pragmatic (start up) product planning
TRANSCRIPT
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Marketing & Sales Roundtable
Pragmatic (Start-Up) Product Planning
May 2004
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Agenda – Pragmatic ProductPlanning
Definitions
Benefits and Issues
Inputs
Top 10 List Appendix
Sample MRD
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ProductLifecycle
Product Management
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Product Planning Hierarchy
Roadmap
Product Plan
NPP1 NPP2 NPPE1 NPS4
Gatekeepers = Executive Committee
Gate #1
MRD PRDEngineering
SpecPlan of
Record (POR)Launch Plan
Gate #2 Gate #3 Gate #4
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ProductPlanning
EarlyCustomer
Buy-in
Lower CostDevelopment,Fewer Revs
Risk Analysis,Mitigation
Faster Time toMarket andRevenue
BOD,Executive Team
AlignmentClear
Direction toDevelopment
Team
Total Product Planning Issues
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Product Planning Process Issues
How to instill structure and process in the product planning function withoutintroducing bureaucracy?
How to get sales input without handing over control?
How to balance customer-specific requests with market and competitiveinput?
How to give the detail needed for product development without developinga full functional spec?
How to limit the number of releases to match development and marketingresource constraints?
How to mitigate product slips?
How to manage internal buy-in and approvals? How to reset expectationsdue to dynamic requirements/changes and slippage?
How to ensure product planning is part of strategic roadmap?
How to develop a product with an offshore team involved?
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Research Sources and Uses
CorporatePositioning
Process
New ProductPlanning Process
LifecycleManagement
(Financial Modeling)Product Strategy
MarketingProduct Management
Customer Sat Channel calls Shows/Events Reg base, key
accounts Lost accounts
Annual Summit WW Channel,Customer AdvisoryBoards
Trade magazines Lab analysis Web ‘Crush’
Supplier visits Technology Advisory Board
Market analysts(IDC, Gartner, etc.) Financial analysts International?
CustomSurveys
QualitativeFeedback
Competitive Emerging
Technologies Subscription
Market Research
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Product Planning: Top 10 List
#10: Segmentation (market and customer) and productroadmap are the foundations of product planning Becomes filter for all product concept and feature requests
#9: Qualitative research with opinion-leading customers in
target customer segment is most important researchcomponent Once identified and tested, build relationships for alpha input, beta
program and ongoing advisory
#8: Market and competitive research complete therequirements, competitive and financial picture Qualitative input from analysts, competitors, industry associations,
customer councils, advisors, gurus, historical/analogue trends, etc.
Structured, time-limited process for input from sales, SEs/FAEs,executives
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Product Planning: Top 10 List(cont’d)
#7: Product manager, VP marketing own the productplanning process
With ‘meeting of the minds’, and formal approval process with
engineering and sales VPs, CEO, founders and a defined
cross-functional team#6: Detailed financial model must substantiate business
opportunity:BOM, development budget, salesforecasts by quarter, lifecycle pricing , discounts,marketing budget, etc.
#5: Two major releases/new products annually
Develop a theme/concept/name for releases with featuregroups that address/anticipate specific market needs – not‘bug fixes’
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Product Planning: Top 10 List(cont’d)
#4: Establish ‘total product’ features as market
requirements for release
Support plan, partner/channel strategies must be executed inparallel with development
#3: Define clear executive (board?) review and approval
process
Formal presentation and sign-off, with regular reviews asdictated by risk assessment, development progress and market
dynamics
#2: Include launch strategy, plan outline, budget to engage
development team and reinforce delivery expectations
Go/no go dates for key launch expenditures and events
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#1: Product Planning is a ContactSport!
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Summary
It’s not necessary to turn product planning into a
bureaucratic process, but
It does need to be built upon customer segmentrequirements
Higher probability that you’ll get the product right, the
first time
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Appendix
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Sample MRD Outline
Preface - The development of a Market RequirementsDocument (MRD) is a critical first step in any newproduct planning effort. The MRD provides a businessview of the market requirements and environment. It also
serves as the foundation for the creation of detailedproduct requirements/engineering specifications, and thestarting point for release and launch planning.
The MRD in the Product Planning Process
MRD PRD
EngineeringSpec
Plan ofRecord(POR)
Release(Launch)Plan
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Sample MRD Outline
When to Create/Refine an MRD New product planning Product enhancement or extension planningObjectives and Uses of an MRD Confirm market/customer need and opportunity Ensure product strategy development and refinement is market- and customer-driven Evaluate potential business model options and opportunity for ROI Identify potential partner categories and requirements in timely way Understand barriers and risks
Product reviews (review and refine MRD assumptions on quarterly basis) Allocate resourcesRisks of Not Producing an MRD Technology risk
Technology won’t work as envisioned Key component not available
Product risk Wrong product Wrong price point
Market risk No market – ‘technology looking for problem’ Established market – ‘me too product’ facing entrenched competition
Unattractive market – not big enough to be interesting Business risk
Too expensive to develop (time and $$) Not profitable to manufacture and sell
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Sample MRD Outline
MRD Outline
I. Product OverviewThis section of the MRD introduces the product concept and structure. Also outlined here are assumptions regarding keyrequirements, release schedule and potential risks and dependencies.
A. Product description (high-level)
1. Market category
a. What is it (Component/SW/HW/System, usage)?
b. Where does it fit in the market (per industry/market analysts’ schema)?
c. Product category name (e.g. PC, PDA, Infrastructure SW)
2. Architecture/Core structure
a. Component – block diagramb. HW – processor, OS, storage, NW, etc.
c. SW - server, client, modules
d. System – HW, SW, NW, etc.
3. Key features and capabilities
B. Problem addressed and benefits provided by the product (prioritized in order of importance to customers)
C. Value proposition
D. Other market requirements identified but not essential to this rev
E. Product release schedule
1. Alpha2. Beta
3. Release (general availability)
F. Risks and dependencies
1. Technology – development feasibility, component availability
2. Product - performance
3. Market – timing, competition, etc.
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Sample MRD Outline
II. Product Strategy
A. Strategic goals/objectives for the product
1. Role of product in the company’s strategy
2. Financial goals
B. Market vision
Why is this product important to potential customers now and in the future? Why can it be the basis for a sustainable companyversus just a point product?
1. Market trends/drivers
2. Technology enablers
3. Market segment problem being addressed by the product
C. Targeted market(s)
1. Market segment – Who has the problem being addressed (broadly), and the most critical need to get it fixed?
2. Market segment development roadmap – potential customer segments (prioritized to the extent possible)
a. Critical need drivers – ‘must-haves’ versus ‘nice to haves’
b. Sample usage scenarios
i. Current solution(s) to the problem outlined in B-3 and their deficiencies
ii. Priority requirements - table stakes – e.g. standards support, integrate-ability, performance, etc.)
iii. Barriers to adoption – for all participants in the product category, and those specific to company
3. Market size and growth rates (3-5 year CAGRs) – See Appendix A for definitions
a. Total Available Market (TAM)
b. Served Available Market (SAM)
D. Competitive Landscape
1. Primary competitor categories (direct/indirect, current/future) – strengths and weaknesses
2. Company/product differentiation against each competitor category
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Sample MRD Outline
II. Product Strategy - Cont’d
E. Partnership strategy by category type
1. Technology
2. Product
3. Marketing
4. Sales/distribution
5. Other?
III. Marketing Planning Assumptions
1. Communications strategy
a. High-level message model - key points related to market, technology, product, company
b. Market leverage model – categorization of market influencers and strategy for reaching them
2. Beta program
a. Objectives
b. Criteria to select beta customers
c. How many and what type
d. Duration and management of program3. Launch strategy (Objectives and key milestone - detailed plan comes later)
4. Sales channel strategy (role of direct versus indirect)
5. International strategy – what, if any markets will be addressed in the first release
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Sample MRD Outline
IV. Product Requirements
This section outlines product development priorities in more detail, and includes preliminary assumptions regarding future releasesand/or product extensions. In the event that the company’s product planning process does not include the creation of a PRD, thissection is used as the foundation for the development of engineering specifications.
A. Priority 1 features and capabilities (identify which are mandatory for first release) *See Appendix B for sample list of key elements to be addressed in core product and in support of the product.
B. Priority 2 features and capabilities (highly desirable but may not be committed to yet)C. Future requirements (may be included in future releases but not committed to at this point)D. Features that will not be implemented (with explanation of why)E. End-of-life strategy/plan
V. Financials
This section should demonstrate that the company has thought through the key financial considerations and include an Excel modeldemonstrating an attractive business opportunity given estimated (best guess) revenue assumptions and development,manufacturing, sales and marketing costs.
A. Bill of materials (preliminary make or buy assumptions for key components)B. Development budgetC. Customer adoption scenarios (how many, over what period of time)
D. Business model/pricing assumptions (over time)1. License versus subscription/hosted pricing2. System versus component (HW/SW/Service) pricing
E. Sales process1. Revenue targets and discount structures by channel2. Sales cycles
F. Marketing budget
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Sample MRD Outline
VI. Cross-Functional Project Team (Roles, Responsibilities, Timeframe, Point Person)
The product planning process should involve representatives of most functional areas/departments. This section should outline theroles and responsibilities of each department, identify a departmental point person and highlight the points at which his or herinput/involvement are required.
A. Development/Engineering
B. Marketing
C. Support
D. Operations
E. Sales
F. Legal
G. International Approvals and Certifications
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Sample MRD Outline
PLANNING TOOL ROLENew Product Planning Process Phased approach for managing the development of a new product that reflects stated
corporate (and product line) strategies
Market Requirements Document
(MRD)
Business view of market requirements and environment, summarizing segmentationstrategy, competitive landscape, total product composition and businessmodel/potential ROI. Source of initial product plan business assumptions
Product Requirements Document
(PRD)
Definition of features, functions, technical specifications for an individual product of family of products. Basis for development of engineering specifications
Engineering Spec Detailed engineering specifications based on MRD/PRD inputs. Core of developmentplan
Plan of Record (POR) Detailed summary of product development activities, schedule and key milestones,including Beta – Engineering/Manufacturing
Release (Launch) Plan Plan for product release detailing activities, schedule, roles, responsibilities and costs – Engineering/Manufacturing-oriented
Launch Plan Marketing plan for product launch detailing activities, schedule, roles, responsibilitiesand costs
Product Roadmap Outlines medium to long-term product platform strategy and response to marketvision (trends/drivers/enablers). Provides explanation of rationale for productevolution relative to target market segments.
Total Available Market (TAM) Total units/$ available at all potential customer companies for relevant categories of products/services and applications. Top-down approach using market forecast data
Served Available Market (SAM) 100% of the units/$ available from addressable customer companies for addressablepercentages of applications that company can serve. Should reflect company’s
technical capability, market rate of adoption of technology, geographic reach, targetmarket segment, etc.
Appendix A - Glossary of New Product Planning Terms
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Sample MRD Outline
Appendix B – Sample List of Features/Capabilities* Sample list of elements to be addressed and prioritized in development andcommunications plans(What are table stakes/must haves? What are differentiators?)
Core product features/functions
Product performance metrics (relative improvements), dependencies Uptime and QoS Regulatory certifications and adherence to standards (e.g. platforms and
protocols supported) Compatibility/interoperability (backward and forward) requirements and testing Bugs/fix requirements Internationalization (e.g. Unicode-enabled)
Documentation requirements and plan (users, developers, etc.) Next generation architectural changes Environmental (e.g. ISO 1400, recycling, etc) Maintenance and technical support requirements
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Presenters
Liz Arrington, Consultant
Market Focus
650-329-0823
Patty Burke, ConsultantMarket Focus
408-398-4921
Rosemary Remacle, ConsultantMarket Focus
408-244-0412