Creating Value

Warren Buffet tells us that price is what you pay, value is what you get.   As product managers, our job is to create and sustain value in our product and service offerings for both our company and our customers.  At first, this sometimes seems like an impossible task.

The puzzle looks something like this:  The company needs to sells a certain number of units at a set gross profit within a defined period of time; the market needs to buy at the lowest price possible to still meet their needs and deadlines by buying a product that works, has great customer support and does what it promises to do.

Companies fail when either side of the equation is out of balance.   The only way I know to keep this in balance is for product managers to ensure the products deliver value to the consumer and therefore the company.

Let’s take a pair of shoes.  You’ve released a cute pair of shoes at a ridiculously low introductory price.   100 new consumers buy your shoes.  The shoes are tight and don’t stretch out.  The shoes are hard, not flexible, and the construction is shoddy.  Those consumers now believe that even the low price they paid was too high.  You’ve lost them.  The company lowered their new user acquisition cost, but those users won’t come back.  So no value has been created to either the company or the consumer.   Additionally, customers who have purchased in the past buy 100 pair from catalog and online, using the same size they always have when buying your shoes.  They’re so excited about the price, that many buy two!   But the size mistakes and the shoddy construction disappoint them, turning them off your brand.    A double loss.

So how does a product manager create value?  By truly understanding what the consumer wants and then working with engineering and manufacturing to deliver it as efficiently and affordably as possible.

That sounds easy, but it isn’t.

As LEAN and Agile principles take over the manufacturing and engineering processes, the role of Product Manager/Product Owner is more critical than ever.    And this is good news.  As dev and manufacturing teams become more self-managed and work toward stories, not requirements documents and functional specs the opportunity for a product manager to get out of the documents and into the market is tremendous.  (Beware the SCRUM team that wants product managers to be at their beck and call).

Some ways to do this:

1. Commit to being with customers every week.  Create a story card for the SCRUM board that requires you, the product manager, to get one question answered in the field by the actual users of the product, not the sales people.  Don’t just go on sales calls, shadow a customer while they use your software for a project or an activity.   LISTEN.

2.  Commit to using the competitors software every month.  Again, use a story card and have the deliverable be a demo you conduct to the team.  Try to solve the problem it was designed to solve; use it the way it is positioned and see if you can do it.

3.  Answer customer support and tech support calls/emails every week.  Even if just for one hour.  Don’t just read the report.  Get online.   It’s easier than ever now to interact with your customers when they are trying to use your product.

4.  Cut features to ensure your solution is easy to use and hassle free; remove the barriers to use.  You need to you know your customer, the market and the task or problem they need solved to do this.

Use this information to constantly check the features, pricing and positioning.  Ask yourself for every Story:  is this consistent with what I’m hearing from my customer?  If they need to pay less for a solution, try to see if you can cut costs, or modularize the solution.   Even simple things, like self-printed manuals cut the costs and keep the margins:  little amounts can add up.

At the end of the day, we all know we need to create value.  My experience over the past 10 years tells me that in many companies,  our time as product managers has become less about discovering the need, defining the problem we need to solve and solving it and more about working internally, leading cross-functional teams to deliver the next release.  This internal focus is preventing product managers from uncovering opportunities, innovating new products and delivering value to the company and the consumer.

Start working with your customers again.  Listen to what they are telling you and what they are not telling you.  You’ll hear what they need; you’ll learn what they value.  And then you can go about delivering it.