Wednesday, May 7, 2014

Product Management 101: Identifying and Assessing Opportunities

by Sam Bryant

One of the core responsibilities of a product manager is identifying and assessing opportunities. There is no shortage of product ideas. Everyone has ideas for products. Just think of how many times you've heard someone say or you've said to yourself, "I had that idea years ago," when you learn about a new product. Identifying product opportunities is fun. Most everyone likes to brainstorm and dream because pretty much anyone can do it and, again, it's fun.

The product manager does not need to be especially good at idea generation but must be able to elicit and capture ideas from others. Facilitating idea generation or brainstorming sessions is skill itself, though many companies may be hired to assist with this process.

The product manager's key function is to take a group of product ideas and evaluate and assess those ideas for viability. This is no easy task.

A framework I have seen applied for both identifying and assessing opportunities is approaching growth from your core. At one organization I was employed it was approached as an adjacency strategy where product development was approached by always staying adjacent to your core product offering, including customer, market, channel, geography, etc. and not straying too far at one time. At another organization, a consulting firm we worked with followed a growth from your core strategy focused on only moving one aspect of your business away from your core at a time. For example, same product in a new geography or new product to the same customers.

A growth from the core model eliminates the possibility for transformative change but mitigates risk when investing resources in growing a business. When applying this strategy to assessing product opportunities, it is essential to first define what is the core:

  • Customers
  • Channels
  • Geographies
  • Technologies
  • Sales team
  • Markets
  • Financials (margin, revenue, EBITDA)
Once you define your core you can evaluate potential opportunities based on their distance from your core. For example, if the new product idea will be sold to new customers in a new market via a new sales team, then the idea is 3 steps away from your core. You can use this methodology to quickly evaluate the risk and feasibility of success associated with product ideas and prioritize the ones that are closer to your core (they will have the lowest scores). While most product managers dream of developing the next iPod that will transform an entire industry, the majority of successful products are close to a company's core.

This methodology can be applied to narrow down a list of potential product ideas to 3 or 4. Any more and it will take too long to pick a product idea to pursue and the market opportunity may pass. Any less and you might complete your analysis and realize the 1 idea you picked is not a winner.

When you have decided on the top 3 or 4 product ideas to evaluate, it is time for development of a business case. Projecting potential revenue from sales as well as ballpark estimates of expenses can result in short and long term profitably estimates, which will lead to the product idea to pursue. I will not dive into business case development, as this is a skill that is critical to numerous positions and there are many resources available to reference.

Once you have picked the product idea to develop, it is time to define the product.

Next: Product Management 101: Right Product, Right Time

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