Several years ago I was part of a group of product management professionals and we all felt that our profession lacked a good how-to guide that product managers could use. We considered writing one ourselves but life was a little too busy for us at the time. A few years later The Product Manager’s Desk Reference was published (and now is in its second edition) and I thought this was the resource we had envisioned and we didn’t even have to write it – bonus! Instead, my guest Steven Haines wrote the book and has also written Managing Product Management, as well as The Product Manager’s Survival Guide, and just put the finishing touches on his fourth book, The New Manager’s Survival Guide. He is the founder of Sequent Learning Networks, a provider of training and organizational advisory services for mid-to-large organizations.
I asked him to join me to discuss an important topic that hasn’t been discussed yet on this show, which is the business case tool. We talk about the right and wrong ways to use a business case and how this tool can improve your success and save you headaches as a product manager.
Practices and Ideas for Product Managers, Developers, and Innovators
Summary of questions discussed:
- Where did you develop your product management experience? Steve is an accidental product manager, coming from the world of financial analysis. He had the opportunity at AT&T to gain international business experience by taking on a product management role. Steve found product management to be a perfect fit for him because he looks at products as businesses and he wanted to deepen his business experience. He became part of a product management task force at AT&T. AT&T created the task force after recognizing other large multinationals’ success came from product management leadership. Product management is a core business function that integrates the other functions of the organization. To illustrate this, picture a picket fence with the vertical boards representing the traditional functions of companies (e.g., Development, Production, Marketing, Sales, etc.) and the horizontal boards representing the cross-functional role of product management.
- What is a Business Case? It is one of the most helpful instruments a company can have at its disposal. Essentially, it is a justification for making an investment that allows decision-makers to say yes to good investments and no to poor investments. The complexity of a business case varies by its use. A new-to-the-company product would require a more extensive business case than would an extension to an existing product. A fledgling business case is needed when considering a new product concept. This can be a one-page opportunity statement. Questions it addresses include: what’s going on in the market, why is the investment important, and what strategic advantage does it provide the company? Business case authors should consider if it was their own money, would they invest in this product concept? Exploring these questions in the form of a fledgling business case creates collaboration within the company. Fundamentally, the business case is a decision tool to decide to move forward and make additional investment in the concept or not.
- What are examples of not using a business case appropriately? When Steve is helping an organization with an audit of their product management practices and he asks to see the business case of a product, more than 90% of the time the business case is not available. They are missing an opportunity by not using the business case as a strategic instrument to help align the portfolio of products to the company strategy. Also, companies are spending insufficient efforts on market research to validate product concepts. Too often companies assume what customers want without actually validating it with them. The proper use of a business case includes a reflection of what validation work has been done. We also need to be much more explicit about the linkage between the investment in the product and how it supports the strategy of the company and helps achieve the goals of the organization. The business case accomplishes this.
- How can we change these issues with an effective business case? Too often a product effort moves forward under its own weight without careful consideration if it should continue or not. A business case provides transparency inside the organization. As a decision-making tool, it adds value to the organization by helping to decide if a product effort continues or is killed. Business cases also become important historical documents for future product managers to learn from and a source for ideas that may have not worked in the past but are needed now.
- What would you tell a new product manager that you wish you had known when you started as a product manager? To be more politically savvy and have a higher degree of organizational instinct. Product managers typically do not have people that work for them but need to have influence throughout the organization. Managing up and across the organization is important to the success of product managers. Successful product managers need to know how to establish connections and build their network inside the organization.
- Sequent Learning
- The Product Manager’s Desk Reference book by Steven Haines, which contains a business case template and example.
“Imagination is not only the uniquely human capacity to envision that which is not, and therefore the fount of all invention and innovation. In its arguably most transformative and revelatory capacity, it is the power that enables us to empathize with humans whose experiences we have never shared.” J.K. Rowling, from a 2008 commencement speech at Harvard University
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Thank you for being an Everyday Innovator and learning with me from the successes and failures of product innovators, managers, and developers. If you enjoyed the discussion, help out a fellow product manager by sharing it using the social media buttons you see below.