Emerging Trends of Master Product Management
What you need to be at the top of your game in 2019
I. THE WORLD HAS CHANGED
The world of Product Management is no longer changing. It has changed. At some point over the last few years we transitioned into a new way of thinking when it comes to technology. Let’s review the situation as we move into the last year of this decade.
What used to be emerging tech a decade ago has now become the de facto standard. VCs used to be enamored by SoMoLo (Social, Local, Mobile) and Gamification, but the new emerging technologies revolve around Spatial Computing. The focus now is about taking computing from behind a rectangular piece of glass and bringing it into the real world. This includes Augmented and Virtual Reality as the interface layer, Artificial Intelligence as the logic layer, and Blockchain as the emerging database layer. With 5G connectivity and the proliferation of IoT devices and sensors, we enable new things like self-driving and Pokémon or Amazon Go.
Our interfaces are becoming ever more invisible as we begin to wear our computers. AirPods in the ear and speaking to voice assistants like Siri and Alexa our in the world or at home. Even physical touch interfaces went from some-of-the-time with smart phone taps to all-of-the-time with vibrating wearables and always-on heart rate monitoring.
Meanwhile, blue chip industrial companies are investing in SAAS-based technologies and because Wall Street no longer rewarding a gigantic sales team that has to start each quarter from zero. The sawtooth revenue curve of the past is being replaced by curves that look more like hockey sticks. It’s not just software that’s eating the world, it’s also their business models. Namely, moving from one-time payments to Monthly Recurring Revenue from Software as a Service. Did you know Salesforce got its start by convincing customers they shouldn’t use installable CDs, but rather a website that gives them updates every day? Now this is taken for granted but changing software buying patterns was hard in the beginning.
Today, everyone has a startup or a side hustle. What we used to hear five years ago, “I’ve got an idea for an app”, is now, “I’m raising $1M on a $5M pre- and have traction with 100,000 users”. Wait, what? You’re only 15 years old? Which brings us to our next point. Digital Natives, Gen Z, and yes, Millennials, have overtaken mindshare, marketing, and advertising share from the Baby Boomers. Many of us with decades of Product experience merely adopted the tech, but these individuals were born into it. Christopher Nolan, eat your heart out.
Valuations have soared since 2008, and new millionaires are minted so regularly that we now collective keep count in billions. Growth at all costs, even profits, have created an irrational exuberance the likes of which Greenspan could hardly comprehend during the go go dot-com days.
Even retailing has changed. The anchors of malls aren’t seeing the foot traffic they once did, Sears is shuttering its doors and Best Buy is struggling. The reason is because we get free shipping and cheaper prices shopping online, and at least in the US, eCommerce executive’s go-to-market strategy is simply www.amazon.com.
As we transition into the mindset of investors, we see a more modern Private Equity, new family offices sprouting up in record numbers, new regulations like the JOBS Act, and new funding mechanisms like Initial Coin Offerings (ICOs) and Security Token Offerings (STOs) enabling much more capital flowing into tech than ever before. Because traditional LPs have been reading the same blogs and would rather source and diligence their own deals than pay a middle man their 2-and-20 fees, we see more demand than ever for the best deals and unique deal flow as a competitive differentiator. The leveraged buyouts of yore targeting low-growth manufacturing firms are now targeting niche software companies because the economics and multiples are better with the same consistent cash flow.
Finally, there’s a resurgence of interest around outer space and private rocket companies. Space Tech is a thing and with falling prices of launches by Blue Origin and SpaceX, the cubesat subsector will ultimately enable next-generation cellular connectivity from space. This is how the other 50% of humanity gets internet access while also being a source of cash for the burgeoning New Space industry in desperate need of investment.
II. THE WINNERS & THE LOSERS
Taken together, we’re all playing a whole new ballgame. The playing field has become shorter while the game has become faster, and harder. Greenfield opportunities where you used to be competitive with a buggy LAMP stack and lackluster UX has even stopped working in the Enterprise. High-quality consumer apps that everyone now uses means we expect the same from all our software, including what we use at work. And desktop apps are no longer enough. The world has become smaller but we’re traveling more often and so we’d rather lose our luggage than our smart phone. We expect our work software to be just as efficient as the apps we use for play. Customers and users don’t care that it takes 320 different video encoding renditions for a single video file shared behind a firewall. “It’s just a play button, why is that so hard?” They don’t care how the sausage is made, expect perfect connectivity and high-resolution streaming. And expect it to be as cheap as YouTube.
We have reached a significant milestone for humanity. Half the human population is connected to the internet, mostly with mobile phones, and everyone is in search of the next gigantic growth product. Skill and talent has blossomed in unexpected markets around the world. France is a key global spot for world-class software development, Africa is emerging as a new startup capital learning from the likes of the Valley and Singapore, while China and the US are in an AI arms race for powering the world of our future. Information is shared in tiny bursts through text messages and short-form videos, with the entire world is trying to steal market share of eyeball for their Monthly Active Users.
At this point you may be feeling a bit down, wondering why you should even consider starting a new project. With the degree of difficulty steadily marching up-and-to-the-right, what hope do you have for standing out in a sea of competing projects, apps, sites, and initiatives?
The winners will be the ones who both Accept & Acclimate to this new world quickly. There’s no time to debate. The winners take action. The losers, on the other hand, will continue to exist in the Web 2.0 or, even worse, pre-connected world. It’s true that legacy business models and declining markets have a much longer tail than anyone realizes, but it’s getting shorter.
In either case, you’re either compounding in a positive direction or a negative direction. The graphic below from Farnam Street tells the story better than any amount of words could.
The key insight here is that it doesn’t require organization-wide adoption to reap the benefits. It only takes a single “2-pizza team”, as Jeff Bezos famously states, to kickstart action in the right direction. But whom you pick for those teams makes all the difference in the world.
So it begs the question: with a discipline as varied and misunderstood as Product Management, how can we begin to slice the skill sets required to determine the right person for the first project but also the second? Is it a mini-CEO, a turnaround genius, a mobile app maven with hundreds of daily builds, or a growth hacking expert who’s earned the stripes from a decade in the trenches? As a high-performing Product Officer, you need all of these next-level skills to stay at the top of the capabilities mountain.
The Product winners understand the importance of spending the time and budget to go find the right talent before doing anything else. The team is the single biggest difference maker between 2x and 10x. The Product losers, on the other hand, focus on business as usual and going with whomever is a phone call away, whether or not they have the requisite skills required to execute in this new world.
III. THE PROMISED LAND
But what does it look like to win? It means you’ve got a successful project on your hands. Your KPIs are up, the product is working, the team is energized, and the kudos stream in from around the internal organization and external community. Most importantly, your revenue and/or users are growing with a healthy k-factor above 1. The A/B testing and Cohort analysis is paying off once you found the correlation between Retention and Engagement. You’ve maintained quality and are in a great repeating cadence of 1) customer development, 2) agile design and development, and 3) continuous deployment and retrospectives.
Master-level Product Management means that the compounding flywheel effect applies to your product, but also the operations of your team, whether that’s a small 3-person group or a large 10,000 person global conglomerate.
A well-run machine is the opposite of chaos. You’ve developed esoteric metrics, like how many Slack messages are sent and how many files are sent back and forth to tell you how good the team is working together and how high-quality the work product is. And of course, that the entire group works backwards from the customer or user, and not forwards from the technology, unless we’re in Hard Tech territory like Quantum Computing.
Master Product Managers have been doing all these things for years but as we move towards 2020, a new set of skills has emerged.
IV. TOP 3% PRODUCT MANAGEMENT MASTERY FEATURES
Below are the top things you need to execute on to maintain your role as one of the best Product Managers in the world, or in identifying them for your next project.
Focus on one KPI: Revenue. Paul Graham of YC fame said a Startup could be defined by a sigle word: growth. Projects and businesses can also be defined by such a word. If the business is not making money, then eventually it ceases to exist. So, for any Master Product Manager, the starting base-level KPI for any project must have Revenue in it somewhere. Even a consumer app with MAU as a metric eventually needs to become self-sufficient at some point. You can choose a monthly subscription fee (Netflix) which has gained popularity above the one-time purchase to match ongoing revenue with ongoing costs, or an ad-supported model (Facebook) to sustain itself. Pricing strategy is understood as a key component of this. If you double the price and demand decreases by less than half, then you just created additional revenue growth with nearly zero marginal cost. In short, the right Product also has the right Price. Note that we’re leaving aside Not-for-Profits as they have a different motivation and core KPI, which would typically center around positive impact, measured by Human, Animal, or Environmental improvement.
Understand and design business models, especially applying them in new ways. A project starts by answering the question of “Who buys what from whom, for how much, and why?” For a lemonade stand, the answer is: a customer buys lemonade from us for $1 because she’s thirsty and we’re located right next to the park she walks her dog at. There are a limited set of business models that exist, like Remove-the-Middle-Man or Give-Away-the-Razor-To-Sell-the-Blade. Flipping standard business models on their head creates new insights and the Master Product Manager has a list of them at the ready with examples. One such example is the new online school that kept the definition of the customer the same (the student), but shifted when the student pays. Instead of paying every semester for classes as a big up-front cost for a buyer with very little money, this startup shifted the cost for the student to a percentage of salary for the first two years after graduation. Of course, the school makes a promise that they will help the student get placed. So, the novel insight here was shifting the business model to a transaction fee of the benefit rather than an up-front fixed cost. Payment processors have been using this model for some time. You submit an invoice to someone and in return for a company processing that payment, you’re willing to give them a fee because it’s small compared to the amount of money you just earned. It’s the same concept, now applied to a different industry: education. Gamification and Incentive design also play a part and have been recognized widely in the tech community since the days of Foursquare and Gowalla. Today, with the emergence of Initial Coin Offerings and its successor, Security Token Offerings, creating an app that becomes an economy means a Master Product Manager needs to understand the intricacies of micro and macroeconomics down to the granular level of “How do users earn tokens?” and “Where do users spend tokens?”. In the beginning of Bitcoin, for instance, it was much easier to acquire the cryptocurrency than it was finding who would accept it as payment. Thus, supply, demand, and transactions are important for unleashing value creation and developing a healthy economy. See Metcalfe’s Law for more.
Position Brand as a key differentiator. A brand is not a logo or a design. A brand is how it makes you feel. Apple feels different than Google which feels different than Facebook or Amazon. They do different jobs for their users, but it’s wisely said that the money in a company’s bank account is really just a physical measure of the trust that their customers or users have in the organization. People spend more money and return more often to brands they love. Today, when consumers are much less brand loyal and are willing to switch providers and products on a dime based on the service they receive (i.e., how it makes them feel), getting Brand right is a big deal.
Executes as CEO of the Product and the real CEO. As the world moves faster, demands of shareholders and the team become larger, and quality-at-speed becomes the new standard, CEOs and Founders are spread more thin than ever. Master Product Managers understand the intricacies of the entire business, not just their own product, in order to successfully deliver on where the puck is heading. They can run the business if the CEO was on leave for a month, they see around corners, understand where the industry is headed, talk with the Board and investors, raise capital while maintaining cost controls, hire grade-A talent, work with adjacent industries to establish new critical Business Development opportunities, and execute capital allocation strategies. See the book Outsiders by William Thorndike for more on how the top 8 public company CEOs over the last half century allocate capital.
Embed social and moral ethics into the atomic unit of the product.MNI Targeted Media’s study showed that more than 50% of Gen Z (i.e., between age 3 and 23) favor a brand who is socially conscious, so the $4B in buying power they have today will transform into tens of billions more when they reach full maturity. Master Product Managers not only act as technology builders, but as an ethical voice of the product and organization as well. They are not afraid to raise a red flag, take a stand, and stick to what’s right and just. Even the CEO of the most valuable brand in the world, Tim Cook, has taken stands for human rights and privacy, total shareholder return be damned (though studies have shown it actually helps). In addition, while operating ethically within business has long been a subset of the standard CFA exam, it is a growing requirement when news spreads around the world in an hour, and talent has the ability leave in a moment’s notice to work for anyone from anywhere. Long-term relationships matter because the apprentice of today will be the master of tomorrow, and reputations are written in stone on the internet.
Has smooth PR and media presentation skills. Master Product Managers know how to talk to the media about the product succinctly. A “repeatable sound bite” is just another way of saying “viral marketing”. Because if the viewer can’t remember it and repeat it, that alone can negatively impact the product’s k-factor. Today, the builder is more important than ever, as it’s less the CEO talking about the product and more about the the trade-offs the people building it had to make. Jony Ive is a hot commodity because the way he thinks is a leading indicator of what gets built. Great Product people are comfortable on camera, and don’t use the “ums”, “ya knows”, and “likes” that have become so prevalent in spoken conversation. As the steward of the product, you represent the product both on camera and on social, whether or not your profile says, “my thoughts don’t reflect my employer”. Again, who you are definitely becomes what you build, especially when customers and users care so much about what Products do with their data, they research who the people are behind them. In terms of efficient communication, a former McKinsey consultant, Barbara Minto, literally wrote the book on it, called “The Minto Pyramid Principle”. She teaches you the way to craft concise memos, reports, presentations, and talking points for a short attention span audience. World-class product people study not just the art of Judo, but also the subtle art of communication.
Exist outside the tech bubble. There are 7.5 billion human beings in the world. These are the users and customers of your product. They have feelings, stresses, and relationships that machines don’t have. Understanding consumer behavior is arguably the most critical aspect of any product. The Job-To-Be-Done framework must also include something new called The-Feeling-It-Creates framework. Is your product about saving time, money, and stress, or is it about escape, fun, and entertainment? As an example, BJ Fogg’s Behavior Model was used almost entirely as the core product mechanic for Instagram, because Kevin Systrom took his class at Stanford and remembered it when investing his product from location-centric to image-centric. Dale Carnegie’s famous book, “How to Win Friends and Influence People” is another great resource as is Chip Heath’s book, “Made to Stick”. These are all now table stakes. Understanding human consciousness, and the move towards mindfulness are necessary requirements for building a product that moves past addiction, and into transcendence. Technology always changes, but humans never do.
IV. IS THIS POSSIBLE & WHAT’S NEXT?
What we’ve laid out here may seem overwhelming, especially for those Product people just entering the discipline. But because the best Product people are ruthless prioritization experts, and agile enough to climb seemingly insurmountable challenges, we believe this gets the best and the brightest excited.
This is a juicy new problem to solve, and a new vector for investing in ourselves and our discipline. “Give me more to learn!” we hear some of our close friends in the industry constantly saying.
So, yes, it is possible. Similar to the documentary, Jiro Dreams of Sushi, the mountain of mastery reaches ever higher, and even after seven decades spent as a master, it’s an unreachable target. So, if you’re more junior, or know nothing about Product, but need someone who does, you’ve come to the right place.
The subtleties in Products often end up making the most difference but can take decades of experience to uncover. Thankfully, this is where many of the top Product people in the world call home, to work together, and learn from each other.
We are equally as excited as we are humbled, to build the products that influence future generations.
from Stories by Sean M Everett on Medium http://bit.ly/2Cw8at5