
2. All of the profits are in the nth copy/unit/user
Revenue Implications
Goal is not to minimize costs but to maximize revenue
• Your development team of 6 costs…• Implied revenue commitment…• Incremental cost per user…
$1M/year$6M/year< 3% (SW)< 20% (HW)
• Professional Services rewarded for more hours, more customization. Priced for effort.
• Product rewarded for large numbers of frictionless, self-onboarding subscribers. Priced for value.
Conflicting Metrics & Models
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Gro
ss P
rofit
CustomDevelopment RepeatableRevenueProducts
KeyMetric StaffUtilization(busydevelopers) Users(subscribers,licenses,units)
BusinessModel Mark-uponstaffhours Re-useofidenticaltech bits
Wetrack... Projects/programs Products/releases
Essentialskills Sales,businessdevelopment Segmentation,validation
Innovationownership&risk
ClientownsIP:wehopetheypayandsendmoreprojectsourway
WeownIP:wehopetargetsegmentpayshandsomelyforperceivedvalue
Gradedfirston... Ontime,onbudget,onspec Marketwinnervs.competition
Customerwantsaone-off?
"Great!Here'sachangeorder" "Letmeputthat(deep)intothebacklog."
Plantoproductizeplatforms?
Alwayssacrificedwhenpaidprojectsrunlate
Essentialpartofproductlineplanning
Opposing Management ModelsCustomDevelopment
KeyMetric StaffUtilization(busydevelopers)
BusinessModel Mark-uponstaffhours
Wetrack... Projects/programs
Essentialskills Sales,businessdevelopment
Innovationownership&risk
ClientownsIP:wehopetheypayandsendmoreprojectsourway
Gradedfirston... Ontime,onbudget,onspec
Customerwantsaone-off?
"Great!Here'sachangeorder"
Plantoproductizeplatforms?
Alwayssacrificedwhenpaidprojectsrunlate
#2Law of Build Once, Sell Many
• Segmentation: strategic art of choosing customers who want the same solution
Executive’s Job• Focus on segments, not deals
(or become a professional services firm)
4 Laws of Tech Product Economics
1. Your development team will never be big enoughLaw of Ruthless Prioritization
2. All of the profits are in the nth copy/unit/userLaw of Build Once, Sell Many
3. Technology bits are not the product
Naked without• Deep customer understanding• Positioning, messaging, awareness • Sales & channels• Support, evangelism
Tech Bits < Whole Product
Commercial Product Failure Modes*
Undifferentiated or poorly positioned
Marketing/sales/ channel failures
Late deliveryPoor quality
Wrong problem, wrong solution
*In my personal experience, mostly SW
Most of the success / failure of a product is determined before we pick our first developer or fill out our first story card
#3Law of Whole Products
• Customers buy solutions (which may include software/hardware)• Mean-Time-To-Joy
Executive’s Job• Focus on end customer satisfaction• Watch for organizational silos
4 Laws of Tech Product Economics
1. Your development team will never be big enoughLaw of Ruthless Prioritization
2. All of the profits are in the nth copy/unit/userLaw of Build Once, Sell Many
3. Technology bits are not the productLaw of Whole Products
4. You can’t outsource strategy or discovery
Decisions > Input
• Voice of Customer/CAB• Showcase customers• Surveys• Crowdsourced feature
ranking• Industry analysts• Competitor data sheets
• Smartest customers• Smartest developers• Executive Survey-of-One• Investment banker• Your mother-in-law• Inflight magazine
• Business value error bars >> engineering error bars
• Bottom-up prioritization àugly products
• “We’re one feature away from competitive parity”
Strategy > Analytics
• Markets are complex, surprising• Your best ideas are half wrong• Need 16 (or 22 or 35) in-depth
interviews to see patterns, outliers• Be there yourself to spot details,
emotions, connections, subtlety
Discovery (Validation)
4 Laws of Tech Product Economics
1. Your development team will never be big enoughLaw of Ruthless Prioritization
2. All of the profits are in the nth copy/unit/userLaw of Build Once, Sell Many
3. Technology bits are not the productLaw of Whole Products
4. You can’t outsource strategy or discoveryLaw of Judgment