Product Management and Value Chain Analysis

Product managers who analyse the value chain aid in increasing their company’s profitability and therefore return on investment (ROI).

Michael Porter’s value chain analysis is usually applied to the processes that would occur in a typical manufacturing company. Porter views a company as a system, made up of subsystems each with inputs, transformation processes and outputs.

In a typical electronic hardware manufacturing environment the input, transformation process and output would involve the acquisition and consumption of tangibles such as raw material, electronic components and equipment.

How value chain activities are carried out determines costs and affects profits for the company. This article applies the value chain analysis to an online publishing environment and how Product Managers can add value to the business processes in order to increase value and therefore increase return on investment (ROI).

The primary value chain online activities are as follows:
Inbound Logistics: Data feeds (RSS, XML, CSV…), ad slots, business pain, keyword research, availability of community tools (e.g. Forums), data capture, lead generation.
Operations: Bulk uploading of jobs and articles, syndication of 3rd party content, targeting ads writing articles and data storage.
Outbound Logistics: Publishing to web both editorial staff and user generated content, fulfilling customers' requests (emailing newletters etc.. or access to secure areas of website) audience attention.
Marketing and Sales: SEO/SEM, Selling website space (jobs, ads, sponsorship…), offering ‘must have’ information (news letters, white papers, case studies...).
Service: Help desk and technical support.

The primary activities mentioned above are all possible due to the implementation of technology. Technical Product Managers working in the online arena will either be:

• Supporting the tools and technologies that enable the above activities.
• Discussing with business stakeholders and developers about enhancements to the above mentioned tools and technologies.
• Managing replacement of these tools and technologies.

The company’s competitive edge will often depend on its ability to carry out the primary activities in an efficient and effective way. At no point in time can an online company afford to be stagnant. One of the roles of the online Product Manager is to be constantly examining the value chain to ensure that the current tools and technologies being used are enabling peak performance and to be examining the market place and be in constant discussion with the development teams to see how enhancements and replacements tools and technologies could enable further improvements and therefore increase margins and ROI. Well embedded Product Management not only adds value but also increases the companies revenue.

See also The innovation value chain and Product Management

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What direct reports and co-workers expect from a Lead Product Manager

In this article I give my take on Larry Bossidy’s article “What Your Leaders Expects of You” published in April’s Harvard Business Review and “..What is Expected from Product Managers..” Where I report what senior managers expected from me as their Product Manager.

Identify what your line manager, MD, and other senior stakeholders expect from their Product Manager is only half of the story. It is just as important to understand what your direct reports and co-workers in other department expect from you and work hard to fulfil them. I have seen a few middle managers become so focussed on keeping the chief executives happy that they forget, neglect and even ignore their direct reports and co-workers. Taking such a stance can only threatens ones future career prospects and hinder current performance. Colleagues may become resentful in going the extra mile.

My Take on Larry Bossidy’s article is as follows:
Provide clarity of direction: Understand what your reports have to do on a daily basis – lead, direct and as well as manage.

• Set goals and direction: Communicate their goals in the context of the goals of the team, group, department and company.
• Give frequent, specific, and immediate feedback: provide feedback in a timely manor and in context.
• Be decisive and timely: Do not delay in acting irrespective or whether the task is agreeable to our feeling or not.
• Be accessible: Try not to be so busy that you do not have time to sit down and have regular (ad hoc as well as official) catch-ups with your direct reports.
• Demonstrate honesty and candor: Be honest, upfront and direct but not blunt, rude or insulting.
• Offer an equitable compensation plan: Recognise and reward high performers.

Compare this academic report with a practical survey where direct feedback from Product Managers to their Lead Product Manager.

• Guidance on the company’s web strategy & how it applies to the online products I manage.
• Knowledge sharing of web strategy & new technology being used.
• Support in resolving issues & difficulties.
• Help in developing new skills and career.
• Fairly access performance & help improve it and processes & working practice.
• Leadership: leading the product manager(s).
• Performance appraisal on a regular basis.
• Training, coaching and guidance for my role of being a new Product Manager.
• Communication and direction given from higher in the food chain.
• Openness – easy for me to approach you regarding work and how my projects are going.
• Recognition of my contribution to department.

A comparison of the two lists highlights that both Larry and the Product Managers who report to me are saying similar things. The following are key point that co-workers expect from their Product Manager.

Feedback from Commercial Stakeholders

• Delivery to agreed timescales.
• Communication of any issues or risks with suggestions of solutions
• Innovative approach, always looking to improve process and technology
• Maintaining effective channels of communication with all key stakeholders.
• Be on hand to lend expertise regarding possibilities for advertising and development on the site.
• Keep team updated on any problems on the site that interfere with advertising or performance.
• Be the bridge between the commercial team and developers for site developments
• Keep me updated on development/deployments we’re requesting for the site and any delays.
• First point of contact for any technical problems on the site.

Feedback from Technical Team Leader

• Coordinating with the business and the development team to ensure that there is a common understanding of priorities.
• Collaborating with the development team leader to ensure that product managers, developers and business owners understand and accept their responsibilities as we proceed with implementing new processes (SCRUM).
• Performing the role of Scrum Master for a number of sites.
• Collaborating with the development team leader to manage the relationship between product managers, developers and the business.
• Contributing to the Release process when required.
• Infrastructure team aware of the importance of a particular release.

Different groups will expect different things from you. It is important to know who expects what and how you can full fill your co-workers and direct reports expectations. Failure to do so could not only threaten your current performance but stifle your career. However by asking the simple question “what do you expect of me” and making the appropriate adjustments could lead to increased performance resulting in an increased ROI and a greater chance of career progression.
What do you expect from your co-workers?

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How Agile is Your Product Management?

Comparisons have been drawn between Prince 2 Project Managers and ScrumMasters. Much has been written about agile software development Vs waterfall with a focus on the developers and testers who actually carry out the technical work. However this blog posting focuses on agile management and in particular ‘Agile Product Management’.

Product Management by its very nature calls for agility. Product Managers, in particular those who have responsibility for the P/L of the products they own, are duty bound to keep their eyes on external and internal moving targets. External targets include: threat of new entrants, bargaining power of suppliers, threats of substitutes, bargaining power of buyers (customers), and rivalry among existing competitors. (Porters five forces).
And internal targets encompass: Requests from Marketing, Sales, Engineering, Legal and Chief Executives.

Product Managers will usually be the mediator between the technical and commercial teams – a kind of universal translator – they will often have to work collaboratively across various departments and business units and manage stakeholders and coordinate various activities.

Most Product Managers do not have line management authority so have to work in a matrix management fashion and yet are held accountable and even responsible for the success of the products. This calls for them to be capable of leading without authority and remain agile as business opportunities are spotted and technical teams are constantly redirected in order to exploit window of opportunities. The Scrum agile framework calls this ‘inspect and adapt’.

“In a recent McKinsey survey on building nimble organizations, 89% of the more than 1,500 executives polled worldwide ranked agility as ‘very’ or ‘extremely well’ important to their business success. And 91% said it had become more important for their companies over the past five years.” (Taken from April’s edition of Harvard Business Review) This makes the Product Manager a real asset to any organisation.

Robert Holler: CEO of VersionOne writes about the five Cs of agile management – I have given a brief overview:

Courage,
Agile management is not for the faint hearted, you should not be afraid to practice, hard work, and failure, especially during the early iterations of software development.

Context,
Steer and manage actions and decisions within an overall business context. Work hard to get decisions about project and business context early.

Course,
Agile working is no excuse for not having a direction and roadmap. Longer range planning is still necessary and valuable. Ask the question where do you see your product in 18 months time?


Cadence,
Also known as rhythm: once the technical team, Product Manager and commercial teams establish and get used to a rhythm they’ll begin to function and produce in a predictable way – rather like a well oiled machine.

Cost.
With Agile software development customers begin to see a ROI with in a few weeks as opposed to many months.

Visit The five C's of agile management for the full script.

A good Podcast on this topic can be found at Product Managent View: Agile Methodologies: How Product Management's role is shifting with Laureen Knudsen at HP

• How agile is your comapnay?
• How agile is your product management?
• Does your CEO or MD know how agile you are?
  **Feel free to share your thoughts.**

Read : Part#5 How to adopt agile product marketing

Part #8 Tips on being an Agile Manager

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Business Sense + Technical Sense = Common Sense

Common sense = ROI (Return on investment).

Getting the right balance between technological innovation and business acumen is critical for successful product development.

I worked for a company that designed and manufactured niche cutting edge products for the video and film industries. The company was principally engineering led, therefore there was always the temptation to spend a significant amount of time and resources producing products and or product features that would improve the quality of the pictures that were processed by the nth degree i.e. ‘Technical Sense’. The upside of this would be the production of products that would set or raise the standards and be a real break through in the market place.

The downside would be a real challenge for the sales team who would be given the task to sell high value, niche products into a market that may not appreciate or be able to justify (based on ROI) the extra cost for the increase in quality. A phrase I often heard at exhibitions and attending sales calls as I carried out product demos was: “your competitor has a product that’s good enough for the job and is at a very competitive price”.

On the other hand the sales team would frequently request features to be added to existing products or sell something prematurely so that deals could be secured. Good ‘Business Sense’.

The role of Product Management was introduced with the aim of achieving a balance between ‘Business Sense’ and ‘Technical Sense’.

I sometimes see history repeating itself in my current role as a Product Manager for a publishing company. I sit close to the engineers/developers and at the same time work close to the business (the commercial teams that have the task of monetizing our online products). I sometimes get requests for products and/or features that may take a significant amount of time to produce but may not achieve a good ROI in the desired timeframe.

As I mentioned in a previous article we are currently implementing an agile development framework know as Scrum. Scrum aims to bring the business teams close to the development team. Bringing a level of transparency and enabling both the business and the technology teams to get a ‘hands-on-understanding’ of each others issues. Or put another way Scrum aims to make:
Business Sense + Technical Sense = a large ROI surely this is just plain Common Sense.

Has anyone experienced a noticeable increase in ROI as a result of
implementing Scrum?

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