Contributor Comments about the ProdBOK®

Guide
“I immediately recognized the value of the ProdBOK Guide in order to
create an international standard to guide our profession, much as
PMBOK® has for the field of project management and BABOK® has for
the discipline of business analysis.” – Greg Cohen, Author, Agile
Excellence for Product Managers

“The ProdBOK Guide finally provides a collaborative view across the

profession for the role of product management and the value it can deliver
to organizations. For anyone at any level or title who wants to improve the
effectiveness of their product management activities in delivering market-
driven products, this is the place to start.” – Don Vendetti, Founder and
Principle, Product Arts

“The ProdBOK Guide will become a vital addition to every manager’s

library and will sit proudly on the shelf next to the PMBOK.” – Lee
Lambert, CEO, Lambert Consulting Group

“The ProdBOK Guide will be on the bookshelf, desktop, and Kindle of

every product manager in the country. I learned a ton when I read it and
was able to apply that knowledge to my day-to-day activities immediately.
I’m sure that this will be an amazing success and a valued resource for
product managers in all stages of their careers.” – David Radzialowski,
President, Chicago Product Management Association

“The ProdBOK Guide is essential for professional development purposes,

for defining who’s qualified to practice, and for communicating the value
of the product management profession to the world.” – Rich Gunther,
President, User Experience Professionals Association (UXPA)

“The ProdBOK Guide is a major step forward in standardizing what

product management is, and the key practices it entails. The Guide will
help product managers and marketers adopt practices that lead to greater
professional success.” – Linda Merrick, Principle, Pivotal Product
Management

“We think that it’s very important for the product management community
to have a common reference point for the roles and responsibilities of
product management. The ProdBOK Guide will provide additional
credibility to the product management function in organizations.” – Nick
Coster, Co-Founder and Head of Training, Brainmates

“The ProdBOK Guide will further legitimize the role of product

management and lead to more attention and study of the field. I’m proud to
have been a contributor to its development.” – Jeff Lash, How to Be a
Good Product Manager

“The ProdBOK Guide connects the roles of product and project managers
and paves the way for improved communication and smoother delivery of
products by providing needed guidelines and explanations that improve
performance.” –Frank Saladis, Owner, Blue Marble Enterprizes, Inc.

“The ProdBOK Guide defines the requirements, orientation, and basic

foundation of product management, which are desperately sought after by
individual product management professionals, product teams, decision-
makers, HR departments, and organizations of all sizes seeking to increase
market share and product success.” – Cindy F. Solomon, Founder,
Global Product Management Talk

“In my 30+ years managing projects and products, I have seen the subject
of product management treated many different ways. But for me, ProdBOK
stands alone as THE definitive guide.” – Gary R. Heerkens, President,
Management Solutions Group, Inc.
The Guide to the Product Management and Marketing Body of Knowledge
(ProdBOK®) and the AIPMM Product Management Framework are
registered trademarks of the Association of International Product
Marketing and Management.

Association of International Product Marketing and Management

Copyright ©2013 by the Association of International Product Marketing

and Management. All rights reserved. No part of this publication may be
reproduced or distributed in any form or by any means, or stored in a
database or retrieval system, without prior written permission of the
copyright holder.

ISBN: 978-0-9845185-0-0
Library of Congress Control Number: 2011927728

Product management
Product management — Textbooks, handbooks, manuals, etc.
New products — Management
Marketing
Project management
Body of knowledge
Foreword
This project began when we received a call from the president of the
Association of International Product Marketing and Management
(AIPMM) inquiring whether we would be interested in channeling the
leading voices in product management —analysts, authors, academics,
consultants, bloggers, and practitioners—to create a formalized body of
knowledge. This would be no easy task, and it gave us pause.

Part of what went through our minds as we considered the opportunity was
that most of what exists in the product management literature has been
authored by insightful individuals who stepped in to help fill the gap that
existed because there was no collective body of knowledge. Although
these individuals, ourselves included, have done an admirable job helping
practitioners broaden their knowledge and work more effectively, a
compendium of the different voices did not yet exist.

We also found ourselves asking why so many other professions, including

adjoining ones like project management and business analysis, had
documented their bodies of knowledge while product management had
not? As we researched other professional bodies of knowledge, it became
clear that the one thing they had in common was the sponsorship of an
industry association. These sponsoring bodies act as the central catalyst to
drive the development of a body of knowledge. The call we received from
AIPMM was this first step.

Developing a body of knowledge requires collaboration from a wide swath

of the professional community in question. We are tremendously grateful
for the generous participation of the many members of the product
management community who contributed time, energy, and material to
this body of knowledge. With very few exceptions, members of the
community gave freely of their expertise. We are truly grateful for their
generosity.

We would also like to thank the various thought leaders from outside the
product management community who contributed to this effort. Many of
the leading voices in the project management, business analyst, and user
experience communities contributed their thoughts to ensure that our
material and the best practices from the adjoining professions aligned for
the betterment of our collective process.

Which brings us to the material itself. Because this is the first edition of
The Guide to the Product Management and Marketing Body of Knowledge,
the editorial team has tried to keep the information concise. However, in a
number of instances our research indicated that we needed to go deeper
than we might have otherwise desired, had the nomenclature been
universally understood. So to establish broader understanding, we have
provided greater detail on the topics of value creation processes, Agile,
and the importance of utilizing project management within the product
lifecycle.

This brings us back to the opening question of whether we would take on

this project. After careful consideration, our response was, “Sign us up!”
We couldn’t think of a nobler pursuit than to help this profession—one
that we believe adds such value for customers, organizations, and
practitioners—develop a solid foundation for learning and creating value.

Editor-in-Chief Editor

President Professor of Management Science and

Innovation

Actuation Massachusetts Institute of Technology (MIT)

Consulting
The Product Management Lifecycle

Source: The Association of International Product Marketing and

Management (AIPMM)

The ProdBOK Guide contains information that is meant to be applied

across the product management lifecycle, a term that describes the
lifespan of a product – from conception through retirement. Once the
product has been developed or acquired, it moves into commercialization,
manufacturing, and operations phases, where the product is introduced,
grows over time to reach maturity, and then declines, eventually leading to
withdrawal from the market. This process can be further broken down into
seven distinct phases: Conceive, Plan, Develop, Qualify, Launch, Deliver,
and Retire. This entire “cradle-to-grave” process is generally considered to
be universal and will be discussed in detail in Section Two.

The ProdBOK Guide does not prescribe an order in which individual tasks
are performed. Some ordering of tasks is inevitable, as certain tasks
produce outputs that are required inputs for other tasks. It is important to
keep in mind that the ProdBOK Guide only prescribes that the input must
exist. The input may be incomplete or subject to change and revision,
which may cause the task to be performed multiple times. Agile or
Iterative methodologies may require that tasks be performed concurrently.
Tasks may be performed in any order, as long as the necessary inputs to a
task are present.
This section provides a basic foundation for understanding product
management. It defines key terms, concepts, processes, and basic context
for the rest of the ProdBOK Guide. It also provides key integration points
on how this BOK can be used and aligned with other industry standards
and marketplace processes.

Chapter Introduction
1
Chapter Product Management and Product Marketing Management
2
Chapter What Is a Product?
3
Chapter What Is Product Management?
4
Chapter Common Product Management Roles
5
Chapter Aligning ProdBOK with Other Existing Processes (and Why It
6 Matters)
Chapter Product Management’s Relationship with Other Disciplines
7
O ver the last 15 years, the product management community has grown
from a handful of thought leaders to dozens. But this growth has done
little to solidify a standard body of knowledge or skill set needed to
succeed as a product manager. Bodies of knowledge lead to greater
understanding. Although product management is clearly understood in a
company like Procter & Gamble, which defined brand management
decades ago, there are many companies that, being unsure what product
management involves, hire an “experienced” product manager to lead.

There is no single course or university program that one can take to

become a professional product manager. Therefore, it’s fair to say that
product management is an on-the-job experience. Using the experience
accrued via trial by fire or on-thejob training, a career product manager
moves from company to company, bringing his or her own uniquely
shaped perspective.

This “on-the-job” education of product managers has led hiring

organizations to believe that domain experience is required because hiring
managers are unsure what skills are transferable from industry to industry.
And the lack of a defined foundational skill set has left the field open to
interpretation and improvisation. The editors of this book believe it is
important, therefore, to establish a basic standard of knowledge on product
management as a profession.

1.1 What Is The Guide to the Product Management and

Marketing Body of Knowledge (ProdBOK®)?
A Body of Knowledge (BOK) conveys a commonly accepted standard of
concepts, definitions, processes, and activities that make up a profession,
as defined by the participating thought leaders, academics, and
practitioners in the field. A BOK is not an encyclopedia of all things
product management but a guide that spurs practitioners to seek additional
knowledge, resources, and certification. The Guide to the Product
Management and Marketing Body of Knowledge (ProdBOK) is that sum of
knowledge within the product management profession.

ProdBOK represents knowledge and practices that are applicable to most

product managers, most of the time, based on a consensus of their value
and usefulness. This BOK provides the fundamental knowledge required to
be an effective product manager. It was developed to give product
managers information that would motivate them to look deeper into the
subject and research the far greater body of knowledge that exists within
the product management domain. It is a living reference that is constantly
evolving.

Introducing a New Standardized Product Management

Framework
A product management framework (PMF) creates a consistent language
encompassing the innovation, creation, delivery, and ongoing management
of products. A PMF is applicable to all products developed and managed
throughout their lifecycle—from emerging growth products to well-
established, mature products in the market. The goal of this PMF is to
define the activities that a product manager must perform to innovate,
design, and manage a product that meets customer and business needs and
expectations and can be properly managed in terms of budget, schedule,
scope, quality, and resources.

The PMF organizes and guides cross-functional development activities

through various stages, and it incorporates design controls to optimize the
execution and effectiveness of resulting products. It is scalable and
maintainable, and can be applied to the full range of goods and services.
Today’s business environment is challenging and complex. Product
managers can use a framework to address issues, such as managing
products, that are integrated combinations of goods and services,
globalization, changing legislation, and increasing regulations. A PMF
enables organizations to adopt a holistic, system level approach. The PMF
is not meant to be a standard operating procedure. That is, it’s not meant to
be prescriptive, where completing all deliverables within the framework is
a requirement. Rather, it promotes critical thinking about the activities
needed to support any product initiative. The critical thinking allows the
team to decide which activities make sense, and it fosters the necessary
agility that teams need to deliver in this quickly changing, competitive
environment.

1.3 The ProdBOK’s Audience

This guide provides a singular reference for anyone interested in product
management, from senior executives establishing expectations for their
product managers to those simply interested in learning more about the
field. This includes, but is not limited to:

Senior executives
Managers of product management professionals
Brand managers
Product managers
Product owners
Product marketing managers
Portfolio managers
Program managers
Project managers
Business analysts
Educators and trainers developing educational programs and teaching
product management or related topics
Consultants and other specialists in the field of product management
1.4 Laying the Groundwork for Certification and Academic
Learning
Bodies of knowledge define a standard for discussing, writing, and
applying a common lexicon to a professional field. They provide an
excellent opportunity for professional domains to standardize the
fundamental understandings, language, and skills needed for individuals
and organizations to be successful. Earning a certification by using this
standard body of knowledge demonstrates to peers the qualitative and
quantitative ability to perform the job. Certification also demonstrates a
dedication to learning and advancing product management skills.

This BOK is the basis for developing questions for the exam that
individuals must pass to become a product manager certified by the
Association of International Product Marketing and Management
(AIPMM). Applicants for AIPMM certification undergo a rigorous and
comprehensive examination of their knowledge in each area. A
professional certification and licensure testing company helped construct
this examination. AIPMM follows the International Standard ISO/IEC
17024, General Requirements for Bodies Operating Certification of
Persons, in creating the certification and examination processes.

1.5 The ProdBOK Guide Structure in Summary

The ProdBOK Guide is organized into three sections:

Section 1: Understanding Product Management

This section provides a basic foundation for understanding product

management. It defines key terms, concepts, processes, and basic context
for the rest of the ProdBOK Guide. It also provides key integration points
on how this BOK can be used and aligned with other industry standards
and marketplace processes.

Section 2: The Product Management Lifesycle Framework

This section identifies the framework used to manage a product. It

describes the seven different phases of product management; Conceive,
Plan, Develop, Qualify, Launch, Deliver, and Retire.

Section 3: Key Product Management Tools by Product Lifecycle Phase

This section provides a detailed description of the major product

management tools contained within each product management lifecycle
phase.
2.1 The Current State of Product Management
Today’s business challenges are causing product management to evolve
and become more structured. These challenges have also created intense
competition and sophisticated consumers. As a result, organizations now
demand highly skilled individuals who can immediately impact the
bottom line, develop the next “must have” product or service, and execute
a winning plan.

During an interview with Harvard Business Review on the topic of growth,

Jeffrey Immelt, CEO of General Electric, once stated that the company did
not “have enough sophisticated product managers and system engineers to
put in charge of highvisibility programs.”[1] Because Immelt saw this as
an “organizational weakness,” General Electric immediately began to
address this problem.

This increased demand for product management professionals has created

a continuing growth in product management training and certification.

2.2 The History of Product Management

To see where product management as a profession is going, it helps to look
at its origins.

Product management was born from intense, sustained, and rigorous trial
and error in the market research department at the giant consumer
packaged goods company Procter & Gamble (P&G). In 1931, D. Paul
“Doc” Smelser, a PhD economist from Johns Hopkins University and the
head of the new unit at P&G—the market research department—hired
female college graduates to conduct fieldwork. He used an anthropological
approach, sending the graduates door to door to survey homemakers about
their use of all kinds of household products. Within several years, the
department’s staff grew to around 34, in addition to dozens of field
researchers. The first product group, commonly called a brand, to
incorporate these market research methods in the product design process
was Camay soap.

Camay soap was the catalyst for defining brand management, and P&G’s
Neil McElroy led the charge. Procter & Gamble’s perfumed beauty bar,
Camay soap, challenged the purity positioning of another P&G product,
Ivory soap. The two products targeted very different markets and
competed for resources within P&G. This convinced McElroy, then a
young advertising manager, of the need to establish assignments for its
marketers in brand-specific teams so those teams would have a measure of
autonomy in running marketing campaigns.[2]

In a P&G company memo dated May 13, 1931,[3] McElroy outlined the
duties and responsibilities of the “brand men.” They were tasked with
analyzing the brand history and instructed to “study the territory
personally,” including the dealers and the customers. Both Smelser and
McElroy understood the importance of fieldwork. They both advocated
getting out of the office and talking face to face with customers. Not
unlike anthropologists, they knew that the most valuable data about people
are how they behave in their own environment. They recognized that
surveys, scheduled interviews, and focus groups only give a partial
picture.

McElroy’s memo laid the groundwork for a shift from a geographically

aligned sales perspective to a brand orientation. The result was a
fundamental restructuring of P&G. John Pepper, former P&G chairman of
the board, president, and CEO, said, “responsibility and accountability for
discreet business units were assigned to separate organizations…by Neil
McElroy, when he helped create the brand management system in the
1930s.”[4] Procter & Gamble brand managers assumed responsibility for
coordinating all activities and tasks involving their brand. Far more than
just marketing, the brand managers would also coordinate product
development and field sales.

From McElroy forward, every one of P&G’s chief executives would hold
the positions of assistant brand manager and brand manager on their way
up the executive ladder.

2.3 The Evolution of Brand and Product Management

“A product is made in the factory. A brand is made in the mind.”[5] This

might be overly simplistic, but it does highlight the differences between
brand and product management.

What exactly does “a brand is made in the mind” mean? A brand is a

name, term, design, or symbolic representation of the seller’s goods or
services. In other words, a brand is the sum of the perceived psychological
and emotional factors that exist in the relationship between a company and
its customers. Brands have meaning and help to establish a personal and
emotional connection with the customer.

Companies build goods and/or services and then add value by creating
brands to convey functional, economic, and psychological benefits for the
customer in terms of quality, price, and image. Products serve as the
delivery mechanism of the brand promise. This promise encapsulates a
company’s reputation and overall value proposition and communicates
what customers can expect beyond what the product delivers.

Many companies have a single brand and therefore structure the

organization around the products. When a company has multiple brands,
such as the case with P&G, the brand is at the pinnacle of the product
hierarchy. An excellent example is Disney’s focus on creating “magical”
customer experiences.

In the brand management model developed by P&G and adopted by many

packaged goods companies, the brand management structure was the
center of the wheel and the career path for future CEOs at P&G. In fact, a
number of brand managers from P&G became leading CEOs in other
industries, such as eBay (Meg Whitman), Intuit (Scott Cook), Microsoft
(Steve Ballmer), and AOL (Steve Case), to name a few.

The noticeable success resulting from P&G’s focus on brands and their
underlying products led organizations outside the consumer product
segment to adopt a similar model — product management. It was in this
way that what began as brand management evolved into the distinct
profession called product management and became more comfortably
acclimated into a wide range of industries, including consumer products.
P roducts are the result of a process of effort or thought. At their core,
products are the sum of benefits that satisfy a customer’s need or desire.
The word “product” is commonly used to describe durable or tangible
goods. However, more correctly, products can be goods or services, and
are distinguished by tangibility: goods are tangible and services are
intangible.

From the customer’s perspective, the product is the overall experience

provided by the combination of goods and services to satisfy the
customers’ needs before they use it, while they use it, and after they have
stopped using it.

3.1 Goods and Services

3.1.1 Goods
There are a number of types of physical products, as follows.

Consumer Products: items that are used daily. Consumer products are
commonly identified as goods purchased for personal use. There are four
types of consumer products:

Convenience products: goods that are purchased immediately and

frequently with little comparison or decision time.

Shopping products: goods that require research and analysis before

purchasing (e.g., gold, silver, automobiles, and clothing). Generally, each
purchase requires an examination of price, quality, durability, and resale
value.

Specialty products: goods and services that are either unique or have such
a clear brand identification that a consumer is willing to make a
significant effort to purchase them. Examples include luxury goods, exotic
vacations, and collector items.

Unsought products: goods and services that a consumer either doesn’t

know about or doesn’t want to think about. Examples include funeral
items, such as caskets, headstones, or burial plots.

Business-to-Business: goods and services used for running a business or

for selling directly to business customers.

Industrial Products: goods or services used by an industry or business,

rather than by an individual.

Other Products: Other commonly used product classifications include:

Perishable products (also known as non-durable goods): goods that can be

destroyed easily or do not have long shelf lives. Good examples are fruits,
vegetables, dairy products, cosmetics, fuel, cleaning products, and paper.

Durable goods: the opposite of perishable products, these goods are in use
for at least three years. Examples are furniture, electronic equipment, and
hardware. Durable goods are also classified with industrial products such
as copiers, machinery, and offices.

Finished goods: goods ready for immediate sale. Finished goods do not
require further processing.

3.1.2 Services

According to Kotler and Keller (2008),[6] services are “any activity or

benefit that one party can offer to another which is essentially intangible
and does not result in the ownership of anything.” The four characteristics
of services are 1) intangibility, 2) perishability, 3) inseparability, and 4)
variability.[7]

A common misconception is that services differ from what is often

referred to as “products.” Understanding that products are a mixture of
goods and services in varying degrees is an important step in the value
creation process (see section 6.2). Therefore, it is important to understand
whether a product would be classified as a “pure good” (something that is
not accompanied by a service, i.e., toothpaste) or a product that would
result in only the delivery of a service (i.e., a dentist appointment).

Professional Services

Services are assistance, support, or benefits offered by one person to

another. Examples are provided by professionals like plumbers,
electricians, mechanics, attorneys, doctors, and cosmeticians.

Business Services

Business services are offerings that span all industries and organizations.
These services include consulting, customer service, and information
technology. Sometimes, business services are combined with
complimentary goods. In these instances, services are closely aligned and
can be difficult to separate from goods, particularly when they are part of
augmented benefits in the case of warranties, service agreements, and
support.

Technical Support Services

Technical support services accompany manufactured products. These

services are offered either directly from the manufacturer or through a
third-party provider.

Financial Services

Financial services are products offered by financial institutions for the

facilitation of financial transactions and other related activities. Examples
include loans, insurance, credit cards, investment opportunities, and
money management.

Service Warranties

A service warranty provides protection against the cost of repair,

replacement, or maintenance of a consumer product in return for payment
of a premium. These services come in many forms, including warranties,
guaranties, extended warranties, extended guaranties, or maintenance
service contracts.

3.2 Brands
As previously noted, products are goods and services that offer a
functional benefit. A brand, on the other hand, is a name, symbol, design,
or mark that enhances the value of the product beyond its functional value.
David Ogilvy, the founder of the advertising agency Ogilvy & Mather,
defines a brand as:

“A complex symbol. It is the intangible sum of a product’s attributes, its

name, packaging, and price. Its history, reputation, and the way it’s
advertised. A brand is also defined by consumers’ impressions of the
people who use it, as well as their own experience.”[8]

A brand can also be described as a strategic asset of an organization and

the experience, perception, and reputation of an organization’s values and
beliefs, personality, and behavior. It also comprises the name and visual
mark by which an organization is recognized.

3.3 Product Lines

According to the 12th edition of Principles of Marketing, “A product line
is a group of products [categorized by a business unit or company] that are
closely related because they function in a similar manner, are sold to the
same customer groups, are marketed through the same types of outlets, or
fall within given price ranges.”[9]
3.4 Extensions
There is quite a bit of confusion about the definition of brand and product
extensions. It is helpful to remember that a brand lives in the mind, and
the product represents the delivery mechanism of the brand. The following
definitions are intended to make the distinctions clear.

3.4.1 Brand Extensions

When a firm uses an established brand to introduce a new product, it is
called a brand extension.[10] For instance, when celebrities use their brand
(their name) in the creation of fragrances, clothing, restaurants, jewelry,
vehicles, etc., they are creating brand extensions. During the creation
process, the development teams for these categories are assuming that a
particular brand identity will resonate with the consumer perceptions of
the celebrity. Success is generally achieved when the brand and the
category are closely aligned. To better illustrate that point, one can look
over the past decade at the enduring brand of Harley-Davidson. Harley-
Davidson has a strong male identity image. Therefore, it experienced a
brand extension failure when it introduced a line of perfume. The image or
identity of the strong male that lives in the mind for Harley-Davidson fans
did not fit the product line of perfumes.

Brand extensions can be classified into two types: line extensions and
category extensions.

3.4.2 Line Extensions

Product line extensions create new products in the same category using the
existing brand name. These new products can include things like different
formats, alternative packaging, new flavors, or new or additional
ingredients. For example, Cherry COKE® is a product line extension of
the Coca-Cola COKE® beverage.

3.4.3 Category Extensions

Category extensions are the use of an existing or parent brand to launch
products in other categories. For instance, Harley-Davidson® is a
motorcycle, but the Harley- Davidson brand is used to distinguish a design
styling used in Ford® F-series trucks.
S tated simply, product management is the process of conceiving,
planning, developing, testing, launching, delivering, and withdrawing
products in the market. It is the organizational function within a company
dealing with the thoughtful and proactive management of a product or
group of products throughout all stages of the product lifecycle.

As a discipline, product management provides managerial focus to

products (goods and services) and brands as profit-generating systems
within the context of the larger organization. Without effective product
management, product development is prone to guesswork, misguided
development projects, and missed opportunities. With world-class product
management, companies develop products with robust knowledge of both
customers and markets, increasing the likelihood of market success.

4.1 Internal and External Aspects of Product Management

Product management as a process has two distinct areas of focus: internal
and external. Internal is defined as within the organization’s environment,
including such elements as current product teams, senior management, and
required processes. The external environment includes such elements as
the supply chain, distribution network, and markets. How each company
defines, develops, and delivers products will be influenced by these
factors.

4.2 Structure of Product Management

In practice, there is no single product management model. However, the
strategic value of one trend has gained momentum and become
increasingly clear: to have the product management function report
directly to the CEO or the president of a strategic business unit. This trend
is further supported by the results of a survey conducted by Tom Grant of
Forrester Research, which indicated an increase in the effectiveness of the
product management organization when the function reports directly to the
senior executive.

Additionally, organizations report that product management performs best

when it functions within a series of checks and balances. In other words,
the process works best when the product management function balances
the short-term needs of functions such as sales and customer care against
the longer-term needs of the client base, market, and organization.

To achieve this objective, the product management function needs the

autonomy to make the best overall decision on behalf of the organization,
customer base, and target market. When these factors are in uneasy
harmony, organizations report a high degree of market success.

4.2.1 The Upstream/Downstream Product Management

Model
Linda Gorchels, in the 2011 edition of The Product Manager’s Handbook,
outlines two fundamentally different—though related—classifications of
product management functions: upstream and downstream.

Upstream functions deal with the strategies of product roadmaps and new
product development efforts. They usually include identifying critical
portfolio needs and then providing leadership throughout the development
process up until launch. Downstream functions deal with ongoing lifecycle
management. Some medical device and diagnostic manufacturers, in
particular, hire separate people for the two job categories. GE Healthcare,
for example, has upstream product managers responsible for global
product strategy and launch. Their downstream product managers handle
the marketing and sales support necessary to manage the profitable sales
of products after launch and beyond. Sometimes the downstream product
managers are responsible for marketing the products in different countries.
Health care product and services company Beckman Coulter has similar
split positions, but refers to them as strategic and tactical product
managers.

The split between upstream and downstream product management is not

consistent across industries. For some companies, particularly in highly
technical fields, upstream activities end before commercialization, with
downstream product managers taking over at launch. And some companies
shift from upstream to downstream at the start of a new product project (at
the shift from R&D to development). The best practice for a company is
what works best for their specific circumstances.

4.3 Product Management Structure within Organizations

Each company’s stage of growth impacts the actual organizational
structure of product management.

In startups and companies in the early stages of growth, where speed to

market is emphasized, product management organizations tend to be small
and nimble with a focus on direct customer interaction. The product
manager is generally managing all aspects of a product or group of
products from inception through launch. The organizational structure is
very flat, with low degrees of specialization.

As a startup gives way to a successful midsized enterprise, resources shift

to building scale and managing the resulting growth. As a result, the
product management function is tasked with managing both growth and
complexity. Product managers at this stage of growth are often surrounded
by additional talent, particularly to assist with managing requirements,
overseeing specifications, and ensuring appropriate levels of engagement
with the cross-functional development and support teams. The product
management organization is expanding during this stage as process
implementation and specialization take hold.

More mature organizations have historically moved slowly and

methodically to protect their existing market share while pursuing growth
both organically and through mergers and acquisitions. As the business
has increased in scale and complexity, product management organizations
have grown significantly and now contain a high degree of expertise
across a range of necessary skills with increased specialization.

Although growth stage often dictates product management’s configuration,

some organizations build cultures that defy convention and common logic.

Google’s structure, for example, is built on a vice president (VP) of

products leading a team of VPs of sector products, ultimately reporting
directly to the CEO. Reporting to the VPs of the sector products are teams
of product managers.

At Microsoft, there are many layers of senior VPs and VPs of business
units to traverse before finding a VP of product management. Microsoft
also has a team product management approach, using product managers,
program managers, and product marketing managers. Facebook, a
“software as a service” (SaaS) model company like Google, has a director
of product management who reports directly to the CEO. Although there is
not one magic formula, the decision on where product management sits in
the organization comes down to these questions:

1. What is the overall product management objective?

2. Where in the organization can a product manager have the best
strategic vantage point and be most effective?
3. Where is financial decision making for products located in the
organization?
4. Where can those decisions be measured and benchmarked?

Clearly understanding the answers to these questions leads to designing

the right product management structure within an organization. Product
managers generally have the best opportunity to succeed when they report
to a business leader at the enterprise or business unit level who must
balance the short- and long-term needs of the customers, market, and
organization.
4.4 Product Management’s Relationship to General
Management
General management encompasses strategizing, planning, organizing,
staffing, executing, delivering, and providing the proper infrastructure
associated with support and operational processes. Product management
can include overall responsibility for managing the strategy, planning,
revenue, cost, marketing, sales channel development, product delivery,
operational rollout, and support of a product. Product management is
essentially general management for a product. But there is a key
distinction—general managers have full profit and loss responsibility and
have functional leaders reporting to them, whereas product managers
interact primarily through influence and by relying on shared
organizational objectives.

4.5 Managing and Marketing Goods and Services across All

Industries and Companies
The main objectives of marketing are identifying, satisfying, and retaining
the customer. Although there are differences within industries on how each
of those objectives is accomplished, some fundamental methods, skills,
and programs exist. Unless otherwise noted, the processes and methods
outlined in this body of knowledge are applicable to a broad range of
industries and organizations, regardless of size.

4.6 Variations by Industry and Maturity

Product management spans a wide variety of industries. Listed below are
examples that illustrate the emphasis on a specific subset of product
management skills.

Consumer Packaged Goods

The consumer packaged goods industry requires product management that

is nimble and responsive. The key to success in this market is to have
effective innovation processes, faster time to market, brand recognition,
and lower costs. There is a constant battle for the consumers’ attention;
therefore, the focus is on enhancing the consumer experience with the
products.

Financial

Organizations offering financial services (e.g., banks, credit card

companies, insurance agencies, consumer finance services, stock
brokerages, investment fund organizations, and wealth management
companies) usually separate the product management structure into
business units by product lines and specialty. Product managers are
augmented by subject matter experts who can focus on the government
regulations and governance, while the product manager focuses on
customer needs and the delivery mechanism of the service organization.

Hospitality

Hospitality is a service organization model covering lodging, restaurants,

event planning, theme parks, transportation, cruise lines, and additional
fields within the tourism industry. This industry favors product managers
who also have aptitudes commonly associated with project management
because of its focus on planning and shorter lifecycles.

Health care

Health care is the broad industry covering equipment and services in

addition to pharmaceuticals, biotechnology, and life sciences. The
particular sectors associated with these groups are biotechnology,
diagnostics, drug delivery, drug manufacturers, hospitals, medical
equipment and devices, diagnostic laboratories, nursing homes, providers
of health care plans, and home health care. This broad range of products
favors product managers who have science backgrounds as well as the
ability to navigate through regulatory issues.

Manufacturing

Manufacturers today face global challenges. They must create rapid

growth, introduce new products, and lower costs—all within the confines
of an often competitive market. Product managers in this environment
must understand the increased demand on innovation and must have the
ability to work with offshore manufacturing teams and distributed supply
chains. With short development times and real-time collaboration skills,
product managers must learn to spot problems early.

Software

Software product management is very similar to that of other industries

but has some issues that are more prominent. As in manufacturing,
schedule slips are one of the biggest problems.

Telecommunications

In the telecommunications industry, time to market is crucial; as the

market consolidates, the key players are forced to release product versions
rapidly. Product management in telecommunication must identify the
requirements and match those customer needs with the company’s core
software resources and technological assets to stay competitive. Pricing
and licensing are also key issues for telecommunications.

Mature Industries

Mature industries are almost always dominated by a small number of large

companies. This domination is caused by the industry consolidation and
the competitive shakeout that accompanies these highly competitive
industries during their growth. Product management within these
organizations is generally more structured. An example of a mature
industry would be the tobacco industry, which has continued sales but
minimal growth.
P roduct manager is the general term commonly used to describe team
members that are responsible for managing one or more products within
an organization. To bring more clarity and meaning to the role, the title is
often enhanced to include the division, products managed, or function
performed, i.e., product manager, beverage division; product manager,
tools and metrics; or technical product manager.

5.1 Product Manager

Regardless of title, most product managers are tasked with channeling the
needs of the market into the organization and ensuring that an optimal
balance is struck between customers’ needs and the organization’s
capabilities. Product managers therefore play an important role in
maximizing the return on an organization’s investment in goods and
services over the entire product lifecycle.

The product manager role is a boundary role[11] that sits at the intersection
of the market and the organization (Figure 5-1). Within the organization,
the product manager must overcome diverse expectations from the various
departments with which they must interact. Product managers also assume
responsibility for product planning. In this role, the product manager is
responsible for the ongoing process of identifying and articulating market
requirements for a specific market or customer need.
To perform this role, product managers must act as the voice of the
customers, channeling their unmet needs. With this responsibility, the
product manager initiates and participates in customer visits, organizes
customer advisory panels, and performs customer interviews. Armed with
this information, they can lead the process of improving in-market
products and developing new ones.

The product manager must also possess keen influence and negotiation
skills. In their article The Product Manager as an Influence Agent,
Gemmill and Willemon state, “While product managers frequently are
assigned total profit responsibility for their products, they often report that
these responsibilities are not matched with commensurate authority over
other organizational units on whom they are dependent for contributions in
carrying out their marketing programs; i.e., sales, marketing research,
manufacturing, research and development, and advertising.”[12] The
product manager’s success often lies in the ability to use alternate methods
of influence to gain support for his or her efforts.

5.1.1 Market-Facing
The market-facing product manager generally manages one or more
products that have customers outside of their organization with whom they
work closely to uncover unmet needs.

Market-facing product managers conduct market research to uncover

unmet needs and articulate the needs of a target market or customer base.
This position is not to be mistaken with the product marketing role, which
will be covered later.

In this role, the product manager considers elements such as intended

demographic, offerings from competitors, and the strategic fit of new
products with the company’s business model. The market information is
used to gather intelligence for building the right products.

5.1.2 Internal
In contrast to market-facing product managers, internal product managers
often represent products that are a component of a market-facing product
but whose customers are inside the organization. Internal product
managers are commonly found in technology or data industries, where a
platform or database must be effectively managed to create value for
products or services that are marketed to external clients via a market-
facing product manager.

5.1.3 Technical
Technical product managers have a detailed understanding of the
technological aspects of a product and commonly partner with market-
facing product managers to serve the market’s needs. It’s not uncommon
for technical product managers to spend significant time supporting the
needs of colleagues—like the engineering team. A market-facing product
manager, on the other hand, focuses on identifying customer or market
needs.
Technical product managers also create detailed descriptions of product
features, prioritization of features, use cases, system requirements,
performance requirements, sales and support requirements, and, if
necessary, market test plans.

5.1.4 Service
Service-oriented product managers are in market-facing positions with
responsibility for managing the scope of an organization’s services at all
levels, including positioning, quality of experience, delivery, and pricing.

5.2 Product Marketing Manager

The product marketing manager role most often derives from a company’s
desire to increase the focus on “go to market” activities by dividing the
product lifecycle into separate parts as the company grows. The product
manager, who before the new role was managing the entire lifecycle,
generally maintains responsibility for the pre-launch activities in the
product lifecycle. The product marketing manager assumes responsibility
for post-launch activities. The organization expects the product marketing
manager to have or develop robust skills in supporting customer
acquisition and in market activities.

One of the best ways to make a clear distinction is to delineate processes

and roles. Product management and product marketing are processes.
Product managers and product marketing managers are roles. This
distinction places the bulk of the focus on the individual tasks.

A product marketing manager’s role is primarily to help define and

manage a product’s image in the market. In other words, to announce the
product to the world, build customer awareness, and support sales in
turning prospects into profitable customers. A product marketing manager
defines the product “promise” and ensures its successful execution in the
market. That also means managing a successful launch, conducting sales
training, and leading key programs through various distribution channels.

In addition to managing the finished product in market, the product

marketing manager is uniquely positioned to gauge customer reactions to
the product and therefore provide valuable input into future requirements,
including revisions or major releases.

5.3 Product Portfolio Manager

Product portfolio manager is an umbrella term for a manager that’s
responsible for a business grouping of products. These products are often
divided into logical portfolios, organized by business line or segment.
Unlike product managers, who are concerned with the specifications and
details of a product, the portfolio manager investigates higher-level details
like investments, diversification, and risks. Product portfolio managers are
also involved in managing the assets of intellectual property, patents, and
trademarks. They are usually empowered to make buy/sell and transform,
divest, or retire decisions while working closely with senior management,
legal, and financial representatives.

5.4 Product Owner Outside of Scrum

The product owner role is a clearly defined subset of product management
responsibilities focused on representing the business and customer
stakeholders in the development process and ensuring the successful
development of a product. They capture market requirements and
customer acceptance criteria for the project. They prioritize the market
requirements and make decisions about feature, function, and time
tradeoffs. The product owner works with development to review product
requirements and functional specifications and interacts with customers
during development to ensure the product will meet their needs. In
organizations with an established product owner structure, product owners
may also develop business cases, release plans, and roadmaps—elements
that have traditionally been thought of as the domain of product managers.

5.4.1 The Product Owner and Scrum

Scrum is an iterative, incremental process widely used for creating
products. A detailed description of Scrum is provided in section 6.2.3.
Although product owners can exist independent of the Scrum
methodology, in Scrum, the product owner is one of three clearly defined
roles (the other two are Scrum master and team member). The product
owner is responsible for maximizing the business value of the output of
the Scrum development team. The product owner can be viewed as the
advocate for the business and the customer in the development process.
Scrum empowers this individual as “the one and only person responsible
for managing the product backlog,”[13] which is a prioritized requirements
list, usually written as user stories. This authority prevents the team from
having to deal with conflicting priorities.

In setting development priorities, the product owner applies knowledge of

the market, the customer, and the business objectives. This individual will
collaborate with the development team to understand the development cost
and technical risk of each feature so risk-adjusted return can be
maximized. Further, the product owner has a responsibility to socialize the
product backlog to the rest of the organization to gather input from each
department and build consensus around the plan.

In organizations where the product owner role has taken root, the product
owner may perform tasks that have been traditionally thought of as part of
the product management function, such as product visioning, road
mapping, and planning. However, the core of the product owner role is
defined by some very specific responsibilities that are often more detailed
than most product managers are used to, such as:

Prioritizing the product backlog.

Grooming user stories: preparing stories for a development Sprint,
including fully explaining the business reason behind each story and
contributing to the acceptance criteria.
Collaborating regularly with the team and being available at all times
to answer clarifying questions about any requirement and to inspect
completed user stories.
Participating in the Scrum planning and Scrum review meetings.

In commercial software development, the Scrum product owner role is

often filled by a product manager or technical product manager but is
more likely to be handled by a business analyst, a sales engineer, and other
titles. For an in-house information technology project, the product owner
might be a product manager but could also be a business analyst or a
department head.

As teams have scaled Scrum in the enterprise to work on ever-larger

development efforts, they often use a product owner hierarchy[14] (Figure
5-2). This hierarchy consists of one or more levels with a chief product
owner at the top. The chief product owner commonly has a director or vice
president-level title and would be responsible for overall product return on
investment and success.[15] Each product owner is involved in overseeing
the success of his or her specific product.

Figure 5-2. Product Owner Hierarchy

In organizations that do not use a product owner hierarchy, the Scrum

product owner might collaborate with a product manager. In this situation,
the product owner works closely with the development team and is
focused at the iteration level, whereas the product manager focuses at the
release and roadmap level.[16]
I n this Body of Knowledge, the term “product management framework”
(PMF) is defined as the process of managing the entire lifecycle of a
product from conception, through development and production, to
retirement. This PMF is a complete end-to-end structure for managing a
successful product, and includes people, processes, data,
business/organizational objectives, and, ultimately, customer satisfaction.
The PMF is meant to focus not just on product deliverables but on the act
of managing the product itself to achieve a desired result. Managing, in
this context, is understanding what the goals are and putting a plan
together to achieve those goals, while effectively dealing with change that
may occur along the way. That goal, in relation to the PMF, encompasses
customer satisfaction, organizational performance objectives, and overall
market success throughout the life of the product. It’s important to clearly
define the PMF process because when it comes to product development,
especially for new products, there are a number of business processes that
allude to product management but actually focus on only a portion of the
product lifecycle.

Product management, as modeled in this Body of Knowledge, naturally

interacts with several other processes. It’s vital that these processes work
together efficiently to achieve the product’s goals. Some of the more
common processes and standards in the industry that are focused on
management and delivery and are typically sources of confusion for a
product manager are the Project Management Body of Knowledge,
Business Analysis Body of Knowledge, and Agile Manifesto (Agile
Software Development). It is important to understand these differing
processes and bodies of knowledge to ensure appropriate alignment and
increase the chances of achieving desired market results. A simple
depiction of that relationship is captured in Figure 6-1.

Figure 6-1. Common Processes and Bodies of Knowledge

That Operate within the Product Management Framework

For optimum results, these processes must align. Without alignment, the
gears in Figure 6-1 will grind and eventually stop, causing product and
project failure. When put in the proper context, these processes can exist
symbiotically, enabling product success. This is not to say that the PMF is
simply a collection of other processes. On the contrary, the PMF has been
designed to capture all the activities and deliverables a product manager
and business leader need to manage a product line, from an undefined,
“fuzzy” product idea all the way to maturation and retirement of the
product after years in the marketplace. The PMF is where the supporting
processes need to align and create value. The following sections will
provide further context regarding these other types of processes and the
value of aligning them with the PMF.

6.1 Strategy and Innovation Processes

6.1.1 Strategy
Strategy is about envisioning a desired outcome, charting an efficient
course to achieve this objective, and aligning to that course of action as
long as it makes sense to do so. Michael E. Porter, Harvard Business
School professor, adds that, “Competitive strategy is about being different.
It means deliberately choosing a different set of activities to deliver a
unique mix of values.”[17]

Practically speaking, product managers split their time between

developing and implementing product strategy and driving tactical
execution. Many product managers use a set of strategy tools from
Michael Porter’s “Five Forces”[18] model to help evaluate market
attractiveness and aid in decision making and planning. Those forces are:

1. Entry. How easy will it be to enter the market? New competitors are
hampered by substantial barriers and might experience retaliation
from existing competitors. For the entrant, some of the most common
barriers are economies of scale, large capital requirements, limited
access to distribution channels, and government regulations or
subsidies.
2. Threat of substitution. Are there other products and services that
can easily be substituted for the product under consideration? If so,
and if there is little difference between products, customers can easily
switch. Also, in the instance of rising prices, a consumer may decide
to substitute another product.
3. Bargaining power of buyers. Do a small number of buyers impact a
large portion of sales? Does one customer purchase a large
percentage of the companies’ products? Is switching between
competitors relatively easy? These factors give buyers a great deal of
power, particularly if the product is not extremely important to
buyers or if they can do without it for a time.
4. Bargaining power of suppliers. Is there significant pressure from
suppliers? If there are too few suppliers or it’s not easy to switch
suppliers, they can control volume and pricing, which can hamper a
company’s ability to function competitively.
 5. Rivalry among current competitors. In crowded markets with little
differentiation between products, competition will impact a
company’s ability to sustain profits and long-term growth.

To manage products effectively and deal with these five forces, Porter
suggests that product managers use one of the three following strategies:

1. Overall cost leadership. Maintain the lowest cost in the market.

2. Differentiation. Deliver products that customers believe have a
distinct or unique position in the market. This can be accomplished
by combining several other factors, such as brand differentiation,
unique features, warranties, or quality.
3. Focus. Focus on niche or limited segments to efficiently serve the
needs of customers.

It is critical that product managers make clear, strategic choices in their

product planning and development processes to avoid being “stuck in the
middle” without clear price leadership, a clearly differentiated product, or
a distinct focus.

6.1.2 Innovation
Innovation is the execution of a new or improved product, process,
marketing method, or organizational method in business practices,
workplace organization, or external relations.

The Oslo Manual[19] defines four types of innovation:

1. Product innovation. Introducing a good or service with

characteristics or intended uses that are new or significantly
improved, including significant improvements in performance or
features, components and materials, incorporated software, user
friendliness, or other functional characteristics.
2. Process innovation. Implementing a new or significantly improved
production or delivery method. This includes significant changes in
 techniques, equipment, and/or software. The customer does not
usually pay directly for this process, but the innovation may be
required to deliver a product or service and to manage the
relationships with the various stakeholders.
3. Marketing innovation. Applying a new marketing method involving
significant changes in product design or packaging, product
placement, product promotion, or pricing.
4. Organizational innovation. Executing new methods in the firm’s
business practices, workplace organization, or external relations.

It is important to point out that any of the types of innovation listed above
can result in a disruptive innovation,[20] a term coined by Clayton
Christensen. Disruptive refers to the innovation process that displaces
entrenched products in established markets to deliver dramatic value to
stakeholders. An example of a disruptive innovation has been the
emergence of digital media, which has replaced CDs in the music industry
and is transforming the book industry.

Regardless of the industry, innovation is about change—in process and in

thinking. And it’s about producing outcomes that may be either radical or
seemingly incremental but will bring about changes in processes,
products, thinking, or business models within companies.

The product management lifecycle walks through the process of how

products are managed in phases, from cradle to grave. Using this as the
base process and adding an innovation funnel to evaluate, qualify, and
prioritize ideas produces results. The approach focuses on gathering,
categorizing, prioritizing, combining, and screening ideas, and on
identifying viable options to implement these ideas.

Aligning the innovation and product management processes is essential.

By aligning the process to the PMF, a product manager can integrate
innovation activities into the workflow within an existing product
management process. To gather ideas, product managers must use all of
their available tools. The most successful and innovative companies use
anthropological methods to discover unarticulated customer needs and
gain penetrating customer insights. These needs must be well understood
before any specific product can be built.

The entire process can be summarized in five phases:

1. Staging. The strategic innovation group is nominated, roles are

identified, goals are determined, and a process is documented.
2. Aligning. This is critical. The innovation team and senior
management align the focus and scope of the planned initiative.
3. Exploring. This is when the process is unleashed. Depending on the
ideas generated and their scope, the team will discover new areas to
begin the changes needed for innovation.
4. Creating. After capturing insights, the team begins to outline the
business models or innovation changes that will take place.
5. Mapping. This road-mapping phase requires detailed timelines
documenting when the ideas will be implemented.

6..2 Value Creation Processes

A value creation process[21] is the way the product manager and the
project team organize around the work that needs to be completed. This
process is when the team chooses the overall process to define market
requirements, which are then concurrently broken down into functional
specifications, design, development, and testing. Some of these
deliverables may be created in phases or iterations. The plan could use a
formal design phase or an evolution of the architecture and high-level
design. Testing could be done as part of the process or saved for the end.
The choice could be made to prototype for a while and then engineer the
features, or implementation could be done by feature, observing how the
architecture evolves.[22] Typically, engineers call these development
lifecycles. However, from a product management perspective, the word
“lifecycle” can be confusing. Therefore, it’s best to name these processes
based on what they do—create value for customers and organizations.
Historically, product managers have not been involved in choosing what
value creation process is needed to deliver their product and features to
market; rather, they typically leave it to the engineers or the quality
department to decide. When the product manager does not choose, the
value creation process can be filled with change, delays, and confusion as
market demands and sales commitments force external constraints on a
project that the broader development teams were not aware of, but the
product manager expected all along. The way to change this behavior is
for the product manager to better define the success criteria upfront and
then understand the associated constraints or drivers (scope versus
schedule versus cost). Said another way, a product manager should define
upfront what would make the product a success based upon both market
and organizational objectives. Once the success criteria are defined, the
constraints on the product manager and the team can be understood. Only
then can a risk- or business-based decision be made on what value creation
process is right for the initiative.

A word of caution: this is not advising product managers to tell engineers

how to do their job or software engineers how to code. On the contrary, the
purpose is to understand the context of the process or processes that are
being considered to deliver that value, and to have a collaborative team
decide which process makes the most sense. Having the entire team better
understand the context for the project and the end product can make all the
difference. For example, the value creation process chosen for a product
development environment would be different than that chosen for a
manufacturing environment because the type of work and the constraints
are different. Table 6-2 charts these differences and illustrates how
choosing incorrectly could lead to failure.

Table 6-1. Comparison of Manufacturing and Product

Development Considerations
Each value creation process optimizes for risk differently. There are three
major kinds of value creation processes: serial, iterative, and
iterative/incremental, which the software community typically calls
“Agile.”[23] However, care must be taken not to categorize all
iterative/incremental processes as Agile. In software product development,
Agile has become a catch-all for lifecycle descriptions—and consequently
can be misused or applied improperly. Table 6-2 shows the different value
creation processes and how a priority of constraints can help a product
manager choose a process.

Table 6-2. Value Creation Processes

The following sections will further explain the different types of value
creation processes, providing the background needed to choose the
appropriate one.

6.2.1 Serial Processes: Waterfall and Phase-Gate

In a serial value creation process, the product team moves through steps
sequentially. Progress is seen as flowing steadily downward (like a
waterfall) through the requirements, design, development, verification,
and launch phases. The general idea is that the team first develops or
obtains market requirements. Based on the market requirements, the team
develops product requirements and performs analysis and design to
determine the system, or “big picture.” Once everyone agrees on the big
picture, the team starts development. Once development is complete, the
team integrates all the pieces and begins final testing. Although it isn’t
necessary for one phase to finish before the next phase begins, the one-
phaseat- a-time mentality is common in the industry. The unmodified
“Waterfall model” (Figure 6-2) shows progress flowing from top to
bottom.
Figure 6-2. Serial (or Waterfall) Model

The serial, or Waterfall, process originated in the manufacturing and

construction industries—highly structured physical environments in which
after-the-fact changes are prohibitively costly, if not impossible. Serial
processes can also be found in the medical device and pharmaceutical
industries, where clear, orderly processes must be documented and
followed, and clear traceability can be mapped to ensure quality and
protect against external regulatory audits.

To be clear, a serial process is not a project management process. Instead,

it is a product development process and should be considered a series of
steps or techniques used to deliver product in a serial fashion. Typically,
serial processes take longer because they are designed to be able to predict
how long it will take to implement features, find and fix defects, integrate
pieces of the system, or manage requirements changes—activities that are
inherently unpredictable. Without a working crystal ball, it’s impossible to
forecast everything you need to know about the future. In a serial process,
you have to allow extra time for tasks, like a final system test at the end of
the project, to compensate for risks and problems you couldn’t predict
during the project.[24] It might make sense to allow for this extra time in
development, depending on the product and situation.

A serial process can be advantageous from a quality perspective where

external audits exist. Because it allows for clear lines of demarcation on
the development process, it can show an external auditor that a clearly
thought-out step-by-step process was followed before moving into the
development phase. The serial process may be perceived as taking longer
in development. But it may save time overall if it hastens the external
auditing and approval processes. This process could be helpful in the
medical device industry, for example, where FDA approval is required.

To arrive at product go/no-go decisions, a formal serial process known as

phasegate reviews can be instituted within an organization. The phase-gate
process will typically review project deliverables and achievements during
the relevant process phase and collectively determine whether to proceed
to the next phase. Considerations such as strategic fit, technical feasibility,
risk, market attractiveness, and competitive positioning are to be used
consistently in decision making. The decision criteria represent the
standards for management judgment and decision making and provide
guidance in support of their assessment of content, quality, and
consistency in decision making.

When a phase-gate review is complete, the participating team members

recommend that the business owner take one of four possible steps: 1)
continue to the next phase (go), 2) cancel the project (no go), 3) redirect
the project based on strategic changes or gaps discussed during the review
(rework), or 4) defer a decision (hold).

Phase-gate reviews are not the same as technical, architectural, or

deliverable reviews, and will not replace them, as technical and other
reviews should be conducted before phase-gate reviews.

During the phase-gate review process, decision makers ask a series of

critical questions and examine key elements to move to the next gate. Here
are some examples.
 Strategic alignment – the project and product fit the business strategy.
Market of a minimum size exists and will still exist at time of launch.
Technical feasibility is reasonably likely – risk areas have been
identified and solutions are available that can be reasonably acquired
by the project.
A product advantage or value proposition exists.
A marketing plan exists to avoid building products or product
capabilities that lack a “go to market” strategy and plan.
An acceptable return on risk-weighted investment exists.
Extent to which the new product offers unique benefits, meets
customer needs better than competitive products, or provides superior
value for the money invested exists. These estimates should arise
from actual tests with customers. How were customers involved with
evaluation of the product? What was their reaction? What criteria
were used to select the best concept?
Relative resources and experience of the team in projects of the scale,
complexity, and technologies sufficient to support the development
effort are available.
Testing has been comprehensive and robust, ensuring a quality
product.
No “show-stopper” issues exist. If they do, can they be mitigated?
And if so, what is the mitigation plan?
All project and product risks have been communicated with
appropriate mitigation and contingency plans.
All parties have been communicated with, and all parties agree with
the plan and the approach for execution.

Gate reviews are not intended to be informal discussions. They are critical
business decision-making meetings used to optimize product/portfolio
performance, scrutinize development investments, and increase the quality
of development execution. Typically it’s customary for all phase-gate
review materials to be distributed at least one week before a gate review
meeting to allow for adequate review and inquiries. This material should
be sent from the project leader to the phase-gate committee members. The
phase-gate committee members, at a minimum, should have the following
cross-functional representatives:

Product management
Quality
Manufacturing
Sales
Marketing
Legal
Engineering
Operations
Implementation
Project management

During the meeting, the team will present the material and information to
the phase-gate committee, demonstrating that the team has completed all
necessary deliverables and work and is ready to move to the next phase.

6.2.2 Iterative
The basic idea behind the iterative process is to develop a system of
repeated cycles (iterative) in smaller portions (incremental). With this
process, the developer can take advantage of what was learned during the
development of earlier versions. At each iteration, the team modifies the
design and adds new functions. Most of the iterative processes do not
require that pieces of the product be finished at the end of each iteration
cycle. They also do not require concurrent testing and integration. The
overall goal, from a product management perspective, is to get customer/
user feedback more quickly by creating and obtaining feedback on
portions of the product sooner instead of waiting until the entire system is
complete. The portion of the product being shown to a customer should
highlight the problem and provide a solution that can be understood and
implemented easily.[25]

To guide the iteration process, the product manager should create a project
control list that contains a record of all tasks to be performed. This list
should include such items as new features to be implemented and areas of
the existing solution to be redesigned. During analysis, the product
manager is constantly revising the control list. However, it is possible that
the control list might also be managed by a business analyst or project
manager in some organizations. The design and implementation of any
iteration should be simple, straightforward, and modular, supporting
redesign at that stage or as a task is added to the project control list.

The Rational Unified Process (RUP) is an iterative software development

process framework created by the Rational Software Corporation, a
division of IBM since 2003. RUP is not a single concrete prescriptive
process, but rather an adaptable process intended to be tailored by the
development organizations and software project teams that will select the
elements of the process appropriate for their needs. RUP is based on a set
of building blocks, or content elements, that describe what will be
produced, the necessary skills required, and the step-by-step explanation
describing how specific development goals will be achieved. The main
building blocks, or content elements, are:

Roles (who) – sets of related skills, competencies, and

responsibilities.
Work Products (what) – the results of a task, including all the
documents and models produced while working through the process.
Tasks (how) – a unit of work assigned to a role that provides a
meaningful result.

Within each iteration, tasks are categorized into nine disciplines: six
engineering disciplines (business modeling, requirements, analysis and
design, implementation, test, and deployment) and three supporting
disciplines (configuration and change management, project management,
and environment).
The RUP process has four phases: inception, elaboration, construction, and
transition. These phases allow the process to be presented at a high level,
similar to a Waterfall-style project, although the key to the process lies in
the iterations of development that lie within each of the phases. Also, each
phase has one key objective and milestone at the end that denotes the
objective.

In the inception phase, the product manager establishes a business case

that includes the business context, success factors (expected revenue,
market recognition, etc.), and a financial forecast. To complement the
business case, the product manager also generates a basic use case model,
project plan, initial risk assessment, and project description (the core
project requirements, constraints, and key features). After these are
completed, the project is checked by the stakeholders against the
following criteria:

Scope definition and cost/schedule estimates.

Product requirements understanding as evidenced by the fidelity of
the primary use cases.
Credibility of the cost/schedule estimates, priorities, risks, and
development process.
Depth and breadth of any architectural prototype that was developed.
Baseline establishment, to compare actual and planned expenditures.

If the project does not pass this milestone, it can either be canceled or
reconsidered after being redesigned to better meet the criteria.

The elaboration phase is where the project starts to take shape. In this
phase the team analyzes the problem domain and the architecture of the
project takes its basic form. This phase must pass the milestone by
meeting the following deliverables:

An 80% complete use case model in which the use cases and the
actors have been identified and most of the use case descriptions are
 developed. A description of the software architecture in a software
system development process.
An executable architecture that realizes architecturally significant use
cases.
Revised business case and risk lists.
A development plan for the overall project.
Prototypes that demonstrably mitigate each identified technical risk.

If the project cannot pass this milestone, there is still time for it to be
canceled or redesigned. But after leaving this phase, the project transitions
into a high-risk operation where changes are much more difficult and can
be detrimental.

In the construction phase, the main focus is on developing components and

other features of the system. This is the phase when the bulk of the coding
takes place. In larger projects, several construction iterations may be
developed in an effort to divide the use cases into manageable segments
that produce demonstrable prototypes.

The activities of the transition phase include training the end users and
support team and beta testing the system to validate it against the end
users’ expectations. The product is also checked against the quality level
set in the inception phase.

6.2.3 Iterative/Incremental Processes—Agile, Scrum,

Extreme Programming (XP), and Lean
The basic concept behind iterative/incremental-type processes is to
develop a product through repeated cycles (iterative) and in small portions
at a time (incremental), allowing the team to take advantage of what they
learned while developing earlier parts or versions of the system.

The process starts by delivering a smaller subset of requirements. The

team then iteratively enhances the product based on customer, stakeholder,
and user feedback and evolves the features and functionality until the full
system is implemented. Smaller, more frequent releases allow teams to
deliver business value to the customer more frequently. This probe-and-
learn process also allows the team to respond to environments where
requirements are constantly changing. When discussing iterative and
incremental development, the terms iteration and increment should not be
used synonymously. Iteration refers to the cyclic nature of a process in
which activities are repeated in a structured manner. Increment refers to
the quantifiable outcome of each iteration. Iterations can offer a
development process of cyclical refinement, where the process improves
upon what was already done. Incremental development takes it a step
further, where the process yields progress against the overall product
objectives of the next release or a new version of the product.

Agile is an umbrella term used to describe a number of development

methodologies that share common principles associated with
incremental/iterative processes and that correspond to the Manifesto for
Agile Software Development.[26]

Agile methods focus on customer satisfaction and company goals, team

collaboration, communication, frequent inspection, small and self-
organizing teams, accountability, transparency, visual management, and
continuous improvement. As mentioned in section 6.2, Agile can be used
incorrectly to lump a number of different incremental or hybrid processes
together that are not truly Agile. Some common Agile processes include
Scrum, Extreme Programming (XP), and Feature-Driven Development.
This text will first describe Agile from a product management perspective,
then describe how it differs from other processes such as Lean or true
incremental.

Agile approaches assume that change is pervasive and that a product

manager’s ability to correctly predict in detail how best to address
customer needs is limited. Therefore, Agilists rely on the use of a probe-
and-learn approach that incorporates frequent customer feedback. As a
result, product managers working with well run Agile teams enjoy greater
visibility into the progress of their products, greater flexibility to adjust
the product plan based on new information and emergent requirements,
and extremely high quality when automated unit testing is fully
implemented. Those who favor Agile feel that it gives product managers
the option to release smaller increments of value more frequently and
allows them to exercise this option if doing so provides competitive
advantage or a better return on investment. Depending on how roles and
responsibilities are split, working with an Agile team may require deeper
collaboration and discipline. Agile practitioners believe the benefit of
making this additional time commitment is fewer surprises,
misalignments, miscommunications, and delays at the end of the
development cycle.

The Agile Theory

Agile software methodologies are constructed differently than sequential
methods such as those found in manufacturing. Manufacturing is suited to
a defined process model: defined inputs yield defined outputs.
Manufacturing excels at repeating the same steps to produce near identical
items. Traditional software development methodologies like Waterfall
attempt to map software development to a defined, sequential process
(Figure 6-3).

Figure 6-3: Traditional Software Development Assumes a

Defined Sequential Process

Agile methods assume writing new software is more like the non-linear
path found in new product development than the predictable path of
manufacturing. New product development requires research and creativity
—both relatively unpredictable activities. New product development is
thus considered an empirical process, with the team cycling between
creating knowledge and identifying problems (Figure 6-3). The best way
to manage an empirical process is through frequent inspection and
adjustment.[27] Agilists believe that software development, including the
product management step of gathering and validating requirements, is best
suited to an empirical model.

Figure 6-4: Software Development Follows an Empirical

Process

Requirements

Through the Agile process, the functional requirements are often written
as user stories.

A common format for user stories is:

As a <type of user>, I want to <do something>, so that I can

derive <a benefit>.[28]

The user story captures the most important aspects of a requirement: who
it is for, what they are trying to accomplish, why it matters to them. The
user story also acts as a placeholder for a deeper conversation about the
requirement. During this conversation details are added to the story. The
user story is not a requirement specification in the traditional sense of the
term. This supports Agilist’s belief that face-to-face communication is the
most effective way to create a shared understanding of a requirement
between the development team and business stakeholders.

Estimating and Planning

Once an organization creates a vision for the product, the team develops a
list of market and product requirements. The list is commonly prioritized
by business value, risk, and dependencies. The prioritized list of
requirements is typically called a product backlog. The development team
estimates the relative effort of each requirement in the product backlog.
The usual metric is a story point, but it can really be anything. Thus, a
feature estimated at 10 story points is expected to take twice as long to
develop as a feature estimated at 5 story points.[29]

After each iteration, the team counts how many story points it completed.
This is the team’s velocity and a measure of their throughput. The velocity
can now be used to estimate how far through the product backlog the team
will be at each iteration, as well as how many story points the team should
commit to completing for the upcoming iteration.

By knowing how many story points of functionality are planned for a

release, the product manager can track progress at each iteration and judge
whether the release is on schedule by using a burndown chart (a graphical
representation of work that is left to do versus time). Because each
iteration produces working software, the product manager can see the
actual progress and catch any miscommunications early in the process.
Further, each iteration allows the product manager to adjust the plan based
on the best available knowledge. For example, scope can be scaled back to
ensure a release date will be met, new requirements can be added (Figure
6-7), and/or the requirements in the product backlog can be reprioritized,
adjusted, replaced, or removed.

Figure 6-5. Agile Release Burndown Chart

This illustrates that the scope added in iteration three will require
adjusting the number of iterations needed to complete the release and,
ultimately, the release date.

Iterative Development

Agile teams develop software in iterations that generally range from one
to four weeks. The iteration encompasses all phases of the development
cycle, including product definition, analysis, design, code, and test. Each
iteration produces a functional slice of the software that is usually tested
and documented. At the end of each iteration, progress is reviewed based
on the software created in the iteration, and the product backlog and the
release burndown are updated.

As stated above, Agile teams prefer to develop software in functional

slices. A functional slice cuts through all the layers of the product, from
the interface to the logic and data tiers. A product team that spends a
month creating the data tier, a month creating the logic tier, and then a
month creating the interface would not be developing in an Agile fashion.
Each iteration may not, however, produce rich, fully featured code. Early
iterations might only produce a log-in screen or the ability to create a
document but not edit or delete the document. Over time, with each
successive iteration, more capability and polish is layered onto the product
until it is ready to be released into the marketplace.

Visual Management
Often called information radiators, Agile emphasizes visual management
so team members and management can see how projects are progressing
and act quickly when needed. In addition to the burndown charts, many
teams use physical or electronic product backlogs and task boards (Figure
6-6).

Figure 6-6. A Simple Task Board

On the task board, the tasks start on the left. When a developer starts to
work on a task, they add their initials to the task and move it to the “In
progress” column. When the task is completed, they move it to the “Done”
column. Boards may include additional columns such as Design, Testing,
Sign-off, etc.

Although the task board’s main purpose is to help the team self-manage
the work, it also provides quick insight into the status of each requirement.
The product manager knows which requirements are in queue, which are
being worked on, and which have been completed. When a requirement
shows up in the “Done” column, the product manager can quickly verify
that it meets its intent and raise any issues.
Scrum

Scrum is an Agile process that was developed in the mid-1990s by Jeff

Sutherland, Ken Schwaber, Mike Beedle, and others. It does not specify
any development practices, but to make it work for them, teams have
routinely integrated some XP practices like automated unit testing and
continuous integration. A scrum team consists of the following:

Scrum Master – Ensures scrum practice is followed and facilitates so

the team can identify areas of improvement and remove roadblocks to
its progress.
Product Owner – Responsible for the success of the product. The
product owner manages and prioritizes the requirements in the
product backlog to maximize the value of the team’s efforts.
Team – Responsible for developing the product and doing it well. The
team is composed of one or more developers and may include other
roles (e.g., database administrators, user interactions engineers,
quality assurance engineers) needed to build the product.

Teams contain between five and nine people. The team should be cross-
functional and have all the necessary skills to transform the requirements
on the product backlog into working software. With Scrum, when more
than nine team members are needed, a new team is added instead of
adding to the existing team. Teams smaller than five can also work. But
because interpersonal communication tends to break down in teams larger
than nine, it’s wise to heed the upper limit.

Development occurs in iterations, which in Scrum are known as sprints.

Sprints are defined as timeboxed and protected iterations that last no
longer than 30 days.

Before the first sprint, a release planning meeting is held to set product
goals and priorities for the release (which will likely require multiple
sprints). Each sprint is structured around four types of meetings: planning,
development, review, and retrospective:
 Planning – deciding what to build and creating requirements (the list
of tasks needed to complete the user stories that the team has
accepted into the sprint).
Development – the actual coding and testing of the product. This is
longest phase of the sprint and accounts for about 85% of the
iteration.
Review – demonstrating to the stakeholders what was built in the last
sprint to get feedback for the next planning meeting (you need to
know where you are to know what to build next).
Retrospective – reflecting on what is working well and what could be
improved.

Figure 6-7. Scrum Process Diagram

During the development phase, the team has a daily 15-minute stand-up
meeting known as the Daily Scrum. During the Daily Scrum, team
members share what they did since the last meeting, what they plan to do
before the next meeting, and if anything is blocking their progress. The
team also maintains a Sprint burndown chart in hours to track and plan
their work. This is similar to the release burndown chart in Figure 6-7
except that it includes the task hours remaining within the iteration after
each day.

Extreme Programming (XP)

Extreme Programming (XP) was developed by Kent Beck in 1996 while

working on a payroll system at Chrysler. He describes XP as a
“lightweight methodology for small-to-medium-sized teams developing
software in the face of vague or rapidly changing requirements.”[30] XP
gets its name by taking common sense development principles to an
extreme level. If code reviews are considered good practice, XP advises
performing continual code review by programming in pairs. If testing
helps produce bug-free code, XP advocates writing automated unit tests
that run multiple times during the day and performing frequent end-user
and functional tests. If refactoring helps improve code, XP dictates that
developers always look for opportunities to do it. If integration testing
helps uncover issues, XP followers complete software builds once or
multiple times each day.

XP shares many similarities with Scrum, but does not have formal roles
like the scrum master and product owner. XP does specify development
practices covering testing, refactoring, continuous integration, pair
programming, simple design, and coding standards. XP teams do not
decompose stories into tasks during their planning phase. Thus, teams
maintain a story point (rather than task hour) burndown chart during the
iteration.

Lean Development

Lean methods derive from principles used in the integrated socio-technical

Toyota Production System. James Womack, author of the book Lean
Thinking, defines Lean as “creating ever more value for customers with
ever fewer resources.”[31] In addition to manufacturing, Lean has been
applied to many other fields, including services, health care, and product
development.

Similar to the Agile methods described in this section, Lean advocates a

focus on the customer, collaboration, empowered teams, continuous
improvement, and visual controls. Lean teams focus on the efficient flow
of value through the system. In this way, Lean differs from other Agile
methods. Lean does not use a time-boxed iteration to set the cadence of
the development process.

Lean development focuses on fast, flexible flow, which looks to optimize

value delivery by first minimizing queues. Queues are minimized by
working in small batches. Small batches are managed by limiting the
amount of work that may flow through the system at one time (also known
as work in progress, or WIP). Because the development team is not spread
across multiple projects or large blocks of work, this approach creates
short cycle times. As cycle times shorten, the system approaches single
piece flow – the ideal state where parts are manufactured one at a time and
flow throughout the manufacturing and supply chain as a single unit.[32]

Lean addresses many of the challenges of traditional Waterfall

development. One such issue is lengthy development times. Lean
advocates believe that long development cycles occur because all work for
a release must be fully defined or completed before passing it to the next
phase. Waterfall encourages large batches of work, usually representing
months of development, being managed through the system, which can
create large queues at each stage. In an environment where requirements
are changing rapidly, the typical serial/ Waterfall method may
significantly reduce the product manager’s ability to respond to new
opportunities and information.[33] In these environments, Lean may be a
process worth considering.

Lean also focuses the team on optimizing the whole system rather than
areas in the system. Because it is expensive, many companies’ plans are
designed to ensure 100% utilization of engineering talent. Large batches
of work are queued for the engineers. Because there is no slack in this
system, any deviation from plan delays the project and all the projects
behind it. As a result, release dates vary widely from plan. Further,
feedback can be delayed in this system. A mistake in a requirement may
not be caught until many months later during quality assurance. What
would have been a quick fix if caught immediately can become a lengthy
and involved process requiring meetings, document updates, code changes,
and retesting.[34]

Lean teams employ a kanban[35], [36] board rather than a task board. Task
and kanban boards look similar, but where the task board is for tracking
tasks, the kanban board is used to visualize flow through the system and
enforce WIP limits. Likewise, Lean teams use a cumulative flow diagram
instead of a burndown chart to track progress. The cumulative flow
diagram highlights the relationship between WIP (how many items are
being worked on at any one time), cycle time (how long it takes to
complete an item once work is started on it), and throughput (how many
items per week or unit time are completed).

There are many more iterative and incremental processes than discussed in
this brief treatment. Product managers should work with their teams to
evaluate which method or methods would work best given the business
culture, nature of the products, and the team’s ability. Transitioning to
Agile requires learning and practicing new skills to become proficient.
Although training and coaching can shorten the learning curve and
improve the chances for success, the team must decide whether the
benefits outweigh the time needed for learning, practicing, and training.
Additionally, the organization should consider whether the cost of
transitioning to Agile for more mature products with a limited life
expectancy justifies the cost.
T he product management process naturally interacts with several other
processes. To the extent each of these is appropriately involved in the
product management lifecycle, it’s vital they all work together to ensure
the optimum product management outcome. Although these relationships
may come into play at specific times, core project management methods
and processes are relied on throughout the entire product management
lifecycle and often provide the execution platform necessary for bringing
products to market. Section 7.2 describes these core methods and
processes in more detail and shows how to effectively integrate them into
the product management framework.

Program management and portfolio management are two management

processes related to project management with unique attributes and value
when applied to the product management framework. The
interrelationships between project, program, and portfolio management
are described in Sections 7.6 and 7.7.

7.1 A Closer Look at Project Management Methods and

Their Application within the Product Management
Framework
Project management is the discipline of planning, organizing, and
managing resources to successfully complete specific project goals and
objectives. Just as this ProdBOK introduces a framework, similar
frameworks exist in the world of project management. Two of the more
prominent frameworks are the Project Management Body of Knowledge
(PMBOK®) Guide, developed by the Project Management Institute (PMI),
and a methodology known as PRINCE2® (PRojects IN Controlled
Environments), developed by the Office of Government Commerce, an
independent office of Her Majesty’s Treasury of the United Kingdom.
Examining either of these frameworks is a useful way to understand the
details of project management—its components’ structure, methods, and
processes that comprise the overall discipline of project management.

Within nearly any project management framework a number of individual

methods and processes exist. The most common of these, core project
management methods and processes, are identified and briefly described
in section 7.2. Sections 7.3 through 7.5 identify ways that these methods
and processes can be used or adapted to support the three major stages of
successful product development: conception (the fuzzy front end), product
development, and commercialization/operations.

The PMBOK Guide and PRINCE2 are commonly used to support project
management efforts within an organization or to manage a project’s
lifecycle. These two documents address project management from
different perspectives. Despite some differences in terminology, they have
a common thread in terms of methods and processes. Project management
methods and processes remain relatively constant. However, not every
project will need to execute the full range of processes in each process
group. By identifying the core methods and processes, regardless of the
approach, a foundation for using project management effectively in the
product management lifecycle can be established.

The type of project, product, and the culture of an organization will

determine the type of process to be used, but the core process groups of
initiating, planning, executing, controlling, and closing are common across
many project management standards. Applying project management in the
product management process can increase productivity, improve output
quality, create efficient use of resources, and hasten time to market.

Project management is composed of a set of related processes that can be

applied effectively to the product management lifecycle. Applying project
management logically and at the appropriate levels of rigor within the
product management lifecycle can produce very positive results and
enhance a product manager’s efforts. A well thought-out approach for
using the tools and techniques of project management will help a product
manager effectively use organizational resources and will add structure,
standardization, and predictability to product development and
enhancement projects.

According to PMBOK, PRINCE2, and other project management

standards,[37] the project manager has overall project responsibility. To
achieve success, the project manager should work closely with the project
sponsor on staffing requirements and funding availability. The project
manager is responsible for completing the project on time, within budget,
and meeting any predefined requirements, including performance and
quality.

The project manager should be assigned as early as possible in the

lifecycle— ideally at project inception—to establish project ownership
and management responsibility and to begin to develop the project
requirements. There is often an added benefit in assigning specific product
domains to a project manager: it can allow the project manager to accrue
additional knowledge about a particular product or group of products and
increase both domain expertise and team efficiency during their
involvement.

7.2 Core Project Management Methods and Processes

Project management, whether following PMBOK or PRINCE2, uses a
common set of processes, tools, and techniques to achieve a project’s
objectives. This section briefly describes these methods and processes.

At the overall project level, methods and processes are subdivided into
five high-level categories, or major process groups. The process groups
are initiation, planning, execution, control, and closing. These processes
are generally associated with the activities found in each phase of a project
lifecycle. For example, regardless of the number of phases found within a
project lifecycle, each phase is initiated, planned, executed, controlled,
and closed. This application of the core project management processes
provides a level of consistency throughout the project lifecycle.
7.2.1 Methods and Processes Used in Project Initiation
The term initiation generally refers to the activities associated with
defining and approving a new project or determining whether a project
should continue into the next phase/stage as a current phase is nearing
completion. Typically, the core methods and processes include:

Identify the project sponsor – Determine the source of funding for the
project.
Review business case – Review projected financial performance,
project feasibility, and connection to business strategy.
Develop project charter – Prepare a high-level document that
describes the project, anticipated risks, key stakeholders, major
milestones, constraints, and boundaries.
Conduct a kick-off meeting – Provide the project team with
information about the project and prepare to develop detailed plans.
Establish project baselines – Baselines associated with project cost,
schedule, time, and quality (performance) are used to measure the
effectiveness of a project’s execution. As a result of the unit’s
performance against these baselines, the project team may propose
acceptable contingencies and buffers to ensure that change can be
successfully managed within the overall constraints of the project.
Approve the next phase plan – Initiation also refers to the decision to
allow a project to continue into the next phase. Reviews are generally
scheduled at or near the completion of a project phase. The review is
an evaluation of project performance. Performance reviews include a
comparison between actual results and approved baselines. Schedule
variance, cost variance, scope changes, quality variances, risk,
benefits realization, and other factors are considered to determine
whether the organization should continue to support the project.

7.2.2 Methods and Processes Used in Project Planning

Project planning includes a set of processes that will detail how the project
will be implemented and who will perform the activities. Project planning
involves defining the scope of the project and the actions that must be
taken to achieve the established objectives. Core planning processes
typically include:

Define the project scope – Creating a detailed description of the work

that must be completed to produce the desired deliverable and
developing a project scope statement or statement of work. This
document provides a basis for more detailed planning.
Implement a work breakdown structure – Breaking down the defined
project scope of work into more detail, ensuring that the project is
laid out clearly and completely. This provides the basis for
determining project activity cost and duration estimates. It is also
used to control changes to the project scope.
Develop schedule – Placing project activities defined in the work
breakdown structure in a logical sequence, determining resource
requirements, estimating activity durations, identifying the project
critical path, refining the schedule to meet requirements, and
identifying where project slack exists.
Determine project budget – Producing an estimated total cost for the
project by determining the costs of each activity and aggregating all
costs to create a baseline.
Plan quality – The level of quality associated with the project will
impact cost, schedule, and decisions about the type of resources that
may be used. Quality (project performance) must be planned at the
beginning. The deliverable associated with process is called the
quality plan. This plan is based on project requirements and success
criteria and describes how conformance to requirements will be
validated and how product and project errors will be prevented.
Plan communications – As projects are executed and results are
reported, the project stakeholders require updated information about
how the project is performing. Project communications planning
generally includes:
Identifying and analyzing project stakeholders
Determining the information needs of each stakeholder
 Deciding the methods to gather and distribute information
Establishing what information will be provided to the project
stakeholders and the detail and frequency at which the
information will be provided
Deploy risk management – A process that parallels all other planning
processes. Risk management is quantifying uncertainty. During
project planning, the project team must consider the uncertainties
associated with all facets of the project, such as:
Deciding the methods to gather and distribute information
Inaccuracies in estimating activity duration and costs
The culture(s) associated with delivering the project
Changes in organizational processes
External factors, such as the potential for regulatory changes
The use of internal versus external resources and the related
impact on capital expenditures
The economy

Risk management includes identifying potential risk events, prioritizing

risk events through detailed analysis, planning response strategies, and
determining how to control risk during the entire project lifecycle.

7.2.3 Methods and Processes Used in Project Execution,

Monitoring, and Control
Project execution, monitoring, and control are about making sure the
project schedule and other baseline success measures, such as cost, scope,
and quality, meet requirements. The core methods and processes of project
execution and control include:

Verifying the work completed – As work is completed and

deliverables are produced, an assessment is performed to determine
whether the work and the deliverable are acceptable.
Managing change requests – A change control process is established
during the detailed planning of the project. It is necessary to manage
change to avoid adding work into the project plan, creating an
unfavorable situation known as “scope creep.” A change control
process will help minimize the costs associated with change and keep
the project team focused on objectives.
Performing quality assurance reviews – Quality reviews or quality
audits are performed periodically during the project lifecycle to
identify performance areas that show variances or deviations from the
original baselines established during initiation and planning. These
audits and reviews are feedback mechanisms designed to help get
projects back within acceptable performance parameters.
Acquiring project resources – As the project plan is executed, the
project manager and team will obtain the resources identified in the
plan. Resources may include people, machines, tools, and equipment.
Procuring goods and services – It is often necessary to obtain services
and resources from external suppliers. Procurement may involve
make-or-buy decisions, requests for proposals, and negotiations to
determine terms and conditions of the contract.
Managing variances – During plan execution, project metrics and
work results are analyzed and deviations will be discovered on all but
the most trivial projects. These deviations may be interpreted as
favorable (e.g., ahead of schedule) or unfavorable (e.g., over budget).
An excellent technique for measuring variance, although not
commonly used, is earned value management. Earned value
management compares planned and actual results to determine
whether variances exist and the extent of their magnitude. Corrective
actions are taken based on the variance analysis.
Managing stakeholder expectations – The information needs of
project stakeholders will vary depending on the stakeholder’s interest
in the project and their authority. During planning, the project
manager and team generally develop a communications plan for
disseminating mission-critical information to all of the appropriate
stakeholders.
 Monitoring and managing risk – Project risk is present from the
initiation of the project through completion. Risk management is a
process that includes identifying potential risk events, identifying
risk symptoms or triggers, prioritizing risks, determining the most
effective response to a risk situation, and monitoring and controlling
new risks that may develop. Risk control also addresses risks that
have been mitigated but may reappear as a threat to the project. This
is the phase when contingency plans and mitigation strategies are
commonly used.

7.2.4 Methods and Processes Used in Project Closeout

Closeout processes bring the project or project phase to an organized and
well planned conclusion. The core methods and processes include:

Conducting final project reviews – Once the project and all

deliverables are complete, the project manager conducts a post-
project review to analyze overall project performance and
deliverables as well as the suppliers and contractors involved.
Although it is common for the team to document lessons learned and
identify areas for improvement at this time, it is preferable to
document and identify these more frequently throughout the project
phases and as processes are executed. This is advisable because if the
team waits until closeout:
They might forget important information from early in the
project.
The benefits of process improvement can be realized
immediately rather than at the next project.
Key staff, who may have important project knowledge, may no
longer be with the project during a closing phase.
Closing all financial accounts – In some instances, projects will have
an accounting system that identifies the source of funding and how
charges are processed. At project completion, a final accounting is
performed and the accounts associated with the project are closed to
prevent additional charges to the accounts.
 Completing and closing all procurements – Many projects include
contractors and subcontractors. Work is often outsourced and work
orders are processed. Procurement also includes purchasing materials
and paying accounts. At project completion, the project manager and
team review all purchases, contracted services, work orders, and other
procurement items, including contract terms and conditions, and
arrange for termination according to organizational procedures.

7.3 Applying Project Management during the Conceive Stage

(“Fuzzy Front End”)
Project management can effectively be used in what is commonly referred
to as the conception or ideation stage of a project – the “fuzzy front end”
of the product management process. Project management is generally
considered a regimented and logical process. If this regimented nature
veers toward inflexibility, there could be problems if it is implemented
incorrectly in the dynamic front-end of product management. Still, there
are many advantages to using project management core processes early in
the product management lifecycle.

In most organizations, product management is responsible for creating a

new product or improving a product or service and bringing enhancements
to market. There are two parallel paths involved in this process. The first
involves idea generation, product design, detailed engineering,
development, testing, and delivery or deployment. The second involves
market research and marketing analysis. Each of these paths is important
and can benefit from project management’s structured approach. New
product development and the product management process are critical to
an organization’s growth and are actually part of the high-level strategic
processes of product lifecycle management. Stakeholder communication,
frequent cross-discipline reviews, and major executive gate or milestone
approvals of the project management process can improve the quality of
the product, increase profitability, improve time to market, and increase
the efficiency of organizational resource use.

The fuzzy front end is the often unorganized, sometimes messy starting
point or kick-off period of the new product development process. It’s the
time when an organization develops ideas for new products, formulates a
concept of the product or products to be developed, and decides whether to
invest in further developing the idea.

During this time, when ideas are flowing and interpretations of designs,
customer needs, and business needs vary, it may be difficult to use a set of
defined tools and techniques. But without them, the fuzzy front end can
become prolonged and extremely costly. In most organizations, there are
limited resources, time, and money available; therefore, a process is
needed to keep the team focused on generating a meaningful outcome. The
fuzzy front end actually ends when an organization approves and begins
formal development of the concept.

Typically, a project is arranged in phases. Each phase has specific

activities, outcomes, and deliverables. Engaging project managers early in
the lifecycle can help identify those critical activities, outcomes, and
deliverables sooner and can maximize the effectiveness of the overall
project and make delivery of the product to the customer more efficient.

Closely comparing the project lifecycle and the product management

lifecycle reveals similarities and provides the opportunity to use project
management techniques. Product development in the fuzzy front end
requires iteration, adjustment of the design, and a continuous review of
requirements. Requirements often change rapidly and some form of
requirements control is necessary. There may also be periods of rework
and in some cases a need to scrap the concept and begin again. It is
necessary to plan for variability during the conceptualization and early
design of the product.

Project management can be applied effectively during the fuzzy front end
of the product management cycle by using the following techniques and
processes:

1. Setting objectives – Determining or defining measureable success

criteria, establishing objectives, and communicating strategic goals to
improve the efficiency of the resources involved by providing
information about how actions impact the whole business.
 2. Scope management – At the fuzzy front end, ideas are being
generated. Scope management may help manage idea generation or
conceptualization by keeping the team focused on priorities and
minimizing the potential to move beyond the defined problem or area
of opportunity.
3. Risk management – Idea development and conceptualization can be
hampered by rules and restrictions, but creativity without some
elements of control could lead to disaster. Risk management can
minimize waste, eliminate unsafe situations, and prevent actions that
could endanger operations.
4. Status report process – Keeping all stakeholders involved and in sync
with the team’s activities and progress.

At the fuzzy front end, it may seem difficult to apply the core project
management techniques. The unique environment of the fuzzy front end –
where structure and discipline seem out of place — may make it difficult
to apply tools and techniques. However, the people involved at this stage
must realize that resources are not unlimited and there are specific
strategic goals associated with managing and developing a product.

There is also tremendous value in having the project manager involved

from the very beginning to ensure that the plan is realistic and that they
have a complete understanding of the desired outcome. Organizations
often assume that certain critical aspects of a project are well-known, but
this is frequently not the case. These assumptions can slow the team’s
momentum as the late-arriving project manager has to come up the
learning curve. A project manager who has been engaged from the very
beginning can also help provide continuity of communication as the
project shifts from conception to execution.

7.4 Applying Project Management during Product

Development
Product development may have different definitions depending on the
industry and the internal processes used by an organization. After the
fuzzy front end, the product lifecycle includes the following phases: Plan,
Develop, Qualify, Launch, Deliver, and Retire. Using project management
processes during the Develop and Launch phases can significantly
improve the probability of delivering a product that functions as planned
and successfully introducing it into the marketplace. During the Develop
phase, the product undergoes reviews, requirements verification, and
changes introduced via new opportunities and shifts in market conditions
or customer requests.

Project management methods and processes will help the product manager
through this phase by ensuring that the planned tasks are completed and by
establishing an approved process for managing change. As the product
moves through the cycle, it will enter the project lifecycle and be subject
to and benefit from the tools, techniques, and processes described earlier
in this section.

Applying project management methods and processes is usually essential

to the successful delivery of a new product.

During the Develop phase the following activities may be performed:

Rapid prototyping
Rough layouts and final prototyping
Mechanical design
Engineering design and assembly planning
Planning for manufacturing product components
Product assembly and testing
Standards compliance
Cost optimization
Quality reviews
Publishing product documents
Contingency planning

Project management provides methods for managing each of these

activities through the core process described in 7.2.
Another variable in product development efforts is the level of
technological challenge, which is sometimes expressed in terms of the
“probability of technical success.” As the technological challenge grows,
so does the level of uncertainty. Many of the principles described above
apply here, with regard to the choice of project management methods and
approaches. For example, on projects that require a substantial amount of
breakthrough (also called discovery), it is common to recognize that
several trials may be needed to accomplish the objective. In this case,
developing a project schedule requires using some number of iterations to
properly model the predicted reality.

7.4.1 Project Management Activities in the Develop Phase

Each phase of a project has a distinct set of activities and processes
applied to ensure that it continues to move forward. Typical processes or
activities performed during this phase include:

Developing updates and status reports

Conducting meetings and conference calls to review progress and
identify issues
Creating meeting minutes and other project documentation
Implementing the change control process
Managing project resources, including re-allocation
Conducting project budget reviews and variance reporting
Monitoring schedule and efficiency in the use of time
Using an enterprise project management software application for
project tracking

The Develop phase of the product management lifecycle provides the most
natural environment to apply project management processes and methods.
The team has defined the product, identified the resources, established a
budget, and defined the requirements. There will be changes and issues,
and new risks will emerge. Project management provides the governance
that maintains the flow of work and the processes to determine project and
product performance.

7.5 Project Management in Commercialization/Operations

Project management can also play a valuable role after product
development— in product commercialization and in ongoing operations.
The key to developing an appreciation for the useful role of project
management in these two worlds is recognizing that many of the process
elements found within those stages of the product management framework
can be configured as projects.

7.5.1 Potential “Projects” Related to Product

Commercialization
Product managers must properly prepare for the eventual launch of their
product and for the significant number of activities that occur afterwards.
Some of these activities are so large and complex they can legitimately be
characterized as projects themselves. Some notable examples are:

Tracking and measuring actual performance metrics related to the

product(s)
Creating a plan for managing the future supply chain
Developing a plan that coordinates all aspects of a product launch
Treating the implementation of the marketing mix as a project
Building plans for addressing product-related service and warranty
work
Initial training of channel partners and sales staff

7.5.2 Potential “Projects” Related to Ongoing Operations

At times, product managers must ensure that the ongoing operations stage
after product launch has been properly planned for, or that they have
developed a longterm operational management plan and implemented it at
the right time. As with product commercialization, many of these
activities could be quite complex and could consequently be configured as
projects. It is important to clarify that the project portion is the
implementation of these activities, as opposed to any ongoing operation of
each activity.

Examples may include:

Building just-in-time or Lean manufacturing methodologies

Implementing value-enhancing efforts, such as value engineering,
value analysis, and value stream mapping
Considering operational readiness as a project
Working to optimize the supply chain
Developing and implementing a maintenance plan for operational
equipment
Treating training of operations personnel (operators, maintenance
staff, etc.) as a project
Creating and implementing an inventory management system or
process

7.6 How Program Management Relates to Product

Management
Most organizations identify and manage programs as part of doing
business. One type of program is a group of related projects coordinated to
achieve benefits and control that could not arise from managing each
project separately.

Programs occur frequently in product management. One common

manifestation of a program is an entire collection of product-oriented
projects. Here, the program is likely to be a combination of research and
development, operational readiness, commercialization, and other related
project efforts associated with one or more products. Many companies, for
example, have been known to introduce a suite of products within a single,
coordinated initiative — a program.
Among the larger challenges in successfully managing programs of this
nature is effectively coordinating simultaneous individual projects.
Duplication of effort, oversights, failure to manage interactions, and
failure to leverage economies of scale are common challenges. In fact,
such challenges are quite likely to occur in situations where multiple
product managers and/or multiple business units are participating.

These problems can be effectively addressed for virtually any program by

introducing these three elements related to the discipline of project
management:

Core project management methods and processes at the program level

Sound program management practices
Dedicated program management personnel

7.6.1 Core Project Management Methods and Processes at

the Program Level
By applying the methods and processes detailed in Section 7.2, product
managers can add structure, organization, and control to a collection of
interrelated projects, often yielding a more successful program outcome.

During program planning, project management methods and

processes can be used to:
Identify project-to-project interactions (at the task level)
Develop the overall program schedule
Estimate the total program cost
Identify and assess program-level risks and uncertainties
During program execution, core project management methods and
processes can be used to:
Track overall program progress
Monitor and manage program risk and uncertainty
 Communicate across projects
Share data and information across projects
Conduct program-level team meetings
Manage stakeholders
Report program status to senior management and key
stakeholders

7.6.2 Sound Program Management Practices

Whereas classic project management methods focus on individual
initiatives, program management tends to focus on managing the
interfaces among multiple initiatives and leveraging the common elements
between them. Some value added benefits product managers can expect
from applying program management methodologies are:

A business focus (i.e., evaluation of profitability, economic rate of

return, etc.)
A strategic focus (i.e., satisfaction of organizational objectives and
goals)
Effective coordination across:
Products
Organizational boundaries
People
Functional responsibilities
Project activities
Program deliverables
A consistent approach to project governance and oversight
Prioritization and sequencing across projects
Allocation and ongoing management of resources across projects
The grouping and/or collaboration of similar work efforts across
projects
7.6.3 Dedicated Project Management Personnel (Where
Appropriate)
When considering all of the project and program management methods
and processes described above, a critical question emerges: Who is going
to be responsible for their effective implementation at the program level?

Although a product manager could be appointed to fill the role of program

manager—and therefore be tasked with introducing project management—
there are two significant challenges associated with that approach: project
management competency and the “two-hat” syndrome.

Project management competency

Although some contend that “anybody can do project management,”

underestimating the value added by an individual with a high degree of
project management knowledge and competency can have significant
negative consequences to organizational product initiatives.

The two-hat syndrome

Trying to manage a project while acting as a technical expert or a market

expert (in this case, a product manager) is viewed as one of the most
challenging jobs in the world of projects. It requires individuals to
continually divide their attention between their product management and
project management duties. The risk of overload is considerable.

These challenges suggest that using a dedicated project management

specialist should be strongly considered when managing product-oriented
programs—even if that individual is not deeply knowledgeable of specific
products. This often takes the form of a product manager working in
concert with an individual who is highly competent at coordinating
complex initiatives. The key to making this approach work is to clearly
define the roles and responsibilities for each contributor as well as the
reporting relationship.

In these situations, it’s common for the project management specialist to

be viewed as an on-demand resource, acting in a service and support role.
It’s widely viewed that a program manager who is involved very early in
the overall program lifecycle is in a much better position to make high-
quality program decisions than one who is assigned after many crucial
program decisions have already been made.

Some of the specific benefits of using project management specialists are:

Lack of personal, political, product, and technology bias

Knowledge of the most appropriate management approach for given
situations
An appreciation of effects beyond the program boundaries (i.e.,
impacts on operations, engineering, legal, etc.)
Keeping the development process focused and moving forward
Focusing on the achievement of product objectives and outcomes

7.7 How Project Portfolio Management Relates to Product

Management
Within product management, using a portfolio management approach to
coordinate the various interactions and interrelationships of products and
product lines is common. A similar—if not somewhat overlapping—
practice exists in project management.

Because both techniques involve coordinating a collection of projects,

there are many similarities between program management (previously
described in Section 7.6) and project portfolio management. Perhaps the
greatest similarity comes in the ways core project management methods
and processes may be applied.

But there are some critical differences between the two management
types. For example, although program management focuses on
coordination across projects that are often interrelated, project portfolio
management focuses on selecting and prioritizing a collection of projects
that may not necessarily be related.
And while program management often focuses on the ultimate fulfillment
of high-level, targeted, deliverable-oriented objectives, portfolio
management typically focuses on pursuing a number of project initiatives
that, collectively, will fulfill an organization’s long-term strategic and
operational goals and objectives. The impact, effectiveness, and success of
a project portfolio is frequently tied to— and expressed via—evaluations,
judgments, and metrics related to strategic intent, strategic goals, key
value drivers, key performance indicators, and so forth. The primary
mission of project portfolio management is to identify, select, and execute
the specific combination of projects expected to have the greatest positive
financial and strategic impact on the organization while balancing the
associated risks and leading to the highest organizational likelihood of
success.

Not surprisingly, the greatest interaction between project portfolio

management and product management occurs in situations where the
portfolio includes many product-oriented projects—specifically, portfolios
that focus on a product line or a family of functionally related products.

To better understand how product managers can optimize the application

of an overall portfolio management approach, it’s useful to consider in
greater detail the critical objectives of the portfolio management approach
in general. The key objectives of portfolio management are:

Pursue only those projects necessary to fulfill organizational goals

Ensure a strong link between company strategy and projects
Enable the portfolio owner to get the best “bang for the buck”
Develop a big picture view and promote broad understanding of the
volume of project work—both in-process and planned
Facilitate a diversified and balanced approach to projects. Some
common dimensions of balance are:
Markets served (diversified)
Geographic regions served (diversified)
Goal horizon (long term vs. short term)
 Risk (business, technical, financial, corporate image, etc.)
Application of technology
Resource utilization
Project size (money, time, quantity of resources)
Competitive advantage
Government mandate
Predicted return on investment

When considering the role of project management in portfolio

management and in support of product initiatives, questions ordinarily
surface, including: When should project management be brought into the
cycle and how?

Sections 7.2 through 7.4 outlined where and how project management can
be effectively applied within the product management framework.
However, the kinds of activities needed to support successful achievement
of portfolio management product objectives—such as those identified in
the bulleted list above—often take place before initiating development of
any specific product (and therefore, before initiating any project cycle).
This period is often named for its main functional objective—portfolio
development.

During portfolio development, candidate projects exist and the

organization is actively assessing in which ones to invest. As a result, the
role of project management in the process is sometimes underappreciated
and, at times, completely discounted. There are, however, a number of
value-added benefits to be realized by including project management
specialists during portfolio development. Their role is typically advisory,
and can yield some important inputs throughout the portfolio development
process, such as:

Enabling the portfolio owner to get the best “bang for the buck”
Recognizing alternative methods and approaches for solving a
problem, addressing a need, or exploiting an opportunity
 Pinpointing any appropriate and available technologies
Estimating resource requirements for a potential project effort
Identifying the functional groups that should participate in a given
study
Coordinating a study or an analysis of alternatives
Helping to prepare project business cases
Identifying projects most aligned with business objectives
Determining the most efficient combination of projects, relative to
the available skill set, to deliver maximum value

As with program managers, product managers who either lead or

participate in portfolio management activities are likely to benefit by
involving their project management colleagues in the process.

7.8 Business Analysis

Business analysis is a set of activities, tools, and techniques an analyst
uses with stakeholders to understand the structure, policies, processes, and
operations of an organization. Business analysts use these activities, tools,
and techniques to analyze needs and recommend solutions to help an
organization achieve its goals. When coupled with a product manager, the
business analyst (BA) can be a skilled partner who helps facilitate,
communicate, analyze, and recommend business solutions.

Business analysis has become more prominent since the late 1980s, which
has created a focus on formalizing the BA as a key facilitator of business
change within organizations. This increased focus has been driven by a
demand for faster marketplace responsiveness, more sophisticated product
offerings, a higher reliance on information technology (IT) applications,
outsourcing trends, and increasingly stringent regulatory requirements.

As organizations evolve to meet these challenges, they are working to

improve their business analysis capabilities. BAs that are properly trained
and have the appropriate capabilities and experience can help define
solutions, communicate with stakeholders, analyze problems and
information, and elicit requirements (commonly referred to as product
features). Last but not least, the BA is well known for being an interpreter
between business stakeholders and IT teams.

Additionally, BAs are now playing key roles in helping specify the
“business behavior” that enables product offerings. This business behavior
is a level above the actual technical design and implementation
capabilities we often think of as IT software applications. The design of
business behavior is intensely focused on realizing the intent of a
product’s goals while balancing organizational and technology constraints
and trade-offs.

Within complex organizations where multiple and diverse strategies,

capabilities, stakeholders, and customer audiences are a reality, having a
capable business analyst on board to help with product development
initiatives can minimize risk while increasing the probability of an
initiative’s success.

7.8.1 Business Analysis Governing Organization and Body of

Knowledge
In October 2003, the International Institute of Business Analysis (IIBA®)
was formed to maintain standards for the practice of business analysis.
Since its formation, IIBA has become the leading association in the world
of business analysis.

In collaboration with industry experts, the IIBA authored the Business

Analysis Body of Knowledge (BABOK®). The BABOK is a collection of
knowledge that reflects generally accepted practices in business analysis.
Similar to the PMI’s PMBOK and the ProdBOK, the BABOK gives
organizations an understanding of where business analysis activities and
techniques can be leveraged in their businesses.

7.8.2 Product Management and Business Analyst

Although not all organizations use BAs in their product management and
product development efforts, those that do often find that BAs play a
valuable role. Brainstorming, capturing the voice of the customer,
analyzing requirements, and scrutinizing business behavior are a number
of activities where the BA brings value to the product management
lifecycle. Numerous opportunities exist in this lifecycle where the product
manager can work closely with one or more BAs to collaborate on
deliverables and milestones and achieve product-related goals. By
engaging BAs early in the lifecycle and during planning activities, product
managers can determine where business analysis activities and techniques
can be incorporated to maximize effectiveness.

The following section introduces three elements that can help the product
manager understand when and how to leverage business analysis
throughout the product management lifecycle:

1) BA skills and knowledge

2) Scenarios for leveraging business analysis

3) The role of the BA in product design

7.8.3 Business Analysis Skills and Knowledge

Product managers have numerous challenges when envisioning, planning
for, designing, and launching products. These challenges include:

Competing for the attention of essential resources (i.e., key resources

from different functional areas)
Meeting the expectations of multiple stakeholders (varying sponsors
and customer segments)
Organizing large amounts of disparate requirements (i.e., conflicting
and ambiguous requirements)
Alternative approaches to achieve product goals (multiple solutions
to a problem with various trade-offs)
Leveraging existing organizational and platform capabilities (using
existing processes and infrastructure and fitting into organizational
product roadmaps)
 Organizational and technology constraints (siloed functional areas
and complex legacy processes and systems)

By leveraging the BA’s skill and knowledge at key points in the lifecycle,
product managers can mitigate some of the risks often associated with
product management and development. Below, a number of these skill and
knowledge areas are summarized.

Communication and Facilitation Skills

Guides discussions between various product stakeholders to increase

clarity and understanding of product features and requirements, areas of
responsibilities, and expected outcomes, values, and priorities. BAs with
these skills:

Help stakeholders effectively articulate their views

Support negotiations between parties
Document the minutes and results of meetings
Help keep meetings focused and organized
Identify and document important issues
Encourage stakeholders to reach win/win outcomes
Identify potential alternative design solutions

Business and Functional Subject Matter Expertise

Has knowledge of business practices, business concepts, and their

relationships along with business acumen and the language of the
business. BAs with these skills:

Understand solutions that have proven effective in similar

circumstances
Are familiar with industry or functional area operations, processes,
and practices related to organization structures, job functions, and
work activities
 Have background working with relevant regulatory and compliance
frameworks
Possess knowledge of major competitors and partners for the
organization
Hold knowledge of major customer segments and similar products

Organizational Knowledge

Understands the formal and informal aspects of the organization,

including structures governing personnel, processes, and decision making.
BAs with these skills:

Recognize and can navigate the relationships between business units

and key stakeholders
Are able to identify the necessary subject matter experts in the
organization
Comprehend the IT software applications and their relationship to
supporting the business
Have insight into the informal lines of communication and authority
Are sensitive to the internal politics that govern or influence decision
making
Understand the organization’s terminology
Are familiar with the products or services offered by the organization

Analytical and Abstract Thinking Skills

Can apply analytical and abstract thinking to analyze problems, propose

design solutions, and comprehend how personnel, processes, and
technology within an organization interact as a holistic system. BAs with
these skills:

Understand organizational behaviors and their impacts that result

from interacting components of the business
 Comprehend and can assess how external forces can affect the
business
Are able to assess how changes to a component of the business affects
the whole business
Understand how the business will adapt to external pressures and
changes
Can apply new ideas to resolve problems
Are capable of thinking creatively to generate new ideas and concepts
Are familiar with how existing ideas and concepts can be leveraged in
new ways

The Effective Application of Business Analysis Techniques

Use industry-standard techniques that help analyze, communicate,

facilitate, and transform the business. BAs with these skills:

Understand when and how to apply the appropriate technique for a

situation
Effectively use notation and semantics that communicate accurately
and are easily understood by all the stakeholders
Ensure integration and traceability between analytical artifacts to
preserve intent and the voice of the customer
Can specify and model business behavior through the use of business
analysis artifacts

7.8.4 Scenarios for Leveraging Business Analysis

There are numerous situations throughout the product management
lifecycle in which business analysis and the use of a BA is instrumental in
achieving desired outcomes. A brief tour of these follows.

Facilitating Brainstorming and Idea Generation

Using appropriate facilitation and elicitation techniques to focus
stakeholder meetings on developing creative alternatives.

Setting Goals and Measures

Providing a structured approach to communicate, align, and decompose

goals, tactics, and associated metrics.

Engaging and Eliciting Stakeholder Business Needs

Eliciting stakeholders through a range of elicitation and analysis

techniques to define scope and identify product requirements.

“As-is” and “To-be” Process Modeling and Analysis

Describing the current product assets and comparing them with the goals,
performing gap analyses, and facilitating implementation planning to
support products.

Estimating Analyzing components, circumstances, and characteristics to

achieve product goals and features; estimating effort, duration, cost, and
benefits.

Identifying and Analyzing Capabilities

Identifying capabilities within the organization for enabling product

offerings and analyzing organizational capabilities for aligning product
strategies (short-term goals and longer-term roadmap considerations) and
product features.

Designing Business Workflow and Rules Interactions

Specifying the business behavior (process workflow) to support product

features and enforce organization policies and product-specific rules.

Assisting with Procedure and Training Development Developing

process-, role-, and application-related documentation with information on
developing procedures and training material.
Considering Alternatives and Trade-Offs

Analyzing, creating, and presenting alternative solutions and trade-offs for

stakeholders to consider.

Validating That the Selected Solution Meets Requirements

Ensuring, through reviews, simulations, and by providing inputs to testing,

that solutions support product features and usage scenarios.

7.8.5 The Role of the Business Analyst in Product Design

One of the most highly valued contributions a BA can bring to the product
management lifecycle is helping to identify a competitive advantage
through the design of a new product. BAs can play a crucial role in product
design as marketplace factors place increased emphasis on innovation and
speedy product introductions. Defining how to successfully launch a
product in today’s complex organizations is no small task. Siloed
departments, legacy systems, and poorly understood processes are often
obstacles that the product manager has to overcome. The reality is that
almost all products at virtually all organizations are supported by
technology of some kind. Technology is no longer just a way of more
efficiently supporting a product—it’s now an essential part of delivering
differentiation to realize a competitive advantage in the marketplace.

Change in the travel industry over the last 10 years is a good example of
this. Online reservations are no longer a side business—they are part of
the core travel industry business. Delivering superior automation solutions
has been a key battlefield in this industry. Although the focus initially was
on using the Internet as a new channel, the battle has now moved to
providing automated ways to create packages, finding fare combinations
that reflect different objectives, providing loyalty-based offerings, and
delivering promotional offerings that provide differentiation.

Ensuring that a product delivers differentiation and is a success requires

more than providing engineers with a bulleted list of desired product
features. Most often, a product’s features are enabled through a set of
interactions between processes, rules or policies, data, and IT applications.
These interactions need to be carefully designed to ensure that the product
supports multiple customer usage and exception scenarios. By analyzing
product usage scenarios and recommending operational business behavior
to support these scenarios, the BA helps technology engineers create a
solution that meets a product’s usability goals. In this role, the BA
supports the design of the product by helping shape features into a
cohesively designed solution that meets the intent of a product’s strategy.

An example of how a BA can help ensure the best product design can be
found in this story of a hotel marketing campaign. With only a few weeks’
notice, a hotel franchise wants to roll out a new marketing campaign for
the Super Bowl that promotes longer stays by offering guests a third night
free when booking a twonight stay. In helping design a solution to support
the new campaign, the BA would consider the importance of timing and
communicate the trade-offs in implementing a quick solution versus the
flexibility in features that may be desired in the future.

Although BAs can play a valuable role in designing how a product should
work, IT departments create and maintain software applications that
enable a product. It is helpful to view IT as the product “production
facility.” IT delivers the hardware and software platforms to execute the
product designs that a product manager and BA specify through product
design and business analysis. This separation of product design and
technical engineering helps the product manager, with the BA’s assistance,
ensure there is always a clear focus on meeting the product goals.

This concept of separating product design and technical engineering can

be further illustrated by the design and manufacture of commercial
aircraft. An aircraft is made up of millions of parts. During design, the
parts and the way they fit together to form a system are identified. Based
on the effort that went into the design, the aircraft is expected to behave a
certain way. It would be unacceptable for the aircraft manufacturer to
decide that an equivalent behavior could be achieved by combining and
eliminating certain parts. The expectation is that the aircraft product
design indicates the exact set of parts that will make up the aircraft when
it is assembled, and it is the product designer’s role to ensure that the
aircraft as a whole performs correctly. Using business analysis activities
and techniques, we can see this same product design role being played by a
BA in support of the product manager’s goals.

7.9 User Experience and Product Management

The relationship between product managers and user experience
professionals typically begins in the Conceive phase of the product
management lifecycle and concludes at the end of the Develop phase.
However, a strong case can be made that user design should continue to
play an active role throughout a product’s lifecycle.

Product managers and user experience professionals share a common

interest in creating as much value for a product’s end users as possible and
doing it in ways that are intuitive. This makes these two groups ideally
suited to partner throughout discreet projects or across a product’s
lifespan. This partnership enables user experience professionals to
leverage their knowledge of solid design principles, requisite skills, and an
understanding of how to apply the right amount of process to help the
product manager create value for the customer and the organization.

7.9.1 A Closer Look at User Experience

User experience can be defined as a person’s perceptions and responses
that result from the use or anticipated use of a product, system, or service.
User experience includes all of a person’s physical and psychological
responses that occur before, during, and after use. It encompasses all
aspects of the end user’s interaction with an organization’s products. These
aspects include interfaces, graphics, industrial design, physical interaction,
architectural structures, messaging, and related documentation.

Universal Design Principles

A working group of architects, product designers, engineers, and

environmental design researchers from the Center for Universal Design at
North Carolina State University[38] collaborated to establish the following
seven principles to guide a wide range of design disciplines, including
environments, products, and communications:
 Equitable use
Flexibility of use
Simple and intuitive use
Perceptible information
Tolerance for error
Low physical effort
Size and space for approach and use

The principles, described below, may be applied to evaluate existing

designs, to guide the design process, and to educate both designers and
consumers about the characteristics of more usable products and
environments.

Equitable Use: The design is useful and marketable to people with diverse
abilities, which includes providing the same means of use for all users—
identical whenever possible and equivalent — when not – and making
provisions for privacy, security, and safety equally available to all users. A
good example is a rocker switch commonly used for turning on and off
room lighting—nearly everyone can operate the switch because the large
rocker is easy to locate and activate with minimal force and manual
dexterity.

Flexibility of Use: The design accommodates a wide range of individual

preferences and abilities, including accommodating right- or left-handed
access and use. Examples include hand mixers with swivel cords to
accommodate use with either hand.

Simple and Intuitive Use: Use of the design is easy to understand,

regardless of the user’s experience, knowledge, language skills, or current
concentration level. Guidelines include eliminating unnecessary
complexity and providing effective prompts and feedback during and after
the task. An intuitive door handle design, for example, provides visual
cues indicating where to grab the handle. A door with poor visual cues
(low affordance) leaves people either pushing when they should pull or
vice versa.

Perceptible Information: The design communicates necessary

information effectively to the user, regardless of ambient conditions or the
user’s sensory abilities. Guidelines include using different modes—like
pictorial, verbal, and tactile—and maximizing “legibility” of essential
information. An example is a crosswalk system that provides a pictorial
“walk/don’t walk” display, verbally announces “walk,” and provides
buttons that are pressed to activate the system.

Tolerance for Error: The design minimizes hazards and the adverse
consequences of accidental or unintended actions. Guidelines provide
warnings of hazards and errors and fail-safe features. Handrails, for
example, separate the in and out traffic lanes in a space, serving as safety
and way-finding features that assist in traffic flow and organization.

Low Physical Effort: The design can be used efficiently and comfortably
and with a minimum of fatigue. Guidelines allow end users to maintain a
neutral body position, use reasonable operating forces, and minimize
repetitive actions. Ergonomic keyboards are a classic example as are desks
that can be raised for standing and lowered for sitting.

Size and Space for Approach and Use: Appropriate size and space is
provided for approach, reach, manipulation, and use, regardless of the
user’s body size, posture, or mobility. Guidelines provide a clear line of
sight to important elements for anyone seated or standing and adequate
space for use of assistive devices or personal assistance. An example is an
adaptable base cabinet with doors that slide into the cabinet or are quickly
removable, providing knee space for a seated cook or wheelchair.

These principles are not intended to constitute all criteria for good design,
only universally usable design. Other important factors such as the goals
and needs of the user, aesthetics, cost, safety, gender, and cultural
appropriateness must also be considered when designing.

Design Standards for Computer-Based Interactive Systems

The International Organization for Standardization (ISO) established the
industry standard for the ergonomics of human-computer interaction (ISO
9241). There are two parts to this standard, 9241-110 and 9241-210.

ISO 9241-110:2006 defines ergonomic design principles and provides a

framework for the analysis, design, and evaluation of interactive systems
for designers of user interface development tools and style guides. It also
provides guidelines for user interface designers, who will apply the
standards during the development process; developers, who will apply the
guidance during design and implementation of system functionality;
buyers, who will reference it during product procurement; and evaluators,
who must ensure that products meet its recommendations. To learn more
about ISO 9241-110:2006, visit
www.iso.org/iso/home/store/catalogue_tc/catalogue_detail.htm?
csnumber=38009.

ISO 9241-210:2010 provides requirements and recommendations for

human centered design principles and activities throughout the lifecycle of
computer-based interactive systems. It’s intended to be used by those
managing design processes, and is concerned with how hardware and
software components of interactive systems can enhance human-system
interaction. To learn more about ISO 9241- 210:2010, visit
www.iso.org/iso/home/store/catalogue_ics/catalogue_detail_ics. htm?
csnumber=52075.

User Experience Skills and Knowledge

User experience standards lay the foundation for superior design.

However, to effectively implement these standards, user experience
professionals must have an array of skills. According to The Invisible
Computer,[39] user experience is not a single discipline but a combination
of several skills. And they’re rarely found in the same person. These skills
include:

User research: The ability to observe potential users in their normal

settings to better determine user needs. Training for this discipline is
most apt to come from anthropology and sociology, where the skills
of careful, systematic observation and effective interviewing are
taught.
Behavioral design: The ability to create a cohesive conceptual model
for the product that is consistent and easy to learn and understand.
Behavioral design must mesh the task requirements with the skills,
knowledge, and capabilities of the intended users. Skills in behavioral
design usually come from cognitive science and experimental
psychology, especially from programs in human-computer
interaction. Having a strong understanding of design concepts is also
extremely important in creating good behavioral design.
Model building and interaction design: The ability to rapidly build
product mock-ups—simulated systems that can be tested. Here the
skills typically come from computer programming, electrical and
mechanical engineering, and model building of the sort usually taught
in schools of architecture and industrial design.
Usability engineering: The ability to create test scripts, facilitate
studies with the end users (e.g. consumers, business people, etc.), and
analyze data. Designers with this skill set understand the pitfalls of
experimental tests and can effectively conduct usability studies that
provide meaningful feedback for the project at hand. User testing of
prototypes allows for fast-paced iteration of designs to better meet
the users’ needs, whereas other types of studies provide feedback on
existing products and services. Most usability studies can be
conducted rapidly or at a more laid-back pace. The difference in
speed can affect the quality of the study and the depth of the analysis.
Recruiting participants for these studies can be done very quickly as
well, or more time can be taken to examine the candidates and find
the best possible fit. It’s important to distinguish between user
research and usability engineering. User research focuses on up-front
envisioning methods while usability engineering emphasizes testing
and other evaluation methods that typically occur much later in the
project.
Graphic design: Focuses on visual communication. Graphic design
is a creative process that combines words, symbols, and images to
create a visual representation of ideas and messages. Skills in graphic
 design usually come from the visual communication or
communication design fields.
Industrial design: The ability to develop solutions for problems of
form, usability, and physical ergonomics. Industrial design is the
process of combining applied art and applied science to improve the
aesthetics, ergonomics, functionality, and usability of a product.
Skills for this discipline typically result from an education in
industrial design, product design, engineering, or manufacturing.
Technical writing: The ability to present useful information that is
clear and easy to understand for the intended audience. Technical
writing requires an understanding of the audience and the activities
the user wants to accomplish, and the skills to translate often
idiosyncratic and complex design into something that makes sense.
These skills are most frequently taught in instructional design
programs.

The User-Centered Design Process

With a strong understanding of the principles of design and the necessary

skills to achieve the stated product objective, designers rely heavily on
process to use these attributes to reach the product’s design goals and
objectives.

User-centered design (UCD) is a process in which at each stage of a

product’s design, designers pay extensive attention to the needs, wants,
and limitations of end users. UCD can be characterized as a multi-stage
problem-solving process that not only requires designers to analyze and
predict, based on ergonomic design principles and how people are likely to
use a product, but also to test the validity of their assumptions with
regards to human behavior in real-world tests with actual end users. Such
testing is necessary because it’s often difficult for a product’s designers to
understand intuitively who a first-time user of their design is and what
each user’s learning curve may be.

The chief difference between UCD and other product design philosophies
is that UCD tries to optimize the product around how customers can, want,
or need to use it, rather than forcing them to change their behavior to
accommodate the product.

There are six key principles to ensure that a design is user-centered:

1. The design is based upon an explicit understanding of users, tasks,

and environments.
2. Users are involved throughout the design and development.
3. The design is driven and refined by user-centered evaluation.
4. The process is iterative.
5. The design addresses the whole user experience.
6. The design team includes multidisciplinary skills and perspectives.

UCD answers questions about end users and their tasks and goals, and then
uses the findings to make decisions about development and design. UCD
of a web site, for example, seeks to answer the following questions:

Who uses the site?

What are the users’ tasks and goals?
How experienced are the users with the site and others like it?
What functions do the users need from the site?
What information might the users need, and in what form do they
need it?
How do users think the web site should work?
What is a normal environment for using the web site? What is an
extreme environment?
Is the user multitasking?
Does the interface utilize different input modes such as touch, speech,
gestures, or orientation?
Depending on an organization’s philosophy and constraints, a product
manager may do some or all of these activities, work with user experience
professionals in or outside the department that perform these activities, or
be responsible for working with outside contractors or agencies that
perform these activities for them.

7.9.2 Product Management and User Experience

Whereas product management is focused on the market and the customers’
business needs, user experience focuses on the end user’s interactions with
the products and services.

For enterprise solutions, the customer is usually someone in executive

management interested in finding the best way to bring efficiency to an
operation, whereas the actual user is typically a company employee more
interested in completing their daily assignments as easily and effectively
as possible. The economic buyer is looking at the overall workflow of the
organization and how specific solutions might improve it, whereas the
user’s needs tend to emphasize the solution’s ease of use. For this reason,
product management and user experience personnel must work together to
understand the market, customer, and users’ needs, and to design and
develop product solutions that meet these needs.

User experience (UX) resources are often highly valued and therefore
quite scarce. In fact, company size often impacts how much user
experience expertise is readily accessible. As a result, an organization may
take one, or perhaps a combination, of the following approaches:

In smaller organizations, product managers may perform user

experience activities, or
The user experience professional may be required to act as a product
management proxy until the organization can add a product manager.
Product managers may seek to employ an internal user experience
professional or hire an external company.
If the company is of sufficient scale, user experience may be another
department or function that works with the product managers.
Regardless of the organizational approach, product managers and user
experience professionals typically interact during the activities described
below.

Identifying Problems and Quantifying Opportunities

User experience and product management team members frequently work

together to better understand the market, customers, and the customers’
end users. As part of this process, they conduct qualitative research
primarily with the end users. The work can also include reviewing the
target market segmentation and demographic data to help establish the
design direction. They interview stakeholders, customers, and observe and
interview users to gain insight into the product domain and user
population and to determine the interactive experience. Product
management may provide high-level market information to inform user
experience team members of the type of research methods needed.

Product management and UX professionals develop requirements called

use cases. A use case is a single example of use—a user interaction with
the solution— that is well-defined and meaningful from the user’s
perspective. Use cases:

define the tasks and expected outcomes,

provide a concise medium for modeling user requirements,
are a powerful task-based model for understanding user needs and
guiding user interaction design, and
guide the design of communicating objects to satisfy functional
requirements for engineering.

UX professionals may also create other deliverables to support the

development effort such as personas that describe the archetype user and
mental models that act as a gap analysis showing the needs of the user
compared with what is being offered.

Writing Requirements and Validating Solutions

User experience assists product management in validating solutions. User
experience professionals develop, conduct, and analyze surveys,
interviews, and/or observations. The data from these studies help identify
problems and opportunities that are realized in the requirements.

Prototypes are developed to elicit feedback from customers to validate

that the identified solutions meet their business needs. Models or
wireframes are used to elicit feedback on conceptual user interactions.
Models and wireframes are basic visual guides used to suggest the layout
and placement of fundamental design elements in the interaction design.
They provide a visual reference for the structure of the solution, define the
positioning of global and secondary levels of the information hierarchy,
and maintain design consistency throughout the solution. It can be easier
for an individual to respond to a model or wireframe than to be asked
about a concept verbally.

Writing the requirements and validating the solutions is an iterative

process. When new insights into validating the solutions appear, the
requirements must be updated. Updated requirements require more
validation. This process continues until the requirements are adequately
validated.

Analyzing Requirements and Designing the Solution

User experience, as part of or under the guidance of product management,

conducts an analysis of the market, technology, and competition, in terms
of the user goals and interaction design, early in the solution lifecycle to
determine the design direction of the user interaction. A person or team
conducts user research, observations, surveys, focus groups, competitive
reviews, and other activities to better understand the market, customer,
and end-user problems that are being solved in terms of the user
experience and interface design.

The person or team develops storyboards, flow diagrams, wireframes,

prototypes, and other artifacts to validate the workflow for the solution.
Prototypes are iterated with customers and their end users to be sure the
solution continues to solve their business problems.
Insight from the design analysis can cause some revisions and/or
refinement to the initial requirements.

Writing the Specification and Building the Solution

Product management writes market and product requirements, and UX

writes interaction specifications of the user behavior and interaction
design. Wireframes, models, and other prototypes must be evaluated with
the customers’ end users for effectiveness, efficiency, and satisfaction
before final specification.

User interaction specifications should be completed before development.

For an iterative development process, evaluations and specifications
should be completed “just in time”—an iteration or two before they’re
needed. The interaction specification, along with product management’s
other requirements, should communicate to engineers the intended target
audience for the solution and what problems will be solved for the market,
customers, and end users.

Engineers build the solution based on the requirements and specifications

provided by product management and UX. UX may work with engineers
on the user interaction design clarification. Sometimes technology issues
require revisions to the interaction design, in which case UX and engineers
work together to determine the best approach for each case. Engineers test
and fix “bugs” in the final phases of development or end of iteration. UX
reviews the interaction design and may request changes to ensure that the
design developed meets the needs of the end user. These change requests
can be informal or formal, depending on the size of the team and the
organization’s development process.

Further evaluation may be conducted in user acceptance testing, beta

testing, and/ or when the solution is in production. Participants may be
observed, surveyed, interviewed, monitored in social media, etc. to better
understand their interactions with the experience. Findings from these
evaluations may be applied to the next release of the solution.

The relationship between user experience and product management is

central to ensuring that the products brought to market not only generate
value for the customer and the organization, but that the final product is
intuitive and userfriendly. Effective collaboration between these two
professions increases the likelihood that the product has the greatest
chance to succeed.
This section describes the stages and phases of the product management
lifecycle. While the product management lifecycle is represented as a
linear and phased model, the actual implementation of the various
components is subject to localization based upon practitioner needs and
should not be viewed as a prescriptive step-by-step process. The intent is
to provide the reader with a comprehensive view of the various tasks and
activities that are typically undertaken during the product management
lifecycle phase so practitioners can make the best decisions on the actual
utilization of the various elements described in this section. Factors such
as company growth stage, product development methodology selection,
available resources, culture, and organizational structure influence how
product management is practiced.

Chapter Introduction to the Product Management Lifecycle

8 Framework and Process Groups
Chapter The Fundamentals
9
Chapter The Conceive Phase
10
Chapter The Plan Phase
11
Chapter The Develop Phase
12
Chapter The Qualify Phase
13
Chapter The Launch Phase
14
Chapter The Deliver Phase
15
Chapter The Retire Phase
16
8.1 The Advantages of Implementing a Standard Product
Management Lifecycle Framework
Adopting a standard product management lifecycle framework is
important because it provides a common way to describe and
communicate with parties in the profession and with counterparts outside
the profession. Lacking a common way to describe the profession and its
core foundational elements increases complexity and inefficiency. By
adopting a standardized product management lifecycle framework, the
profession improves efficiency and simplifies communication, to the
benefit of all parties.

8.2 A Common Lexicon

The product management lifecycle framework establishes a common
lexicon for describing the information, activities, practices, and
deliverables required to bring products to market. It also presents core
foundational principles that enable effective management of a product
throughout the entire product management lifecycle.

Some of the benefits of having a common lexicon are:

Makes product management more relevant and effective by defining

the boundaries of the profession and how its professionals interact
with key functional partners in delivering value
 Provides a universal, standardized framework for managing products
throughout their lifecycles
Empowers product teams to develop mutual and well-understood
commitments at each stage of a product’s evolution and increases the
clarity of communications
Enables product teams to execute more effectively at each phase of
the product management lifecycle
Establishes a platform for developing a common set of tools to help
product teams bring quality products to market

8.3 The Product Management Lifecycle Framework

The product management lifecycle framework represents the passage of
time and illustrates the universal nature of product management as
products move through their various life stages, beginning in new product
development or acquisition and continuing until final market withdrawal.
Taken in its entirety, the product management lifecycle illustrates a
complete “cradle-to-grave” perspective of a product’s existence.

As depicted in Figure 8-1, once the product has been developed or

acquired, it moves into commercialization, manufacturing, and operations
stages where it’s introduced, grows to maturity, and declines, eventually
leading to withdrawal from the market.

Figure 8-1. The Stages of the Product Management Lifecycle

A new product also evolves through a number of common, standard, and

predictable phases during its lifecycle. The standard phases are labeled as
simple, universal verbs describing the major activity of each phase (Figure
8-2):

Figure 8-2. The Seven Phases of the Product Management

Lifecycle

At the conclusion of each phase is a decision point (represented by

triangles in Figure 8-2) that indicates the transition from one phase of the
product management lifecycle to the next. Decision points are milestones
that represent critical business decision-making junctures used to optimize
performance, scrutinize product development investments, and increase
the quality of execution.

The criteria used in decision points reflect standards and criteria

established by senior management to assess risk and effectively manage
investments. The outcome of each review is a recommendation by the
product team to the executive sponsor or steering committee to:

1. Continue to the next stage (Go)

2. Cancel the project (No-Go)
3. Redirect the effort based on strategic changes or gaps discussed
during the review (Rework)
4. Defer a decision (Hold)

These reviews are not the same as technical, architectural, or deliverable

reviews and shouldn’t replace them; technical and other reviews are
conducted before decision point reviews.

Some questions that should be examined at the various decision points are:

Do the project and product fit the business strategy (strategic

alignment)?
 Does a market of a minimum size exist, and will it still exist at
launch time?
Is there first-hand customer data illustrating that the new product has
unique benefits, that it meets customer needs better than competitive
products, or that it provides superior value?
Is technical feasibility reasonably likely? Have risk areas been
identified and are solutions available that can be reasonably
acquired?
Has a product value proposition been developed?
What is the “go-to-market” strategy and plan?
Is an acceptable return on risk-weighted investment available?
Do resources with related experience exist to construct a team that
has the scale, complexity, and technologies needed to support the
development effort?
Has testing been comprehensive and robust, ensuring a quality
product?
Do any “show-stopper” issues exist? If so, can they be mitigated, and
is there a mitigation plan?
Have all project and product risks been communicated and do they
have appropriate mitigation and contingency plans?
Have all parties been informed of and agree with the execution plan
and approach?

Figure 8-3. The Combined Stages and Phases of the Product

Management Lifecycle
Source: The Association of International Product Marketing and Management (AIPMM)

When combined, the stages, phases, and decision points compose the
entire product management lifecycle framework that all products follow.

8.4 Defining Roles within the Product Management Lifecycle

Framework
To discuss the actual process groups, further exploration of the cross-
functional aspect of the product management role is needed. Product
managers are tasked with singular responsibility throughout the entire
product lifecycle for the products they represent. However, they rely
heavily on collaboration with other functional parties across the
organization to achieve their objectives. Product managers can’t do it
alone.

Organizations allocate cross-functional responsibilities differently based

on need, company growth stage, and the available skills on the team.
Therefore, it’s essential to provide an effective tool for defining these
critical product responsibilities within an organization. Titles and roles
can be highly variable, so knowing who is doing what improves the overall
flow and is important to a product manager’s success.

One of the best ways to gain role clarity is to use a RACI matrix.[40] A
RACI matrix defines the parties that will be Responsible, Accountable,
Consulted, or Informed as the product migrates through the product
management lifecycle. By defining who is doing what and their
interdependencies, product managers improve the likelihood of success
and their ability to effectively deliver value cross-functionally at each
process phase.

Four Key Roles:

Responsible parties do the needed work for a specific deliverable or

task. Usually only one person is responsible for a specific activity.
Accountable parties are ultimately accountable for the correct
completion of the deliverable or task. Only one accountable party
signs off on the finished task.
Consulted parties’ opinions are sought when developing a task or
deliverable. These parties are sometimes called subject matter
experts. This is meant to be two-way communication.
Informed parties are kept up to speed on the progress of a deliverable
or task. This is usually one-way communication. Table 8-1 illustrates
how having clarity on the roles and relationships of the members of
the extended product team can increase efficiency. Although this
example only illustrates a small subset of the extended product team
and the breadth of activities, it shows how the roles can be clearly
defined.

Table 8-1. Abbreviated RACI Matrix – Technology Industry

Example
Role clarity is essential for increasing the effectiveness of the product
manager and the cross-functional team across the product management
lifecycle. To maximize efficiency, everyone on the team, including the
executive sponsor, must understand their role and their dependencies.

8.5 Mapping a Product’s Production Process

Once the organization understands the various stages and phases of the
product management lifecycle and the role of the parties involved in value
creation activities, it’s possible to construct the operational flow for the
product.

To stay in sync with the product team, a product manager must understand
the process being used to develop and support the product. Product
managers should start by gaining clarity on their role and the deliverables
they’re responsible for, then strive to understand the entire product
process. Understanding the crossfunctional product activities—
information, people, and processes—increases execution efficiency and
effectiveness. Figure 8-4 illustrates the entire process, the roles involved,
the degree of involvement, and what deliverables are expected at each
phase of the lifecycle.

Figure 8-4. Product Production Process Example[41]

The completed process map shows everyone involved in the production
process (roles, linkages, and deliverables). Outlining the process clarifies
the hand-offs and increases overall efficiency.

The basics of the product management lifecycle, including its stages,

phases, and decision points; the RACI matrix and its usefulness in
bringing clarity to the product team’s roles; and how all this information
comes together in an operational roadmap for products have been covered
above. Next, an examination of the underlying process groups and their
inputs and outputs will be conducted.

8.6 Product Management Processes for a Product

To optimize a product’s success and meet its objectives, product managers
must thoughtfully use knowledge, skills, tools, techniques, and
collaborative teamwork. Each process inherently contains a series of
inputs and outputs to attain the desired results.

To achieve success, product managers must:

Understand the product management lifecycle, including the

individual stages and phases that comprise the process in its entirety.
Choose appropriate process groups to most efficiently achieve the
overall product objectives.
Follow a defined approach to adapt and localize the standard
processes to meet organizational objectives.
Recognize that strong product management processes rely upon
contributions from stakeholders from adjoining professions to
achieve the desired result.

This body of knowledge documents the information needed to manage a

product across all the phases of the product management lifecycle. These
phases include Conceive, Plan, Develop, Qualify, Launch, Deliver, and
Retire. Additionally, these processes apply universally to all goods and
services and across various industries. The processes represented reflect
general agreement that the use of these processes is likely to increase the
chances of success for the product and the product manager.

However, the fact that these processes are universal doesn’t mean that the
knowledge, skills, and processes described should always be applied to
every product. Product managers, working closely with their teams, must
determine which processes are appropriate for their circumstances; a
certain degree of localization is to be expected.

Product managers need to carefully contemplate each process and the

related inputs and outputs. The material in this section is intended to
establish a process framework that product managers must consider as
they manage their product. Additionally, the processes in this body of
knowledge are largely interrelated—they are interconnected and tied
directly to the product management lifecycle.

Because product management is a leadership role, success is often tied to a

product manager’s ability to work closely with team members to achieve a
common objective. It is therefore a cross-functional undertaking. This
integration requires that each product, and the supporting processes, be
appropriately aligned with the processes of the contributing functions in
order to optimize results and achieve organizational objectives. These
processes can fail when the contributing functions do not adequately
perform at a level that ensures success. In many cases, product managers
will work closely with their counterparts in project management to ensure
that each party meets the process and deliverable obligations.

This section overviews the product management lifecycle and outlines the
specific processes related to each phase. These phases have their own
process groups that, in their entirety, compose the product management
lifecycle. Each process group will specifically define the process steps for
each of the seven phases.

Although these product management processes are presented here as

discrete elements with clearly defined interfaces, this is not always the
case in the real world. In actual practice, these processes often overlap and
relate to each other in ways that are not identified here.
9.1 Levels of Product
Marketing professor Philip Kotler established the concept that there are
five levels of product that constitute a customer value hierarchy[42]
(Figure 9-1).

Figure 9-1. Kotler’s Five Levels of Product

The first and most fundamental level is the core benefit. Customers don’t
seek to buy products, they seek out benefits that satisfy needs or wants.
The next level is the basic product that is comprised of the actual product
or service purchased. The basic product is comprised of a set of attributes
or features that define and differentiate it from other products.

The third level is the expected product and defines a higher level of
expectation the customer has from the product and the company selling it.
This level includes delivering the core benefit but also aligning it to other
expected parameters, such as speed, quality, and support. The fourth level
is the augmented product, which takes the product beyond its expected
level. These items might be included for no extra charge, such as free
shipping or fresh flowers in the customer’s hotel room, or they may be
available as an extra charge, such as an extended warranty or in-home
installation.

The fifth level is the potential product and describes what the product can
be at some point in the future. This level can be achieved through
customization or personalization, such as adding content or applications to
the product, or through ongoing extensions of the product features over
time.

There are several ways to add value to a product beyond the basics and
differentiate it from the competition. However, the other product levels
will not matter if the core benefit is not delivered. The customer will
likely reject the product if it does not contain the core benefit the customer
is seeking.

9.2 Product Lifecycle

The product lifecycle is a general concept that drives product strategy
planning. It is a visual representation of sales versus time.[43] Figure 9-2
illustrates the classic S-curve shape of the lifecycle. Over time, the curve
passes through four different phases, much like a biological lifecycle:
Introduction, Growth, Maturity, and Decline.

Figure 9-2. Product Lifecycle

In the Introduction phase, sales start at zero and slowly ramp up as
marketing activities begin to create awareness and early adopters try the
product. A successful product develops momentum and the sales rate
accelerates through the Growth phase. Then sales growth begins to slow as
the market starts to saturate and sales flatten in the Maturity phase.
Finally, sales growth begins to fall in the Decline phase and the product is
eventually discontinued.

The actual shape and time frame of this curve can vary dramatically by
market, industry, and product, so Figure 9-2 is a general representation.
Some products may have very rapid growth and equally rapid decline with
no middle stage, such as in fashion or fads. In most cases, the Maturity
phase is long, relative to the initial Introduction and Growth phases. The
majority of products in most companies are in the Maturity phase.

From a strategy perspective, it’s necessary to pinpoint where products are

on the product lifecycle continuum because each phase incorporates
unique characteristics about the customers and the state of competition.
There is also a general view of how profits are flowing from the sales at
each phase, indicating how investments need to be planned.

The product lifecycle can also be applied to markets or, more specifically,
product categories. An entire industry can go through this lifecycle
representation and eventually be discontinued, as has been the case for
typewriters, eight-track tapes, floppy disks, and encyclopedias.
9.3 Market Segmentation
A market, as defined in economic terms, is where buyers and sellers
conduct transactions, and where the dynamics of supply and demand
operate. From a marketing perspective, a market consists of groups of
current or potential customers who have specific unmet needs that could
be met by goods or services. For example, there’s the automotive market
where customers have demonstrated the need for and desire to purchase
automobiles as a form of personal transportation to easily get from one
place to another.

Within this broad definition of a market, there are typically many different
submarkets that begin to organize customers into smaller, more
specialized groups based on some unique characteristics or needs. These
sub-markets are called market segments. For example, the automotive
market can be divided into the car and truck segments, with buyers for
each requiring different solutions to address different needs. Each of these
broad segments can be further refined into many different segments
resulting from customer needs around the automobile price ranges, size of
the vehicles, fuel costs, etc. These needs can be met by varying the
marketing mix—product, price, promotion, and place—or in the case of
service deliveries, the extended marketing mix of people, process, and
physical evidence.

Market segmentation can be obtained by grouping customers by specific

attributes. For consumer markets, some common attributes are:

Demographic — gender, age, race, ethnicity

Socioeconomic — income, education, occupation, neighborhood
Psychographic — personality, values, attitudes, interests, lifestyles
Behavioral — product purchase patterns and usage, brand affinity
Geographic — location-specific by city, state, region, or country

For business markets, common attributes include:

 Industry/Firmographic — size, product categories, classification by
Standard Industrial Classification, verticals, geography
Behavioral — what they purchase, what they produce, how they
produce
Needs-Based — what they want or need, drivers for their actions
Customer Tiering — potential fit, alignment of firm-to-company
strategy, lifetime value

Segmentation is accomplished through market research, either primary or

secondary. Primary research is going directly to the actual or potential
customers in order to gain information or data; it includes surveys,
interviews, and observations. Secondary research uses indirect methods
from other sources, such as published reports, public or commercial
databases, websites, and agencies.

The data obtained can then be analyzed for groupings or trends among
various different sets of attributes to create meaningful segmentation
models for a specific company. Understanding specific characteristics of a
market segment and the relevant issues or needs that customers have
within this segment is at the core of successful product strategy. The
primary goal is to identify the gaps that exist in current solutions relative
to identified market needs, and develop a better solution along some axis
that the segment values.

9.4 Innovation Types

Innovation is the concept of bringing a new idea into the world and is the
primary driver of new products and markets. Innovation can occur at
multiple levels in a company, including core technology, products and
services, platforms, processes, and the company’s business model (how it
operates and makes profit). It can also occur across a spectrum from
incremental to disruptive.

Incremental innovation is a small advancement beyond what already

exists. On a scale of measured improvement, incremental innovation
raises an attribute by some linear increment, such as 10%. This
improvement can be in performance, cost, speed, quality, etc. In a product
or service, it can include new features that incrementally add functionality
or improve user experience. Most products that have ongoing sustaining
development activity are implementing incremental innovation.

Radical innovations are large changes to the existing landscape and can
add a larger linear improvement, such as 10 times improvement. It can
also be a nonlinear change that redefines the attributes of a product, such
as adding the mobility element to traditional wired phone service as with
the introduction of the mobile phone. Other terms used to describe this
type of innovation are discontinuous, breakthrough, or transformational.

Disruptive innovations are different from the more common types of

incremental and radical innovations. According to Clayton Christensen,
disruptive innovations create value along a different dimension from
existing offerings, subsequently “disrupting” the incumbent companies,
businesses, and markets. Christensen states that radical innovations are
different from disruptive innovations since radical innovations improve
value along the existing value dimension of existing products.[44]

Radical innovations can create new markets for the company and spawn a
significant period of revenue and profit growth. It also is an area of
extreme high risk, with the majority of projects failing. For example,
venture capitalists expect only one out of every ten investments in startup
companies to provide a significant return, but that one can be so large it
offsets all of the other losses. Radical innovations also have a unique
adoption process in the marketplace versus proven products, characterized
by different profiles of the adopters at different points in the product
lifecycle. Within the Introduction and Growth phases are sub-phases
overlaid on a bell curve for different groups of customers adopting the
innovation over time. Figure 9-3 illustrates the diffusion of innovation bell
curve against the normal product lifecycle curve.

Figure 9-3. Diffusion of Innovation Bell Curve

This concept was originally presented by Everett Rogers in Diffusion of
Innovations[45] and by Geoffrey Moore in Crossing the Chasm.[46] Moore
added a discontinuity in the adoption cycle between the Early Adopters
and Early Majority, known as the “chasm” due to the large behavioral
difference between the two profiles.

Moore also introduced the notion of the whole product required to bridge
this gap, which is related to Kotler’s expected level of product. The
concept suggests that Early Adopters are willing to take a partial product
that delivers the core benefit and are willing to sacrifice certain attributes
or other commonly associated expectations in order to be first in obtaining
the product. They are very forgiving of missing attributes and may even
complete the product themselves.

The Early Majority, on the other hand, have a higher expectation and thus
the whole product needs to provide all of the expected levels of
performance, quality, services, and components to make it fully usable
“out of the box.” In summary, the expected product attributes vary along
the adoption curve for radical innovations.

Between the minimal level of innovation and the disruptive innovation

that creates entirely new industries, there can be different increments of
innovation that can be pursued depending on the environment for any
given company. Investments in pure research, technology improvements,
and process methodologies all yield different perspectives on how to view
and pursue innovation. One concept that is relatively common in higher
levels of innovation is ideation, or the generation of new ideas. Ideation is
a structured method of creating new ideas that goes beyond brainstorming.
Some core elements that make up ideation include:

A formal event, such as a two-day workshop at some location

A diversified set of participants who can bring different perspectives
to the discussion
A focused set of objectives or problems to solve
Pre-work in order for the participants to properly prepare and analyze
the situation before arriving
An experienced facilitator to lead and optimize the activities
Documentation with follow-on activities and assignments

9.5 Levels of Strategy

Business strategy can be described as analytical thinking and the
commitment of resources to action and innovation. This strategy includes
making decisions today about an uncertain future and taking the right risks
while exploring opportunities. From the perspective of product
management, strategy occurs at several levels of the organization.

The highest level of strategy is at the company level. The goal of corporate
strategy is to define which markets the company competes in and how it
will leverage company assets and capabilities to achieve success in these
markets. This goal is easiest to visualize in a larger global corporation
with multiple divisions and product lines. A market is defined as a
relatively homogeneous set of members who share general characteristics,
have generally similar needs, and are reachable as a group. The company
strategy can also include what categories of products it will provide to
address these markets, and there may be multiple categories addressing
the same market for different needs.

The company strategy will also include how it intends to address these
markets, and how it might leverage its major strategic assets and
capabilities, and in what proportions. These assets can include its brands,
distribution, manufacturing, product development, unique processes, and
intellectual property. The company strategy is typically reviewed and
updated on an annual basis aligned around the budgeting process, but it
can also be more dynamic and aligned to monitoring and responding to
changes in the market or deviations from current plans.

For example, a consumer products company could define its current

company strategy as focusing on growth in specific emerging international
consumer markets through adapting its products to local needs or entering
adjacent product categories. Other company strategies could include
investing in a new growth category while maintaining or decreasing
investment in its current mature categories. An example of this is Proctor
and Gamble’s decision to pursue a targeted strategy of 40/20/10. This
strategy entails focusing on its 40 biggest category/country combinations,
its 20 largest innovations, and its 10 most lucrative developing markets.

The next tier of strategy is at the product level. Product strategy ranges
from the overarching product portfolio strategy to the individual products
or product components. Startup organizations may have only one product
and one product strategy, whereas large and complex organizations will
likely not only have individual product strategies but a portfolio strategy
that aligns the various individual product strategies toward a common goal
or objective.

Product strategy is focused on market segments, their needs, and the

specific solutions to those needs. The solutions to these different needs are
the goods and services offered by a company.

Depending on the size of the company, this hierarchical breakdown could

be at a product category, product line, or individual product level. There
can be many different product strategies in a company driven by different
market segments, and there can be hierarchical reporting up to a broad
category.

A category encompasses a large, generic set of products, such as

household goods. Product lines are narrower offerings of similar products
that may provide smaller variations in the offer, such as different options,
complementary functions, or accessories.
A simple view of how to visualize a high-level set of strategy options is
through the Ansoff Matrix shown in Figure 9-4.[47]

Figure 9-4. Ansoff Matrix

This grid plots Markets on one axis and Products on the other. If the focus
is on the current market with current products, then the strategy is one of
market penetration—obtaining growth by selling products to more
customers in existing markets or getting existing customers to use more of
an organization’s existing products. If a decision is made to expand
horizontally into new products, then the focus is a product development
strategy requiring investment in building new solutions. If there is a need
to expand vertically into new markets or market segments, then the focus
is on market development, adapting products to the new market and
focusing on distribution and marketing activities. Expanding in both
directions creates a diversification strategy of both new products into new
markets, with associated investments in several activities. An overall
product strategy can have elements of each of the Ansoff trajectories with
different priorities and resource allocations directed appropriately.

Diversification strategy involves the most risk for a company because it

has the most unknowns and least amount of current knowledge and
leverage it can apply. If the market is already proven with current
companies supplying products, then the risk can be mitigated through an
acquisition strategy of one of the existing players. If the market is
unproven or in an emergent state, then the risk involved is similar to a
startup organization. In this case, a customer development process that
involves incremental product, market, and business model development
may be required.

The product management function should lead the development of product

strategy. Individual product managers have responsibility for single
products, multiple products, or product lines. For large system-level
products with a high degree of complexity, a product manager may own
only a small set of capabilities or features and must coordinate with other
product managers or teams to architect the overall strategies.

Directors or vice presidents typically own a portfolio or full set of

products, a category, a product line, or a large product, and will generally
own the overall portfolio or product strategy across their span of control.

9.6 A Closer Look at Product Portfolio Management

Product portfolio management is a strategic process that runs in parallel
with the company and individual product strategies. It serves the function
of optimizing the overall value of the products being delivered by the
company relative to investment.

Product portfolio management is sometimes confused with project

portfolio management. However, project portfolio management focuses
upon projects, programs, and other related work and is not focused on
nurturing the overall health and value of the products in a company’s
portfolio. Product portfolio management involves managing overlapping
product lifecycles to ensure that the overall investment for both the short-
and long-term profits is maximized. As new ideas for solutions emerge in
the organization, they’re often assessed by a committee or team for
attractiveness for the business to pursue. For large companies, the number
of new ideas to assess and track can be quite robust and the portfolio
management activity can be complex. For smaller companies, the process
can be more straightforward, but still difficult to manage.

The balance of a product portfolio is important to take into account with a

diversified view to address both planned and unpredictable outcomes,
much like a diversified personal investment portfolio. This diversification
attempts to balance current products with new products, current markets
with new markets, short term versus future revenue, and low-risk versus
high-risk ventures.

The product portfolio also needs to be aligned to support the strategic

objectives of the overall business. The portfolio management process is
the link between corporate strategy and product strategy. Finally, portfolio
management helps to maintain the appropriate flow of product-related
projects into the organization so as not to overload or starve available
resources but to optimize their utilization.

9.6.1 Portfolio Analysis

Product managers rely on product portfolio analysis tools, such as the
Boston Consulting Group (BCG) Growth-Share matrix and the GE-
McKinsey matrix to analyze the market, customer needs, and product lines
in order to decide which products should be retired. These tools are
illustrated in figures 17-1 and 17-4.

These tools are often used in conjunction with competitive and market
analysis to ensure that the decisions made by the product manager are
aligned with the market forces that can affect product outcomes. This
helps ensure that product decisions take advantage of favorable changes in
market forces in order to increase the likelihood of success.

The BCG Growth-Share matrix is a two-by-two matrix that helps classify

products into four types: Stars, Cash Cows, Question Marks, and Dogs.
The GE-McKinsey matrix is similar to the BCG matrix. It’s a three-by-
three matrix that compares different products based on Competitive
Position and Industry Attractiveness. This matrix allows the product
manager to compare competitive position, industry attractiveness, market
size, and market share for different product offerings.

Products that are classified as having low competitive position and low
industry attractiveness, low competitive position and medium industry
attractiveness, and medium competitive position and low industry
attractiveness are candidates for retirement.
Industry Attractiveness is estimated by analyzing the market size, the
market growth rate, the market profitability, the competitive intensity, the
overall risk of returns in the industry, the entry barriers, the pricing trends,
opportunity to differentiate, demand variability, segmentation, distribution
channels, and technological development.

Competitive Position is estimated by analyzing factors such as strength of

assets and competencies, market share, market share growth potential,
brand strength, customer loyalty, relative cost structure, relative
profitability, distribution strength, production capacity, record of
innovation, management strength, and access to financial and other
investment resources.

These tools are often used along with SWOT, PEST, or TIME analysis to
help establish the context of how external factors impact product decisions
and outcomes.

SWOT analysis identifies an organization’s Strengths and

Weaknesses and market trends that create Opportunities and Threats
within an industry.
PEST analysis identifies Political, Economic, Socio-cultural, and
Technological factors that impact an organization’s industry.
TIME analysis is an alternative method that identifies Technology,
Industry, Market, and External events and trends that impact an
organization’s product outcomes.
10.1 Setting the Stage
The Conceive phase begins the journey through the full product
management lifecycle. This phase is often called the “fuzzy front end” of
product development because it’s not a linear process starting at point A
and arriving at point B. This process is in contrast to how the other phases
typically operate with specific objectives, milestones, deliverables, and
timelines. The front end of the process is much more unpredictable and
may involve retracing steps, changing directions, and potentially making
no measurable forward progress for some period of time.

The product manager should approach the Conceive phase as more of a

research activity than a delivery activity. The following discussion of the
Conceive phase will be centered on specific questions that need to be
answered at different points in the process.

The Conceive phase is split into two sub-phases or activities that can occur
sequentially or independently as two separate processes. The first activity,
Concept Identification, concerns finding new market opportunities that
may be addressed by a product delivered through the organization. The
second activity, Concept Investigation, explores and analyzes a specific
product concept for viability and attractiveness to pursue it.

Before diving into the questions and activities of the Conceive phase, it’s
important to understand some high-level concepts that will help frame the
overall phase.

10.2 Product Concept Identification

Concept Identification is a sub-category of the Conceive phase and entails
performing an overall situation analysis for external and internal
environments, creating and prioritizing strategy options, and selecting a
product concept as a supporting initiative.

The situation process used for external and internal assessments is

commonly called a SWOT Analysis, which identifies Strengths,
Weaknesses, Opportunities, and Threats. SWOT Analysis is depicted in
figure 17-5.

10.2.1 External Assessment

The heart of a successful portfolio or product strategy lies in
understanding what’s going on in the market that will create opportunities
and threats. The market is external to the company and is in a state of
constant change. For some industries, this rate of change is relatively slow
with the flow of products, competitors, and overall market dynamics quite
stable for years. In other industries, especially high-tech and software, the
situation is more volatile as an entire product lifecycle can be less than
one year.

The external assessment attempts to understand several different trends

that can affect your business, including:

Market view – changing market growth, emerging markets, and

demographic, geographic, behavioral, and psychographic trends
Competitor view – new entrants, strengthening or weakening of
competitors’ products, reputation, key customers, locality, and
financing
Technology view – advances, obsolescence, adoption, and declining
costs and availability
Partner view – changes in distribution channels, suppliers, and value
chains
Environmental view – changes in regulations or laws, financial
markets, and political or geo-political impacts
It is also necessary to attempt to identify which trends have the largest
potential impact. This requires looking further down the road. Some
impacts are obvious, such as a new competitor entering the market with an
attractive offering that is gaining attention and warranting a response.
Many are less obvious, such as trends or new products outside the
product’s specific industry, but with an analogous impact or use that may
threaten the entire industry. For example, the Internet, along with
innovative companies leveraging it, has brought significant challenges to
several industries, including retailing, publishing, and communications,
and will certainly impact many more.

Besides understanding the broad market trends that have potential impact
for products, a company must also have a keen understanding of its current
and potential customer needs. The most common process of collecting this
information is known as Voice of the Customer (VOC). This method seeks
to go beyond simply asking customers what they want and need. It
attempts to understand the customers’ underlying goals and then identify
gaps in current solutions for achieving those goals. This can lead to both
incremental and radical innovations.

The VOC process can involve many different types of market research,
ranging from surveys and interviews to detailed studies of how customers
perform current activities. Many insights can be gained by simply
mapping out a process flow of how customers currently perform tasks to
achieve their end goal and identifying bottlenecks or needs that are ripe
for new innovations.

An example is the Apple iTunes® service.[48] Whereas the introduction of

the iPod® music player had several new innovations that enhanced the
user experience over previous music players, most potential customers did
not have a library of digital music to put on it. The early adopters of the
product converted their often large CD music libraries to digital file
format. For most people this was a headache. The introduction of the
iTunes online music store enabled customers to easily purchase new songs
and immediately listen to them. Sales of the iPod skyrocketed after the
barrier to adoption was addressed.
Many tools and services now exist for implementing VOC activities. A
strong VOC program requires an ongoing process involving multiple
functions and levels within a company. The final result is to gain a deep
understanding of current limitations in the marketplace that can ultimately
create new product opportunities. It may also reveal behavioral changes
occurring within customers that could present threats to existing products.

The largest challenge for most organizations is managing the volume of

potential information. Finding a place to store it, making it easily
accessible and searchable, and keeping it up to date is a tall order. Those
who make strategic product decisions need to be able to consume this
information. Managing this information is an ongoing process
fundamental to every product manager’s role.

General questions that need to be asked on a regular basis to gain or

maintain an understanding of the external influences include:

What external trends or events are occurring that could create new
market opportunities or present a threat to the current business? What
is the timing, growth, and size of the trend?
What emerging needs are being identified through VOC research?
What patterns are recurring within market segments that could create
new opportunities or threats?
What importance and priority should be assigned to each finding?
Which ones will create the most impact for the business?

Table 10-1. External Assessment: Inputs and Outputs

10.2.2 Opportunity and Threat Identification

Once thought has been given to trends occurring in the market, the next
step is to identify how they may impact the company in both positive and
negative ways. Trends or patterns that have a positive impact can lead to
the identification of specific opportunities that may allow pursuit of new
initiatives. Trends or patterns that have a negative impact can lead to the
identification of specific threats to the current business that need to be
avoided or minimized in the future. In some cases, both opportunities and
threats can result from the same driver.

For example, a large demographic trend in the United States is the aging
and retirement of a large percentage of the population known as the Baby
Boomers. There are several associated trends that will impact various
industries, including higher demand for healthcare, retirement facilities,
travel and recreation options, health and fitness offerings, leisure and
entertainment options, retirement planning services, adult education, and
more. A company in any of these categories could envision broad needs
and foresee ways that they may be able to capitalize on the trends. Even
companies outside the categories could entertain entering one of these
markets.

There are also potential negative consequences to existing categories.

Those that may experience lower demand could be sports equipment,
single family housing, and larger automobiles and trucks. Companies in
these categories could foresee how the need and demand for their products
many diminish over time.

At this point, the major objective is not to jump to solve the opportunity or
threat, but to acknowledge it and understand it in as much detail as
possible. What specifically is the opportunity? Are there sub-segments or
sub-categories of the market that may have distinctly different impacts?
For example, within the healthcare or travel categories discussed above,
there are dozens of sub-categories that will be impacted in varying ways.

How big is the expected change and over what time frame? In our
example, the full impact of the changes may occur over several years due
to the wide age distribution of the Baby Boomer generation, and the
corresponding decline will be fairly predictable. For other types of market
trends, especially technology or regulation changes, the impact may be felt
more quickly in specific industries.
The high-level questions to be answered during this identification activity
include:

What specific opportunities result from the external assessment?

What market problems or needs emerge relevant to the business?
How big is each opportunity? What is the potential?
What specific threats result from the external assessment? What
changes are occurring that can negatively affect the current or
planned business?
How big is each threat? What is the impact if the threats are not
addressed?

Table 10-2. Opportunity and Threat Identification: Inputs

and Outputs

10.2.3 Internal Assessment

The internal assessment identifies strengths that can be leveraged to
address the external opportunities and threats. Capitalizing on these
strengths will increase the likelihood of success. This assessment also
identifies weaknesses that might limit the ability to address threats and
that will need to be minimized in pursuing product initiatives.

Like the external assessment, the internal assessment includes several

different views, including:

Competitiveness view – includes market share, market coverage,

growth trajectory, brand strength, diversity of offering, completeness
of offering, loyalty, and barriers to switching
Product view – product capabilities and gaps, price, quality, product
line breadth and depth, costs, and profitability
 Competencies view – processes, intellectual property, knowledge,
core and distinctive, flexibility, culture, and leadership; may be at a
company or group level versus product
Resources view – people, capital, assets, financing, materials, and
economies of scale; may be at a company or group level versus
product
Partner view – capabilities of suppliers and channels, capacity, speed,
exclusivity, and breadth (these may be at a company or group level
versus product)

Some of these views are more relevant at a company or group level and
play into a high-level company or product category level and are therefore
inherited by lower level product line or individual product strategies.

Like the external assessment, gathering this amount and variety of

information requires some effort. Some data will be obtained from outside
sources, such as overall industry statistics to help you determine your
relative market share or develop category forecasts. Estimating competitor
performance and market share from public sources or through top-
down/bottom-up estimates is also required.

At the product level, high-level competitive analysis is needed to identify

major capabilities and solutions provided to the marketplace to help
identify any gaps in the current product line. An internal product audit
may also help to consolidate information about costs, profitability, quality
issues, changes in sales trends to specific segments, or continued requests
for specific functionality.

A side effect of performing the internal assessment will be uncovering

additional opportunities and threats. These will be the result of gaps found
in the product or organization as potential overall threats to maintaining
business, or gaps in the competitor offerings that may present additional
opportunities.

When considering opportunities and threats discovered in the external

assessment and this internal assessment, the questions to be asked include:
 What strengths does the company possess that can be leveraged to
address this opportunity or threat?
What weaknesses does the company possess that must be overcome
in order to address this opportunity or threat?
What weaknesses does the company possess that could be minimized
by addressing this opportunity or threat with a strength?

Table 10-3. Internal Assessment: Inputs and Outputs

10.2.4 Product Strategy Options

The overall situation analysis achieved through external and internal
assessment is a good start to understand the current status of the product,
but it’s not the stopping point from a strategy development perspective;
it’s only the beginning.

It would be a mistake for the thought process to end here without defining
specific strategy options to pursue to capitalize on the opportunities or
neutralize the threats. The next step is to develop specific initiatives or
projects that could address each of the opportunities and threats. This
analysis leverages strengths to maximize opportunities for success and
recognize specifically where weaknesses may have an impact or be
impacted.

For example, an exercise equipment company making home-based

equipment has identified the Baby Boomer aging populations as an
opportunity for wanting to stay fit while getting older. The company has
identified that the equipment needs to have lower impact on joints, be less
strenuous to use, and provide options for entertainment or fun while
exercising. Some specific strategy options to achieve these goals are:
 Modify existing exercise equipment to address these needs
Create a new line or brand of equipment specifically targeted at this
segment
Rebrand an external company’s equipment to test the market first
before diving in with new development projects

To decide on the most attractive option, the product manager needs to

consider what the strengths and weaknesses are for each. For example,
does the company have the right existing products to be able to meet the
need through adaptation? Are resources available for creating a whole new
line of products? Does the company have the skill sets needed to develop
products with these new requirements? Are the right distribution channels
in place to address the market available, even with rebranded products?

Not all strategy options have to be product-based. There is a full toolkit of

options to work with, including other elements of the marketing mix such
as price, promotions, and place (i.e., distribution channel). There are also
non-marketing elements that wrap around the product, such as support and
maintenance, ordering and payment processes, and partner or third-party
offerings that can be leveraged.

Developing strategy options that leverage strengths and minimize

weaknesses can be an intense exercise and take several iterations.
However, this is at the core of identifying and assessing the options to
make the best choices. It is a true team exercise that can also be executed
as a formal ideation event. It also provides an assessment of how to
leverage as many company and current product strengths as possible.

Product strengths should be leveraged as much as possible, and relevant

weaknesses have different levels of impact. Some weaknesses will be
areas that need to be addressed for maximum success. Others will prohibit
action on specific initiatives and will need corrective action for any
progress. Action is particularly critical if there are major weaknesses
related to addressing a large external threat, which is often the case when a
disruptive innovation enters the market and incumbents are unable to
respond due to inherent limitations in their existing business model. At a
product level, this situation could exist when a competitor offers major
new functionality that cannot be easily countered due to existing product
architecture. In both of these situations, a new weakness has been created
by competition that requires specific action and investment to counter the
threat.

The questions to be answered for developing strategy options include:

What initiatives can the company pursue that will leverage their
strengths to capitalize on the identified opportunities?
What initiatives can the company pursue that will leverage their
strengths to minimize the likelihood and impact of the identified
threats?
What initiatives can the company pursue to minimize their
weaknesses that prevent or diminish capitalizing on the identified
opportunities?
What initiatives can the company pursue to minimize the weaknesses
that increase the likelihood and impact of the identified threats?

The next step is to prioritize this list of potential strategy options. The
objective is to identify the strongest initiatives that address promising
opportunities and critical threats. Opportunity initiatives that leverage
several strengths while also minimizing or reducing weaknesses will
likely drive the highest success potential. Threat initiatives that remedy
weaknesses that are significant contributors to the threat present the
highest defensive position. Depending on the perceived urgency of the
threat, these initiatives may become the top priority.

Table 10-4. Product Strategy Options: Inputs and Outputs

10.2.5 Create the Product Concept

Top strategy initiatives provide a high-level approach for addressing
product opportunities and threats in the marketplace. These initiatives will
be at the same level as in the original analysis, such as product category,
product line, or individual product.

For example, initiatives generated at the product category level could

involve expanding a product line for the existing market to increase
penetration, or adapting an existing product line to enter a new market
segment. For an individual product, an initiative could be adding major
functionality to a software product to upsell existing customers or
lowering the cost of a manufactured product to become more competitive.
For each of these initiatives, there may be multiple tactical possibilities to
pursue.

To proceed further into the Conceive phase, the product manager needs to
look at the strategy options and pick one to focus on. For this transition,
the product manager needs to take off the macro lenses and begin focusing
on the specifics of one possible project, as if through a microscope, to
assess its high-level viability for success.

A retirement investment portfolio can illustrate this transition. Depending

on the person’s age, earnings, and temperament for risk, there are methods
for deriving an investment strategy consisting of an allocated mix of
stocks and bonds across different types of investments—large or small
cap, income- or growth-generating, etc. This allocation would be
analogous to the prioritized set of strategy initiatives developed up to this
point. Now it’s time to identify and assess the actual investments that
could be made across all of the possible stocks, bonds, and funds available
within the framework of the investment strategy.

In the case of product management, the team looks into the possibilities of
one project. If there are several product ideas to pursue, the product
management team needs to perform a high-level assessment of each one,
and then compare them against selection criteria. This resultant single
project is called the Product Concept, which identifies a specific market
need and conceptual solution to solve it.
At this stage in the process, the team needs to answer some fundamental
questions as an initial screen to decide if they want to proceed with further
investigation. The Product Concept can be a lightweight document that
answers the following or similar questions:

What market problem needs to be solved?

Who specifically has the problem? What buyers and users?
How big is the opportunity for the company who solves it?
What is the market window for this opportunity?
What is the competitive situation for this solution?
What are the main features of the solution and key success factors?
What are the company’s key differentiators?
How should this solution go to market?
How can business success be measured with this solution?

Note that much of the information needed may already exist as a result of
the situation analysis and development of the strategy initiatives. This
document just pulls that information into a single location and adds more
structure and depth to the conversation. The team can also add other
means of describing the concept, such as mockups or diagrams, to help
explain the solution in more detail.

It is possible that a product concept can originate outside the formal top-
down approach used in this discussion and arrive in an ad-hoc way through
normal day to- day activities, such as a customer visit. In this case, some
focused background research will be necessary to answer all of the
questions. Regardless of how and where the idea starts, the product
concept begins the initial step of assessment as a potential project for
resources to be assigned to investigate further.

The product concept can be generalized to a broad set of proposed projects

within the domain of product. It can be for a new product, a major upgrade
to a product, or for an upcoming feature release, as in the case of software.
It can also center on enhancements outside of functionality that increase
the overall perceived value of the product to the customer, such as cost,
quality, user experience, and support. It is not uncommon to utilize these
enhancements as other levers available for increasing value and
differentiation in the market.

Table 10-5. Create the Product Concept: Inputs and Outputs

10.2.6 Product Concept Approval

The product manager now has one or more product concepts to consider
moving forward to undergo a rigorous and detailed investigation. What the
product team actually has are ideas that can now be applied to an initial
screen to determine if the team should proceed.

A natural part of the overall product management lifecycle is to provide

some management decision points between each phase. As an idea moves
from Conceive to Plan and then onto Develop, Qualify, and Launch, there
are business objectives and measurements to apply to ensure the product
concept is on track. This process implies that at any point, the product
concept may fall below the needed threshold to continue and can be
stopped (Figure 2-6).

Figure 10-1. Only the Strongest Product Concepts Survive

Through to the Launch Phase
In the early Conceive phase, there are many ideas, usually too many. The
product manager needs to prune this list into something more manageable.
The more promising opportunities progress to the Investigate sub-phase
and only the most promising will exit to the next phase: Plan. This process
continues until Launch, when only a few viable projects remain.

In many companies, the picture looks more like a pipe than funnel starting
at the Plan phase, so that any product concept that enters at this point is
assumed to be a candidate for launch and gets a free pass all the way
through all of the gates. This accounts for many products being introduced
into the market that really never should have been.

The goal at this point in the Identify sub-phase of Conceive is to assess

which ideas are the most promising and which to continue with a deeper
look. Because there is not yet much information about the product
concepts to go on, each one must be analyzed at a more subjective level.

The product manager can develop a prioritization matrix that allows the
scoring and weighting of each of the potential opportunities on a similar
scale across a number of different factors. This matrix can be developed
using any criteria that make sense for the specific objectives of a company
or strategy. Here are some possible questions to help determine the
criteria:

What is the market attractiveness (growth and size of market)?

What is the competitive attractiveness (few players, fragmented, or
dominant players)?
What is the timing for entering the market (too late, now, soon,
future)?
How much market value is provided by the conceptual solution?
How much differentiation is provided by the conceptual solution?
How large is the potential gain for the company?
How well-aligned strategically is the concept to company objectives?

The move from the Identify sub-phase to the Investigate sub-phase could
be a formal gate review in the overall portfolio management process, or it
can be an informal decision point that is approved by a functional manager
or core product team. The goal is to screen out less attractive opportunities
as quickly as possible to focus resources on the strongest concepts,
reducing overall risk for the portfolio and the organization.

Table 10-6. Product Concept Approval: Inputs and Outputs

10.3 Product Concept Investigation

Now that a specific solution concept has been chosen, the goal is to flesh it
out with more substance. The intent is to apply the right amount of
resource and time commitment such that the market, technical, and
business assessment can validate that the effort should proceed.

The amount of resources to achieve this sub-phase can vary significantly

depending on the size of the investment, risk being considered, and the
organizational culture. In a rapid cycle organization considering a smaller
incremental opportunity, the effort and output of this analysis can be very
lightweight. For an organization considering a major strategic investment,
the resources and time spent in this analysis can be significant.

In many organizations, once a product has hit this entry point into the
product management lifecycle, the concept is considered “ordained” as an
official product. A less risky approach at this juncture would be to
consider the product concept as a hypothesis, and that it has to prove itself
in business terms to move forward. A company with this attitude will
more likely find the failure points and appropriately kill the project, or
adapt the concept to overcome the weaknesses and build a stronger
foundation from the beginning.

The Investigation sub-phase will be segmented into the following high-

level activities:

Establish Cross-Function Product Concept Team – Form the team that

will do the work.
Product Charter – Define the purpose of the product, its success
parameters, and what the expected outcomes are.
Market Investigation – Gain a greater level of understanding of the
target market, the customer, the market problem, and the competitive
solutions. Document written market requirements.
Solution Investigation – Identify alternative product solutions and
generate high-level estimates of the effort required for each candidate
solution and the costs to deliver each in the form of high-level
estimates. Assess the solution trade-offs and select the best candidate
to pursue, including buy, build, or partner analysis. Document the
initial product requirements of candidate solution.
Market Feedback – In parallel with the above activities, obtain
market feedback that the requirements are captured correctly and, as
much as possible, gather feedback on the candidate solution.
Product and Marketing Strategy – Develop the high-level product
vision and strategy to achieve it. Identify the initial overall go-to-
 market strategy for how the product will be launched to the market.
Business Case – Roll up the anticipated revenue forecast and overall
business cost and return for pursuing this opportunity and the
associated risks.

The process is not necessarily linear, which contributes to the idea of this
still being the fuzzy front end. The activities may proceed in more of a
spiral or ad-hoc fashion as new information is uncovered, assumptions
validated or disproved, and initial estimates determined that don’t support
a successful outcome. These discoveries are better to uncover upfront with
low investment of time and resources than in later phases when changing
direction will be increasingly more difficult and costly.

10.3.1 Document Naming Conventions

Within the Conceive and Plan phases of the product management
lifecycle, there are a number of commonly used documents that are
similar in their intent and scope, but carry different names. This is
especially the situation with regards to how the requirements for a product
or service are specified. It is not the intent of this guide to be prescriptive
towards a single convention. We have instead split out various pieces of
information into different conceptual representations to help simplify the
discussions. This guide uses the terms Market Requirements Document
(MRD) and Product Requirements Document (PRD) as placeholders for
the many different forms of requirements documents in actual use. The
MRD is intended to refer to market segment-specific definitions of needs
and has more focus on describing the market problem, gap, or need to be
addressed. The MRD may originate in a marketing or product management
organization and the PRD in a technical organization. The PRD is intended
to refer to product-specific definitions of the conceptual or planned
product and thus is more focused on the solution to be delivered. It is also
not uncommon for a single document to fill both roles, though this can
become unwieldy and unfocused for a larger product.

In addition to the specific requirements for a product, each of these

documents can contain additional information about how the product will
be delivered. In the case of the MRD, the marketing strategy for how the
product will be positioned, distributed, and communicated can also be
included. In this discussion, this has been split out to a separate Marketing
Strategy Document. In the case of the PRD, the development plan for
major milestones, resources required, estimated costs, and overall project
plan can also be included.

Other common names for the MRD are Business Requirements Document
and Customer Requirements Document. Other common names for the
PRD are Functional Requirements Document, Functional Requirements
Specification, Functional Specification, and Software Requirements
Specification.

The physical implementation of these various documents can also vary

widely, from text documents to spreadsheets to intranet wikis to
requirements management software. The format is not as important as the
capture of the right information at the right level of detail to support the
planning and development of the product for a given organization.

The goal in organizing the documents in this fashion is to provide

containers for the specific information that is discussed, with
consideration for the primary audience. These documents communicate a
large breadth and depth of potential information and need to be organized
into manageable chunks.

10.3.2 Establish a Cross-Functional Product Concept Team

The establishment of a cross-functional team is the first step toward
getting a product concept refined and fleshed out. The team needs to be
cross-functional due to the number and variety of tasks that need to be
performed. It requires product management as the central business driver
of the effort with support from others in the organization as key
contributors. Typical involvement includes marketing, engineering,
design, manufacturing/operations, and support. The team also often
includes additional involvement from sales, research and development,
information technology, finance, and external partners or vendors.

Building a cross-functional team and assembling team members into an

effective unit is one of the central tasks of a product manager. Product
managers act as the team leader. This is a natural position for the product
manager as their role is to know the customer need, communicate vision
and strategy, and optimize results by creating and sustaining value
throughout the entire product management lifecycle. Product managers
and product owners are the only parties that stay with the product from its
conception to ultimate retirement.[49] This commitment to the product
over the entire product management lifecycle represents a best practice for
product managers and owners.

Successful cross-functional team leadership requires support and

thoughtful engagement from the senior leadership team in addition to
allocation of appropriate resources. The product manager must articulate a
clear purpose and ensure that the goals of the team are well defined and
effectively articulated to all the team members.

Once the team is identified, ideally the project manager and/or product
manager should create a project charter. Charters are documents that
define the purpose of the team, how it will work, and what the expected
outcomes are. It is a guiding document that the team and its sponsors
create at the beginning of the effort to make sure that all the cross-
functional team members are clear on the objective.

A project charter answers a series of important questions about the team’s

mission and objectives. Once drafted, it’s then shared with the product
team. Team members ask questions at the first team meeting and offer
suggestions in order to clarify the mission. The final decision regarding
any requested revisions to the charter is made by whoever has created the
team. This is likely to be the team leader or sponsor. An alternative
approach to developing the charter centers on bringing the team together
to draft the charter as a group in order to create stronger buy-in.

The charter document answers several key questions:

Who is on the team and what is each individual’s role?

What is the purpose of this team?
What are we trying to achieve?
 How will success be defined?
Who is the sponsor?
What deadlines have been set for this effort?
What financial resources are allocated to the team?
How often is the team expected to meet?

The required approval for the charter can vary depending on the
organization and effort expected from this phase. For a lightweight
analysis, the team can self approve and for larger projects a formal
sponsor approval may be required.

Table 10-7. Product Concept Team: Inputs and Outputs

10.3.3 Market Investigation

The purpose of the market investigation activities is to understand the
overall needs of the market segment and the market gap that’s being
addressed by the product concept. How the product concept got identified
in the first place will dictate how much effort and what focus is required
for the market investigation.

For example, if during the market assessment the team identified

opportunities to expand into a new market with its high-level concept, then
a significant amount of new research may be required to investigate and
understand the market segments, buyers, and users in much greater detail.
On the other extreme, if the product concept is an extension of an existing
product in the current market, then there may already be a wealth of
information and further research may be minimal except for specific usage
scenarios. If the product concept originated through VOC activities that
involved in-depth analysis of user activities, then the market investigation
may be more focused on understanding competitive solutions better and
why the gap exists.
The primary output of the market investigation will be some form of
market requirements that describe the market gap in enough detail to
enable a thorough investigation of possible solution implementations. It
will also begin to drive portions of the marketing strategy that are
discussed in later sections.

The overall questions to be answered in the market investigation are:

What attributes of the target market(s), including sizing and growth?

Who are the buyer and user groups in each market segment, and what
are their major goals and characteristics?
What are the scenarios where the market gaps are exhibited? What
are the desired scenarios for customers to achieve their goals?
What is the full set of needs a solution must address to close the gap
and be competitive in the market and with what relative priorities?

The process and resources used to acquire this information can also vary
widely by company and even by project. It could involve directly talking
to customers through VOC activities or it can involve customer proxies:
expert or market-facing specialists who have experience with customers
who can provide input on their behalf. These resources are often internal,
such as sales people, sales support, customer support, and product
marketers, or they can be external resources such as consultants, partners,
and vendors with relevant market knowledge.

The process can also be largely executed by the product manager or with
the help of other team members with more specialized skills in these
areas. These can include market researchers, product marketing, business
analysts, user experience professionals, and technical staff. It is common
in some organizations to approach this as a team activity and leverage the
different perspectives obtained from all of the team members in aggregate.
Different skill sets will view the situation through different lenses, and
some unique insights may be gleaned through a conversation spanning
these cross-functional viewpoints.

Understand the Target Market

A first step in understanding the market gap is to identify in more detail
the target market attributes and specifically who the customer is who will
buy and use the product. As discussed in the Market Segmentation
discussion earlier in this section, this is the time to define the key
attributes and characteristics of the target market. The product team may
have already obtained this information from market research or may have
to do additional research. The team must also identify the size of the
overall market, current state of penetration, and growth potential.

A common sizing approach for the market segment is to do it in steps. The

first step is to estimate the Total Available Market (TAM), also called
Total Addressable Market. This is an estimate of the maximum revenue
number or total customers available to all competitors in the segment for
all competing solutions. Next, the team must determine how much of this
market can be accessed. This is called the Serviceable Available Market
(SAM), or Served Available Market.

Many factors influence this analysis. If the market is highly penetrated by

competitors, then the opportunity will likely be a small niche not
addressed by the competition. The growth potential of the segment may
also be limited in this scenario. If the market is emerging and there are no
competitors with a large share of the TAM, then the opportunity may be
large, assuming the product has the right solution to jumpstart the growth
phase of product lifecycle. Product managers also need to consider how
much of the market can be reached. If the TAM is global, but the sales
channel reach is geographically limited, then the SAM should reflect this
limitation. Once the target market is clearly defined, then the customer
needs to be identified.

The buyer is defined as the person who is paying for the product. Buyers
are motivated by getting the expected value out of the product compared
to the perceived cost. Therefore, the buyer is the target for the overall
product value proposition. The buyer is also a target for the sales process.
Understanding how the buyer seeks information, makes decisions, and
purchases the product will influence the entire go-to-market strategy. If
entering a new market, new sales channels may need to be developed to
reach them.
The user is defined as the person who will directly use or interact with the
product’s functionality or capabilities. The user is motivated by
accomplishing a specific task or a goal. There can also be multiple users
of a more complex product performing different tasks. There can also be
different levels of users from an experience or expertise perspective, such
that they will use the product to accomplish a similar end goal but may
want to do it in different ways. Therefore, the user is the target of the
product functionality and overall user experience.

Buyer and user information is obtained through market research and

interviews, and then organized into similar buyer and user groups with
similar characteristics. A common method of organizing the different
profiles is through the use of personas.

Personas are representations of the similar groups that are personified

such that they are given characteristics of an individual in order to bring
them to life. The information conveyed by a persona includes
demographic, psychographic, and behavioral information relevant to the
market segment product. They are also often given real names and
imaginary photographs to make them more tangible. The overall goals are
to have a common frame of reference for all of the people on the project,
to understand for whom they are developing the solution, and to use the
information to help them make decisions along the way. Personas can be
valuable tools throughout the product management lifecycle.

Buyer personas represent specific groups of buyers that the sales channels
are likely to encounter, such as a department manager and purchasing
manager for a business product. These personas will help drive the
development of the important components of the value proposition in
addition to the messaging and sales materials to communicate it.

User personas represent specific groups of users who will use the product
in different ways or have different expectations of it. An example could be
a group administrator who installs and sets up a software product for the
end users versus the end user who uses it for the job on a daily basis.
These personas will help drive decisions and prioritization for product
capabilities and functionality, and specific design decisions impacting
usability, such as look and feel.
Table 10-8. Understand the Target Market: Inputs and
Outputs

Illustrate the Market Problem

One of the most important tasks for product management is capturing the
market problem in a broad context so that the rest of the team can fully
understand the situation. Very often, only a small part of the problem or
need is captured without information that could be useful in developing a
complete and possibly innovative solution.

Problem scenarios are one method for describing the market problem to
be solved. They are an easy way of describing a typical situation that a
persona encounters. They can also illustrate the desired or conceptual
solution with the new product being used. For this discussion, problem
scenarios will be included in the MRD, and solution scenarios illustrating
the conceptual solution will be included the PRD. These latter scenarios
are more commonly called Use Cases or User Stories, especially for
software products.

Scenarios can take several forms, depending on the type of product being
developed and the level of detail needed to capture the information. One
common format is a simple story consisting of a few paragraphs or
bulleted steps in a sequence. The intent of a scenario is to capture some
key elements, including the persona(s) involved, a setting for when the
problem is occurring, the overall goal the persona wants to achieve,
common steps the persona performs, and major decisions the persona
makes that can affect the flow.

Other methods for illustrating usage scenarios can be storyboards that

combine both illustrations and story steps, or flow diagrams that show
major activities and decision points graphically. The overall objective is to
describe, in a simple and comprehensive way, the challenge the persona
has in achieving its high-level goal with existing solutions in the market.

Often it’s just the complexity or number of steps required to achieve the
goal that is creating the opportunity for a new solution. Many successful
products have resulted from simplifying the task flow or organization of
information, enabling the persona to achieve its goal more easily. Also
note that the persona, either the user or buyer, may not have explicitly
asked for the simplification, since he or she may not have known a better
way might exist. This is called a latent need.

The best product companies understand this concept and drive innovative
solutions that expand the possibilities by capturing both latent and
identified needs. Scenarios are a way of capturing the persona’s world so
that the internal team can utilize it to more effectively envision latent
needs and innovative solutions.

Table 10-9. Illustrate the Market Problem: Inputs and

Outputs

Analyze the Competition

In addition to identifying and understanding the market gap that exists in

buyers achieving their goals in a more effective way, it’s important to also
understand the alternative offerings in the market.

The goal is to understand why, in spite of potential offerings in the market,

the gap isn’t being addressed. It could be that the competitors’ offerings
have the wrong feature sets, incomplete end-to-end or poor user
experience, are too complex, are priced too high, etc. Or perhaps the
solutions were intended to address a different problem for a different
segment and were not really intended to focus on this particular gap as a
complete solution. It may be concluded that the competition is addressing
the gap, but the majority of users are not choosing those solutions. This
scenario should cause the product management team to think deeply about
the real problem and potentially reconsider entering the market with their
current concept.

The competitive assessment performed as part of the product concept in

the previous section was focused at a higher level of company-to-company
competition, though it could have also been at product level if the
information had already been researched. In this section, specific product-
to-product capabilities will be compared.

The best way to perform a competitive analysis is to first identify all of

the major competitors that appear to be targeting the potential market
segment with a similar or alternative solution. For the industry and
solution, this may be easy with just a handful of known competitors. In
other cases, there may be dozens of potential competitors, so it will take
some pre-assessment of those who have the strongest market offerings.
The next best alternative for users should be considered and it may be
none of the current competitors. Home, grown solutions may actually offer
the strongest competition and is very often the case in early stage markets
where nobody has yet created the right solution for the majority of users.

The next step is to identify the key capabilities of the solutions being
offered to the market and attempt to rate how well the capabilities are
delivered and if they meet the market need. This is not always easy or
straightforward. Ideally, obtain competitor’s products and then use them.
This technique provides the greatest insight into their capabilities and user
experience, but is not always possible if they are not available in the open
marketplace through third parties. Reviewing competitor products may
also highlight some features that the product management team didn’t
consider. A competitive analysis example is shown in figure 17-8.

The easiest method to obtain product information is to find literature or

peruse websites, which may identify what the competitor’s feature sets
are, but may not identify how well they are implemented. In some cases,
you may be able to obtain third party reviews, such as through trade
magazines, bloggers, or independent review services that publish results.
For many products, these reviews are not available and the product
manager may have incomplete information about the competition.
Additional actions can be taken to fill in the void such as user interviews,
scouring online forums, or even hiring secret shoppers.

The product manager should also include information beyond product

capabilities to include the full end-to-end experience of the buyer and
users, such as ease of purchasing, delivery, installation, paying, support,
and maintenance.

As the product team begins to collect the results, they can build a matrix
of features and capabilities with competitors’ ratings, and how well their
solution competes. An example of effective content and presentation
would be Consumer Reports®, who publish comparative matrices of
hundreds of types of products.[50]

Product managers should note that more features do not always correspond
to a better product and often dilute the core value proposition. It is
potentially better to be superior along key attributes of the solution rather
than trying to offer a full complement of average features. It is tempting to
think that a product can be strong across a full spectrum of capabilities,
but few companies have this depth or the resources to compete effectively
in this manner.

Not all features in a product have the same level of importance. Some are
fundamental capabilities required to provide the core benefit of the
product. Others have varying levels from “somewhat important” to “not
important at all” for certain users, and competitors may have included
them to appease an important customer or simply because other
competitors included it. These are not good reasons. The product team
should make every capability earn its way onto their feature list.

Market importance can also drive prioritization across the features. If the
product team is short on resources or time to complete all of the desired
features, then the unimportant features should be removed.

The product team should also assess “how well” or “how complete” a
feature is implemented by the competition. Just because a feature is
included doesn’t mean it’s implemented well or completely by a
competitor. Attempt to get more granular in identifying how well the
competitors execute on the capability. Create levels of criteria that would
describe a well-executed feature versus mediocre or poor. These could be
along the lines of performance, completeness, and quality. There may be
opportunities to surpass the competition in execution, especially for those
features that have been marked as important to the segment. This enables
the product manager to fine-tune the allocation of resources to the
capabilities providing the biggest impact.

This assessment can span as few as a dozen high-level features for a

simple product, or dozens for a more complex product. It is often useful to
group them by category for easier reading and to stay at a relatively high
level because it’s easy to get bogged down and lose sight of the major
value the product is offering by going too deep into minor feature
variations.

Table 10-10. Analyze the Competition: Inputs and Outputs

Document the Market Requirements

The major objective of market investigation activities is to understand the

overall market needs to be satisfied by the product concept, and to
document those needs in the form of market requirements. Refining the
definition of “customers” into buyer and user personas is one part of that
effort, as are the problem scenarios that help create context around the
problem. The major effort is in specific details about capabilities,
including any constraints and quality levels that need to be attained to
meet customer expectations for the total solution.

Due to the broad differences in products across industries, the specific

detail required can be very different. One common categorization between
different types of requirements is functional requirements versus non-
functional requirements.

Functional requirements are used for products that have some amount of
interactivity with the user; the specific high-level functions the user can
perform. For example, a simple blender could have capabilities of turning
the unit on and off, as well as selecting one of three different blending
speeds to blend to different consistencies of the mixture. An advanced
blender could have functionality for setting any possible speed range from
a minimum to a maximum, a means for timing the duration of the
blending, and a means of feedback that measures the specific viscosity or
other parameter of the mixture.

Non-functional requirements describe qualities and constraints placed on a

product. Qualities can include usability, performance, reliability,
compatibility, and a whole list of possible capabilities of a system. These
specify “how well” a system needs to perform for specific measurements.
Constraints can include “how much” a system needs to support and can
include items like operating environment, certifications, compliance,
physical attributes, documentation, and reporting requirements.

The MRD creates an overall view of what is needed in the marketplace to

address the gap. It should be focused on the problem to be solved and not
the solution to be created, but as discussed earlier, can also lead into the
definition of the conceptual solution that will be addressed in the PRD in
subsequent sections.

Special emphasis should be placed on each of the market requirements

having a measurable assessment of success. For example, performance
requirements terms such as fast, high-performance, or highly scalable are
subjective terms and should be avoided. All of the requirements need a
specific measurable parameter from the market’s perspective that would
define whether the solution meets the criteria. For example, a high-
performance requirement could be specified in terms of a minimum
number of transactions per second of a certain type or if the product can
perform the entire sequence of activities within a minimum period of
time. The result should be measurable and have a definitive pass or fail
result against the requirement.

Prioritization is also a key part of the requirements process. Individual

requirements or groups of requirements can be prioritized to indicate their
relative importance from the market perspective. Common methods
include “High, Medium, and Low” or “Must Have, Important, and
Optional” designators. Alternatively, organizations can develop more
sophisticated decision matrices that weight various desired criteria in a
fashion that is meaningful to the organization. These criteria can include
relative business value, competitive advantage, estimated cost of
development, linkage to product strategy, and financial criteria to name a
few. Creating a rank ordered list of features is another approach, so that
the most important ones appear on top and lesser ones on the bottom.

This helps later discussions about solution options, including cost and
schedule impact, and there is nearly always a trade-off of capabilities
against these parameters. It is neither useful nor realistic to indicate all
identified capabilities as being a high priority of market need. The true
value of any specific solution is highly dependent on identifying the few
key attributes that drive the overall core benefit as the “must haves” and
leaving other capabilities or their level of implementation as negotiable
with lower priorities. Oftentimes, the major prioritization discussions are
not about the major features, but smaller second- or third-level features
within these larger groups that may be used by only a portion of the
targeted user segment.

A Closer Look at the Minimum Viable Product Concept

An extreme example of this prioritization is the concept of Minimum

Viable Product (MVP). The MVP is truly the very minimum set of
functionality that the organization can put into the market with the
specific intent of testing whether it correctly identified the problem
and core benefit. This concept could contain a single major path
through a problem scenario with no decisions or alternatives for the
user. The MVP can represent a minimum test devised to validate that
the market need was correctly identified and the product concept
addresses the core need. You may be able to achieve this through
mockups or simple prototypes as will be discussed in the solution
investigation below.

In the actual delivery from a solution perspective, the MVP is an

incremental version of an eventual fuller vision that contains just the
 very core capabilities targeted at early adopters. The goal would be
rapid market feedback coupled with an equally rapid ability to evolve
and adapt the product to get it right before investing into capabilities
for a broader market. The initial prioritization needs to be extremely
aggressive in paring down the delivered solution to bare bones in
order to get to market as fast as possible to obtain feedback that the
market need has been correctly identified and core benefit is being
delivered.

The overall contents of the MRD should include:

Definition of the market segment, specifically the buyers and users of

the envisioned product.
Detailed definition and illustration of the market problem to be
solved.
List of market requirements covering various aspects of the required
functionality and associated qualities and constraints placed on the
solution. All requirements should be measurable and have
quantitative success measures and emphasize the whole product or
solution from the customer’s perspective.
Prioritization of the market requirements against the perceived
market importance.

Table 10-11. Document Market Requirements: Inputs and

Outputs

10.3.4 Solution Investigation

Up until this point in the Product Concept Investigation, the focus was on
identifying and detailing market needs that may have emerged from a
variety of different research methods. It is now time to define how to
address the need.

This is a natural transition point in the process from defining what is

needed in the market to how the need will be addressed. There is also
typically a shift in the primary owner of the activities from product
management to the development team, but this does not always have to be
the case.

The most important idea to realize at this point is the possible existence of
an unlimited number of potential solutions, each with specific trade-offs.
There is not a single “right” solution to any customer need. The solution
domain is a multidimensional space in which there are many different
solutions. Each potential solution has strengths along some dimensions
while having weaknesses along others. One dimension may be price, as the
cost to create a superior product can be expensive in terms of unit cost and
cost to create and deliver. Another may be complexity of use in that an
attempt to do everything well can make a product complicated. Finally, the
ability to deliver the perfect solution to the market in the needed time
frame may not be achievable with the resources available.

So the major effort of the solution investigation is to explore the possible

implementation options, including the cost and time to deliver each.

Identify Solution Candidates

There may already be some ideas for candidate solutions based on the
different levels of discussions that have occurred. The scope of the product
concept may also be relatively narrow, such as adapting an existing
product for a new market or expanding a product line with similar-type
products. In these situations, a fairly small field of candidates may already
have been thought through, and so this activity may be complete or
relatively small.

In other situations, there might not be a candidate list. This could be the
case if the development team has not yet been involved in the discussion
to provide input on potential solutions. It may also be the case where the
concept is new for the company and many different approaches could be
used.

In the earlier discussion regarding types of innovation, the process of

ideation was defined as a form of structured idea brainstorming. In much
of the literature, ideation around solution candidates is the prime target of
the activity, especially for new product solutions. The defined market
requirements illustrate the market problem to be solved, and the MRD
contains specifics on the types of functionality needed, as well as the
constraints and qualities the solution needs to provide. This provides a
framework to focus the brainstorming activities.

One method for implementing solution ideation is through structured

workshops where a group of people are brought together specifically for
brainstorming. These are sometimes called Joint Application Design or
Development sessions. The sessions can include participants from several
functions, and even include external customers and partners.

Another method is working with customers to jointly come up with

solutions, which can be especially useful if lead users are identified. Lead
users are thought leading customers who are already creating adaptations
of the product or other solutions to better solve their needs and are leaping
ahead of most other customers. A major benefit of identifying these
customers is that they provide immediate market feedback that helps the
product manager to mold the solution and make priority trade-0ffs.

Another method gaining popularity is the concept of open innovation,

where a particular problem is presented to an open community of
customers or partners, and where a competitive environment exists for
proposing solutions. The best ideas are then rewarded through some
payment mechanism or outsourced to the partner to develop under
contract.

Regardless of which methods are used for the solution ideation process, a
useful activity across any of them is the development of solution scenarios
that help paint the picture of the user activities that would result with each
candidate solution. Analogous to the problem scenarios illustrating the
market problem, the solution scenarios illustrate how the solution makes it
easier to achieve the goal. This can also directly identify where the value
is being created for the customer.

The exercise equipment example discussed previously to modify existing

home based equipment to better accommodate the needs of aging Baby
Boomers led to major requirements, including the need for the equipment
to have lower impact on joints, to be less strenuous to use, and to provide
options for entertainment or fun while exercising. Our ideation process
would involve brainstorming modifications that could be made to
accommodate each of these requirements while also attempting to
quantify how well it solves the particular need. Some ideas could rank
high on achieving one of the requirements, but rank low or even negatively
against the other requirements.

The items on this completed list could be ranked comparatively against

each other based on the total value created, which would provide an initial
list of prioritized solution candidates to investigate further. Then the
product management team could analyze these solutions relative to other
alternatives to determine if they provide significant value to this specific
segment versus the existing equipment or offer something better than what
is already in the market. If not, they may need to step back and consider
other approaches.

Value identification is a key step in coming up with real measurable

benefits from the solution, such as savings in time, reduction in
complexity, and savings of real cost. These benefits are fundamental
drivers of the solution value proposition. Different solution candidates
may provide vastly different results when viewed from the perspective of
measurable benefits. This scenario view can also immediately eliminate
any further investigation into most of the solutions, based simply on the
comparison of relative benefits.

It is easy to overestimate the value created from a market perspective for a

solution candidate. This overestimation happens due to internal biases for
cool technologies, pet ideas from executives, ideas originated from
important customers, and internal politics. Diligence is required to gather
market information and maintain an objective market-centric view which
provides the best vantage to create real value.

Table 10-12. Identify Solution Candidates: Inputs and

Outputs

Study Feasibility and Alternatives

The list of prioritized solution candidates provides the basis for further
study to identify if the solution is truly viable. There are many
perspectives to consider, but the major questions to be answered are:

Is the solution technically viable? Can the company develop and

produce it?
What is the effort, time, and cost to deliver it? Are there multiple
options?
What are the major risks in delivering it? Can they be mitigated?

A feasibility study examines the proposed effort to help ensure that any
product development undertaken will provide a fully functional product on
a technical, financial, and operational level. The study typically includes
an alternatives analysis, which offers workable alternatives for the system
design and development. When the feasibility study and alternatives
analysis are combined, the resulting comprehensive view of the proposed
product makes the risks easier to assess.

The detail includes an analysis of the objectives, functional requirements

and design concepts, the effectiveness of integrating automated systems to
efficiently and economically improve the program operations, and an
evaluation of alternative approaches you can use for the product to achieve
its objectives.
As indicated earlier, the primary activities during this phase are likely
driven by the development team or from specific design and architecture
functions with collaboration from product management. The effort and
duration of the analysis can vary dramatically, depending on the amount of
new development work that is required versus what can be leveraged from
existing products and expertise.

The analysis is also driven from company culture and how much
information is required to make a decision before moving to the next
phase. Some organizations are more comfortable in moving forward with
unknowns that they are confident they will figure out along the way. These
organizations should also be more comfortable cancelling a project that
runs into problems. Other organizations are much more risk averse and
need to try to discover every potential pothole they could stumble on
because once development starts, cancelling the project is problematic.

Once the development team identifies feasible technical solutions and has
an idea of the full scope of the envisioned solution, the next step is to
generate cost and timeline estimates. The cost estimates include both the
estimated unit cost of materials and labor to produce or deliver individual
products to customers, plus the development costs to create the product in
the next phases of the product management lifecycle. The development
costs include the internal resources required and estimated durations, plus
major equipment, materials, and other external vendor costs. At this point
in the process, the estimates are quite high level or rough-order-of-
magnitude (ROM) estimates.

The estimated timeline is derived from the overall estimated effort and
logical flow of high-level activities. It also is at a ROM level and
expressed in terms of months or quarters for the project to deliver to some
milestone, and often contains ranges or confidence level of the estimates.
End date ranges can be approximated if a start date is assumed.

If there are multiple options in the solution implementation, especially

driving large potential variations in unit cost, development cost, or
timeline, then all of the options and trade-offs can be presented for
consideration in the eventual decision process. It is often best to explore
alternatives at this stage to anticipate the inevitable request for how it
could be done faster and cheaper.

Finally, the team should identify any significant risks for the development
of the product. These risks can be in the solution implementation itself, in
the expertise of available resources, the known unavailability of needed
resources, or the new processes and learning required.

A useful technique for assessing the overall importance of risks is to

assess both the likelihood of risks occurring on the product and the impact
to the project. A risk that has a high likelihood of occurring and has a
major impact to the product or project should be considered a red flag with
significant effort put into how to reduce or mitigate it.

For products that have an incremental or evolutionary delivery, such as

technology and software products, this may also be an opportunity to start
thinking about phasing of specific capabilities of the product. This phasing
could be driven from the priorities of requirements in the MRD or it could
be that some capabilities will take longer than others due to complexity or
effort required. This phased view of product deliverables would be the
preliminary thoughts around the future product roadmap.

The formality of the deliverables from these activities can vary from a
short study write-up summarizing the feasibility, estimates, and risks, to a
formal document or presentation supported by spreadsheets and other
more detailed materials.

Experience Design Research

A company needs to have a deep, detailed knowledge of its customers’

needs before it can design solutions. A company can build upon prior
knowledge and experience to design and develop better products and
services. Each new generation of solutions improves based upon market
and customer feedback.

Sometimes when a company addresses a market need, the solution may

completely eliminate existing workflows, activities, and tasks with a
better process. Customers may know only “their” way of doing things
while the solution provider may have a broader perspective across many
customers’ processes and a deeper understanding of the capabilities of a
newly available technology.

Listening to customers’ suggestions may simply lead to incremental

improvement instead of disruptive or truly innovative market solutions
that are normally derived from latent or unknown customer needs. It is by
direct observation of the existing solution that the team may see how the
customers actually interact with the products and services in their own
work environment. Many things are never verbally communicated because
the user is unconsciously doing them or they do not see them as important
to mention.

It is also important for product managers to consider the strengths and

weaknesses of the competitors’ solutions and how the various customers’
goals, process workflows, activities, and tasks are similar and different.
Innovative thinking can often be aided by looking at solutions that have
been developed in other markets and adapting them.

Experience design research supports the requirements work necessary to

understand the people who interact with the product. The research can be
part of a larger segmentation exercise to select a specific sub-segment of
end users to initially target, as opposed to the larger segment. This
exercise is often done to reduce the scope of the initial version by
targeting early adopters within the target segment who may be more
tolerant of missing functionality or interactions. This output can be fed
back to update the MRD and also to the business case for market sizing
and forecasts.

User research can be accomplished in a number of ways. Some of the most

commonly used mechanisms include surveys, focus groups, interviews,
and ethnographic studies. The objective is to understand the needs and
goals of the target audience in order to develop the reference personas
used in the requirements process and to understand in detail how they
accomplish their goals currently without the proposed solution. This could
be with respect to a competitive offering or by using alternative methods.
The insights obtained can enable innovations in the product that
accomplish the user’s goals in new and better ways.
Information Architects, Business Anthropologists, or Usability Specialists
develop, conduct, and analyze surveys, interviews, and observations. The
data from these studies help identify problems and opportunities that are
realized in the requirements.

Prototyping

One common method used in the feasibility study is prototyping. A

prototype is an early sample or limited implementation of the product
concept. Prototypes can serve a number of purposes, including:

To align the team – helpful to get everyone on the same page and to
avoid misinterpretation of ideas
To work through a design – for designers and developers, a way to
experiment with different design solutions and understand the design
trade-offs
To sell an idea internally – helpful to demonstrate the design solution
to internal stake holders like senior management, other designers, or
the engineering team
To assess technical feasibility – Can engineering do it? What
resources are available? Is it worth the effort?
To present an idea externally – obtain market feedback or begin
advance selling of a solution

In order to achieve these different objectives, prototypes typically fall into

distinct categories as follows:

Proof of Concept – Often uses existing materials, parts, and

components to prove the new idea works or not. Can be for a full
product or just critical parts to validate the overall concept is viable,
such as the technical feasibility of specific functionality. Also called
a Breadboard for electronic products.
Mock Up – A rough implementation using crude materials such as
cardboard, foam, paper, or wood to illustrate the concept in three-
 dimensional (3D) form. For software products, this can range from
simple paper illustrations to software-based illustrations of screen
flow. Also called a low fidelity prototype.
Model – A form built for aesthetic appearance only. Usually built by
hand for physical products to illustrate size, weight, and overall
visual characteristics.
Virtual Prototype – 3D Computer-Aided Design (CAD) rendering
often providing the ability to visualize a physical product on a
computer screen. For software products, can be an exact
representation of the screens built from visual design tools. Also
called high-fidelity prototypes or simulations.
Rapid Prototype – A group of techniques used to quickly fabricate a
scale model of a part or assembly using 3D CAD data, such as
through a 3D printer; another form of model. For software products,
it could be a visually accurate system using rapid programming tools
or languages, but not intended for production release.
Working Prototype – A functioning item but may not be fully
operational, designed and engineered for manufacturability, or have
the final appearance required. Useful for demonstrating to others or
to obtain feedback.
Pre-Production Prototype – A fully functional implementation that
is still in the testing or validation stages prior to formal release. Often
used for beta testing. For software, can be actual working code at
varying degrees of progress.

Table 10-13. Study Feasibility and Alternatives: Inputs and

Outputs

Document the Initial Product Requirements

Now that the team has some direction as to the specific solution it
proposes to deliver, it should be documented. Much like the MRD, the
variations in how this documentation is accomplished can vary widely.
While more detailed work is required during the Plan phase, this initial
version documents the high-level view of features and architecture of the
envisioned solution. While the MRD was focused on “what” is needed in
the marketplace, the PRD is focused on “how” the need will be satisfied.
The overall goal of the PRD is a response to the market needs identified in
the MRD and answers the following questions:

What are the overall goals and approach of the solution?

What high-level functionality will be included in the delivered
solution?
What high-level constraints and qualities are driving the solution?

The focus of the PRD is on the functionality provided by the product and
other system level qualities, often called the non-functional requirements.
For software products, the major emphasis will be on the functionality to
be provided, with the non-functional requirements defining the qualities
and constraints for the system as a whole. For hardware products,
including embedded software systems, much of the emphasis will be in
defining the physical attributes and the operating constraints. For services,
the emphasis is on procedural or workflow changes along with any
necessary changes to environmental, architectural, or material changes
such as interaction with new technology.

The level of detail required at this point is driven from the needs of the
organization, but the intent in this discussion is to keep it at a high level
for the initial version. This deliverable will be expanded in the Plan phase
should this product concept get approved and exit the Conceive phase. For
products that have ongoing development cycles, such as software, the PRD
can also begin to narrow down what will be delivered in the initial release.

The PRD should include the major goals to be achieved by the product as
described in the MRD and overall approach being taken to address the
product needs. The intent is to provide context and an introduction to the
overall solution before diving into specifics. Depending on the type of
product, this high-level view can be illustrated in a number of ways,
including:

Block diagram of specific subsystems or groupings of functionality

or activities
Context diagram that illustrates the solution and other external
systems with which the solution interfaces
Drawing or mockup that illustrates the major physical aspects

If several alternatives were considered in the feasibility phase, the PRD

should discuss the chosen approach and key aspects of the proposed
solution, with reasoning as to why the approach was selected. This may
help in subsequent phases of the project when additional team members
join, to reduce relapses into discussions that have already occurred.

The description of the functionality can vary depending on the product

type, but a good starting point would be to re-purpose high-level solution
scenarios, or stories, developed earlier to illustrate how the user will use
the product. This is the complement of the problem scenarios identified in
the MRD, which illustrated the gap that existed for the user in achieving
some goal.

The solution scenario in the PRD illustrates the set of activities the user
performs using the solution. Another common way to describe these two
scenarios is the “as-is” process for the problem scenario, meaning how the
current activities are performed today, versus the “to-be” or “proposed”
process for the solution scenario. These are also commonly documented as
flow or activity diagrams.

The description of the functionality should also go deeper than just a story
and should begin to focus on discrete sets of functionality that emerge
from the usage scenario. One common approach in software is through
Use Cases, which provide a step-by-step list of activities performed by an
end user or external system (as an actor interacting with the system) and
the system responses.
Another common technique is through functional requirements that have
the form “The system shall (or must) <do something>.” These can be
derived from Use Cases or they can replace Use Cases.

Both the functional requirements and Use Cases can be complemented

with graphical representations of documentation, including flow charts,
work flow diagrams, data flow diagrams, and other forms of modeling as
required. For software systems, it’s also common to include some level of
definition for the user interface, such as the high-level mockups or
prototypes developed in the feasibility study.

A Note on Agile Product Development

Agile methodologies rely upon two key aspects of the Agile

Manifesto to drive the requirements process. These are 1) individuals
and interactions over processes and tools, and 2) working software
over comprehensive documentation.

To that end, Agile organizations do not produce a formal PRD to

define the product and the details of requirements are created “just-
in-time” to support the Plan and Develop Phases. This is where the
major deviation from the traditional serial or Waterfall methodology
occurs.

The substitute for the PRD is typically a short product vision write-up
discussing the overall product goals for the initial release with a high-
level description of the solution coupled with a product backlog
comprised of prioritized user stories.

A user story has the form “As a <persona>, I want <to accomplish
something> so that <a benefit is realized>.” For the initial start, the
user stories are typically at a very high level, called epics, and evolve
to a number of more granular user stories. These lower levels can be
developed further in the Plan phase.
 As a user story is readied for the development team, more detail is
added by the product owner in the form of acceptance criteria that
define testable success criteria for the user story. Other forms of
documentation, including use cases and graphical documentation, can
also accompany a user story to help define complex operations.

Non-functional requirements commonly have the form “system shall (or

must) be <requirement>.” As discussed in the MRD, these types of
requirements especially need to be measurable and testable. For this high-
level view, the non-functional requirements should focus on the overall
solution qualities that have the greatest impact on product cost,
development effort and time, and major risks. This list will evolve in later
iterations of the PRD in the Plan phase.

An issue to be aware of is there are different levels of “how” for the

solution definition. One is at an abstract level of requirements that
indicate some capability the solution will provide, and the other is the
specific implementation level where decisions need to be made as part of
the design process.

These will be refined with additional qualities and constraints in the Plan
phase followed by the actual “implementation how” or design decisions in
the Develop phase. The latter would include the actual choice of switches
used, their location placement on the product, and the specifics of how
they operate.

Another issue is to address who is responsible for the PRD. As discussed

earlier, the MRD typically originates in the marketing or product
management organization and the PRD from the development
organization.

Regardless, product management should always be responsible for the

MRD. The situation can be less clear for the PRD, but in general the PRD
should originate from the development team in collaboration with product
management. In some cases, product management may be called upon to
develop the PRD, and if this occurs, their focus should be limited to the
high-level view.

As subsequent iterations of the PRD go deeper into refining the solution,

the product and overall process will be better served by the addition of
more solution focused team members. These include business analysts,
requirements managers, technical program managers, system architects,
and user experience professionals. This enables product management to
maintain appropriate levels of focus on the market needs and other
deliverables, including product and market strategy as well as the business
case.

Table 10-14. Document Initial Product Requirements: Inputs

and Outputs

Obtain Market Feedback

In parallel with the feasibility and PRD activities above, it’s also the best
time to obtain quick market feedback on the solutions to validate that the
team has correctly identified the market need and is creating a valuable
solution. The longer the team waits to get specific market feedback, the
higher the risk of increased wasted investment in time and resources. As
discussed earlier, every solution idea at this point should be considered a
hypothesis until market feedback can validate the idea as having potential.

The mockups or prototypes developed as part of the feasibility study can

also be used in conversations with potential users or specific versions can
be created for this activity. The goal is to allow the user to get an early
approximation to the solution under consideration, including any
implementation specifics that have been incorporated into the
demonstration. They then can provide feedback on their level of
satisfaction in using it to close the gap identified in earlier conversations.
Several outcomes can occur in these conversations. The ideal outcome is
they are excited by what they see so far and can’t wait for the company to
bring it to market. More often, they like some things but not everything, or
the limitations of the mockup prevent them from conducting a realistic
experiment. What the product team is trying to identify is that they are at
least directionally on the right path, and there may be some amount of
iteration required to refine it. The more they can check off that they have
identified the right problem and have some portion of a workable solution,
the further along they are in moving the hypothesis to something more
substantial.

The conversation can also reveal that the solution does not get the positive
feedback that was expected. The user may find that the solution requires
too many changes that feel unnatural or creates new issues or problems for
them or just isn’t any better than the current solution. It may be that the
user is not the right target or is not an early adopter or does not feel the
pain of the problem as deeply as others, and thus does not see the potential
in the product. However, if the same feedback occurs across multiple
users, then it is likely there is a solution issue or the market need was
overestimated.

It is far better to have this realization now, with relatively low investment
in resources and time, than to find it out months or quarters down the road
after a failed product has been launched. The product team can continue to
try alternative solution concepts to get past this point or they may decide
that they have enough feedback to abort the project. While it can be
difficult, it is important to be objective with the results and try to put egos
and politics aside. Market results are a critical measure of product
success. Obtain results early and often over the product management
lifecycle to maximize chances of success.

Table 10-15. Obtain Market Feedback: Inputs and Outputs

Assess Operational Impacts

In addition to identifying the scope of effort, time, and risks associated

with the development of the product, a high-level assessment needs to be
performed for operational departments to identify any major impacts. It is
easy to get lost in the creation of the solution capabilities and miss the big
picture of building, operating, distributing, and supporting the solution.

The questions to be answered by this assessment are:

Does the solution require major changes to the ways other products
are currently built, operated, distributed, or supported?
What are the estimated costs and resources required to address the
impacts?
What are the major risks associated with the impacts? Can they be
mitigated?

Gathering this input usually requires participants from other cross-

functional departments to understand the scope of the solution being
created and to assess how they might be impacted. The results can vary
from no impact to significant changes in processes and supporting
systems. The latter can potentially create additional projects that rival the
size of the solution development and have a significant impact on the
overall business case.

Table 10-16. Assess Operational Impacts: Inputs and

Outputs

10.3.5 Develop the Product and Marketing Strategy

Until this point, most of the activities have focused on research and
analysis to obtain as much information as possible about the market
situation, market needs, solution alternatives and feasibilities, solution
costs and timelines, and market feedback on the proposed concept.
Assuming the product concept continues to show viability and value to
both the market and the company, it’s time for the product manager to
solidify the overall strategy for the product and how it will be brought to
market.

The high-level questions to be answered and added into the documentation

include:

What is the high-level vision of the product in terms of the target

market, the high-level benefits that will be delivered, and the general
strategy of delivery?
What is the initial value proposition and positioning being targeted
for the product?
What are the initial thoughts on how the product will be launched and
sold?
What are the specific objectives to be achieved and in what time
frames?
What are the major product and market risks and how are they
addressed?
What are the key resources and programs necessary to support
success?

Some of the information already exists from the activities to date and now
can be consolidated into central locations for clarity and ease of use. The
formal documentation of the strategies can be accomplished in several
different forms, from being distributed in the MRD and PRD to separate
specific documents addressing the questions. This distribution will be
driven by the company’s own processes, by which function or group needs
the information and in what form, and the size and scope of the initiative.
The overall framework for each question will be discussed here and can be
localized as needed by the product management team.

Set Product Vision and Strategy

The product vision encompasses the general idea of what the product does
for whom and with what high-level benefits. The intent is to keep the
efforts focused in a consistent direction over the life of the product or at
least the foreseeable future. For products that do not have an upgrade
cycle, the initial value proposition will likely be its ongoing product
vision. For products and services that evolve with ongoing updates and
development activities, the product vision helps to maintain a common
overriding theme that all future development will respect.

The product vision is not a list of features or capabilities. It describes what

the product does for a specific target market in terms of benefits. For
example, a product encourages healthy exercise in the home for an aging
population and is gentle on the joints, fun to use, and affordable. Much can
be interpreted from this vision that can be implemented through a variety
of features, while also putting boundaries around it and implying what the
product is not. The vision is enduring over the product lifecycle.

The product vision can also put stakes in the ground relative to
competition that will force the product team to constantly stay ahead of
their competitors by finding ways to make their product a market leader.

The initial product strategy describes, in general terms, how to achieve

this product vision. Its intent is to provide the high-level context for the
set of activities to be pursued in the Plan phase and beyond. For example,
“our entry into this market will be through a newly branded product line
that utilizes our existing products as a platform, but with specific
adaptations addressing the unique requirements of this market.”

The product strategy can also lay out a phased timeline or series of steps
that are planned. This may be necessary to acknowledge that the product
team does not have the necessary resources or the foundation in place to
deliver all that they ultimately need, yet they want to deliver components
of the product strategy. This approach can help break the overarching
strategy into manageable and easy to- understand pieces.

In addition to the focus on the strategy for the development of the product,
additional thought should be put into any partner or ecosystem needs that
should be addressed. The concept of the whole product comes into play
here. Is the product team dependent on external third parties for
complementary products or services that are needed to really deliver the
envisioned value? For example, does the product depend on third party
content, such as media, information, or data? Is the content already
available or does it need to be created or aggregated? How would a
customer acquire it and is it affordable? Is this product solving only a
small part of a customer’s problem and the rest is out of the product
team’s control? Does the product strategy address the gap?

Like the product vision, the product strategy does not constrain the
innovations that could be developed by being overly specific, and it
clearly defines the paths not to be taken. Unlike the product vision, the
product strategy can vary over time as the product management team
achieves milestones and decides the next major move based on the results
and future market dynamics.

Providing an inspiring product vision can go a long way toward enabling

the team to think in creative and innovative ways. Providing a solid
product strategy will help focus activities, establish a direct link between
the product and the company strategy, and clearly identify to everyone
involved the high-level steps currently taken to achieve the vision.

Table 10-17. Set Product Vision and Strategy: Inputs and

Outputs

Set Preliminary Value Proposition and Positioning

The value proposition is a statement of the value the customer will receive
by using the product. Value can be thought of as the difference between a
customer’s perceived costs versus his or her perceived benefits received.
The cost side of the equation includes not only the purchase price and any
ongoing costs, but also the time and effort expended to purchase and use,
plus any emotional, psychological, or social costs incurred.

The benefits side of the equation includes not only the direct benefits of
achieving a goal, but also indirect or more intangible benefits along the
other dimensions. The perceived benefit side needs to be higher than the
cost side to provide significant value.

The value proposition is the “promise” to the customer of what they can
expect from the product. Some products can provide a measurable
improvement in something, such as 20% faster or cheaper than other
existing solutions. Other products provide a more subjective value, such as
being convenient or fashionable. Some of the most successful products are
able to capture value that is both measurable and subjective. An example
for the home exercise product line could be “30 minutes of use per day, in
the convenience of your own home, helps you lose or maintain weight,
improve mobility, and raise your energy levels.”

The value proposition should focus on the primary benefits at this point
and does not need to be in “market-ready” form, such as what would
appear in an advertisement. The wording and the key elements will evolve
over time as the product team finds out what resonates best with potential
customers for the actual messaging. It may also evolve due to changes in
the actual implementation of the product. Its purpose is to capture the
value in a concise statement so that it can be succinctly communicated to
the team.

If developing this statement is challenging, it may indicate that the actual

customer value delivered is not high, which is why the exercise is so
important from the beginning.

The positioning defines the product’s unique advantage versus

competition. It isn’t just how the product is different from the
competition, but also why the difference matters to the customer. The
starting point here is to define the reference point for the competition. If
the product team is developing something new to the marketplace, then the
competition is the existing situation from the customer’s perspective. If
there are several existing competitors, then it’s often useful to group them
into similar categories and identify the unique advantage versus each
different group. The product management team can also pick a single
“target” competitor who becomes their benchmark for defining their
advantage relative to them.

In defining positioning, it’s tempting to focus on one or two specific

capabilities as the advantage. However, similar to the discussion about
value proposition, the question is: what unique value does the product
deliver versus the competition? This will be at a higher level than features
or capabilities. It is also tempting to rely on advantages outside of the
product, such as strong brand name or distribution. While this might help
enable the product’s success, more will be achieved if the team finds real
advantages in the product offering, and compounds the advantage with
unique company or partner strengths.

Positioning for the exercise equipment example could be “while other

equipment providers offer one-size-fits-all solutions for everyone, we
provide specialized equipment to seniors that is easy to adjust, and easy to
move and store, with a focus on safety to avoid injury.”

It is also useful to combine the value proposition and positioning into a

succinct overall statement. This is sometimes called an elevator pitch, a
quick but comprehensive statement of the product’s intrinsic value.

Identifying the true value the product provides to the market and why it’s
better than alternatives is at the heart of a successful product. It will drive
development priorities, timing decisions, and overall product messaging
throughout the product management lifecycle. While it will likely
continue to evolve, it’s imperative that the team establish the value early
in the process. Too often, these elements are considered to be the
marketing message that is created after the product is built. Unfortunately,
if the value and differentiation are not identified in the concept phase and
used to guide the product requirements and design, no amount of after the-
fact marketing is going to overcome this weakness.
Table 10-18. Set Preliminary Value Proposition and
Positioning: Inputs and Outputs

Set Product and Marketing Objectives

The next step after the product management team crafts the product vision
and the product strategy is to identify how progress will be measured. This
exercise of setting specific objectives will help to identify one of three
states after the product launches:

Met or exceeded the initial plan. Time to set the next objectives.
Have not yet met the objectives, but current indicators show positive
progress. Maintain momentum.
Have not met the objectives and current indicators show little or the
wrong progress. Time for an adjustment.

Objectives are not the same as lofty goals that may be part of the vision,
but rather are specific measures of success against a strategy step. For
example, as part of the product vision, the company aspires to be the
performance leader in its category. One of the strategy elements could be
that it will invest in research and development activities for a specific core
element of the solution with an emphasis on performance. An example
objective would be to achieve a 20% improvement over the current
performance within 12 months. This puts a stake in the ground for how the
company knows it succeeded and when the measurement will occur.
Objectives can also create a sense of urgency when dates are explicitly
defined for when the measurement is due.

Objectives are also commonly called Key Performance Indicators (KPIs).

A common framework for setting objectives is employing the acronym
SMART, in which the letters stand for:
 Specific – state exactly what is to be achieved and by whom
Measurable — demonstrate whether (or how far) it has been achieved
Achievable — be realistic given the circumstances in which it is set
and the resources available to the business
Relevant — be relevant to the people responsible for achieving them
Time-Bound — be set with a realistic time frame or deadline

At this point, the product team is looking for high-level drivers that will
set the stage for quantifying early successes. They can set objectives for
the product to achieve in two or three years, but they will also benefit by
breaking their primary objective down into aligned sub-objectives that
show results sooner, such as in the next six to twelve months. Example
types of high-level objectives include:

Product – specific capabilities that will be added, or levels of

performance or cost that will be achieved
Project – statement of milestones or deadlines, or budget and
resource constraints
Marketing or sales – response rates to marketing activities, qualified
leads in a sales process, early customer pilots or trials, and initial unit
or revenue targets
Market – change in market share, change in penetration into a
specific segment, or change in repurchases from existing customers

Setting objectives for the new product helps to clarify for the whole team
what’s important and where to focus. Coupled with the higher level
product vision and product strategy, it will also align all of the
stakeholders around what the team is trying to achieve.

Table 10-19. Set Product and Marketing Objectives: Inputs

and Outputs
Create Preliminary Launch Strategy

In addition to figuring out the product that needs to be built, an initial

view of how the product will reach the market is needed. The purpose in
this phase is to identify the high-level marketing and sales activities
appropriate for the expected release of the product. The key questions to
answer are:

What is the specific market segment, or sub-segment of the larger

market, that is being targeted for the initial launch?
What general configurations of the product and pricing are being
considered?
What distribution channels are to be used, with what assumed
discounts and commissions?
What is the initial forecast for units and revenue?
What are the key messages to communicate the value proposition and
positioning of the product (often called the Unique Selling
Proposition)?
What are the primary messaging channels to be used, including
advertising, press, analysts, social media, trade shows, and partners?
What are the initial thoughts on sales, channel, and partner training
and materials that will be required, including demos and tools?
What is the initial estimate of launch budget required for resources
and expenses?

The format of this information does not have to be a detailed document at

this point if the product is leveraging current company assets for sales and
marketing, though it is preferable. It may suffice that it is a list of
assumptions and rationale in another document, such as the business case.
However, if there is a significant mismatch between the go-to-market
needs for this product versus the current capabilities of the company, then
an investment in more detail and documentation is probably warranted to
better develop the strategy. In either case, this is just an initial view of the
plan, and it will get significant attention and refinement in subsequent
phases beyond Conceive.

Table 10-20. Create Preliminary Launch Strategy: Inputs

and Outputs

Identify Product and Market Risks

The last component of the overall product and marketing strategy should
identify the major risks the product faces. All products face some amount
of risk. It is simply a part of doing business. Other risks are much more
consequential and need to be identified, prioritized, and if possible
mitigated. Some high-level questions to ask are:

What are the risks in creating and delivering the product? Are there
major concerns in technical feasibility, available resources, timeline
or cost estimates, manufacturing or operational challenges, supplier
or partner weaknesses, or legal or intellectual property issues?
What market risks does the product face? Are there major concerns
with market timing, barriers in distribution, macro-economic
conditions, competitive moves, sales forecasts, or product
acceptance?
What is the likelihood of the risk occurring? Is it a lesser possibility
or a high probability of occurring?
What is the impact if it does occur? Is it a small “speed bump” that
may cause some minor disruptions or is it a major brick wall hazard
that will stop the team in its tracks?
What is the mitigation for high-probability, high-impact risks? Is
there a Plan B? Are there steps the team can take now to lessen the
 probability or impact of the risk? Is there a subset of the project, such
as continued feasibility or market studies, that could be undertaken to
reduce the risk before proceeding?

The need to resolve all of the major risks before exiting the Conceive
phase is not a requirement, as they can be further investigated and plans
put in place as part of the next phase: Plan. However, it’s always better to
identify them upfront, so that the appropriate resources and activities can
be assigned to lessen the risks or plan alternative courses of action.

Table 10-21. Identify Product and Market Risks: Inputs and

Outputs

The product and marketing strategies are the core elements to come out of
the Conceive phase to guide the product through the next phases in the
product management lifecycle and on toward market success.

Table 10-22. Create Product and Marketing Strategies:

Inputs and Outputs

10.3.6 Create Overall Project Charter

The project charter begins to lay out the overall plan for the solution
delivery. It can be a separate deliverable or included in the preliminary
business case. The information is a roll-up of specific project information
that will be used going forward. The major questions to address are:
 What are the primary objectives of the project?
Who are the project stakeholders?
Who is on the core team? What supporting teams are needed?
What are the high-level deliverables or activities? What is out-of-
scope for the project?
What are the major milestones planned and when do they occur?
What are the major constraints on the project? What are the deadlines
and resource or budget constraints?
What is the risk management plan?
What is the project communication plan? How will stakeholders and
team members communicate?

The project charter will evolve into a full project plan as part of the
activities in the Plan phase. The charter created in the Conceive phase will
help jumpstart the team required for that activity.

Table 10-23. Create Project Charter: Inputs and Outputs

10.3.7 Create Preliminary Business Case

The business case provides the overall justification for the product,
illustrating an internal cost-benefit analysis. It can range from a simple
spreadsheet that shows the financial assessment of the project to a formal
document set that weighs the trade-offs of entering into an entirely new
line of business.
The business case can roll up much of the information that has already
been discussed here, specifically the product and marketing strategy
components. The financial analysis also rolls up the estimated revenues
and costs that have been accumulating through each of the other activities,
and the outcome of the operational assessment. Of course, at this point, the
estimates for a new product are very high-level and can have significant
error, but the overall goal is to get a quick assessment if this product has
potential. Even if the numbers don’t yet create a compelling financial
picture, the product team might still decide to proceed based on other
strategic factors or find a way to improve the financials. This is why a
business case composed of just a financial analysis may be too restrictive.

The questions to be addressed by the business case include:

What is the situation being addressed? What are the summary market
needs being addressed and the supporting background information?
What is the overall opportunity? How does the company benefit?
What is the envisioned solution? How did the team arrive at this
solution? How does it address the need? Why is it better than
alternatives?
What are the overall objectives being pursued? What business
assumptions are being made?
What are total costs of pursuing this opportunity? What resources are
required?
What is the strategic alignment of the product? Does it leverage the
company’s strengths? How does it align with the company’s stated
objectives or goals?
What is the overall timing of the project? Does the timing satisfy the
market need? Is now the right time to invest?
What is the overall cost-benefit outcome? Does it make financial
sense? Does it make strategic sense? What happens if the company
does not proceed?
What are the major risks the product and organization face? What are
the contingencies?
 What investment is needed? What is the estimated overall investment
required in delivering the product to the market? How much
investment is required for the next immediate step?

Spending the time to perform high-level due diligence upfront can save
significant time, effort, and cost down the road. The effort, however,
should be balanced against the scope of the overall project and the
downstream processes in place for further analysis, if required. The
decision point the product management team is trying to reach now is
whether they invest more resources into further definition of a high-
potential prospect.

Table 10-24. Create Preliminary Business Case: Inputs and

Outputs

10.4 Exiting the Conceive Phase

In order to exit the Conceive phase, an approving sponsor or committee
typically requires approval of the business case and overall strategy.
During this major decision point, the concept can pass through the gate, be
killed, be put on hold while other higher level projects are in progress, or
recycled for more information or study. If there are lots of ideas in the
company, then the approval meeting can be a routine event.

Every concept has its supporters and detractors. To rise above the opinions
and politics the best approach for the product manager is to come into this
meeting highly prepared and armed with objective data.

It also helps to have had a conversation with all of the approving

stakeholders and their advisors, in advance. These conversations provide
the opportunity to educate them on what the product team is trying to
achieve, and receive input on their concerns and issues. If done well, there
will be no surprises in the meeting and an open discussion and decision
can occur.
T he Conceive phase initiates thoughtful activity for a new product or
major enhancement. If the product concept is found to be worth pursuing,
the Plan phase dives into further detail about the product, how it will be
delivered, the marketing strategy, and the business case to support it. For
many organizations, this culminates in the decision to invest a great deal
of money and resources to produce the product in the next phase: Develop.

Due to the amount of time and money involved, the Plan phase can be
quite rigorous and involve a large number of resources and time to
execute. This can be especially true for hardware products, services, and
systems comprised of multiple hardware, software, and service
components. Even smaller projects requiring capital equipment or
engineering expenditures can be a major decision for a company.

The contrary is also possible, especially for smaller companies in fast-

moving industries. In this case, the Plan phase can be smaller in scope, as
the risk and cost of changing direction is often low. This is particularly
true for smaller product or service updates, or add-ons to an existing
product. The amount of rigor required is typically much less significant
due to the incremental nature of the development or operational activities
required to support an established product. Due to this continuum of
needs, this chapter will discuss the types of activities that are most often
associated with the Plan phase, while leaving it to the practitioners to
adapt planning activities and their depth to the needs of the organization.

11.1 Plan Phase Activity Groups

There are four major groups of activities that can occur in the Plan phase:
Product Definition, Project Plan, Marketing Strategy, and Business Case.
All of these activity groups evolve in parallel and leverage the outputs of
the Conceive phase as their starting point.

Product Definition activities are focused on defining the product well

enough to enable the product to be developed by the development
organization. These activities should be driven by a deep understanding of
customer needs and often supplemented in close partnership with user
experience professionals with a focus on the end-to-end user experience
and detailed user interface design. The activities can include refinement of
the target market, a more focused description of all types of end users, and
more detail about how they’ll use the product. It can also include
additional market testing and validation to ensure that the concept and
requirements meet the targeted needs and deliver the intended value.

Project Plan activities are focused on the execution activities required to

deliver the product to the organization. This plan outlines the boundaries
of the project designed to create or enhance the product, including
estimates of required resources, delivery milestones, and the anticipated
cost of delivery. The plan should also include specific functional plans that
provide for other schedule, resource, and cost estimates to deliver or
support the product once it moves into the Launch phase and beyond.

For some products, the impact to existing systems and departments is

minimal and thus the amount of project planning required is small and
primarily focused on marketing activities. In other situations, the impact
can be significant, such as requiring new manufacturing, test processes,
equipment, supply chain partners, support of a new distribution channel, or
changes in the business model or workflow for purchasing, delivering, and
supporting the product. In this case, the project planning needs to be
detailed.

Marketing Plan activities are focused on updating and expanding the

initial market strategy and go-to-market plan with greater detail. This
includes the target market and competitive information as well as further
refinement and validation of the value proposition and positioning. It also
includes updates to the distribution channels, anticipated pricing, and
forecasts. Marketing Plan activities also include the initial iteration of the
launch plan as the product manager begins to think through the details of
how the product will be introduced into the marketplace, including sales
channel rollout, public relations, advertising, and the estimated launch
costs.

Business Case activities provide a roll-up of all of the cross-functional

plans and costs into an overall justification for funding the product and/or
project. It always involves a financial analysis that provides a full view of
forecasted revenue, the estimated costs, the expected return on investment
for the product, and a risk assessment. As with product and project
definitions, the scope and depth of the business case can vary dramatically
for different organizations or different product efforts, from very elaborate
to a simple analysis.

The concept of a full Product Plan also exists for some organizations. The
product plan is typically an integrated document suite that includes all
four of the deliverables listed above in one central location. As part of this
discussion, the product plan will be referenced as a potential output of the
full Plan phase. The subsequent sections will cover the four activity
groups in more detail.

11.2 Product Definition Activities

The Product Definition activities consist of the product requirements and
supporting processes, including user experience definition and
requirements validation. For many products, the definition also includes a
future-looking product roadmap.

11.2.1 Product Requirements

Product requirements are the primary driver of the technical development
activities. In the Conceive phase, a high-level product solution is defined
in a preliminary draft of the product requirements. The focus of the
Conceive phase requirements were on identification of a preliminary
solution defined at a high level.
The focus of the Plan phase is to create detailed functional and system
level requirements with the goal of defining the product in enough detail
to deliver it using the chosen development methodology. This detail will
come from diving into deeper levels of capabilities beyond the high level
captured during Conceive, including:

More specificity on specific user actions and system responses

More depth in non-functional requirements
Potentially the full definition of the user interface design
Completion of the whole product definition

Deeper definition of the solution also assists in the creation of a strong

project plan and is necessary to flesh out the cost model required for the
business case.

The focus of the product requirements document (PRD) is on the

functionality provided by the product and other system-level qualities
(often called the nonfunctional requirements). For software products, the
major emphasis will be on the functionality to be provided, with the non-
functional requirements defining the qualities and constraints for the
system as a whole. For hardware products (including their embedded
software systems), much of the emphasis will be on defining the physical
attributes and the operating constraints. For services, the emphasis is on
procedural or workflow changes along with any necessary changes to
environmental, architectural, or material changes like interaction with new
technology.

A Note on Agile Software Development

The substitute for the PRD is a product backlog comprised of

prioritized user stories. A user story has the form “As a <persona>, I
want <to accomplish something> so that <a benefit is realized>.” As
a user story is readied for the development team, more detail is added
by the product owner in the form of acceptance criteria that defines
 testable success criteria for the user story. Other forms of
documentation, including use cases and graphical documentation, can
also accompany a user story to help define complex operations.

Prioritization is also a key part of the requirements process. Individual

requirements, or groups of requirements, can be prioritized to indicate
their relative importance and delivery sequence. Common methods
include “High, Medium, and Low” or “Must Have, Important, and
Optional” designators.

Alternatively, organizations can develop more sophisticated decision

matrixes that weight various desired criteria in a fashion that ranks
individual requirements in a manner that is meaningful to the
organization. This helps the development team focus on those items with
the highest priorities while providing for some flexibility in the
capabilities to achieve cost or schedule objectives. In Agile software
development, the requirements are stack-ranked in a linear priority
backlog, with the opportunity to change priorities between iterations and
releases.

The overall process of developing a PRD can be time-consuming, and is

generally iterative with multiple reviews among various stakeholders. The
PRD is also a fundamental driver of the project delivery plan, as
development estimates are derived from the individual requirements given
architecture and design assumptions.

It is not uncommon for requirements and requirement priorities to change

in response to efforts to reduce project scope or risk as the plan is built. In
some templates, the development project implementation details, such as
resources, milestones, and costs, are included in the PRD. For this
discussion, those items are deferred to the project plan section for
simplicity.

The results of the planning process and development of the detailed PRD
can also affect the original product concept. As the product is further
defined and validated and as the project is scoped for cost and delivery
estimates, the original product concept may be altered.

This can also affect the overall value proposition, competitive positioning,
pricing, and other assumptions made in the Conceive phase as part of the
product and marketing strategy that will need to be reconciled. The market
requirements document (MRD) may also be updated or superseded by the
PRD and marketing strategy documents.

Table 11-1. Product Requirements: Inputs and Outputs

User Experience and User Interface

A key part of developing effective requirements is getting the user
experience (UX) right for the targeted end user(s). The UX of a product
contains not only the user interface (UI), but also the end-to-end
experience in its acquisition, payment, installation, use, and support. For
many products, especially web-based software, these activities are often
intertwined with the product itself.

Methods for modeling and testing the UX/UI revolve around the creation
of mockups and range from simple paper-based drawings used to illustrate
product functionality or flow to elaborate high-fidelity prototypes that
look just like the real product. These can be both software-based and
physical mockups that simulate the look and feel of the product. Mockups
are commonly used in discussions or demonstrations with focus groups or
with individuals to ensure that the use goal is obtained. The mockups can
also become part of the formal set of deliverables for the product
requirements.
As part of the experience design process, user experience professionals
conduct qualitative research that includes reviewing the target market
segmentations’ demographic and psychographic data necessary to
establish the design direction. Designers also interview stakeholders,
buyers, and the people who interact with the product and service, in order
to gain insight into needs and goals. This information feeds directly into
the types and characteristics of the personas that drive the design.

Usability Evaluation

Usability can be defined as the ease of understanding and learnability

inherent to an experience. Usability studies enhance the elegance and
clarity with which the interaction with an experience is designed. The
primary objective of usability studies is to ensure that the user’s
experience of the product is:

Learnable: How easy is it for users to accomplish basic tasks the first
time they encounter the design?
Efficient: Once users have learned the design, how quickly can they
perform tasks?
Memorable: When users return to the design after a period of not
using it, how easily can they re-establish proficiency?
Free of Errors: How many errors do users make, how severe are these
errors, and how easily can they recover from the errors?
Delightful: How pleasant is it to use the design?

The key principle for maximizing usability is to employ an iterative

design approach, which progressively refines the design over time.
Evaluation steps enable the designers and developers to incorporate client
feedback until the product reaches an acceptable level of usability.

The preferred method for ensuring usability is to test actual customers on

a working product and procedures. The most basic and useful process is
evaluation, which has three components:
 Work with actual customers that meet the target persona.
Ask them to perform representative tasks with the design.
Observe what they do, where they succeed, and where they have
difficulties with the interactions.

It is important to evaluate participants individually and let them solve any

problems on their own. Any help or directing their attention to any
particular part of the solution will bias the evaluation. Rather than running
a big, expensive study, it’s better to run many small evaluations and revise
the design between each one so usability flaws can be fixed as they are
identified. Iterative design is the best way to increase the quality of
experience: the more versions and interactions that are evaluated with
participants, the better.

Conduct usability evaluation early and often—usability plays a role in

each stage of the design process. Don’t defer evaluation until there is a
fully implemented design because it’s difficult to fix problems that may
require “re-architecting” the product. Early designs should be fast, cheap,
and easy to change. The best way to create a high-quality experience
design is to start evaluation early in the design process and to keep doing
evaluations every step of the way.

Before starting the new experience design, evaluate the old design to
identify salvageable parts that should be kept or emphasized, and poorly
performing elements that give customers trouble. Also evaluate
competitors’ experience to get data on the range of alternative designs. It
can be helpful to conduct field studies to see how customers behave in
their own typical setting instead of in a lab.

Consider making prototypes of one or more new design ideas and evaluate
them—but the less time invested in these design ideas the better, because
they’ll need to change based on the evaluation results. Refine the design
ideas that resonate with customers through multiple iterations, gradually
moving from low fidelity prototyping to high-fidelity representations.
Inspect the design relative to established usability guidelines, whether
from earlier studies or published research. Once the product management
team decides on and implements the final design, it should be evaluated
again. Subtle usability problems frequently creep in during
implementation.

Evaluate early designs with a small representative sample of the target

audience. As the product progresses along the continuum with higher
fidelity prototypes and increased validation, sample size should be
increased.

11.2.2 Product Roadmap

A product roadmap is common for products that can be delivered
incrementally or in an evolutionary fashion, and high-level requirements
are their building blocks. Product roadmaps act as the bridge between the
product vision and strategy and the actual tactical product development
projects that are undertaken in pursuit of attaining the product goals.

While the product vision and strategy from the Conceive phase outlines a
desired future state, there can be multiple product development projects
over a defined time frame that visually illustrate specific steps to take to
achieve the vision. As business conditions and priorities change, so should
the product roadmap—think of it as a “living document.”

The roadmap can be visualized in two distinct time frames. In the short
term, it’s a record of planned releases and may extend two to four release
cycles into the future. These activities are often represented by calendar
year or on a rolling 12-month basis. See Figure 11-1 for an example of a
product roadmap.

Figure 11-1. Product Roadmap Example

Some projects on the product roadmap may be already in active
development, or some amount of planning has already occurred, and there
is a high degree of confidence that most of the specified deliverables will
happen.

The longer-term portion of the roadmap outlines product capabilities that

reside outside the organization’s current planning activities and are
effectively queued while the current priorities are being developed. This
section provides a directional view of where the product might head given
current business conditions in the next 12 months or longer, depending on
the industry. Any major changes in the current projects, the external
marketplace, or internally in the business can change these envisioned
future releases.

For products or platforms with relatively long lives or industries that are
relatively slow-moving, the long-term view can project out multiple years
or span a predetermined lifecycle. For faster moving industries, such as
software or consumer electronics, a multi-year look into the future may be
much more difficult to assess with any degree of certainty, given the
native rates of change, but it should remain directionally correct.

The primary internal objective of product roadmap activities is to gain

organizational alignment so that resource and budget allocations can be
planned in advance to enable effective execution. The main components of
the product roadmap consist of 1) a defined time frame, 2) a solid
understanding of market events or deadlines that will drive deliverables,
such as the underlying sales cycle or product seasonality, 3) specific
products, product capabilities, or themes phased over a period of time, and
4) associated development activities or resources impacted or required.

The internal product roadmap may also be the result of, or heavily
influenced by, the product definition and project plan activities for the
current release. Very often, the desired scope of envisioned capabilities to
be delivered, in the current targeted time frame, far exceeds the team’s
human resources or budget, and so a prioritization exercise will be needed
for what is delivered now—versus what can be deferred. Requirements
prioritization may go so far as to further define a set of phases for future
work, which becomes additional short-term and possibly longer term
aspects of the roadmap.

For some industries or products, especially those sold business-to-

business, an external version of the roadmap may be required for
customers. This is often the case where the product impacts a major
operational or strategic capability of the purchasing company, or is
deployed on a large scale across the organization. As the buyers are
making long-term and/or major decisions for the company, they expect to
see long-term product plans from the suppliers. Customers typically want
to be sure that the organization will continue to invest in the products, and
product roadmaps are often used as a means to measure the pace of
investment.

External versions typically contain much less detail than the internal
roadmap and can also be much less committal on specific dates. The most
common representation depicts a high-level set of planned release
milestones, in presentation slide format, and is often used to support
internal or external communication—generally faceto- face.

An alternative is a statement of direction document that contains a high-

level narrative discussion. It is rare that physical copies of these
documents are ever provided to anyone outside the core product team, and
if they are, it’s typically done under a non-disclosure agreement.

The external roadmap can serve several purposes. One is to demonstrate

thought leadership and open up discussions about future possibilities with
customers and partners in order to collect feedback. Another is as a
planning tool for the customer’s budgeting and operational processes so
that major expenditures can be planned for in the future. The external
roadmap can also be used in high-impact competitive sales situations
where it becomes one of several decision factors to help seal a deal.

Product managers need to exercise caution when it comes to developing,

executing, and communicating aspects of a product’s external roadmap. It
is wise to embed a disclaimer that the information represented is the best
view of the product’s direction given current information and that it’s
subject to change without notice. Many customers perceive the roadmap as
a commitment and if the direction changes, it can cause some difficult
situations to ensue.

The second caution is that roadmap information is confidential and not to

be disclosed. Even when roadmaps are clearly labeled confidential, expect
that elements of the information will “somehow” end up in the hands of
competitors.

The last caution relates to distribution across the sales channel. The
external document should not be freely disbursed, but tightly controlled by
the product management organization. It is not uncommon for the sales
channel to latch onto “selling” future capabilities instead of the current
product, and the roadmap becomes the reason to initiate a new
conversation with a customer.

Table 11-2. Product Roadmap: Inputs and Outputs

11.3 Project Plan Activities

The Project Plan activities primarily include the development plan for the
product, but can also include several other functional plans, depending on
the scope and organizational needs.
11.3.1 Development Plan
In the Conceive phase, an initial preliminary development plan may have
been created in order to get rough estimates of potential development
costs and timeline. Since the product definition at that point is very high-
level, only a rough estimate of what is being built can be obtained. A
major deliverable in this Plan phase is a more detailed definition of the
product through the product requirements. These requirements, in
conjunction with a more thorough project planning process, enable a more
detailed pass at the development plan. The overall goal of the development
plan is to identify how the product (including version or phase) defined in
the requirements will be delivered via the project.

It is not the intent of this section to detail how a project will be defined
and run, as this is outside the scope of this Body of Knowledge and ideally
handled by project or program managers. Instead the focus of this section
will be on the major project needs that are typically the output of
development planning.

Once the product requirements are complete, or in parallel with their

creation, the development team can begin assessment of what it will take
to deliver the product. This may be fairly straightforward if the envisioned
solution is similar to the capabilities or platforms that already exist, or it
may require the invention of significant new capabilities for the
organization. Therefore, the scope of any development activity can vary
widely from previous initiatives.

The development plan is usually orchestrated by a project manager, but

may also be led by a program manager or a functional manager/lead.
Based on the product requirements, development estimates of effort or
time are created to begin understanding the resource and budget needs for
the project. Depending on the organization, these estimates can vary from
very high-level to very detailed and low-level. The estimates themselves
may come from the project lead directly or they may come from various
individuals in the organization responsible for their delivery.

Once the estimates are obtained, a project schedule can be developed

assuming specific resource assignments, availability, and loading. The
schedule itself can become a formal part of the development plan, or high-
level milestones derived from the schedule can be what are represented in
the plan. In addition to the development activities, the plan should also
account for any resources required to set up and manage the development
environments, any testing and validation resources, any design or research
resources, and product or technical documentation resources.

Typical resources included in a full development plan can include

engineers/ developers, project/program managers, architects, testers,
experience designers, technical writers, business analysts, requirements
specialists, product managers, product owners, Scrum Masters, quality
assurance, and database analysts.

In order to support the business case and any budgeting activities required,
costs are often derived from the overall estimates and schedules, plus
additional costs for equipment, outside services, production tooling,
prototypes, development tools, and any other costs required for the
Develop phase.

A summary list of the common components of a development plan

include:

A list of resources or skill sets required for the project

Estimates of overall time and costs required for all resources
Cost of Goods Sold (COGS) estimates for manufactured or sourced
products
High-level list of project milestones and a detailed schedule
Testing and product validation strategy, including alpha and beta
testing
Additional project costs outside of the direct resource costs

A final part of the development plan must also be risk assessment and
mitigation. Identification of the key potential technical, schedule, and
resource risks can be identified, with early warning indicators and risk
mitigation plans determined in advance to help reduce fire drills down the
road.

Table 11-3. Development Plan: Inputs and Outputs

11.3.2 Other Supporting Functional Plans (Preliminary)

In addition to the development plan, other major functions within the
organization may need to weigh in with their own high-level plans and
costs. This may be a routine requirement of the development process, or it
may be required for specific projects requiring activities or expenses
outside the norm.

The following is a potential list of department plans that may be required

for a specific product development project:

Manufacturing Plan – Identifies the changes required to manufacture

and test the product.
Information Technology (IT) Operations Plan – Identifies changes in
how a product or embedded software component is hosted or
operated.
Ordering or Billing Plan – Identifies changes in the business systems
or processes.
Support Plan – Identifies changes in needs for customer or technical
support.
Distribution/Logistics Plan – Identifies changes in how the product is
fulfilled and delivered.
Partner Plan – Identifies changes in external partner communities,
such as service providers, Independent Software Vendors, or
 Developers.

Note that a specific marketing plan is broken out separately as it’s nearly
always a component required for new product activities. It also covers any
changes required to sales channels, which may drive some of the
requirements to the other department plans above.

In most cases, these functional plans will be preliminary and additional

detailed work will be conducted in subsequent phases while the product is
being developed. Some of these plans may also spawn additional projects
for the organization. This is particularly the case for a new manufactured
product that requires major changes in processes or required equipment. It
can also be the case if there are major changes required in the IT systems
that support a new product for operations, ordering, billing, or customer
support.

The components of the plans are analogous to the development plan, with
the intent of identifying the resources, schedules, and costs required to
support the initial and ongoing delivery of the product once it is released
from Development. This can also include supporting the product in the
Qualify phase prior to launch.

A summary list of the common components of a cross-functional plan

includes:

A list of resources/skill sets required for the project

Estimates of overall time and costs required for all resources
High-level list of project milestones
Additional project costs outside of the direct resource costs
Risk assessment and mitigation plan

Table 11-4. Preliminary Functional Plans: Inputs and

Outputs
Cross-Functional Coordination

In a structured environment with a formal cross-functional project

manager or program manager role, the managers are likely tasked with
organizing all of the project planning activities across the organization and
orchestrating the roll-up of department plans. In this scenario, the product
manager may be a subject-matter expert to other organizations while the
formal project/program manager drives aspects of the tactical planning
process in collaboration with the product manager across the organization.

In less structured environments, the product manager may be the cross-

functional lead to roll up the planning activities and results. It is also not
entirely uncommon for product and program management roles to report
to a single department that is looking across the product and delivery
projects cross-functionally.

Given the potential number of deliverables and resources required for the
activities in the Plan phase, it often needs its own project plan and project
manager. As indicated earlier, the amount of analysis and resource
requirements can be significant for the phase, especially across multiple
functions.

It is recommended that the Plan phase have its own project charter defined
with all key stakeholders identified and resources assigned. The risk of not
treating the phase formally can be the loss of key information that may
have material impact on the cost or schedule of the project. Additionally,
the formal involvement of key stakeholders, early in the planning, will
facilitate alignment and meeting objectives later in the delivery of the
product to the marketplace.

11.4 Marketing Plan Activities

The Marketing Plan activities are focused on updating the marketing
strategy based on parallel activities in this phase, and adding more detail
to an evolving launch strategy to support overall planning and the business
case.

11.4.1 Product and Marketing Strategy (Updated)

The product and marketing strategy that originated in the Conceive phase
was the first attempt at defining how the product meets the needs of the
target market, and the initial thoughts on how it’ll be taken to market.
These strategies helped to drive the product concept and initial business
case estimates.

As the product requirements and development plan evolve throughout the

Plan phase, there can be a significant change in the overall marketing
strategy that results.

This can occur for several reasons. One is that more work has been done,
resulting in increasingly detailed market segmentation, user research,
competitive analysis, or requirements validation. The additional work may
reveal that the initial need requires further refinement. Or the conceptual
solution was inadequate to solve the market need or compete effectively in
the market. Thus the product evolved differently than originally
envisioned and directly impacts multiple aspects of the strategy.

Another common scenario is the trade-off of product capabilities versus

development time or cost considerations. These trade-offs can reduce the
value of the overall product, slip the original schedule plan, or defer major
functionality into the future on a product roadmap. This can also have an
impact on the product strategy. Regardless of the reason, the initial
product and market strategy typically needs to be updated to adjust to new
information uncovered during the Plan phase.

Typical updates include:

Segmentation and initial target segment

Value proposition and positioning
 Pricing and forecasts

Table 11-5. Updated Product and Marketing Strategy:

Inputs and Outputs

11.4.2 Launch Strategy (Updated)

The initial view of the launch strategy in Conceive now needs to be
updated with more detail and changes.

This version of the launch strategy also expands information on pre-launch

activities that may be relevant to the overall plan, including beta and pilot
tests in the Qualify phase that could provide case studies and referrals for
launch. A validation strategy can be defined that outlines the goals of
market validation, from a marketing perspective, and any costs associated
with the testing beyond those identified in the development plan.

The launch strategy components typically include thoughts on:

Marketing collateral needs

Sales tools and demos
Social media and web marketing
Advertising and demand generation
Sales promotions
Public relations (PR) initiatives and analyst reviews
Tradeshows and digital events, industry conferences, sponsorships,
and media partnerships
Beta and pilot test strategy
High-level launch timeline, milestones, and overall budget
Table 11-6. Updated Launch Strategy: Inputs and Outputs

11.5 Business Case Activities

The business case activities are focused on a detailed version of the
financial analysis and an updated roll-up/summary of the overall business
case.

11.5.1 Financial Analysis (Detailed)

The business case coming from the Conceive phase was an initial
projection of the potential revenue and costs given some very high-level
assumptions. The intent of the Plan phase is to evolve this projection
significantly by understanding more fully the target market, need, and
solution to be provided. More specifically, what product capabilities, in
what time frame, and what it’ll take to get there.

The typical update to the business case financials will include the
following information and result in updated confidence factors:

Updated target market sizing and growth parameters

Supportable assumptions on target adoption and growth
Pricing assumptions and revenue forecast
Cost of sales/COGS estimates
Development and Marketing launch cost estimates
Manufacturing, Operational, and Support cost estimates to launch
Ongoing Development, Marketing, and Operational costs
Profit & Loss, Breakeven, Net Present Value, or some other Return on
Investment calculations
The complexity and depth of the business case financials will vary
significantly from company to company and project to project. In some
organizations, the financial analysis is managed by a financial analyst with
help from the product manager; in most it’s completely managed by the
product manager; and in others it’s more of a conversation than a
deliverable.

The output of the financial analysis is a major decision driver in many

organizations. For relatively stable markets where historical market
performance is available, they can also be fairly accurate if specific
product assumptions are met. For nascent markets or those that are
relatively small and growing, the ability to forecast adoption and revenue
numbers is likely much more of a guess than science. In this case, the
financial analysis results should be considered with caution and with less
emphasis relative to other strategic factors in the overall business case.

Table 11-7. Detailed Financial Analysis: Inputs and Outputs

11.5.2 Business Case (Updated)

The business case is the summarized roll-up of all the updated planning
activities that have occurred, and rationalizes them relative to strategic
drivers. In the Conceive phase, a preliminary version was developed and
the goal in the Plan phase is to provide the justification for the overall
product to move forward.

At the highest level, the business case should address the consideration of
the product in context with the entire company investment portfolio and
answer:

Why this opportunity and solution?

 Why will we win?
Why now?
With what risks?

Typical components of the business case include:

Summary of the market need and opportunity (from marketing

strategy)
Summary of the market and competitive landscape (from marketing
strategy)
Product capabilities, product vision, product strategy, value
proposition, and positioning (from product and marketing strategy)
Strategic leverage and alignment to objectives
Summary development and go-to-market plans (from department
plans)
Summary financial analysis
Summary risk assessment (from department plans and overall
assessment)
Open issues, conclusions, funding recommendations

Table 11-8. Updated Business Case: Inputs and Outputs

11.6 Create Preliminary Product Management Plan

The product management governing plan acts as the central repository for
all of the materials that are created in support of the new product. The plan
helps to ensure that the appropriate parties have access to the most up-to-
date materials and can help in the transition process as new team members
join or leave the team or organization.

Table 11-9. Preliminary Product Management Plan: Inputs

and Outputs

11.7 Exiting the Plan Phase

In order to exit the Plan phase all the deliverables defining the product and
the plan to deliver it must be agreed upon. Funding and resources are then
approved for the major Develop phase activities to begin. As indicated
initially, the amount of information required to exit the Plan phase can
vary significantly by product type, investment size, and organizational
culture, but should be judged on the same set of objective criteria.
Therefore, the process should be tuned to deliver “just enough
information” to make the investment decision to proceed to the Develop
phase or to decide not to pursue it.
T he Plan phase provided the groundwork for establishing the desired
functionality of the product and overall business plan to create and launch
it. The Develop phase begins a major investment cycle for the company
with the assignment of product development resources to design, create,
and test the product. The scope and duration of this phase can vary
dramatically based on the type of product, ranging from a handful of
development resources spanning a few calendar quarters to multiple
dispersed teams spanning multiple years.

The product manager’s involvement in this phase can also vary widely,
depending upon how the various team members’ roles are defined and the
degree of specialization. It’s not uncommon to encounter overlapping or
poorly defined roles within the organization. Due to the variability in
actual practice, this section will discuss the types of activities that are
most often associated with the Develop phase, while leaving it to the
practitioners to adapt these activities and their depth to suit the needs of
the organization.

12.1 Develop Phase Activity Groups

There are four major groups of activities that can occur in the Develop
phase, and this section will address each group separately. The activity
groups are Product Development, Market Validation, Launch Planning,
and Program Review.

Product Development activities are focused on monitoring and working

with the Development organization as necessary to build, verify, and
release the product while taking primary responsibility for product
requirements refinement and prioritization.

Market Validation activities are focused on obtaining market feedback on

the product’s design and implementation, both during the Develop phase
and in planning for the next phase: Qualify.

Launch Planning activities are focused on developing more detailed

crossfunctional plans to support the eventual launch of the product.

Program Review activities are focused on ensuring that the overall project
plan is being executed based upon expectations. The subsequent sections
will cover the four activity groups in more detail.

12.2 Product Development Activities

Product Development activities encompass the overall implementation
process in the Development organization, supporting product requirements
refinement as required, product verification, and release and configuration
management.

12.2.1 Product Implementation

For many organizations, there is a complete hand-off of the lead role
between the Plan phase and Develop phase. During the Plan phase, the
product management function takes the lead in defining the overall
functionality and business rationale for the product, with the development
function providing solution and implementation options and estimates of
cost and time to support the business plan.

In the Develop phase, the Development function takes the lead role
creating the actual product while the product management organization
shifts its focus to the forward-looking phases of Qualify and Launch.
Therefore, for product development activities, the product manager
typically takes on more of a monitoring role and jumps in to resolve issues
as they arise. However, alternatives exist when the product development
team is executing on projects utilizing Agile product development
methodologies. The implications of this variation will be discussed below,
particularly as it relates to product requirements refinement.

The Development team dives into defining the details of the product and
delivering the initial version, or working with vendors or partners to
deliver portions or the entire product. As part of the overall process, the
developers may create detailed design documents to share with others or
to document the implementation. Overall documentation varies
significantly by product type, industry, and the release process used by the
organization.

Intermediate deliverables from the Development team include mockups

and prototypes. Mockups are typically non-working models created early
in the process to facilitate decision-making or to illustrate how the product
may eventually look or function. For hardware or consumer products, it’s
common to mock up the overall packaging to capture the size, specific
visual attributes, and look of the product. For software products, mockups
illustrate portions of the user interface to capture the general functionality
and/or look and feel. These mockups can range from a simple rough sketch
to a fully simulated product. Regardless of the detail, the mockup can be
used for early user testing.

Prototypes are typically early versions of the product that are put together
to test the integration of multiple subcomponents or subsystems. They are
often evolutionary versions toward a final product, have varying levels of
the final capabilities, and can be of varying quality levels.

It is not uncommon to develop multiple versions of prototypes with

increasing refinement, especially for hardware systems or manufactured
products. These prototypes may also be used for Beta testing or other user-
testing activities. For software, the product development team may start
with low-fidelity paper prototypes and increase the fidelity of the
prototype and sample size of the reviewers as they gain a better
understanding of the design. The same is true for 3D models of spaces that
may start with white foam-core models and increase the fidelity of the
models by adding color, texture, and workable elements that demonstrate
how people interact with the objects.
As the Development phase nears completion, the Development team works
with Manufacturing or Operations to ensure a smooth hand-off of the
released product and to signal readiness for these functions to begin
ramping up their operational activities. Manufactured systems may have
long lead items that need to be purchased, or capital equipment that needs
to be designed and created, or procured, and installed to support building
or testing the product.

In addition, the design of the physical packaging for retail and/or shipping
will need to be created and sourced. Hosted software systems may require
servers, software licenses, and hosting facilities that need to be acquired to
support the product. Interior spaces may require interior designers,
architects and engineers, and exterior spaces may require landscape
designers—some may specialize with plants and others with lighting,
hardscape, or other special skills.

Aside from the requirements refinement and verification testing, the

product manager often has little day-to-day involvement in the details of
the development function activities, and the main source of status is
through regular team meetings led by the project/program manager. The
primary interest of the product manager is in ensuring that the product
functionality is being delivered per the prioritized product requirements
based upon actual market data and according to the project plan.

While there are some projects that move along without too many issues or
roadblocks, it’s not uncommon for major implementation or project issues
to surface that impact the overall plan. These can be unanticipated design
problems that force a change in the capabilities of the solution, a major
underestimate of the schedule, or cost of an implementation, loss of key
resources or partners, or the accumulation of many smaller issues that
ultimately result in an overall product or project impact.

In this situation, the product manager needs to participate in the decision

process to mitigate the issue. They may be requested to help generate
alternative options that impact functionality, cost, or schedule (optimal
outcome), or they may just be informed of the impact that was decided by
the development function (least desirable outcome).
The ideal process includes the product manager leading the collaboration
process with the developers to investigate all of the options and impacts,
and to guide the team to the best outcomes considering the objectives
established in the Business Case. Any major deviations to the plan or
escalations that result from project issues will need to be addressed,
usually through the program review process to be discussed later in this
section.

Table 12-1. Product Implementation: Inputs and Outputs

12.2.2 Product Requirements Refinement

One of the major deliverables from the Plan phase is the product
requirements document (PRD), and the breadth and depth of the
deliverable can vary widely from project to project and company to
company. During the Plan phase, some projects may completely define the
product functionality in granular detail due to the nature of the industry or
application, such as aeronautic or medical, while other projects may define
them at a “good enough” level to create a conceptual solution with
estimated costs and schedules.

In the detailed planning scenario, the requirements document from the

Plan phase becomes the plan of record used to baseline revision control.
Changing the requirements, in any way, is a formalized process, and is
therefore highly resistant to change. In the “good enough” scenario, the
requirements are intended to be evolutionary, with additional details
defined as required in the Develop phase and through a much less rigorous
change control process, if any. Due to this broad spectrum of possibilities
for the requirements, the involvement of the product manager in ongoing
requirements discussions can range from nil to active engagement.

Very often, the requirements are not changing in any significant way, but
there are missing requirements or lack of enough detail for the developers
to make an implementation decision when faced with a range of choices.
The implementation choice may not directly affect the primary
requirement, but could impact a nonfunctional requirement, such as
performance or ease of use.

Another possibility is the requirement is vague, can be interpreted as

having multiple meanings, or can have more than one technical solution.
Additionally, there could be conflicting requirements and a priority needs
be assigned between them or resolution of the conflict defined.

Finally, there may be a limitation in the implementation of the

requirement and a change is requested by the developer. It will be the role
of the product manager to deal with these requirements issues as they
surface by whatever process has been established for the project.

Agile software methods are designed to handle evolutionary requirements.

As part of the Agile process, requirements are detailed during the
development process. The product manager can be in the role of product
owner and thus is expected to be available on a continuous basis to the
developers.

The product owner initially creates a set of prioritized user stories—one or

more sentences in the everyday or business language of the end-user or
user of a system that captures the goal or task they wish to accomplish—
and testable acceptance criteria. These are compiled into a list known as
the product backlog. As a developer begins to execute on each of the user
stories, additional details are discussed and/ or documented in near real-
time with the product owner and built into the product within a sprint—a
short iteration cycle of a few weeks. The product owner is on demand for
all of the developers with user stories or acceptance criteria under
development during the iteration development cycle.
To offset this high demand on the product manager, organizations often
split the product manager and product owner roles into more specialized
functions. One way to compensate for this split is to add a business analyst
as the product owner reporting to the product manager. The product
manager provides the large user stories, referred to as epics, and features,
for the release while the product owner breaks down the epics and features
into smaller user stories for the sprint backlog.

The business analyst or product owner then works on a continual basis

with the development team while the product manager oversees the work.
This allows the product manager the necessary bandwidth to provide the
additional planning and coordination required for the Qualify and Launch
phases while continually monitoring market dynamics.

Another commonly used approach is to have the lead product manager

oversee a less senior or more technical product manager as the product
owner. Yet another possibility is the product manager is the product owner
and begins to work more closely with a product marketing manager or
program manager for the Qualify and Launch planning activities.

The situation does arise that requirements change during the Develop
phase, as new or expanded requirements threaten to increase the original
product scope that was approved during the Plan phase, also called
“feature creep.” These could arise in the form of new customer requests or
in response to a new competitive offering or as determined during user
testing.

In some cases, the development team may agree to take on the additional
scope if it has minimal impact to their schedule. In many cases, however,
the project impact may be too great and the responsibility will rest with
the product manager to identify the preferred resolution. This resolution
can include reprioritizing other capabilities to make room for the new
functionality, deferring the feature to the future, or expanding the project
scope and schedule through the formal program review process.

Table 12-2. Product Requirements Refinement: Inputs and

Outputs
12.2.3 Product Verification Activities
To verify that product requirements are being delivered as agreed, the
implementations are also usually tested by a separate Test and/or Quality
Assurance team. The test strategy provided in the Plan phase is expanded
in the Develop phase to a test plan that includes the details of how the
product will be verified. It may also include the test cases used to verify
the product. The test plan should provide specific reference back to the
product requirements for traceability.

In order for the product to be released from the Development team, the
product needs to pass a minimum verification level with acceptable
results. These can include individual module testing of subcomponents or
subsystems and full system testing of the integrated product. For complex
systems, testing of the integrated product can involve a significant amount
of effort and time.

For manufactured products, part of the verification process can involve a

manufacturing test build that runs a limited number of units through a full
manufacturing and quality control cycle. This is to ensure the product
documentation is complete, the product can be manufactured and tested
per the plans, and any process or product issues are identified before a
major manufacturing cycle and investment is initiated.

A similar activity can be conducted for hosted software products, where

the hosting operations group is responsible for verifying the system can be
built and deployed in a staging environment. This is especially critical to
ensure that an existing system can be upgraded and operational within a
limited duration maintenance window to minimize system downtime.
There may also be the need to test a major migration of user accounts or
data between a legacy system and a new or upgraded system.

The product may also have to go through separate certification testing for
compliance to standards, such as for safety, emissions, security, and
specific industry requirements or government compliance.
In some scenarios, especially for contracted software products or more
customized solutions for end customers, there is a formal user acceptance
testing (UAT) or similar type of acceptance by customers. This testing
usually involves a set of high- -level functionality and failure tests
performed by the end customer to ensure the specification and contract
obligations have been fulfilled.

The product manager is often heavily involved in product verification

testing as a proxy user to ensure the overall functionality and experience is
as envisioned. Many product managers are also involved in reviewing and
prioritizing quality issues to determine which issues must be corrected
prior to launch. They may also be responsible for a formal acceptance
approval along with the test team. The product manager may also be
directly involved with the customer in planning and creating the UAT.

Once all verification and compliance testing has been passed, the product
is officially released to the supporting operational function.

Table 12-3. Product Verification: Inputs and Outputs

Release and Configuration Management

As indicated in the previous discussions, varying amounts of formality and
control of the overall development process and documentation is required
for different products. This process involves managing the lifecycle of
requirements from initial approval to product release, ensuring
compliance to requirements and required processes, transitioning the
product from Development to Manufacturing or Operations, and capturing
issues and resolutions beyond the development activities.

For software products, this process is often coordinated through Release

Management. These activities can be centralized within an organization or
partitioned across different functions or individuals for different aspects
of the process. It is common to have a Release Manager role within the
Development team. The major activities can include:

Version control and change management of the product requirements

and software components
Maintaining development and testing configurations and
environments
Managing the software “build” process for ongoing development and
testing activities
Packaging and validating the finalized components for distribution or
Operations
Ensuring all required process steps for release have been completed,
including security audits, operational tests, and documentation
Defect tracking, triage, and issue tracking process and systems

For manufactured and complex system products, the process is often

coordinated through Configuration Management. It typically is managed
through a dedicated group as part of the overall QA activities. The major
activities can include:

Version control and change management of the product requirements

and system components
Bill of materials and Stock Keeping Unit assignments and
management
Management of product build and use documentation
Ensuring all required process steps for product release have been
completed, including testing and issue resolution

The direct involvement of the product manager in these overall activities

is usually minimal, though they are likely involved at a deeper level on
individual activities.
Table 12-4. Release and Configuration Management: Inputs
and Outputs

12.3 Market Validation Activities

The Market Validation activities relate to obtaining market feedback and
include the development of a Beta Plan or Market Plan to be executed
during the Qualify phase and usability testing performed during
development.

12.3.1 Beta Plan/Market Plan

Prior to doing a full product launch, it’s common to first do some form of
product validation in the market to verify the product is ready. This is
often called a Beta test or Pilot and is performed as part of the next phase:
Qualify. The Develop phase is a good time to create a Beta Plan to get
alignment in the organization about the goals of the testing to be
performed and the logistics of how it will be conducted once the product is
ready for release.

Some internet companies choose to publically launch their initial version

of the product and call it a Beta release in order to set market expectations
on the feature or quality level. For this discussion, a Beta test is a limited
test run before formally releasing the product or service to the full market.

Depending on the goals and scale of the planned test, the effort and
resources required could be significant and would need to be incorporated
into the Launch schedule. Collaboration with a project or program
manager for these planning and scheduling activities can help ensure
success. Beta tests can range from a handful of users to thousands, and it’s
not uncommon that dedicated resources need to be assigned for larger
tests.
Sometimes there is a dedicated leader for this effort—a Release Manager
—or it may fall onto the product marketing manager’s list of
responsibilities. It is also important to find testers who are motivated to
test the product. The testers should match the product personas—be part of
the target market user group and are often early adopters or some of the
leading edge customers.

There are multiple reasons or goals for performing a Beta test prior to
launch. The Beta can also have multiple phases that each address different
goals. Some of the results that can be obtained from a Beta include:

Product functionality verification – Ensures that the product performs

as expected across different users and environments to gain broader
verification test coverage before launching.
Marketing validation – Provides feedback on various aspects of the
product messaging, positioning, value proposition, and pricing, and
provides early customer testimonials to use at launch.
Supporting system readiness – Allows end-to-end testing of the full
customer experience, including purchase, delivery, use, and customer
support.
Usability validation – The product is effective (key tasks are
completable), efficient (key tasks can be completed in a timely
manner), quickly learnable, and delightful (positive emotional
associations).
Sales support – Pre-launch demonstrations or prospect trials to
accelerate purchases.

Of course, the single primary reason to go through the effort of a Beta test
is to provide data to make an important decision, which is to launch the
product or not. Therefore, the Beta test can be one of the major drivers in
choosing one of three options for the readiness of the product:

1. The product is ready to launch and the Launch phase begins.

 2. The product is not ready and additional work is needed before a
launch is approved.
3. The product does not or cannot meet market or business needs and the
launch is cancelled.

The Beta Plan created in this Develop phase typically includes answers to
the following questions:

Why are we doing this test? What results are we trying to achieve?
Who are we targeting for the test? How many testers are we seeking?
How will we find and recruit testers? How will we incent them?
What will we be providing to the testers? Do we plan on getting the
product back and how?
What do we want them to test (general operation, specific functions
or environments)?
Who will be managing the test, including setting up the testers and
supporting them?
How will we communicate with them and how often? How will they
provide feedback?
What are the activities, schedule, logistics, resources, and costs of the
test? Who pays for it?
What legal documentation do we require, including confidentiality or
licensing agreements?
How do we plan on incorporating the results of the feedback prior to
launching the product?
What are the measurable success criteria for the test?

To help flesh out the product functionality prior to doing a Beta test, an
Alpha test is often also performed. An Alpha test is usually an in-house-
only validation of the product using internal staff outside of the
development function. It can also include “friendly” external testers, such
as partners or leading edge customers who will be very tolerant of the state
of the product. If an Alpha test is also planned to be performed, the
logistics should be included in the Beta Plan.

The Beta Plan can be implemented as a stand-alone document or can roll

up as a section in the launch plan discussed later in this section. Be sure to
account for any incremental costs that have been identified in the updated
business plan and project budgets.

Table 12-5. Beta Plan: Inputs and Outputs

12.3.2 Usability Testing

As discussed in the Plan phase section, usability evaluation should be
occurring throughout all phases of the product development cycle. In the
earlier phases, low fidelity rapid prototyping or mockups helped vet
assumptions and validate design direction. As the team gets closer to the
end of the Develop phase, the fidelity of the prototypes increase, as do the
sample size and exactness of the personas matching the target customer.
The focus of the usability moves from overall workflow to more exact
tasks and interactions.

During the Develop phase, the product is being actively created and is still
at a point where changes can be made to the product design fairly easily.
The further the product moves down the development path, the more
difficult and costly it’ll be to make changes. Therefore, it’s advised to test
early and test often as pieces of functionality are implemented. The
opportunities will vary widely based on the product or service, such as
hardware or software, or interior or exterior space.

The preferred method for ensuring usability is to test actual customers on

a working system or place and procedures. It’s important to evaluate
participants individually and let them solve any problems on their own.
Any help, or directing their attention to any particular part of the solution,
will bias the evaluation. Rather than running one big study, it’s better to
run many small evaluations and revise the design between each one to fix
more usability flaws. Additionally, it’s better to conduct three iterative
studies with five participants than one with fifteen.[51]

Table 12-6. Usability Testing: Inputs and Outputs

12.4 Launch Planning Activities

Launch Planning activities include expansion of the preliminary launch
and supporting functional plans developed in the Plan phase, plus
beginning the work on product documentation and marketing/sales
materials required for launch.

12.4.1 Launch Plan (Detailed)

The launch strategy provided in the Plan phase provides the basis for the
detailed Launch Plan in the Develop phase. In the launch strategy, the
intent was to identify a general launch philosophy and a high-level set of
tasks and costs to support the business plan.

The Launch Plan moves to a more tactical view that begins to nail down
the specific messaging and positioning of the product, with the necessary
projects to support a launch from a marketing perspective. Most of these
projects will occur in the Qualify phase leading up the actual launch of the
product.

The Launch Plan components typically include detailed information on:

Overall launch strategy and objectives (including forecasts)

Planned messaging and positioning of the product
Pricing and discounting policies
Sales promotion plans
 Marketing collateral requirements
Sales tools and demo requirements
Advertising and demand generation activities (including social
media, search engine optimization, and web marketing)
Public relations (PR) activities
Industry analyst rollout and reviews
Tradeshows, industry conferences, and digital events
Beta Plan (or as a stand-alone plan)
Detailed project milestones and overall cost update

The authorship and contributions to the Launch Plan can be accomplished

in many ways. The product manager can be the primary driver and owner
or he/ she can work with a product marketing manager as the beginning of
a hand-off for go-to-market activities. Other marketing specialists can also
be contributors to the plan, or can take a lead role with product expertise
support provided by the product manager. Ultimately, having a single
individual responsible for the launch increases the odds of success and
enables more effective measurement of the results.

Table 12-7. Detailed Launch Plan: Inputs and Outputs

12.4.2 Other Supporting Functional Plans (Detailed)

The preliminary functional plans provided in the Plan phase provide the
basis for the detailed functional plans in the Develop phase. Similar to the
Launch Plan, the preliminary plans from affected organizations were
developed to support the initial business plan. Now the plans need to be
updated for specific project activities that need to occur to support the
product launch and beyond. These all include milestones, resource
assignments, and costs.
The following is a potential list of functional plans that may need to be
evolved with more detail:

Manufacturing Plan – Identifies the changes required to manufacture

and test the product.
Information Technology (IT) Operations Plan – Identifies changes in
how the product is hosted or operated.
Ordering or Billing Plan – Identifies changes in the business systems
or processes.
Support Plan – Identifies changes in needs for customer service or
technical support. It also identifies the product training plan for the
support staff.
Distribution/Logistics Plan – Identifies changes in how the product is
fulfilled and delivered.
Partner Plan – Identifies changes in external partner communities,
such as Independent Software Vendors (ISVs) or Developers.

Table 12-8. Detailed Functional Plans: Inputs and Outputs

12.4.3 Documentation and Materials

In addition to the Launch Plan delivered above, work can also begin on
some of the deliverables defined in the plan. As with the overall plan
itself, these deliverables can be provided by the product manager, product
marketing manager, or other marketing specialists.

Product documentation is often required to support the installation, setup,

use, and support of the product. This documentation can take many forms
and have different user audiences, and therefore can have multiple
delivery paths, including from the Development team or product
management function. Very often, a dedicated documentation or writing
group is involved under the direction of one of these groups. The product
documentation is also often required for any Beta testing that will occur,
and is typically in draft form to allow for changes.

Marketing collateral is another major deliverable that can be started

during the Develop phase. A marketing function typically organizes the
overall design process and delivery, but the product manager likely plays a
key role in providing the content and reviews collateral to ensure accuracy.

A number of sales materials may be required for a product, particularly to

support a direct sales force. These can include sales presentations,
competitive assessments, product whitepapers, demos, and cost-of-
ownership/ROI calculators for more complex solutions. These may all be
driven by the product manager or with support from product marketing or
a sales operations team. A major culmination of the development of all of
these materials is sales training conducted just prior to launch.

Support materials and training may be required for all staff required to
provide direct customer support. The product manager typically works
with support training leads to identify what material is needed. The actual
training material creation and delivery is usually conducted by the support
staff.

The involvement of the product manager in pricing activities can vary

widely across organizations. In some, pricing is controlled by other
groups, including finance or executive committees. In most organizations,
the product manager is directly responsible for pricing, including analysis,
the supporting business case, and publishing the price list. While the
pricing may not be finalized until just before launch, the discussions and
analysis likely start in the Conceive phase.

Finally, the product manager may be involved in several different

discussions with the legal staff about product terms and conditions, end
user licensing agreements, service level agreements, and actual sales
contracts terms and conditions.

Table 12-9. Documentation: Inputs and Outputs

12.5 Program Review Activities

The Program Review activities include ongoing review checkpoints and

potential updates to the Development, Other Functional Plans, or Business
Case.

12.5.1 Review Checkpoints

The Develop phase is often one of the longest phases and has the highest
opportunity for issues that need to be addressed. For this reason, a periodic
program review is highly warranted. The intent of the review is to get
indicators that the project milestones and business plans are both on track
and within acceptable deviations. If deviations are beyond acceptable
limits, the reviews provide an opportunity to make corrections and
adjustments in time before product launch. In addition, these reviews can
provide stakeholders and senior management the ability to course correct
or remove roadblocks that are outside the authority of the project team.

As discussed in the Product Implementation section above, a number of

issues could arise that affect the schedule for the effort, the scope of the
functionality, or the cost and business case as originally estimated. Finding
out at the end of the Develop phase that major changes have occurred is
usually a costly and an unpleasant surprise.

Outside of the Development team, other issues can also arise related to
any of the supporting function’s plans relative to the initial preliminary
versions from the Plan phase. Manufacturing or Operations may need
more time or have higher costs than anticipated. Other business systems to
support ordering or fulfillment may have issues. Support may need
different processes than planned. All of these can have a major impact on
the overall project plan and business case for the product.
The project/program manager should be responsible for coordinating these
reviews with the appropriate stakeholders and rolling up the overall status.
In addition, the program manager is responsible for risk management and
issue resolution with support from the various teams and subject matter
experts.

Table 12-10. Review Checkpoints: Inputs and Outputs

12.5.2 Business Plan Update

The business plan provided in the Plan phase provided the overall
justification for the approval of the project to proceed to the Develop
phase. As the project progresses with more detailed product designs and
detailed cross-functional plans, there may be major changes to the
business plan that need updating and potential review. There may also be
changes in the external market regarding the competitive situation or
macro-environment that need to be documented.

Potential areas of change for the business plan include:

Marketing strategy
Development plan
Other functional plans
Launch plan
Financial business case
Risk assessment

Table 12-11. Updated Business Plan: Inputs and Outputs

12.6 Exiting the Develop Phase
In order to exit the Develop phase, the product must be created, tested, and
released per the specific processes required by the individual company. It
is highly recommended that market validation activities are undertaken
during the Develop phase to ensure the product is meeting marketing
needs during a time when adjustments in requirements and
implementation can be made more easily.
T he Qualify phase can be defined as the transition from the
development of the product to the market launch. This phase should be a
formal period within an organization’s approval process. Alternatively, it
can be a set of activities tacked onto the back of the preceding Develop
phase or onto the front-end of the subsequent Launch phase. The important
point is that validation occurs—ensuring the product delivers the intended
value—before a full-scale launch.

There are three major groups of activities that occur during the Qualify
phase. The first is Market Validation, in which the product is externally
tested, in a controlled fashion, to ensure it meets the market needs. The
second is Launch Preparation to ramp up all internal processes and
systems, and to prepare the sales and marketing channels to engage. The
third is the Launch Readiness Assessment, which evaluates if the product
and company overall are ready for launch.

As with previous phases, the product manager’s involvement in this phase

can vary widely. The level of engagement often depends upon how the
various team members’ roles are defined and the degree of specialization.
Due to the variability in actual practice, this section will discuss the types
of activities that are most commonly associated with the Qualify phase,
while allowing practitioners to adapt these activities and their depth to suit
the needs of the organization.

13.1 Market Validation Activities

Market Validation activities are centered on obtaining market feedback
and include the execution of a Beta test or other market testing planned
during the Develop phase.

13.1.1 Beta or Market Test

The Beta Plan created in the Develop phase provides the basis for
obtaining market validation through a formal Beta test. As discussed in the
Beta Plan section of the Develop phase, the scale of the Beta test can range
from a handful of participants over a few weeks to hundreds over a period
of months. The goals for the test can also vary between verifying the
product functionality and its usability to identifying the most attractive
marketing messages and product price points. It can also test that internal
systems are ready for launch.

The Beta test can also be implemented as a pilot or similar concept. A

pilot is a full end-to-end test of the system within a limited environment.
One example is within a handful of early customers who implement the
product for their use and provide feedback on the results. This is a fairly
common practice for information technology products for internal
business systems or processes. The pilot can be useful for obtaining
market validation of your solution, a set of references for future sales
opportunities, and even a set of case studies as part of the sales materials.

Another pilot example would be to perform market testing in a limited

geographic area, such as a specific city or region. This allows the set of
product and support systems to be tested on a smaller scale, with lower
risk exposure than a full product launch. Pilots of this nature can be
valuable for verifying that the product works as expected, the required
infrastructure for sales and support are available, and the product
messaging and pricing are sufficiently fine-tuned.

Another form of pilot testing is a soft launch. This type of launch is

similar to either of the pilot examples above, and includes the caveat that
limited or no marketing is done to create demand. It is purposely low-key
to assess the product, its performance, and some adoption and conversion
factors before moving to the more formal hard launch.
The product manager is often highly engaged in market testing. The
primary role of the product manager will be the overall definition and
guidance of the market testing and assessment of the results. While it’s
recommended that a dedicated project manager handle the day-to-day
testing logistics, the product manager will have significant involvement in
supporting the issues and questions that arise. It is also not unusual that
Development and/or a dedicated test team are also on standby to support
the testing. The product manager will be the person to roll up the final
results and recommendations from the test.

As discussed in Beta Plan development, the primary reason to go through

the effort of a Beta or Market test is to answer the question of whether the
product should launch or not. Issues that can be found during testing
include:

Portions of the product functionality or usability do not meet

requirements and additional development work is needed before
launching. This can recycle the activities back to the Develop phase,
as either a planned event or as an extension to the project schedule.
An alternative is to document the deficiencies of the initial release to
customers and continue the launch, while planning to correct the
deficiencies in the next release. This is fairly common in software
products due to their flexibility in incrementally adapting the
functionality.
The supporting infrastructure for the product is not ready. This can
include the sales channel is not able to sell, order, or process
payments for the product, the manufacturing or operational systems
are not able to fully deliver the product, or the support systems are
not able to adequately provide customer support. The origin of these
issues may be missing requirements that were not identified during
the Plan phase.
The success metrics defined for the test are not achieved. The defined
metrics for the test can vary widely, but a few higher level indicators
can be used to determine the overall likely success of the product
after launch. One measure is customer satisfaction with the product.
Does it provide a solution that meets the customer needs and in a way
 that’s satisfactory for the users? Would they recommend it to others?
If not, where does it have gaps in functionality or benefit? A second
measure can be the value of the product—its level of benefits versus
the cost. Would customers be willing to purchase the product
themselves and, if so, at what price? If not, why not? A third measure
could be for those tests aimed at the product messaging. Are the
response and conversion rates for purchase or use meeting the goals?

The results of the Beta test are rolled up as one factor to consider in the
overall decision to proceed to the Launch phase.

Table 13-1. Beta Test: Inputs and Outputs

13.2 Launch Preparation

The Launch Preparation activities include specific activities occurring in
Marketing, Manufacturing/Operation, Sales, and Support to prepare for
launch in addition to completing the required product documentation.

13.2.1 Marketing Launch Preparation

The detailed Launch Plan completed during the Develop phase becomes
the basis for marketing activities in the Qualify phase. A new product
launch, or a major update to a product, typically requires several
marketing activities happening in parallel to be able to align them to a
specific launch date. This requires crossfunctional coordination and a
dedicated resource that provides singular focus to these activities.

This may be someone in a product marketing role or a project/program

manager. Some organizations have a similar role filled by a Marketing
Operations team whose main focus is to coordinate these activities. It is
also not uncommon for the marketing team to work with outside agencies
for support of specific deliverables when the company may not have in-
house expertise or available resources.
The product manager will work with the identified resources to help the
product successfully maneuver through the process. The product manager
may also be directly providing some of the key deliverables, such as the
content for marketing collateral and needed sales materials. A product
marketing manager can also be the primary point person for coordinating
all of the product-related information and materials to the marketing or
marketing communications team.

To close out the Qualify phase, the Launch Plan may need to be updated to
reflect changes in launch activities and expenses and rolled up to the final
business plan. An update to the launch metrics that will be tracked post-
launch may also need revising based on the results of the market testing or
limitations of system readiness identified by the other functions.

At the conclusion of the Qualify phase, all of the marketing deliverables

and the marketing channel should be fully prepared for the launch.

Table 13-2. Marketing Launch Preparation: Inputs and

Outputs

13.2.2 Manufacturing and Operations Launch Preparation

For tangible products, the units need to be built, tested, and shipped.
Product packaging and logistics also need to be designed, developed, and
available. For web-based software services, they need to be hosted on
servers and general administration provided. For other types of services, a
combination of equipment, personnel, and processes may need to be
provided to ensure smooth operation. All of these capabilities require
planning and implementation time prior to being available for a
commercial offering. Manufacturing, in particular, may require a long
lead time for availability of raw materials, parts and equipment, and to
make needed changes in the manufacturing flow.
In addition, there are supporting processes and systems in parallel that
need to handle specific customer touch points, including ordering,
inventory management, and fulfillment, payments and support. These also
need to be primed and ready to go prior to the formal launch.

The product manager generally serves as a subject matter expert to the

functions that will be delivering these capabilities, rather than providing
any hands-on activities directly. A common area for the product manager
to be involved is ordering part number(s), configuring definitions, pricing,
and getting the elements into the required systems.

Occasionally, the product requires changes to the way a company

traditionally implements its other products, and the involvement of the
product manager may then need to be higher. There may be issues that
develop and work-arounds to the original plans that need to be
implemented with the help of the product manager. There may even be
some impact to the product itself that needs to be addressed or resolved.
The further the product strays from the established capabilities of the
delivery organizations, the more likely the product manager will need to
stay close to the teams to facilitate the transition.

Functional plans should be updated to reflect any changes in the

deliverables, timing, or costs originally envisioned and rolled up into the
final business case.

At the conclusion of the Qualify phase, all of the delivery systems should
be fully prepared for the launch.

Table 13-3. Manufacturing and Operations Launch

Preparation: Inputs and Outputs

13.2.3 Sales and Channel Launch Preparation

The product manager’s initial thoughts on supporting sales activities are
typically captured in the initial launch strategy and subsequent launch plan
in the previous phases, with the focus being on what’s needed from the
product and marketing teams to support the sales efforts. During the
Qualify phase, there is often active participation from the Sales
organization to facilitate the rollout.

The type of sales channel activities required for the product will heavily
dictate how the product manager engages during the Qualify phase. If
there is a direct sales force and/or third party solution partners, the product
manager or product marketing manager may be directly engaged with the
sales team in order to provide tools and training. If the product is sold
online or through indirect retail channels, then the product manager may
have far less involvement and support the sales through the marketing
channels team.

In a similar manner as the marketing activities, in some companies a Sales

Operations team may exist to work with the product manager in
developing the appropriate content. Content can include:

Sales presentations, competitive assessments, and product

whitepapers
Price lists and sales contracts
Product demos
Cost-of-ownership/ROI calculators and other sales tools

These may all be driven by the product manager or with support from
product marketing or the sales operations team. A major culmination of
the development of all of these materials is often sales training conducted
just prior to launch.

During the Qualify phase, or perhaps even prior to it, a sales plan may be
generated by the Sales organization that goes into more detail as to how
the product will be rolled out. This plan may cover items such as
individual quotas, geographic or regional phasing of the rollout, how the
sales force is to be supported, and specific compensation and sales
promotion plans to promote the new product.

There may also be additional sales channel partners that need some or all
of the materials presented to the internal sales force. These would
typically be retailers, wholesalers, and manufacturer’s representatives,
also finished-goods manufacturers, system integrators, or value-added
resellers or independent software vendors who bundle the product into
other products or provide associated products and services into a more
comprehensive package.

Another related partner channel is a software developer program where

documentation on ways to write software applications for the product is
required. The applications may also require a certification process and
even a dedicated sales implementation to facilitate distribution, as is now
common for mobile content and devices. These efforts can be so large that
they require dedicated product management resources and are effectively a
supporting product to the main product being delivered.

Any changes to the Launch Plan that have been impacted by revised
forecasts or costs should be captured to roll up to the final business plan.

By the end of the Qualify phase, the sales channels should be fully prepped
for the product launch.

Table 13-4. Sales and Channel Launch Preparation: Inputs

and Outputs

13.2.4 Customer Support Launch Preparation

The Support organization for some companies requires major pre-launch
activities as there is significant end-customer contact involved. This can
be the case for many consumer-related products and services. Even when
the support required is not at a high-volume level, but required at a
technical level, a significant amount of product training may be required.

Support materials and training may be required for all customer-facing

staff. The product manager typically works with support training leads to
identify what material is needed and a “train-the-trainer” approach is
taken to facilitate knowledge transfer. The actual training material creation
and delivery is usually conducted by the support staff to the rest of the
support organization.

There may also be a need to update or enable the information technology

systems used by the support staff to effectively support the product. At a
minimum, the ability to record issues associated to the product and report
on them is generally targeted. There may also be online knowledge bases
to facilitate finding the appropriate answer to common questions. Finally,
support personnel may need direct access into specific administrative
functions of the product, such as for online software products, to be able to
modify or adjust operational issues for the customer.

The support plan should be updated to reflect any changes in the

deliverables, timing, or costs originally envisioned and rolled up into the
final business case.

By the end of the Qualify phase, the support organization should be fully
prepared for the product launch.

Table 13-5. Customer Support Launch Preparation: Inputs

and Outputs

13.2.5 Product Documentation Delivery

The Development organization typically handles all of the required
documentation to build and deliver the product from manufacturing and/or
the operations functions. User documentation may also be a deliverable
from the development team, or it can be provided by marketing.

Typical documentation includes user guides, user manuals, warranties,

license agreements, installation and configuration manuals, and other
technical documents. There may be several different user groups for
different sets of documentation, including end users, administrators,
resellers, service and maintenance personnel, and third-party software
developers. The scope of the documentation can also vary dramatically,
depending on the complexity of the product and the channels that it needs
to go through.

There may also be a large effort in language localization required on the

documentation, in addition to the user interfaces on some products, to
support an internationally distributed product. If the documentation is
included with a physical product, then it must also be printed and available
on the bill-of-materials for the product, so printing and manufacturing
lead time must be taken into account.

Any changes to the launch plan that have been impacted by revised
forecasts or costs should be captured to roll up to the final business plan.

By the end of the Qualify phase, the required product documentation

should be available for the product launch.

Table 13-6. Product Documentation Delivery: Inputs and

Outputs

13.3 Launch Readiness Assessment

The Launch Readiness Assessment activities include an update for a final
version of the business plan and a formal launch decision process.

13.3.1 Business Plan Update (Final)

It’s been a journey, likely with several twists and turns along the way.
During the Qualify phase, more changes to the original thinking likely
have occurred. Market validation activities may have turned up issues with
the product or customer acceptance that could affect early adoption
forecasts. Or perhaps the value proposition has to be tuned or even
repositioned to a slightly different initial target market. Or pricing could
change, which would impact the financial analysis. Or any number of
other project issues could have occurred in the preparation activities for
manufacturing, operations, marketing, sales, or support. Or there may be
changes in the external market that need to be taken into account, such as
competition or macro-environmental factors. Or maybe your overall sales
forecast is being raised due to great results, and you need to account for
being able to scale faster than planned.

Whatever the situation, this is the time to update the business plan and any
financial analysis accompanying it to validate the product is still within
the intended results. It is also wise to do a final risk assessment.

Table 13-7. Final Business Plan: Inputs and Outputs

13.3.2 Launch Decision

The decision to launch is the culmination of all the activities from the
Qualify phase, including the results from the Beta test and the functional
readiness assessments.

The outcome of market testing is one of the major measures of the

product’s readiness to go to market. If the product does not meet the
success criteria defined for testing, then a major decision has to be made
regarding the fate of the product launch.

The product can still be launched, with the risk of wasting precious launch
resources, budgets, and potentially company reputation. The product can
be recycled back to the Develop phase for further development or
modifications and the launch deferred. Or the product launch can be
cancelled and the project terminated. The latter decision, while painful,
may sometimes be in the best interest of the company if the road ahead
looks too risky. The resources and attention may best be utilized on
another project, despite sunk costs.

The readiness assessments from each of the functional areas also indicate
whether the launch should begin. These assessments typically do not
weigh toward outright cancelling of the launch, but rather delay or reduce
its scale until the required readiness is achieved. It is not unusual for one
or more functions to have some limitations in supporting the launch, and
so a risk mitigation plan may be created by the project manager to guard
against certain envisioned scenarios.

The final business case should identify the major changes to plan that have
occurred and should set expectations on what is expected to be achieved.
As with the market testing, if the results are significantly below what had
been envisioned, it may be better to direct the company resources toward
better opportunities. Otherwise, it’s full steam ahead.

The decision to move to the Launch phase is similar in magnitude to the

decision to move to the Develop phase in terms of importance. The costs
for the launch are often significant, as is the impact on company
reputation. This decision should not be taken lightly and should have the
expressed consent of all affected functions.

Table 13-8. Launch Decision: Inputs and Outputs

13.4 Exiting the Qualify Phase

In order to exit the Qualify phase, the product should meet the market
validation criteria established, meet the acceptable level of business
viability established in the final business plan, and achieve launch
readiness from all of the affected supported functions.
N ow that a product has been developed to meet market and customer
requirements, it’s time to take it to market. The Launch phase is one of the
most critical phases of the product management lifecycle process. It is the
point where the product management lifecycle phase of Launch aligns
with the product lifecycle stage of Introduction.

A product launch can fail due to many reasons, such as overconfident

estimates, recent competitive activity, under-allocated resources, and
market shifts. Launching a product is more than following a standard
checklist. It requires a carefully crafted strategic and tactical foundation in
the preceding phases, particularly Conceive. A successful product launch
is still not guaranteed even though all the preceding phases may have been
executed according to plan and care taken to ensure the product meets
market and customer requirements. A successful product launch is the
result of many carefully planned steps by a focused, coordinated team.
These teams can be further supported by product planning tools that
enable cross-functional collaboration ensuring product management,
marketing, sales, and other customer-facing teams are on the same page
throughout the product launch process.

14.1 The Importance of Market Type in Setting Launch

Strategy
The finalized launch plan requires much forethought. One of the key areas
to consider is market type. Is this an existing market or a new market? Or
is it a market that has been re-segmented to capitalize on the company’s
unique capabilities? The type of market will determine the launch strategy,
budget, and resources required.

For example, if it’s an existing market, the launch team may want to
consider a full frontal assault using every available demand generation
vehicle. This type of launch requires a sizeable budget upfront for ads,
public relations, tradeshows, direct mail, etc., in addition to a high level of
commitment from the entire company characterized by maximum
exposure at a single point in time. Such an aggressive launch is required in
an existing market where the cost of entry is high. The launch team must
dedicate and focus all the marketing and sales resources available to grab
a share of the marketplace.

In the case of a new market, a targeted low-cost approach may make the
most sense. Online marketing and social media are the most popular
approaches today for a new market given the cost versus reach
considerations. The company needs to continually educate the market on
how they can solve an existing, unsolved problem with the new product
through long-term thought leadership and awareness programs, while
investing in tactical demand generation programs and campaigns to gain
sales momentum. Either way, the final goal is to create a tipping point in
customer demand.

In the case of re-segmenting the market to create a niche for the product or
service, the launch strategy will depend on various factors. For example,
are there customers ready to buy in the new segment? Does the market
clearly see the difference in this product or service versus existing
offerings? If the new market is immature, treat it like a new market
launch. If the market segment is more mature and ready to buy, then
consider a full frontal assault. For a niche launch, invest all marketing
dollars in acquiring a single, identifiable market segment and customer.
Bottom line, invest time in studying the market type upfront and tailor the
launch objectives and plan accordingly. This is the single most important
consideration that can determine the success or failure of the product or
service in the market.

14.2 Product Launch Activity Groups

With less than 50% of product launches successful, the risk of product
failure is high. Mitigating and managing execution risk is critical for a
successful product launch. Specific risk areas that companies need to
consider when planning a product launch include: selecting the right
launch strategy, allocating resources appropriately to match timing and
constraints, managing execution dependencies across multiple teams and
regions, and ensuring product and marketing teams are well coordinated
across all stages of the launch.

The two activity groups of the product Launch phase can be categorized as
follows:

Launch activities begin with the product and marketing teams

collaborating on the product narrative and finalizing the key positioning
messages for the launch. This includes working cross-functionally to
prepare for market readiness, including the development of customer and
market-facing collateral, website messaging, select analyst and customer
briefings, press relations readiness, product demonstration tools, and SEO.
As these are being done, it’s also critical that sales and channel partners
are trained and enabled to appropriately position and sell the product with
the required sales tools and access to final marketing collateral.

All customer-facing teams, including operations and customer support, are

provided with the necessary documentation and product details to enable
them to effectively deliver and support the product. Finally, any
manufacturing-related readiness factors are considered to ensure a timely
delivery and distribution of the product. Once complete, the product is
officially launched in the market with clearly defined selling, delivery, and
support processes.

Post-Launch activities occur once the product has been officially

launched. It is time to promote the new offering to gain maximum
attention and interest, and ultimately to create a desire to buy. The product
is now showcased in relevant industry events, tradeshows, and advertising
efforts conducted per the launch plan. It is now time to execute and fine-
tune demand generation strategies to gain the prospective customer’s
attention and interest, and convert this interest into sales and market share
— the goal of the Launch phase.
Upon the successful execution of these activities and before the transition
to the Deliver phase, it’s also important to monitor, evaluate, and refine
the launch activities to ensure any corrective measures are taken to
finalize and tighten for a successful launch. This includes measuring
product launch progress with indicators that can identify unforeseen
launch issues and respond before they become big problems.

14.2.1 Launch
Behind every successful launch is invariably the support of key executives
from all the represented functions as well as a dedicated budget to support
launch activities. Gaining access to needed resources is a critical step that
needs to be completed before proceeding with the launch.

With executive support and financial resources secured, representatives

from each of the functions are identified and a core team is formed. The
functions that need to be actively involved in the launch process include
product management, product marketing, operations, manufacturing,
customer service, and sales. The team members need to be briefed on the
level of commitment required until the completion of the launch. Ideally,
product marketing leads the launch and coordinates the key activities with
the rest of the team. The high level of activity to be coordinated across a
large number of cross-functional groups may indicate the need for a
project manager to assist the team.

Once these activities have been completed the emphasis shifts to

positioning. Product positioning defines the space in the market that the
company wants to own in the future. Very closely associated with
positioning are the value proposition and the key messages that amplify
the value proposition. The value proposition is a one- to three-sentence
summary of the compelling reasons why the customer should buy the
product or service solution as opposed to someone else’s. The key
messages, ideally limited to three, amplify and provide more detail in
support of the value proposition.

These messages should be backed up with facts and figures that prove the
point. The brand positioning statement, value proposition, and key
messages need to fit on one page. This document becomes a one-page
product story that is articulated in every communication with the target
audience (e.g., websites, advertisements, direct mail, sales presentations,
collateral, and other communication vehicles).

It is important to establish the exact value proposition the company wants

to convey to the market. The value proposition and key messages are
central to the success of the new product. Invest in the right advertising,
collateral materials, and sales tools. Precisely articulating the product’s
value proposition, key messages, and substantive facts supported by the
right collateral and sales tools provides the best chance to achieve the
marketing objectives.

The launch team should make a list of all the key influencers, leading
analysts, and thought leaders in the space who can act as product
champions. They should develop a briefing deck that communicates the
value proposition and clearly explains why the product is different from
the competition.

The Importance of Marketing Materials

Sales people depend on professional marketing materials to drive

business. How much effort and planning has gone into ensuring that
the key product messages translate right through the documentation
chain from engineering specification to user documentation, product
brochures, and white papers?

In order to avoid sales and marketing efforts separating themselves

from the engineering and documentation sections, the launch team
has to implement a system that facilitates information flow through
the business. Good marketing materials will enforce the key product
features and messages that are found in engineering, support, and user
documentation, and contribute to market readiness.
Collateral is developed to support the sale of the product and influence the
customers’ opinion of the company or product. Product collateral typically
includes:

Product brochure or sell sheets – Created to highlight the unique

aspects of the product and provide customers a reason to purchase
this product over the competition.
Product fact sheet – Developed to present compelling facts about the
product, often at a more detailed level than a brochure or sell sheet.
The product fact sheet typically highlights favorable characteristics
of the product down to the actual features and functions.
Press release – An announcement of major news events related to the
product, such as a new release, new version, product line extensions,
partnerships, high-profile customer acquisitions, or other relevant
news.
Return on Investment Calculator – A tool created to demonstrate how
quickly the product will provide a return on the customer dollars
invested. This tool is most appropriate for B2B and more expensive
consumer purchases.
White papers – Educational or research-orientated documents that are
used to support the product’s value proposition by highlighting key
aspects of the product or countering a competitor’s advantage.
Websites – An effective channel for communicating the information
listed above.
Product demo or video
Competitive product comparison

It is important to enable sales and channel readiness by equipping the sales

and channel teams with needed training and tools to successfully sell the
product. Product marketing should lead these cross-functional efforts,
coordinating closely with product management and key internal
stakeholders.
Operational and support readiness ensures that the operations and support
teams are ready to deliver and maintain the product post-sale. Typical
steps to consider ensuring operational and support readiness include:

Integrating procedures for operations, quality, logistics, and

production functions
Developing procedures that improve the availability of any system,
database, and tool
Implementing all operations programs and procedures
Ensuring the system integrity of the applications, that the
applications are tuned for best performance, and that the daily
services are working as expected
Helping the business to find better ways of working and exploiting or
improving the application Product support readiness includes:
Establishing the product support functions:
Level one help desk – assist users of products with basic
questions
Level two and three – assist users of products with advanced
technical issues
Enabling users to utilize the product effectively by providing process
and applications training
Preparing policies, procedures, databases, and support systems
needed for vertical launch and operating success
Creating online support vehicles
Preparing automated email and telephone response systems

Manufacturing readiness applies to many types of products and is the

ability to achieve an operational capability that satisfies company
objectives in the quantity, cost, and quality needed for a successful
product. The process technologies, facilities, workforce, tooling, and
supplier base must be ready for effective transition from development to
production.
Successful product design follows a proven process that complies with the
applicable regulatory standards, depending on the product and industry.
Certain industry regulations require that a comprehensive management
system be established and maintained to monitor and mitigate risks from
product inception through design transfer and into production. For
instance, pharmaceutical products require significant legal and regulatory
procedures to ensure compliance.

At the point of design transfer to a manufacturing environment, most of

the identified risks will have been eliminated or mitigated usually by the
design, process control, and labeling stages. The design history file is
complete with supportive verification testing data, and the documentation
to procure, fabricate, tool, build, and test has been released in support of a
production lot build.

A manufacturing readiness review is a key tool that determines whether

the output of the design process, along with the manufacturing, supply
chain, and quality team preparedness, meet all the requirements to move
to a production environment. Moving through this phase without
completing all the elements could result in costly engineering changes,
rework, and product recalls in the future.

Moving too slowly through this phase could cause product launch delays
and potential erosion of market share. This is why a well-planned and
executed product development process with meaningful product decision
points that culminate in a manufacturing readiness review leads to a
smooth design transfer to production.

Table 14-1. Launch Activities: Inputs and Outputs

14.2.2 Post-Launch
Now is the time to line up and conduct press interviews. The goal of this
step is to make sure all key analysts, industry influencers, relevant media
publications, and online resources, such as influential bloggers, are aware
of the product launch and serve as a platform for promotion.

The launch team identifies all the tradeshows, conferences, and digital
events that are relevant to the industry to showcase the product and
include in the plan, and budget as appropriate. They speak at events and
have staff on-hand to demonstrate and evangelize product capabilities and
benefits. They undertake a road show, if budget permits, showcasing some
early customer victories. The team uses social media and digital event
opportunities to extend their reach.

The launch team prepares a demand generation plan to reach out to the
target audience by region. They develop an integrated demand generation
plan with key messages by role and segment at every stage of the
campaign. Deciding on the right sequence and promotion mix is very
important. For example, the launch team may start by sending out an
email message inviting prospects to a webinar announcing the launch
followed by a reminder as the date draws closer. At the end of the webinar,
there may be a call to action followed by an offer or online promotion and
next steps. The purpose of these demand generation campaigns is to
capture the prospect’s attention and interest, and then convert interest into
desire and action, leading to a sale.

Table 14-2. Post-Launch Activities: Inputs and Outputs

14.3 Exiting the Launch Phase

In order to exit the Launch phase, all the deliverables defined in the two
activity groups must be agreed upon. As each of these stages is reviewed,
launch activities are evaluated and refined. The team’s project manager
reviews the deliverables for each of the above stages, ensures completion,
and conducts an exit review. The team obtains executive sign-off before
moving into the Deliver phase.
T he Deliver phase is the point where the product management lifecycle
intersects the “product lifecycle” stages of Growth, Maturity, and Decline.
While represented as a serial or linear phase in the product management
lifecycle— as each successful product must pass this phase and continue
on ultimately to the Retire phase—it can also be thought of as a circle or
spiral because the product is adapted throughout its lifetime to meet the
changing customer, organizational, and market needs.

The exact length of this phase and the number of iterations undertaken is
highly dependent upon the product’s market. Durable products can last for
decades whereas technology products can last a few months as new
technologies rapidly replace existing ones. The challenge for product
management professionals is to understand the underlying market
dynamics and optimize the company’s product investments to increase the
value of the product during the Growth stage and then regulate investment
in the Maturity stage while realizing that minimal or no investment may
be warranted in the Decline stage. Product managers continuously balance
investment and return throughout the Deliver phase.

Once a product has been successfully launched, it will then progress

through the rest of its lifecycle similar to how we as human beings go
through infancy, childhood, adulthood, and old age. This sequence of
progressive stages from a product’s launch to growth, maturity, and
decline is associated with changing market conditions and evolving
customer requirements that impact a product’s marketing strategy and
mix. These factors continually shift depending on where the product is in
its lifecycle. For example, consumers are regularly bombarded by
advertisements announcing exciting new features of existing products,
such as a car with standard satellite radio or a cereal that now comes in
additional flavors. Yet, there are thousands of products in stores that are
not advertised at all.

Some established products are regularly given makeovers and generous

marketing budgets, while others are left to sell themselves because
product managers and product marketers are acting according to where the
product is in its lifecycle.

For example, during the earlier parts of the product lifecycle, the cost of
promoting the product may be greater than the revenue it creates.
However, if that investment results in a product that meets its objectives
for market share, unit sales, and cost targets, the product will likely
become increasingly profitable during the Growth and Maturity stages.
And as the product enters the Decline stage, marketing investment tapers
off or is diverted to different versions of the product depending on its end-
of-life plan and exit strategy.

This section provides insights into these types of questions and can help
you make the right product, feature, and marketing decisions and ensure
that the product maximizes its profitability across the entire lifecycle.

15.1 Product Deliver Stages

As discussed previously, products go through the three stages of Growth,
Maturity, and Decline after they are launched. Each stage requires a
different mix of marketing activities to maximize the lifetime profitability
of the product.

Growth – During the course of its launch, a product spends a considerable

amount of time in market where customers and potential consumers get
familiar with its capabilities and start buying the product or consuming it.
As demand for the product increases the product enters the Growth phase
and product marketing activities focus on expanding the market for the
product into new segments, usually either geographic or demographic.
These new segments frequently result in enhanced product features or
introduction of newer versions, such as new variations, sizes, or software
releases.

As a successful product steadily grows in the market, it gains strength and

faces increasing levels of competition. The competition now offers a
greater range of choices to the customer in the form of different product
types, packaging, and prices. This competitive situation offers an
opportunity for new products to differentiate themselves. The market base
expands as more customers buy the product. Now is also the time to enter
new regions and target new industries, depending on product-market fit.
More channel partners are willing to sell the product and one generally
observes a softening of prices towards the latter stages of the Growth
phase.

At this time, the company increases operations and manufacturing in order

to scale. There are fewer product bottlenecks, hence cost is lowered. To
remain competitive over a period of time, the firm initiates product
improvements or modifications to suit new target markets or segments,
but profits taper off at the end of this phase.

Maturity – Upon the completion of the Growth phase, the product now
enters its Maturity stage. By the time a product reaches maturity, overall
market growth is flat and the company typically seeks to increase profits
by reducing costs while investing enough to maintain customer loyalty in
order to entice customers to the next generation product. The Maturity
stage is the most important phase of Deliver from a financial point of view
because this is the period when the product is most profitable.

There are a number of reasons for a product entering the Maturity stage.
For example, entry of a disruptive new product that may be offering better
quality at a cheaper price and has induced a consumer shift may cause a
product to enter its Maturity stage. This calls for some effective product
and marketing strategies to revitalize the product so that it stays alive in
the market.

During the Maturity stage, strategy shifts again to focus on reinforcing the
current market position, revitalizing the brand, and increasing sales.
Product marketers try to come up with ways to defend their market
positions against possible in-roads by competitors.

In addition, the product’s features may continue to be augmented, and

there will still be some promotional activity to differentiate the product
from the competition and increase market share. However, marketing
activity and expenditure levels may be much lower than in the Growth
stage.

At this point of the Maturity stage, it is important to recognize that it’s

difficult to survive, as there are new entrants that are now offering better
quality, more features, and lower priced products. Product maturity often
leads to the decline of the product, and this is the time when the company
starts incurring losses on its production. A clear indicator is dwindling
profits, signaling decline.

Remember, while a product is contributing to the growth of the company,

it will continue to be produced. But when the carrying and marketing costs
are higher than the return from the product, production needs to stop and
the product is often discontinued.

Decline – Dwindling sales and profits bring the product to the Decline
stage when sales slow down dramatically and profits fall off. The product
may be dropped to make way for new products and the cycle
recommences. Finally, once the product begins to decline, marketing
support may be withdrawn completely, and sales will entirely be the result
of the product’s residual reputation amongst a shrinking market sector.
Staunch brand loyalists, for example, may continue to buy the product
despite zero marketing or advertising.

By this stage, the most important decision that needs to be made is when
to take the product off the market completely. It can be tempting to leave a
declining product on the market—especially if it served the company well
in its time and there’s often a certain sentimental attachment to it.
However, it is essential that the product is not allowed to start costing
more than it takes to produce and market. This can easily happen if
production and marketing costs increase as volumes drop.
More importantly, the old product’s very existence can absorb the entire
product team’s time, energy, and valuable resources and can discourage or
delay the development of a new, potentially more profitable replacement
product. This is in addition to other customer-facing teams required to
keep the product in the market, including customer support, customer
relationship management, and sales renewals.

The following sections outline the steps within each product lifecycle
stage in more detail.

15.1.1 Growth
Now that the product has been successfully launched, it’s time to stress
differentiation to solidify the product’s position and gain market share.
This stage is characterized by growing market acceptance and increasing
profits. Marketing objectives and strategies change rapidly during the
growth phase as competitors begin to enter the market and sales begin to
increase.

Companies concentrate on optimizing product availability and making it

easy to reach the customers. The primary objective at this stage is to
stimulate “selective demand.” This is an attempt to stimulate demand for a
specific product instead of the entire product line or category. The focus is
on obtaining additional market share by swaying significant numbers of
the mass market (early and late majority) to the new product.

Here are some key considerations to ensure the product stands out during
the Growth stage and solidifies its market position:

Modify and enhance the product as required to exceed market and

customer expectations. Correct weak or omitted attributes in the
product and build capabilities that will ensure competitive
differentiation and help gain traction.
Adopt a pricing strategy that will ensure parity with competition,
especially if a price-skimming strategy has been adopted previously.
Set premium pricing only if the differentiation is very clear to the
 customer, or you will run the risk of being perceived as an expensive
provider missing out on an opportunity for rapid customer
acquisition.
Build loyalty for the product. Ensure marketing communications
stress the competitive differentiators of the product. Since consumers
are more aware of the product’s benefits and there is more
competition, it’s imperative to clearly and consistently differentiate
the product from the competition.
Move toward intensive distribution. Expand the channel partner
network as the product category is more familiar and the product is
now more accepted. Intermediaries are therefore more inclined to
accept the risk associated with the product and will be willing to
invest in its growth.

Product managers and product marketers ensure that the sales organization
has the appropriate amount of product information and the necessary tools
to enable a quickening rate of revenue capture. Product managers may also
lend support to the sales organization by assisting in the sales process with
key clients in order to close deals that contribute significantly to the
organization’s revenue stream.

Profits begin to flatten out late in the growth stage. Product marketers and
managers will need to pursue further segmentation in order to continue
growing, albeit at a slower rate, before the product enters its Maturity
stage.

15.1.2 Maturity
The rate of sales growth slows down during the Maturity stage as the
product has already been widely distributed and has hit peak sales during
the Growth stage. The company now focuses on creating product line
extensions and promotion offers to boost sales. New product research is
critical to ensure future sales as product managers uncover new market
needs and specific capabilities to meet them. During the Maturity stage,
the sales curve peaks, severe competition ensues, and consumers are now
experienced users of the product.
Several marketing strategies can be adopted to ensure that the product still
continues to be profitable as it progresses during the Maturity stage. An
additional strategy for extending growth and maturity is to expand and add
new products within the same product line. These new products can carry
the same product line or brand name as their parent products, or can be
given different names.

Price cutting or promotional discounts may be called for as competitive

pressure intensifies. Defending market share and profitability becomes the
main focus and purpose of the product marketing team.

When products reach maturity they are well known. However, as

competing products enter the market, mature products can begin to look
old and tired. Action must then be taken to refresh the product’s image.
For example, a product may be rejuvenated through a change in packaging,
introducing new models or versions, or making aesthetic changes.
Repositioning can create new appeal for existing customers or attract new
customers.

Repositioning strategies are used to respond to changes in customer needs

or market conditions, or a change in competitor strategy. The extent of the
repositioning will depend on the level of change in customer requirements,
needs and supporting technologies, and on how well competitors are
doing.

Firms also can modify the augmented product to extend growth and
maturity. Services can be added where none existed before—adding free
set-up and delivery are good examples.

15.1.3 Decline
After the Maturity stage the product now enters the Decline stage where
sales fall off rapidly. This can be caused by new technology or a market
trend. Product managers and marketers can justify supporting the product
as long as it contributes to profits or enhances the effectiveness of the
product mix.
Sooner or later, however, companies need to decide whether to eliminate
or reposition to extend the product’s life. This is the stage when some of
the competition drops out.

Decline poses serious challenges to all competitors still remaining in the

market. The major strategy employed during decline is harvesting.
Expenses are reduced as much as possible to squeeze out all remaining
profits from the brand. Costs are cut back in all areas of the marketing
program, including advertising, sales promotion, personal selling, and
channel support.

One of the major causes of product decline is the advent of a new

technology. New technologies have led to a long list of products that are
no longer relevant, for example the impact touch-tone phones had on the
rotary dial, or what laptop computers did to the sales of word processors.
The rotary dial phone and word processor entered their decline stages and
faded into history.

Once a product enters the Decline stage, the company must consider its
potential deletion from its product mix and start thinking about the end-of-
life plan. There are multiple deletion strategies companies can employ
when anticipating a product’s removal from the market, such as the
following:

Harvest the Product — Harvesting usually signals the company’s

future intention to drop the product. Harvesting entails finding ways
to cut production and marketing costs to a bare minimum. The
product is eliminated from unprofitable distribution channels and
market segments. All forms of marketing promotions and activities
are cut back. Most sales promotion is eliminated and advertising is
refocused to serve only as a reminder to the customer that the product
is still available. The company knows that harvesting will effectively
hasten the decline of the product, but any remaining sales will be
more profitable.
Discontinue the Product — A company can simply discontinue the
product, just as Apple does with unprofitable laptop models.
 Sell the Product — The product can be sold to other companies to
augment or complement their existing product line. For example, GE
sold its small appliance line to Black and Decker.

Here are some key considerations when a product enters the Decline stage
and becomes a candidate for deletion:

The potential impact of the product’s withdrawal on the sales of other

products in the company’s mix must be examined. Most companies
sell entire lines of products, not single products. Generally, these
products complement one another. If so, yanking one from the market
potentially can hurt the sales of the other items.
Sometimes it’s better to keep the declining product on the market
because it leads to higher levels of sales of other products in the
company’s mix.
Honoring warranties and service contracts, as well as providing
replacement parts for existing product owners, is a must when
products are deleted. The company may choose to provide parts and
essential services itself, or may contract these out to other companies.

15.2 Controlling the Length of Product Lifecycle Stages

The duration of each stage of the lifecycle can be influenced or controlled
to a certain extent. This is particularly true of the Maturity stage as this is
the most important one to extend from a financial point of view because
this is the period when the product is most profitable.

In addition to the marketing strategies discussed in the section earlier,

typical tactics designed to extend the Maturity stage include:

Increasing the amount of the product used by existing customers or

expanding its user base to other divisions within an enterprise
Adding or updating new product features and functionality
Price promotions to attract customers who use a rival product
 Advertising to encourage trial of the product targeted at people who
don’t use this category of product at all, for example web-based trials
Acquiring competitors—Oracle and Seibel, for example

If the product management team understands how to manage the product

lifecycle for individual products, then they are in a better position to
manage the company’s entire product portfolio to ensure that the overall
mix of products generates the highest possible returns for the firm.

Products entering decline must be balanced with products that are in their
growth and maturity phases. This is the only way the companies can
maintain stable levels of overall sales and profits. Individual product
lifecycles must complement one another and the result is a strategic
product mix that will ensure the company or product line’s market
dominance.

15.3 Exiting the Deliver Phase

In order to exit the Deliver phase, all the key indicators must be defined
and agreed upon. Key indicators can include any of the following:

Low product demand – Due to lack of demand or a significant drop in

demand, the product is no longer profitable.
Consumption decline – Long-term consumption for the product type
is expected to significantly decline due to a change in customer
behavior. This market trend impacts all direct competitors that do not
have a substitute product.
Market uncertainty – Due to market uncertainty, significant
consolidation occurs with direct and indirect competitors through
mergers and acquisitions.
Business strategy change – Due to changes in the business strategy,
the product strategy no longer aligns. This may happen when a
company is in survival mode and the product is not a significant
revenue stream.
If the product manager reviews the status data and concludes that demand
for the product has begun to decline due to an irreversible shift in market
forces, an exit review will be conducted to confirm that all the indicators
have been examined before moving into the Retire phase.
R etiring a product is a difficult and complex task. Product managers
have spent the majority of their professional careers focused on driving
growth and creating and maintaining value throughout all the previous
phases of the product management lifecycle. So market withdrawal is
often difficult personally and professionally.

In fact, many organizations underestimate the complexity of the task,

including the amount of time and resources required. Retiring a product
successfully, with a minimum of customer disruption, can be one of the
most difficult aspects of a product manager’s job.

Market decline occurs when there is an absolute reduction in unit sales

over a sustained period of time. An absolute decline means that it impacts
all direct competitors or rivals in the same industry. Revenues drop to the
point where it’s no longer economically feasible to continue developing
the product.

Market decline is not the only factor influencing the decision to retire a
product. Other reasons can include strategic business considerations,
regulatory changes, fine-tuning the company’s product portfolio mix,
mergers and acquisitions, or simply determining that the product is no
longer central to the organization’s business model. Regardless of the
reason, any of these factors can lead to a product’s retirement.

Once product retirement is agreed to by the key stakeholders, the product

manager must now decide when and how to gracefully withdraw the
product from the market and ideally migrate existing customers to an
alternative product. The product will formally reach its end-of-life when
the parent organization is no longer marketing, selling, or sustaining it,
and may also be limiting or ending its support.

The duration of a product’s lifetime depends on the product and on the

customer’s perception of how long a product should last. Different
products have different expected lifetimes. For example, on average, toys
from fast food chains may last a few weeks, cars may last ten years, and
mobile phones may last up to three years.

In some cases, the life expectancy of a product is considered at its

inception so that all the stakeholders within an organization understand
when to begin planning for its market withdrawal. This is referred to as
planned obsolescence. For example, Intel introduces a new microprocessor
every 18 months as they announce the end of- life for previous versions.

While planned obsolescence is an established part of the overall product

lifecycle management process for many organizations, each product
entering its end of- life prompts a company to review key indicators that
signal the need for withdrawal. Companies frequently rely on portfolio
analysis tools to monitor and visualize these indicators.

16.1 End-of-Life Plan

Once a determination to withdraw the product from the market has been
made, the company organizes activities into a structured End-of-Life
(EOL) plan. This EOL plan is the reverse of a Launch plan. It outlines the
company’s plan for gracefully withdrawing a product from the market
while minimizing the impact to existing customers who may utilize more
than one of the company’s products.

The actual components of the EOL plan will vary based upon industry, but
there are several key areas of consideration that must be taken into
account. The first is that ending the life of a product requires effective
communication to all impacted internal stakeholders, as well as externally
to the market. Customers and business partners will need to understand the
schedule for full market withdrawal in order to find alternatives or prepare
accordingly.
Legal considerations and contract terms also can play a big role in
dictating the appropriate approach and timing of the product’s retirement.
This is particularly true in business-to-business environments.
Organizations that manage this process well often develop a targeted
project plan to help manage the components of market withdrawal to
ensure that the goal is attained and that all the associated complexities are
fully planned out and effectively executed.

Another factor to take into consideration is product support. While a

company may choose to withdraw a product from the market, it is not
uncommon for organizations to maintain some level of product support
past the point of the product’s actual retirement.

For example, hardware may have an expected lifetime of ten years after
production ends, and the company may choose to maintain product support
by making spare parts, technical support, and service available. This
approach is often profitable for the organization, although the cost of parts
production is likely to increase as manufacturing volume drops.

A well-thought-out EOL plan helps customers plan and manage their

transition to alternative products. It also communicates the role that the
company can play in helping them migrate to a replacement product or
solution. It clearly identifies external impacts on the customers/users,
distribution channels, key partners, and suppliers. It also identifies factors
internal to the company, such as cost analysis and impact on customer
support, operations, or manufacturing functions.

16.1.1 External Areas of Impact to Consider in End-of-Life

Plan
External areas of impact are identified by looking at the company value
chain (Table 16-1). This chain includes companies on the supply side of
the value chain, such as key partners and suppliers that the organization
relies on to reduce time to market or manufacturing and operations costs.
This also includes companies on the demand-side of the value chain, such
as distribution channels, which the company relies on to deliver products
to customers.
Table 16-1. External Areas of Consideration for an EOL
Plan

16.1.2 Internal Areas of Impact to Consider in End-of-Life

Plan
Internal areas of impact include all departments and functions involved
within an organization that support the product that is being retired (Table
16-2). This includes, but is not limited to, development, quality
assurance/control, customer service, manufacturing, operations,
marketing, and sales. This may also include deployment teams, supply
chain management, and distribution channel management.

Table 16-2. Internal Areas of Consideration for an EOL Plan

EOL plans are an essential tool for ensuring that all parties are aware and
appropriately engaged in the often difficult transition to retirement.
Product portfolio analysis tools coupled with competitive analysis and
relevant financial data can point to the need to retire a product that is
winding down its market relevance. The resulting EOL plan provides the
necessary structured framework to ensure that the product is terminated
efficiently and with a minimum of market and customer disruption.

If a replacement product is offered, a migration plan will be needed to

communicate to internal and external stakeholders how customers can
migrate from the terminated product to the replacement product.

Table 16-3. End-of-Life Plan: Inputs and Outputs

16.2 Phase Review

The Retire phase is successfully exited when the good or service is
withdrawn from the market in accordance with the end-of-life plan.
Section three provides an overview of some of the key tools used by
product managers throughout the product management lifecycle. The
intent of the section is not to provide every conceivable tool or to explain
each tool in minute detail, but rather to describe the general nature of the
tool, the underlying components, and the characteristics that distinguish a
strong tool from a less robust version.

Chapter 17 Product Management Tools

17.1 The Conceive Phase Tools
There are a number of tools product managers are expected to know,
particularly in the conceptualization phase. These tools often provide
product managers with a more strategic view and reveal insights beyond
the boundaries of individual products and their features.

17.1.1 Product Portfolio Management

The product portfolio connects the overall corporate strategy to a specific
product strategy. The product portfolio contains the overall suite of
products, both existing and planned. The active management of planned
and existing products helps to ensure that the company achieves its stated
goals and objectives.

The portfolio management process provides the linkage from high-level

corporate resource/budget allocation down to the strategy initiatives
encapsulated in one or more product roadmaps. The overall portfolio
management process is also coupled to a more tactical project portfolio
management discipline that approves and tracks specific projects
supporting the product portfolio initiatives.

The portfolio management processes and activities involve the analysis of

the suite of products in the portfolio relative to strategic corporate goals.
The methods used to analyze the product suite and the measures used to
evaluate success can vary significantly among companies.
Knowing where to invest (and not to invest) is perhaps the most important
contribution made by product leaders. In fact, Steve Jobs once famously
said “Deciding what not to do is as important as deciding what to do.
That’s true for companies, and it’s true for products.”[52]

For example, one common and easily understood method used to

communicate the analysis visually is illustrated by the Boston Consulting
Group (BCG) Growth- Share Matrix, as shown in Figure 17-1.

Figure 17-1. BCG Growth-Share Matrix

The matrix has Market Growth Rate on the vertical axis and Relative
Market Share on the horizontal axis with respect to the market (segment)
leader. Products in the lower right quadrant (those in low growth markets
and with low market share) are referred to as dogs. These “dog” products
are ripe for disinvestment or divestiture and can free up resources and
management attention for more attractive options.

In the upper right quadrant are products in a growth market but with
relatively low market share, referred to as question marks. Question marks
typically require an investment of some sort to improve their market
position with no guarantee of success.

Products in the upper left quadrant have high growth markets and strong
market share and are referred to as stars. Stars also require investment to
capitalize on any market opportunity and to maintain or grow share.

In the lower left quadrant of the matrix are products in lower growth
markets with relatively high market share, referred to as cash cows. Cash
cows are typically successful mature products with limited additional
potential, requiring a minimal amount of investment to maintain market
position or maximize profitability. Profits and resources from cash cows
are often used to fund investments into stars and question marks, as shown
in Figure 17-2.

Figure 17-2. Profits from Cash Cows Fund Investments in

Question Marks and Stars

Over time, stars become cash cows as market growth begins to slow, and
cash cows become dogs as newer and better solutions gain relatively
higher market share, as shown in Figure 17-3. Thus, the portfolio must
have investments and products in the question mark stage with the
potential to replace fading stars. A major problem in many maturing
companies is the lack of a pipeline of new products positioned in new
growth markets to offset or replace products in the maturity or decline
stages.

Figure 17-3. Progression from Star to Dog over Time

Another similar tool is the GE-McKinsey Matrix, which extends the BCG
approach by expanding the definitions of the labels on each axis.
Replacing Market Growth Rate on the vertical axis with Industry
Attractiveness creates the opportunity to define elements that are more
company-focused, including size of the market or competitive intensity in
addition to market growth. The approach also allows weighted
combinations. On the horizontal axis, Market Share is replaced with
Competitive Position. The definitions can expand market share to include
other corporate strengths, including brand equity, core competencies, and
distribution strength. The GE-McKinsey Matrix expands the grid to a 3 by
3, giving nine possible options. These alternatives range from a clear
investment opportunity to exiting a product, as shown below in Figure 17-
4.

Figure 17-4. GE-McKinsey Matrix

Regardless of the analysis method chosen, elements of a good Product
Portfolio Management process include:

Allocation of resources aligned to strategic corporate objectives

across the various product activities.
A balance of product activities that diversify across current and
future products, current and future markets, and short-term versus
longterm revenue.

17.1.2 Product Concept Identification

SWOT Analysis

A great tool for understanding the product’s current and potential standing
in the competitive market place is the SWOT analysis. The acronym
stands for Strengths, Weaknesses, Opportunities, and Threats. A SWOT
analysis is the process of assessing the current situation for a company, a
product, or a competitor, and is used to help formulate strategy. At a high
level, the analysis involves the assessment of various components of the
external and internal environments, and looks at them from both positive
and negative perspectives.
The results of the analysis can be rolled up into a 4-by-4 matrix shown in
Figure 17-5.

Figure 17-5. SWOT Matrix Example

The matrix lists Strengths and Weaknesses in the upper row. The strengths
and weaknesses are internal to the company or product under analysis and
are focused on the current view. Strengths are considered positive
attributes for the company, while weaknesses are considered negative. The
matrix in Figure 17-5 lists common categories for assessing the internal
view, including product capabilities, company competencies, market
position, key resources, strong processes or quality, and key partnerships.

Opportunities and Threats are listed on the bottom row. The opportunities
and threats are external to the company or product, and are trends or
events that may impact the company at some future point in time.
Opportunities are those factors providing a potential positive impact,
while threats are factors providing a potentially negative impact. This
analysis focuses on changes occurring in the market, competition,
technology, processes, resources, and partners.

It is important to remember that strengths and weaknesses are about the

product and company in the competitive landscape, whereas opportunities
and threats are related to trends and situations in the markets the company
serves. For example, “we might not deliver on time” is a weakness, not a
threat; “technical literacy is expanding in our markets” is an opportunity.

The information provided by the SWOT matrix by itself does not tell the
product team what to do. The next step in the process is to assess the
options from a strategic perspective to address the 0pportunities and
threats being faced, while being mindful of the specific strengths and
weaknesses present in the organization.

An extension to the SWOT analysis is the TOWS matrix (TOWS is SWOT

spelled backwards). The reverse order is intended to illustrate that the
assessment of the external environment (Threats and Opportunities) is the
primary focus and should be done first, followed by the assessment of
relevant internal capabilities (Weaknesses and Strengths). This approach
helps to remove or mitigate the risk of focusing on internal elements that
may not have any impact on the potential opportunities or threats. For the
actual TOWS analysis, the focus becomes what strategy options best
leverage the strengths while minimizing or overcoming the weaknesses.
The strategy options can be developed as shown in the TOWS matrix in
Figure 17-6.

Figure 17-6. TOWS Matrix with Strategy Options

Each of the TOWS quadrants assist in the development of options from a
strategic perspective that matches with outputs from the SWOT analysis.
The left column shows potential strategies that can leverage strengths to
take advantage of identified opportunities and/or threats.

For example, one strength element could be a strong technology

development capability with expertise in a specific area. The product team
might be able to leverage technology development capabilities by
expanding the product line into an adjacent growth segment. Or identified
strengths might be able to be utilized to counter an emergent competitive
threat.

The right column shows strategic options the product team could pursue
that address the opportunities and threats and that minimize or overcome
weaknesses. For example, addressing an attractive growth market with a
new product line could offset an identified weakness of the maturing or
declining current market. Addressing the competitive threat of a new low-
cost competitor could lead to the creation of a low-cost or simplified
version of the existing product, which could offset cost and pricing
pressures on the core product or product line.

Once the product team has a full set of options, they can be prioritized by
rolling up options that leverage the most strengths and diminish the most
weaknesses in addressing the opportunities and threats. The top options
can then inform the strategy initiatives to support the overall product
strategy going forward.

A good SWOT analysis includes:

A comprehensive view of the external environment along with major

factors that impact the business, and the opportunities and threats
projected.
An honest assessment of internal strengths and weaknesses relative to
the future opportunities and threats identified.
A set of strategy options generated by leveraging strengths and
diminishing weaknesses for each of the opportunities and threats.
 A prioritized roll-up of the strategy options into initiatives that will
drive the specific project selection going forward.

The product team should be prepared to defend assessments of

weaknesses. This area may offend the people who are responsible for the
items that the team has noted. In general, collecting relevant customer
quotes and meaningful data can help ensure that the right decision is
made.

The Product Concept

The Product Concept is the first step toward connecting a high-level set of
market needs to a specific conceptual solution that could be developed to
satisfy the need. It proposes the potential market opportunity, the way in
which the company might create and deliver the solution, and the value the
solution delivers to the market.

The Product Concept statement is typically a lightweight, living document

that answers the following questions:

What market problem are we attempting to solve?

How big is the opportunity if the problem is solved?
Who specifically has the problem? Who are the buyers and users?
What are the benefits for the customer? What are the benefits to the
organization?
What evidence have we collected that demonstrates that we correctly
understand the problem and that prospects would really buy our
solution?
What is the market window for the opportunity?
What is the competitive situation for the solution?
What are the main features of the solution and key success factors?
What are our key differentiators?
How would we take the solution to market?
 What metrics should be utilized to determine product success?

The objective of the Product Concept is to provide enough information

about how a company might approach a market need in order to justify
continuing the investigation at a deeper level with additional resources.
Therefore, a good Product Concept statement will:

Contain enough research into the market segment to document the

current situation and market needs.
Provide an understanding of the competitive situation and an
explanation as to why the market gap exists.
Provide a conceptual solution that aligns with the company’s
capabilities and strategic objectives.
Define how the solution will provide enhanced customer value
beyond what existing competitors or products offer.
Define the financial and long-term benefits that the company should
expect.

A popular tool for a product concept document is the Business Model

Canvas.[53] It is a visual chart with elements describing a firm’s value
proposition, infrastructure, customers, and finances. It assists firms in
aligning their activities by illustrating potential trade-offs.

Idea or Feature Prioritization Matrix

Every product team, no matter the size, must learn to choose from a wide
range of possible options. After all, organizations have limited resources.
A Prioritization Matrix is a scoring mechanism that is used to assess
alternative product concept ideas. When product ideas are developed and
submitted for review, a systematic approach can be helpful in determining
which ideas should move forward for further study. The same systematic
process can be utilized to determine which proposed product features may
or may not provide value.
The matrix can be developed using any criteria that makes sense for the
specific goals and strategy of the organization. Here are some possible
criteria:

Market attractiveness
Competitive attractiveness
Timing for entering the market
Market value
Differentiation
Projected return on investment over a defined period of time
Strategic alignment with company goals and objectives
Estimated cost of development relative to the size of the opportunity

An example of a prioritization matrix is illustrated in Figure 17-7.

Figure 17-7. Example Idea Prioritization Matrix

Each of the selected criteria is scored using the illustrated measurement

scale. It is best to specifically define each measure to eliminate individual
subjectivity. For example, for market attractiveness, high = market growth
> 5% + market size > 2M potential customers. Each idea is then scored on
the available scale and totaled.
In most cases, the scoring will be somewhat subjective and that’s okay. At
this point, the product team is not building a financial forecast but looking
for the best opportunities to explore further.

There can also be some automatic stops built into the evaluation process.
An example of a hard stop might be if the proposed solution is not in line
with company strategy, then the proposed solution would be dropped from
consideration. Finally, there should be some minimum score criteria, so
that projects that do not score a minimum of X are also dropped from
further consideration. A systematic approach provides increased efficiency
and a more effective use of resources. It is not unusual for a company to
discard the majority of the ideas submitted for review.

17.1.3 Product Concept Investigation

Personas

Before the product team can build a product, they need to answer the
question, “For whom?” Personas represent groups of customers that
possess a set of characteristics. A persona is a way to bring an individual
(or homogenous group) to life via an archetype or character. Personas
provide a common frame of reference for team members on the project.
The persona allows team members to understand for whom a product or
service is being developed. The characteristics and behaviors of the
persona helps team members make decisions during the planning and
development of a product. Information to create the persona is obtained
through primary research and Voice-of-the-Customer activities.

A persona can range from a very lightweight user profile, containing just
enough information to gain a basic understanding of a homogeneous group
of individuals, to a very elaborate description of behaviors and
characteristics that attempts to capture activities and motivations for
decision-making purposes. Information contained in personas can vary
between business-to-consumer and business-tobusiness products and
services. Common information found in a persona includes:

A made-up descriptive name and optional photo or caricature

 Demographic information (gender, age, marital status, location)
Education, work, income
Lifestyle or work factors and goals
Domain competence or experience in the product category
A quote or slogan that captures personality or personal drivers
Typical activities that may influence the product use, especially pain
points
Other related products or solutions currently used
Values, attitudes, and motivators that influence the decision process
Other collaborators related to reaching goals
Frequency of activity toward goals

Buyer personas represent specific types of buyers that the sales channels
are targeting. Examples include an end user, a department manager, and a
purchasing manager for a business product. Personas drive the
development of the important components, functionality, and benefits of
the value proposition. Personas may also impact and influence the
messaging and sales materials development.

User personas represent specific types of users who will use the product in
different ways or have different expectations of it. An example is a group
administrator who installs and sets up a software product for the end users,
versus the end user who uses it for the job on a daily basis. These personas
help drive decisions and prioritization for product capabilities and
functionality, as well as specific design decisions impacting usability, look
and feel, etc.

The overall goal of the persona is to provide a tool for understanding a

typical customer for the product. Successful personas will have the
following characteristics:

Provides relevant information that gives insight into the customer’s

world, including the challenges and goals they are trying to achieve
related to the product.
 Focuses on the primary buyers and users of the products, typically
achieved with just a handful of personas.
Driven from market research or Voice-of-the-Customer activities
over a sufficient number of customers to realize trends or common
tendencies.

The product team should be especially cautious of “creative writing.”

Many teams build elaborate personas based entirely on internal opinions
and perhaps one or two customer interviews. Creative writing is not
appropriate for business documents.

Problem Scenarios

Personas have problems that the product is intended to solve. Problem

scenarios represent one method for describing the market problem. They
are an easy way to describe, at a high level, a typical situation that a
typical customer encounters and the challenge the customer faces in
achieving a goal. For example, a customer may need to provide a quick,
healthy, and tasty meal for the family before running off to gymnastics
practice and a baseball game. The need is for a quick meal. The challenge
is to provide a healthy and tasty meal within time constraints.

Scenarios can take several forms, depending on the type of product being
developed and the level of detail needed to capture the information. One
common format is a simple story consisting of a few paragraphs or
bulleted steps in a sequence.

In this story, some key elements should be identified as follows:

Primary persona for the scenario. There is typically only one, but
occasionally multiple personas can be involved if they are interacting
with each other and have different perspectives on the problem. An
example would be an online doctor/patient interaction where both
have specific sets of information to share in order to assess symptoms
and make a diagnosis without an office visit.
 Setting for the scenario. The location and time frame of the scenario,
such as in an office during a normal workday.
Goal of the persona. The high-level objective that the persona is
trying to achieve in this situation, such as “easily listen to music
while jogging” or “quickly get some cash at a convenient location.”
This goal sets the high-level context that helps the product team focus
on the problem and potentially generate entirely new solution
options.
Most common steps to achieve the goal. These are high-level
activities the persona would do to achieve the goal, with focus on the
most common flow that illustrates challenge or frustration. These
steps describe what the persona currently does using existing
solutions or competitive offerings. The steps should illustrate a full
end-to-end set of activities providing a comprehensive view of the
situation and an overall context for developing a solution.
Major decisions the persona needs to make in the workflow. For more
complex or interactive products, such as software or services, there
may be multiple paths that can be taken depending on choices the
persona needs to make. For example, if the product team was
attempting to create an ATM for obtaining cash, some common
decisions a persona would need to make are from which account to
withdraw, the amount of the withdrawal, and whether he or she would
like to know the resulting account balance.

Another method for illustrating the problem is through a storyboard that

combines graphical illustrations with individual steps, much like an
illustrated story or cartoon. Storyboards help to capture information and
context much more rapidly than reading a story, though attention should be
paid to the potential loss of detail that might be conveyed more
completely through text.

Alternatively, for process-oriented solutions, a flow diagram may be useful

for capturing the series of steps and decisions required to achieve a goal.
Flow diagrams are especially useful if there is collaboration required
between individuals or departments within an organization, where flow
diagrams can graphically depict steps and hand-off points.
The purpose of the problem scenario is to illustrate the challenge a user
has in achieving the goal, including the limitations of existing solutions. A
successful scenario ensures:

Understanding of the context in which the user is attempting to

achieve a goal, and a definition of the goal itself.
Understanding of how the customer pursues the goal today, and the
frustration and/or latent needs associated with current solutions.
Opportunity to stimulate ideas for solving the frustration or need,
including the potential for a radical or breakthrough idea that could
significantly improve the customer experience.

Competitive Analysis Matrix

In SWOT analysis, the product team examines the offering at the product
level. A competitive analysis matrix drills down further to the feature
level. A competitive analysis matrix is a comparison of features across a
set of competitive solutions in the target market. The competitors are
usually other companies offering comparable solutions, but could also be
existing alternative ways users achieve their goal through entirely
different means.

The matrix is usually in a tabular format (in a spreadsheet or document)

that has a list of features on one axis and a set of competitors on another. A
rating is provided for each feature and against each competitor for the
level of support. Figure 17-8 illustrates a high-level competitive analysis
matrix:

Figure 17-8. Example Competitive Analysis Matrix

In the example, there is a column corresponding to the importance of each
feature to the target market. Not all features have the same level of
importance. Some are capabilities required to provide the fundamental
value proposition. Others have varying levels from “somewhat important”
to “not important at all.” Competitors may have included features to
appease an important customer or simply because other competitors
included these capabilities. Features add costs. Unused or low value
features should be eliminated. It is essential that every capability or
function earn its way onto the features list. Market importance can also
drive prioritization across the features. If the product team finds itself
short on resources or time to complete all of the desired features, then the
first ones to be removed would be those features that are of less
importance and value to the customer.

The ratings in figure 17-8 are not simply a “yes” or “no” that a feature
exists. Just because a feature is included doesn’t mean it is implemented
well by a competitor. The product team should attempt to attain more
granular information for identifying how its competitors execute on each
capability. Levels of criteria should be created that describe a well-
executed feature versus a mediocre or poor feature. Ratings represent
performance, completeness, quality, etc. The product team may find
opportunities to surpass other solutions for those features marked as
important to the customer. The product team may also consider including
features at a reduced performance level that may be less important to
customers. Feature inclusion options enable the product team to fine tune
allocation of resources to the capabilities providing the biggest impact in
terms of assisting customers in achieving their goals.

The purpose of the matrix is to help identify gaps in competitive offerings

relative to specific features that are important to the customer. The matrix
therefore helps in positioning and prioritizing the feature set. A useful
matrix will include:

High-level feature sets, spanning a dozen or so for a simple product,

and potentially dozens for a complex product. It is often useful to
group related features that support a high-level value being offered.
While it may be tempting to capture a comprehensive, detailed view,
the team may get bogged down by the detail and lose sight of the
major value the product is offering.
End-to-end customer view. The matrix should include attributes
beyond characteristics of the physical product or capabilities for an
interactive product, and include attributes that affect the entire user
experience. This can include how the product is purchased, delivered,
installed, maintained, supported, and disposed. This can open the
door for differentiation beyond the delivered product to those that
satisfy the expected whole product.
Measure of “how well” features perform. A “yes/no” rating does not
provide insight into whether the feature implementation is complete
or useful.
Measure of the market importance. It is very likely the competition
has features that are not of high value to most customers. If the
product team can identify them, they can deprioritize these to
maximize the focus of limited resources on those features that are
highly valued in the market and less than completely addressed by the
competition. The assumption that the company needs to match
competition on all features is the easy, but often unnecessary and
wasteful, approach to developing a truly valuable product offering.

The product team should focus their efforts on those items that are valued
the most by customers, regardless of what the industry expects or the
competitors offer.
The Market Requirements Document

The Market Requirements Document (MRD) is probably the most

important deliverable from product management in the creation of a new
product or major extension to a product. The MRD identifies the overall
target market and need or gap that exists. The MRD also goes beyond
illustrating just the specific set of problems by attempting to capture the
market expectations across a number of product attributes that would be
necessary for a successful solution.

The actual implementation of the MRD can be in many forms, including a

document, a spreadsheet, a wiki, a specialized software tool, and possibly
others. The size and scope of the opportunity and individual company
processes and capabilities will dictate the actual contents required. The
core of the MRD typically contains the following information:

Definition of the target market, specifically the buyer and user

profiles or personas.
Problem scenarios highlighting the major issues or gaps that exist for
the personas. Note that the buyer and user may have different
motivations and different needs, so they likely will need different
problem scenarios documented to illustrate the gaps in achieving
their goals.

In general, requirements fall into two major types:

Functional requirements are used for capabilities that have

interactivity with the user and describe the specific high-level
functions the user can perform.
Non-functional requirements describe performance factors and design
constraints placed on a product. Performance requirements specify
“how well” a product needs to perform for specific measurements.
Constraint requirements include “how much” a product needs to
support.
Many categories of non-functional requirements exist and are industry-
specific. The list below includes some common categories:

Physical requirements are typically for manufactured products and

include maximum or minimum dimensions and weight, portability or
mobility needs, ruggedness, and packaging.
Environmental requirements are typically for manufactured products
and include the operating or storage environment, such as
temperature ranges and humidity, exposure to water, tolerance to
chemicals or gases, exposure to or omitting noise, etc. Power needs
could also fall into this category, such as the typical voltage and
current limits and stability and noise limitations. For system-based
products, this category can identify the operating environment, such
as a lab or data center.
Performance requirements can address a number of different types of
parameters, including how fast specific operations need to be, how
many over a period of time, lifetime expectations for usage,
scalability for how large the system needs to be able to grow, etc.
International requirements describe where the product will be sold
and used, including requirements for language, currency, power
supply, and any special localization needs.
Compatibility requirements describe how the product needs to work
with other products or systems, including any standard or non-
standard interfaces that need to be provided.
Documentation requirements describe the type, formats, and delivery
methods for product documentation.
Support requirements describe how customers will obtain help in
installation, operation, repair, payments, maintenance, and disposal
of the product.
Legal, regulatory, and compliance requirements describe any special
laws, standards, rules, certifications, or other government- or agency
imposed requirements.
Distribution and packaging describe how the system will be
distributed and any requirements for how the product needs to be
 packaged for different channels.

A successful MRD should convey the market gap that exists and also a
broad assessment of the market expectations for a potential solution.
Specifically, the MRD should:

Capture a definition of the target market, specifically the buyers and

users, their goals, and the market gap that exists.
Provide a comprehensive list of market requirements that would be
expected from the solution.
Suggest objective measures of success for each of the requirements,
preferably in quantitative forms.
Prioritize requirements from the market’s point of view. Not all
requirements are of equal or high importance. There is always a
hierarchy of importance from “must have” to “optional.” Attempt to
prioritize major feature groups first, and then sub-prioritize within
each group.
Focus on the market problem, not an envisioned solution. It is easy to
confuse the two. The solution is discussed in the Product
Requirements Document (PRD).
Target a time frame for introduction and communicate a supporting
rationale.

Product Vision and Strategy

The Product Vision is a high-level definition of what the product will

aspire to be beyond where it is today. It sets a target for the ultimate value
the product will deliver to the market.

The Product Strategy defines the high-level actions or activities needed to

achieve the product vision. It helps the organization understand the
fundamental path it will take toward the product vision, and provides
boundaries that define what will not be undertaken.
A Product Vision and Strategy can be delivered as individual documents,
and incorporated into other documents, including the Marketing
Requirements Document and Product Requirements Document.

The product vision and strategy should provide:

A future, ideal statement of what the product will be or will deliver to

the market.
A set of high-level actions or initiatives that will be undertaken
towards realizing the future state.
A set of measurable objectives that define both short- and long-term
goals.

The characteristics of a good product vision include:

A picture of the future, at least a year and possibly many years

depending on the product lifecycle, which can endure for the entire
product’s life.
A definition of the target customer and the ultimate problem(s) the
product solves or the value derived from the product.
A high bar that pushes the need for innovation from the product team.
Reaching the bar might even appear impossible given current
solutions or capabilities.
A sufficiently high level that doesn’t change every time a market
dynamic shifts.

The characteristics of a good product strategy include:

Clearly defined phases that are stepping stones toward realizing the
vision. This is quite common and helps to set up the product
roadmap. The product strategy will further detail key activities or
major programs the product team will undertake toward realizing
their aspirational product vision. The product strategy can change
 over time depending on current business and market conditions, while
the overall product vision remains a constant.
Measurable product objectives with time lines that are usually
associated with business metrics around customers, the market, the
competition, or financials.
Measurable project objectives that typically define some shorter term
milestones for specific deliverables and the next few steps in the
journey.

Product Roadmap

The Product Roadmap is an envisioned set of phases or activities that

illustrates the potential steps that will be taken in executing the current
product strategy. The roadmap typically extends for multiple product
development cycles into the future and defines high-level targeted
deliverables or product objectives. The product roadmap can be
communicated in many ways—a presentation, a spreadsheet, a document,
etc. The primary purpose of the roadmap is to ensure internal alignment,
performance measurement, and resource assignments. An external version
of the roadmap may be prepared for partner, supplier, and customer use.

A typical Product Roadmap contains the following elements:

A time line aligned to major development or business cycles, such as

quarters or years, which extends into the future for multiple cycles.
Market drivers are external events or milestones that may drive
specific deliverables on the roadmap. For example, annual
tradeshows for new product introductions, or seasonal periods of high
sales like holidays or summer, or effective dates for new legislation
or compliance rules.
Business objectives or product themes that partition the larger time
line into phases with specific alignment to the overall product
strategy in realizing the longer-term product vision. Objectives help
prioritize the major activities that will be the focus during specific
time frames.
 High-level features within each of the phases identified that act as a
high level set of major product capabilities that are being targeted for
delivery. The capabilities may be expressed as major market needs
that will be addressed, as opposed to the specific solution that will be
delivered. The roadmap projects into the future and suggests the
likelihood that additional products and/or services will be developed
to continue to address identified market needs.
Technology roadmap (optional) that will indicate specific technology
platforms that are impacted by each of the major phases and feature
lists. The technology roadmap gives further visibility into major
resource allocation requirements. This type of roadmap can be useful
to align the product and technology groups in longer-term strategy
development.

A good product roadmap includes the following:

Serves as a guide for each of the planned phases and project

prioritization.
Aligns with and provides a plan for delivering the product vision and
product strategy.
Contains a plan and resource requirements that are explicitly
supported by the executive team.
Allows for updates on a regular basis as progress is made and changes
occur in the product strategy.

The biggest issue relating to roadmaps is who they should be shared with.
If a roadmap is provided to sales, they are likely to share it with
customers. If a roadmap is left with customers, they could share it with
competitors. The best practice for roadmap distribution is to have two
roadmaps: one for internal use with more detail and one for external use
with much less detail. In general, don’t put anything on the external
roadmap that is likely to change or be unachievable. The external roadmap
is perceived by all to represent committed projects. Never share an
internal roadmap with customers or externally facing employees.
Positioning Statement

A positioning statement unites the overall value proposition and

positioning of the product into a high-level set of statements that
summarizes the overall solution. The positioning statement is sometimes
called an elevator pitch, to imply it needs to be a quick but comprehensive
statement of the product’s intrinsic value. A useful framework for product
positioning comes from Geoffrey Moore in his book Crossing the Chasm.
[54] Table 17-1 conveys Moore’s framework.

Table 17-1. Positioning Statement Framework

A successful positioning statement has the following elements:

Identifies the overall purpose of the product and added value the
product delivers to fill a market gap, and the ways in which it’s better
than the current alternatives.
Provides enough information for someone who is unfamiliar with the
product to gain a good understanding in just a few minutes.
Contains analogies to other existing solutions to help create an image
and understanding of the solution.
Focuses on benefits and value provided, not features or specific
implementation methods.

There are other formats for positioning, including the simile and the user-
story format. The “simile” approach is perhaps the quickest way to convey
a message. This approach explains the product by utilizing a familiar
context: It’s like [reference product in another category] but for [new
application]. An example is the Amazon Kindle Paperwhite: It’s like an
iPod but for books.[55] Agile teams are very comfortable with the user-
story format, so they can write positioning like any other user story, but at
a product level: As a [persona] I want to [solve a problem] So that
[professional benefit statement] Plus [personal benefit statement].
Regardless of the format chosen, create a positioning statement that
resonates with customers and helps focus the development and marketing
of the product.

Launch Strategy

The Launch Strategy document encapsulates the approach to taking the

product to market. Launch strategy can originate in the Conceive phase
and evolve towards a detailed launch plan developed in later phases. The
intent of this effort is to document all marketing and sales assumptions for
launching the product so that an estimate of scope, resources required, and
budget needs can be developed for updating the business case. For a new
product, the cost of the launch can sometimes be larger than the product
development effort.

The focus of the launch strategy is on the breadth of coverage across all of
the envisioned activities so that overall costs and initial timeline can be
developed. The plan must address four key points:

Who will you reach (top priority audiences)?

How will you reach them (top priority outreach activities)?
What will you say (messaging)?
To produce what result (objectives)?

Typical components of the launch strategy include:

Targeted sales channels

Marketing collateral needs
 Sales tools, demos, and training requirements
Advertising and demand generation activities
Sales promotions
Public relations, industry, and social media initiatives
Tradeshows and event needs
Social media and community activities
Field testing strategy
Sales forecast by channel
Measurable launch objectives
High-level launch timeline, milestones, and overall budget

Subsequent revisions to the launch strategy will update assumptions while

adding depth and details from a tactical perspective.

A successful launch strategy will have the following characteristics:

Confirms audience and competitive targets

Confirms messaging
Aligns launch plans to the overall product strategy and development
plan
Prioritizes the go-to-market activities to gain focus on those that are
most impactful
Provides measurable short- and long-term criteria to assess the
success of the launch
Aligns to the marketing and distribution strengths of the organization
Identifies any new activities or capabilities that need to be sourced or
developed
Provides inputs and support from targeted channels

Project Charter
The project charter identifies, at a high level, the scope, objectives,
deliverables, schedule, required resources, communication plan, risk
management, and project management monitoring and controlling
procedures for the project.

The project charter establishes the authority of the project manager,

especially in a matrix environment. A good charter should be clear and
concise. The charter should contain information about the purpose of the
project, the benefits and objectives, a measurable set of success criteria,
the name of the project sponsor, the list of stakeholders, budget, and the
product description and deliverables.

The project charter typically includes the following:

Reasons for undertaking the project

Objectives and constraints of the project
Identities of the main stakeholders
In-scope and out-of-scope items
High-level risk management plan
High-level communication plan
Target project benefits
High-level budget and spending authority

The product team knows it has a good project charter when:

The project stakeholders approve the charter and assign the necessary
resources to begin.
Any new executive can reference and evaluate the charter.
There are clear decisions on who owns the budget and who is
managing the budget.
There are measurable and achievable objectives that the execution
team agrees to be accountable for.
17.2 The Plan Phase Tools
17.2.1 Product Requirements Document (PRD)
The Product Requirements Document (PRD) provides the level of detail
needed by the development team to understand the features, functionality,
and capabilities required. The level of detail varies significantly,
depending on whether development is focused on a new product or
enhancements to an existing product.

The general questions the PRD should answer are:

Who are the users of the product targeted for this release? What
market need or gap is the product addressing? What are the
characteristics of end users that this product targets and how will end
users utilize the product? End users are often portrayed via the use of
personas.
What actions will the users take with the product? The actions are
often called the functional requirements and are specific activities the
users perform through interactions with the product. Functional
requirements may be as simple as buttons and indicators or it may be
a computer display. For other products, specifically services,
interactions can be defined using a process flow of various activities
that different end users perform. Requirements are often captured in a
hierarchical set of use cases or user stories in Agile methodologies.
Other forms of documentation that illustrate the flow of events or
information, such as flow diagrams, data diagrams, context, and
entity relationship diagrams, are also often included within the
functional requirements document.
What are the performance requirements and design constraints of the
product? These are often called the non-functional requirements.
Performance requirements define how well or how much the product
needs to perform along some measureable criteria. These can include
performance, capacity, scalability, and so on. Constraints define
boundaries within which the product must be developed and/or
function. Constraints can be physical, environmental, other platforms
 the product supports or interfaces with, specific geographies, legal or
compliance needs, etc. The list of nonfunctional requirements for any
product is typically industry-specific and can be extensive for large
systems or complex products.
What accompanies or supports the product? Support items can be any
additional items that are not directly related to the specific operation
of the product, but are necessary to support a full end-to-end user
experience. While often captured in the non-functional requirements
section, this provides a check that everything has been accounted for.
Support can include documentation, accessories, shipping or
packaging needs, installation or maintenance tools, and replacement
parts. Additionally, support can define how the product will be
maintained in terms of customer service issues, including
troubleshooting, maintenance, and repair.

A good PRD defines both the breadth and depth of the product capabilities
in enough detail such that:

The development team sufficiently understands what should be

designed and built. An indicator for this is when questions about
“what to build” shift to “how to build.”
Given the definition of what the actual product will be, the supporting
organizations understand what they need to deliver with the product.
A complete end-to-end customer experience is defined for the new
capabilities.
The requirements are aligned to the business objectives set for the
product release.

Additionally, good product requirements should be:

Verifiable — the requirements can be verified or tested. This means

that requirements can be validated and that they perform as intended.
This also means that requirements are measurable rather than
subjective.
 Clear and Concise — understandable for all team members. The
document is easy to understand and does not have multiple possible
interpretations.
Complete — contains all of the necessary information. The document
communicates the entire scope of the needed product or
enhancement. In addition to scope the details for individual
requirements, such as units of measure, are effectively conveyed. The
document does not require making assumptions to fill in missing
gaps. The definition of completeness will vary based upon the method
chosen to create the product.
Consistent — there are no conflicts between requirements.
Terminology is defined and used consistently and there are no
duplicate requirements that might confuse the reader.
Traceable — all requirements can be traced back to a source of the
market need. The document includes discrete numbering or
annotation of individual requirements and hierarchical structure that
allows breaking requirements into smaller units while maintaining
ability to associate with higher level requirements. The document
also includes version control to trace changes in requirements.
Viable — the requirements can be met and are feasible. The product
can be delivered with existing technology, skills, capabilities of the
organization, and within schedule and budget. This may be a
negotiated or iterated agreement based on further analysis.
Necessary — requirements must be present for the system to achieve
its purpose. Removing the requirements would create a deficiency in
the system. This often leads to prioritization discussions with explicit
and transparent criteria.
Free of Implementation — defines what, not how. Does not decide
how a requirement is implemented. Leaves the choice to the
designers except where the market demands that the product meet
certain standards.

17.2.2 Project Planning

Formal planning has a positive influence on innovation and product
management activities. Two kinds of plans are critical to product
development success: project plans organize the activities required to
reach the defined near-term product objectives, and product management
plans set out longer-term goals and define the cross-functional activities
required to optimize the product and deliver business value.

Project Plan

At a high level, a project plan is the deliverable that explains how the
product team is going to execute, manage, evaluate, and communicate
change in the project. The project plan organizes the project work,
reducing risk and increasing predictability.

The project plan for a new or expanded product is typically cross-

functional to account for all of the interdependencies required to deliver
the product. Subprojects within the overall project plan can include:

Development — identifies how the development team will create the

product
Manufacturing — identifies the changes required to manufacture and
test the product
Information Technology (IT) Operations — identifies changes in how
the product is hosted or operated
Ordering or Billing — identifies changes in the business systems or
processes
Support — identifies changes in needs for customer or technical
support
Distribution/Logistics — identifies changes in how the product is
fulfilled and delivered
Partner — identifies changes in external partner communities, such
as Independent Software Vendors (ISVs) or Developers

The project plan is designed to remove ambiguity by clearly mapping out

activities against expected outcomes relative to time. Identifying the
interdependencies between deliverables and functional teams early in the
process will better determine which teams should be more integrated and
when, relative to the overall product development process.

This document is a high-level view of deliverables, resource assignments,

estimates, and dependencies based on core team members and overall
project success criteria. It is a plan in which all team-member deliverables
are recognized and related back to the customer’s needs and requirements.
The plan is designed to ensure the project team understands the context
behind the project.

The primary purpose of the project plan is to be the single authoritative

source of information to ensure a shared understanding of all project
parameters:

Scope
Timing
Assumptions/Constraints
Risks/Issues
Resources
Quality
Special Considerations/Exceptions
Development Methodology considerations
Team Members and associated Roles and Responsibilities
Policies and Procedures

Additionally, the project plan defines the technical and managerial

processes to be utilized. It is a living document and will be revised as
necessary during the course of the project.

In order to ensure all project components are addressed, a project plan, at a

minimum, should include the following:
Quantifiable success criteria for the project — Role clarity and
shared objectives can be further translated, at the project level, into
success criteria. Success criteria need to be understandable,
measurable, and achievable by the project team and project
stakeholders. Define who is going to benefit from what, and how
they’re going to measure it.
Project trade-off matrix (scope versus schedule versus cost) —
Documents the options available when critical trade-offs must be
made among the scope, schedule, and resource/cost parameters. The
matrix captures both stakeholder and product management guidance.
Work Breakdown Structure (WBS) — The WBS breaks down
activities and tasks into management work units. Each descending
level of the WBS represents an increasingly detailed definition of the
project work. It is a hierarchical decomposition of the project work
into smaller and more manageable work units. At the lowest level of
this breakdown are project deliverables.
Roles and responsibilities broken down by deliverable – The RACI
matrix is used to describe the roles and responsibilities of various
teams or people involved in developing and delivering a product. The
matrix should also include the stakeholders and any extended team
member needed to deliver the project. The RACI matrix is to be used
as a tool to help plan and break down the work even further, so that
the right people are doing the right work at the right time. The RACI
matrix splits tasks into four participatory responsibility types, which
are then assigned to different roles in the project. These responsibility
types make up the acronym RACI:
Responsible — The individuals who do work to achieve the
task. There can be multiple resources responsible.
Accountable — The individual ultimately accountable for
completing the task. There must be exactly one “A” specified for
each task. The Accountable role is accountable for the creation
of the deliverable and the communication associated with the
deliverable. The person accountable may or may not also be
responsible for the task, but typically it is a person in a
functional or team leadership role.
 Consulted — The individuals whose opinions and feedback are
sought. The role is focused on two-way communication. These
are often individuals who provide approval on a deliverable.
Consulted parties sometimes turn into Accountable parties in the
next stage of the project.
Informed — The individual(s) who are kept up-to-date on
progress. The role typically involves one-way communication of
information.
Communication plan/stakeholder management plan — A quantitative
and qualitative approach for communication to internal and external
stakeholders during the course of the project.
Risk management plan — Must include identification, prevention
planning, contingency planning, and ongoing monitoring of risk. The
goal of risk management is to head off problems before they become
events changing the course of the project.
Budget management plan — Designed to address both capital and
operating costs relative to the project. The plan is typically broken
into components for granular visibility and transparency of tracking
cost. Typical components in a budget management plan are:
Estimates of overall time and costs required for all resources,
such as internal labor (plan vs. actual) and external labor (plan
vs. actual)
Hardware/Software
Procurement costs and any third-party development partners that
may be used throughout the project
Cost of Goods Sold (COGS) estimates for manufactured or
sourced products
Change management plan — Project Change Management is a
process for identifying, assessing, controlling, and documenting
proposed changes to the project. A “project change” is any
modification to the project that will potentially affect the project
schedule, cost, resources, and/or risks.
The product team knows it has a good project plan when the entire core
team understands the meaning of the word “done” as it relates to the tasks
that make up the project schedule. All the ambiguity in roles and
responsibilities has been removed and activities against expected
outcomes, relative to time, have been clearly mapped out.

Product Management Plan

The product management plan acts as the central repository for all of the
materials that are created in support of the new product. The plan helps to
ensure that the appropriate parties have access to the most up-to-date
materials and can help in the transition process as new team members join
or leave the team or organization. The plan includes:

Product charter (goals, objectives, and organizational alignment)

Product scope (market and product requirements)
Product roadmap
Strategy (Organization, Business, Customer, Product,
Marketing/Launch)
Preliminary phase review product schedule
Cross-functional team requirements
Cross-functional team staffing (core team members assigned)
Product communication plan
Product risks/contingencies
Optional - Preliminary product procurement plan (purchase/acquire)

All members of the team and stakeholders have easy access to the key
information and plans for the product and the project regardless of
changes taking place on the team or within the organization.

17.3 The Develop Phase Tools

During the Develop phase, it’s important to test the product on different
audiences using a variety of validation methods that are ideally iterative in
nature.

17.3.1 Usability Evaluation Methods

Usability evaluation assesses the degree to which the product, process,
and/or system can be used by customers. The evaluation validates that the
customer can easily complete the job or task required. Not only should the
customer find that the product helps accomplish the job, but that using the
product is easy and intuitive. If the product solution does not make the
task easier, then the solution is most likely not ready for the marketplace.

Large companies in mature markets may have several usability labs and
teams that are constantly testing solutions with customers. Smaller, more
nimble companies may or may not have someone who is evaluating
usability with the same rigor or formality as a larger, well-established
company.

Usability testing is at the heart of ensuring that the company delivers a

viable market solution capable of gaining and retaining market share.
Retaining market share is also dependent on constantly evaluating and
improving upon the original product. If the original company fails to
improve on the product, a competitor will, and market share will be lost.

When conducting a usability evaluation, the product team should begin by

identifying the target audience. The target audience consists of one or
more user groups or personas. For example, a single website or application
may have content for consumers and a separate log-in area for site
administrators. It is likely that these two user groups perform different
tasks as part of their normal activities. Each user group should be given
tasks to perform during testing that reflect their different usage patterns.

Typically, participants will perform a set of tasks within a session or

through the use of instrumented apps. Tasks should represent the most
common user goals. Well-defined tasks include clear success criteria,
where the participant should begin the task, and how task completion will
be measured. Measurements include task completion, time on tasks,
learnability, and satisfaction.
When conducting user evaluations, the usability engineer reads a
participant one task at a time, such as, “Find out how to contact technical
support,” and allows the participant to attempt to complete the task
without any guidance. To prevent bias, the same script is used with each
participant.

Part of the testing may include asking the participant to “talk aloud” as he
or she works on a task to better understand the participant’s mental model
—what they’re thinking—while completing the task in real time. Several
methods for conducting usability studies are described in the following
sections.

Usability Lab

Some companies have a usability lab; others employ an outside lab to run
their usability studies. The lab is usually designed to simulate the target
user environment. For example, a living room to test a remote control, a
retail counter to test a service, or an office to test a software experience.

A lab provides a controlled setting and more exact comparative analysis.

However, since the lab is not the real setting, “in the field” factors like
ambient lighting, sound, interruptions, and other conditions cannot be
easily measured.

Onsite Usability

Conducting a usability study onsite allows the product team to observe the
solution in the context of real-world interactions. They can observe how
factors like ambient lighting, sound, hardware, and other conditions affect
the user and the quality of the service or product in this environment.
There is more of a challenge in conducting these studies because these
various factors can interrupt the study and metrics. There are also costs
associated with travel expenses, scheduling issues, and inconvenience for
the customers when planning and executing onsite usability studies.

Remote Usability
Remote usability studies are more cost effective and easier to run than lab
or onsite studies. The most common way to conduct a remote usability
study is to host a web meeting, turn the controls over to the participant,
introduce the tasks, and record the interactions. There are also online
services that may be used. Participants are able to participate from the
comfort of their home or office.

In the case of any of these methods, when all participants have completed
the study, the usability engineer will compile the data to determine the
severity of each usability issue that was encountered and provide
prioritized recommendations for the development team to meet usability
requirements. For example, a user experience engineer can identify the
most frustrating parts of a software-related task and suggest ways to
improve the interaction to better support the user by analyzing
participants’ facial expressions, the number of mouse clicks made, the
users’ verbal statements, and the navigation path used to complete a task.
If the study was recorded, clips of the recording can be added to the study
to illustrate the issues.

17.3.2 Alpha and Beta Plans

An Alpha test plan illustrates how the product will be tested internally,
usually by quality assurance professionals with pre-selected customers and
often in-house customers as well. When a release candidate is tested by
internal personnel, this is known as an alpha test.

The Beta Plan describes how the product will be tested in the market by
end users prior to possible commercial product launch. The goal is to
ensure the product meets the needs of the customer as articulated in the
market research, competitive analysis, and project charter. Beta testing
includes executing the product functionality and assessing the overall
completeness in terms of the product meeting intended goals. In addition,
the level of product quality and usability is tested to ensure its readiness
for commercial use.

Beta test execution during the Qualify phase can vary dramatically from a
few weeks with a handful of users to several months with hundreds or
thousands of users. The resources and level of project oversight and
management required will be directly proportional to the defined scope.

The overall Beta Test Plan identifies the goals and objectives of the
testing, all of the resources required to execute the test, and project-level
detail for milestones and major activities.

The Beta Plan typically includes answers to the following questions:

Why are we doing the test? What results are we trying to achieve?
Who are we targeting for the test? How many testers are we seeking?
How will we find, recruit, and compensate test participants?
What will we provide test participants? Do we plan on retaining the
product or giving it to test participants?
What do we want participants to test (general operation, specific
functions, or environments)?
Who will be conducting and evaluating the test, including setting up
the test participants and supporting them throughout the test?
How will we communicate with test participants and how often? How
will test participants provide feedback?
What are the activities, schedules, logistics, resources, and costs of
the test? What part of the organization is responsible for paying for
the test?
What legal documentation do we require, including confidentiality or
licensing agreements?
How do we plan on incorporating the results of the feedback prior to
launching the product?
What are the measurable success criteria for the test?

A good Beta Plan provides both the strategic reasons and objectives for
conducting market testing and tactical planning. The Beta Plan provides a
discussion and a plan for how the feedback will be used in the overall
product readiness assessment. Unfortunately, some Beta tests are only a
checklist item in a product development process with no plan for
incorporating feedback into the launch readiness decision. A well-
executed Beta test can provide real insight into the likely success of the
product launch and beyond. Beta testing can provide early indication of
achieving expected product results.

17.3.3 Launch Plan

The Launch Strategy provided in the Plan phase provides the basis for the
detailed Launch Plan in the Develop phase. In the Launch Strategy, the
intent is to identify a general launch philosophy and high-level set of tasks
and costs to support the Business Plan. In the Launch Plan, the product
team moves to a more tactical view that nails down the specific messaging
and positioning of the product, with the necessary projects to support a
launch from a Marketing perspective. Most of these activities will occur in
the Qualify phase leading up to the actual launch of the product.

The primary goal is to define how to launch the product, including

resources and subprojects required from a marketing perspective. The
Launch Plan includes detailed information on:

Overall launch strategy and objectives

Planned messaging and positioning of the product
Pricing and sales promotion plans
Launch forecasts
Marketing collateral requirements
Sales tools and demo requirements
Advertising and demand generation activities
Public relations activities
Tradeshows and event needs
Social media
Internal/channel sales training
Detailed project milestones and overall cost update
A successful launch plan aligns all parties on how the product will be
introduced to the market. The plan drives the budgeting, resource
allocation, and milestones planned for the eventual launch.

17.4 The Qualify Phase Tools

17.4.1 Launch Readiness Checklist
Launch preparation activities include specific activities occurring in the
areas of Marketing, Manufacturing/Operations, Sales, and Support. To
facilitate the decision as to whether the product is ready to go to market, a
high-level checklist is prepared to make the assessment across a broad set
of criteria.

The checklist categories can vary by overall scope of a product and the
needs of any specific organization or industry. Potential candidate
categories and checklist items include:

Product Readiness
All Development and Quality milestones have been achieved
All compliance and certifications required are complete
Market validation objectives have been successfully achieved
All required documentation and associated deliverables are
complete or scheduled
A product roadmap is in place for Development to move to the
next set of deliverables
Marketing Readiness
Clear messaging and positioning have been defined
Product naming, including trademarks, are finalized
Marketing collateral and website are complete and available
Point-of-Sale materials are complete and available
Advertising and demand generation activities are ready
Press releases, media and public relations activities are ready
 Frequently asked questions and Q&A documents have been
prepared to anticipate friendly and not-so-friendly questions
Whitepapers and in-depth discussion/education materials are
available
Case studies and customer testimonials from early testing are
available
Tradeshows and event activities are planned and scheduled
Social media objectives are defined and channels ready
Launch objectives are defined and measurements in place to
assess success
Customer and channel feedback mechanisms are in place to
collect input
Sales and Channel Readiness
Pricing, volume discounts, and promotions are formalized
Sales compensation, channel discounts, and sales incentives are
formalized
Sales/Channel training has been completed
Sales presentations, materials, pricing/return on investment
tools, and demos are available
Sales contracts and other legal documents are available
Manufacturing/Operations/Legal Readiness
Inventory, manufacturing, testing, and packaging are ready for
production units (physical products)
Operational systems to support hosting or operating the product
are ready (service or hosted software products)
All legal contracts with suppliers and vendors are in place
Support and Repair Readiness
Customer and Technical Support training are completed
Customer Support systems are ready
Product Repair personnel are trained and systems ready
 Orders and Payments Readiness
Product ordering systems with defined product configurations,
pricing, and options are in place and functional
Payment systems for required payment options are ready
Distribution and Logistics Readiness
Systems and vendors for product delivery and returns are ready
Other Required Systems or Programs
Reporting systems in place to assess status and product results
Professional Services or outside partners used for installation or
customization of the product are trained and ready
Other industry-specific supporting programs are ready, such as
Developer Programs, Partner, or Trade Association Programs
Final Business Plan Update
Planned sales and revenue forecasts and adjustments have been
made and factored into all of the supporting functional area
plans
Final costs have been captured and factored into the overall
profitability model
Overall financial business case has been updated and meets
business objectives
Major business risks have been updated and have mitigation
plans going forward

The overall goal of the checklist is to ensure that the company is aligned
around delivering a successful product to the marketplace. The measure of
a successful launch is always after the fact. Successes and unpleasant
surprises or outcomes should be recorded to inform the next product
launch. A final meeting should be scheduled to review lessons learned and
to update the process and the checklist.

17.5 The Launch Phase Tools

As discussed in Section 2, Launch is one of the most critical phases of the
product lifecycle process. Hence it becomes absolutely critical for product
teams to ensure the right tools and methodologies are in place to enable
success.

In addition, product managers and product teams need to know when and
where to apply tools and methodologies. A codified set of tools and
methodologies can help the team move forward confidently and go to
market successfully.

Within each deliverable listed in this section are specific descriptions that
are vital for decision making at every stage of the launch process. For
those individuals not familiar with the launch process, this section serves
as a comprehensive guide to take the product team step by step towards a
successful launch. For more experienced product managers or marketers,
the launch strategy, plan, and checklist serve as a reference and guide to
ensure that all critical product launch decisions, issues, or management
questions are considered at every stage.

17.5.1 Product Launch Plan

The Product Launch Plan is a blueprint of how the product or service will
be delivered to the marketplace. In addition, the product launch plan
serves as a checklist to guide all product launch activities. The plan
ensures that all activities are on track to support the launch. The plan is
centered on product management and sales and marketing, and involves all
critical functional areas, including Engineering, Manufacturing, Product
Support, Operations, and Implementation. The launch plan establishes
accountability with concrete actions and timelines that ensure alignment,
consensus, and ultimate success. Typically, the Product Marketing function
owns the product launch plan.

The primary questions a Product Launch Plan should answer, at minimum,

are grouped into three main areas:

1. Strategy
 What are the product launch objectives?
What product launch strategy provides the best chance to meet
the objectives?
What are the main customer needs that will be met?
What are the main product differentiators?
What is the competitive landscape?
What is the positioning and messaging strategy?
What is the market awareness and promotion strategy?
2. Planning
Who should be involved in the product launch?
Who are the key stakeholders?
Whose approvals do we need?
Who are the assigned resources by functional areas? (These are
often referred to as the core team members.)
What is the allocated and approved budget for the product
launch?
What are the go-to-market activities in priority order?
3. Execution
What are the timelines and major milestones?
Who is responsible for monitoring, tracking, and reporting on
execution?
How is launch effectiveness measured?

A great Product Launch Plan should:

Define launch objectives clearly and in measurable terms

Explain the launch strategy, action plan, budget, and timeline
Help structure and organize resources for a well-executed and on-
time launch
Communicate market, customer, and competitive intelligence
 Position the product appropriately and differentiate effectively
Ensure marketing, sales, and channel readiness
Provide a mechanism to track, monitor, and report on execution
Establish an ongoing process that measures performance and adjusts
dynamically

17.5.2 Messaging and Positioning Platform

The messaging and positioning platform is the core communications
document used for interfacing with industry media, creating web copy,
improving search engine results, pitching investors, and developing
marketing material.

Without a messaging and positioning platform, execution of marketing

communications is random and leads to ineffective messaging. Worst of
all, different mediums convey different messages about the product, which
confuse customers, as well as the sales and support teams.

A messaging platform helps protect the product team from these

problems. It will make the launch and ongoing marketing endeavors easier.
It will also give the team more comprehensive and coherent messaging.
Product Marketing usually owns the messaging platform efforts and
documents.

The questions an effective Messaging and Positioning Platform should

answer are as follows:

What are the clearly defined objectives?

How should the company best position the product?
Who is the target audience?
What is the category for the product in the marketplace?
What are the main product differentiators?
What is the strategic direction of the product?
 What is the company’s brand promise and how does the product
fulfill that promise?
What are the key market drivers and challenges?
What are the main product features and benefits?
Who is responsible for execution and evaluation of messaging?

The product team can leverage earlier concept and planning phase work to
create the Messaging and Positioning Platform by referencing the problem
scenarios, personas, value proposition, and positioning statement.

An effective Messaging and Positioning Platform should:

Provide a foundation for category, company, solutions, and product-

level messaging and positioning
Describe the problem to be solved
Articulate the value proposition and product positioning
Describe the market drivers, target audience, and their needs
Describe the barriers to adoption and major objectives
Define the category that the product or service fits best
Differentiate the product or service effectively from the competition
Reinforce how the product or service delivers on the brand promise

17.5.3 Sales and Channel Readiness Plan

The Sales and Channel Readiness Plan ensures that the sales and channel
teams are ready, enabled, and equipped with the proper training and tools
to successfully sell the product. Product marketing often leads this effort
in coordination with product management and the marketing organization.
The questions an effective Sales and Channel Readiness Plan should
answer are as follows:

What objectives are we trying to achieve?

 What sales tools and collateral do we need to precisely articulate the
product value proposition, positioning, features, and benefits?
What are the training requirements for the sales and channel teams?
How do we conduct the training most effectively?
What is the training schedule and major milestones?
Do we go to market with existing channels or do we need to recruit
new channel partners?
What is the sales cycle and what are the main objections at every step
in the sales process?

A Sales and Channel Readiness Plan should:

Provide a clear schedule and delivery mechanism to train the sales

and channel teams
Describe the sales tools and collateral to be developed by sales stage
Outline the entire sales process and objections to be overcome at
every stage
Identify new channel partners and agreements to be put in place (if
required)
Reinforce pricing strategy, discount terms, contract negotiation
process, and all the approvals required to complete a sale

17.5.4 Demand Generation Plan

The purpose of the Demand Generation Plan is to provide a blueprint or a
set of campaigns that describes the trends, themes, targets, and tactics to
be used to capture the customer’s attention. The goal is to convert interest
into desire and action, leading to a successful sale. The Demand
Generation Plan covers target audiences by region with key messages by
role and segment at every stage of the campaign. Deciding on the right
sequence and promotion mix is important. For example, the product team
may start by sending out an email message inviting prospects to a webinar
announcing the launch, followed by a reminder as the date draws closer. At
the end of the webinar, there may be a call to action followed by an offer
and next steps.

The questions an effective Demand Generation Plan should answer are as

follows:

What are the objectives?

What are the current market trends?
What are the primary marketing and demand generation themes?
Who is the target audience?
What are the specific programs and tactics we will use to generate
awareness and create desire?
What are the objectives of each campaign or program?
What industry associations and experts need to be engaged to create
buzz?
What are the key metrics that need to be tracked for lead conversion?
Who is responsible for execution and monitoring of the plan?

An effective Demand Generation Plan should:

Articulate the major demand generation themes for the campaigns to

be developed based on market research and trends
Outline the specific campaigns and programs on a timeline with key
objectives and actions
Show the entire demand generation program’s calendar and schedule
Provide a snap shot of campaigns and program’s progress over a
quarterly timeline
Explain the budget and resources required for a successful program
Combine all promotion vehicles—direct mail, email, webinars, social
media, telesales—to arrive at the optimal marketing mix by
campaign or program
17.5.5 Analyst Relations Plan
The purpose of the Analyst Relations Plan is to make sure all key analysts,
industry influencers, and relevant media publications are aware of the
product launch and can lend their support and influence.

The questions an effective Analyst Relations Plan should answer are as

follows:

What are the objectives of the plan?

What industry influencers and analysts need to be made aware of the
launch?
What industry associations and experts need to be engaged to support
messaging?
Who are the major analysts covering the space?
What are the major briefing themes?
What is the analyst briefing plan and schedule?
What are the key metrics that need to be tracked for analyst
coverage?

A great Analyst Relations Plan should:

Identify the key analysts and industry influencers that can serve as
champions for the product
Outline a specific briefing timeline with key objectives and messages
Reinforce the major themes and the strategic direction of the product
that need to be promoted as part of the analyst and industry
influencer’s briefings

17.5.6 Public Relations and Media Plan

The primary purpose of the Public Relations Plan is to serve as the basis
for the public relations program. It can be either company-wide or may
focus on a specific product line, product, or service. The plan needs to
make sure all relevant media publications are aware of the product launch
and can lend their support and influence.

The questions an effective Public Relations Plan should answer are as

follows:

How can we preserve or augment our corporate and brand identity?

What is our media strategy?
What should be the major briefing themes?
What industry influencers and media publications need to be aware of
the launch?
Who are the key spokespeople in the company?
What should be in the press kit?
What are the key metrics that need to be tracked for public relations
coverage?
Who is responsible for plan execution, monitoring, and reporting of
results?

A Public Relations Plan should:

Identify the key media publications that are relevant and can promote
the product
Outline a specific media/roadshow schedule on a timeline with key
objectives and messages
Reinforce the major themes and the product’s strategic direction that
need to be promoted as part of the media briefings

17.6 The Deliver Phase Tools

The Deliver phase of the product management lifecycle is centered upon
continuously optimizing a product or a group of product’s market
performance throughout the growth, maturity, and decline phases of the
product lifecycle. This requires careful consideration and proactive
management of the marketing mix and product investment.

The marketing plan needs to have the flexibility to adapt to changes in the
business environment as the product advances through the growth,
maturity, and decline phases. The competition may change, technology
may rapidly advance, and products and services will likely require
modification over time. The product team must think about contingency
plans for ways to adjust the marketing strategy to changing conditions to
ensure that the product has the adaptability for lasting success.

This section provides an overview of some of the key tools that are
commonly utilized to make the right product, feature, and marketing
decisions and ensure that the product maximizes its profitability across the
growth, maturity, and decline phases.

17.6.1 Market Analysis Template

Total product sales, measured in volume or in value, are the most direct
measure of the market’s behavior and response. Product sales analysis by
itself, however, can be misleading since it does not reveal how the product
is doing relative to competition operating in the same market or region.

For example, an increase in sales may be due to a general improvement in

market conditions and have nothing to do with the product’s performance,
or the increase may be hiding a decline in the product’s position (e.g., if it
has grown but at a lesser rate than competition). Thus, product sales
analysis must be complemented by a market share analysis.

The reason for measuring market share is to eliminate the impact of any
environmental factors and consumer behavioral patterns that exert the
same influence on all competing products, thus allowing a proper
comparison of the performance of each product.

Quality market analysis helps predict future performance. The critical

question addressed is: What makes up our market share? Traditional
market share measures in units or in value should be complemented by an
analysis of the customer base. Market share is simply calculated as
follows: A Product’s Unit Sales divided by Total Market Unit Sales for all
vendors. While the calculation is easy, finding the total unit sales for a
market can be very difficult. The product team can often get this
information from industry analysts.

A strong Market Analysis helps marketing, sales, and finance teams

forecast the market share for a new product or service. A quality market
analysis template can be used to forecast annual revenue and gross margin
based on the market share forecast, and to generate charts that illustrate
revenue and gross margin trends.

A great product market analysis should provide three- to five-year market

share projections by competitors. It should also provide the number of
active and converted customer projections for the same period. Product
market analysis should also contain a financial projections section with
direct and channel mix by percentage and revenue projections by direct
sales teams and channel partners. The final part of the financial
projections should provide a gross margin analysis by channel and direct
sales.

The information will help the product team make the right market and
channel decisions to maximize the product performance during the Deliver
phase. It will help the team decide which product lines to retire, and when
to retire them, so that they don’t continue to manufacture, market, and
support products that are underperforming and negatively impacting the
company’s profitability.

17.6.2 Channel Strategy and Plan

A channel plan is a document that can be used to consolidate the channel
analysis and choose the optimal strategy and sales channel(s) to increase
the product’s reach. The plan will enable the product team to proactively
manage the growth phase of the product and ensure that it is being
distributed appropriately in targeted markets and geographical regions via
preferred channel partners.

The channel plan should document the channel strategy and outline how to
measure the results of the respective channels and evaluate each for
effectiveness. The important elements that should be included in the
Channel Strategy and Plan are:

Clearly Support Corporate Goals – The channel plan and strategy

should be clearly linked to the organization’s corporate goals and
objectives and communicate the rationale for the indirect channel(s)
selected.
Segment Target Markets – Determine the targeted markets and
identify the size and priority of them.
Channel Selection – Analyze channel profitability and capability to
ensure that product objectives can be met.
Partner Selection – Identify and qualify that the correct partners are
selected with careful considered criteria and competency
requirements, including how success is to be measured.
Clearly Define Roles – Determine who is in charge of the channel and
identify who is running the program.
Create a Business Plan – Develop an annual operating plan to achieve
targeted goals as defined in the success criteria.
Define the Capabilities of a Partner – Include important factors that
will enable the partner to work with the indirect sales channel team.

A Channel Strategy and Plan should provide a blueprint to:

Penetrate new geographical territories

Reach more customers at a lower cost point
Penetrate specialized market segments that require particular skills or
specialized knowledge
Test new markets with reduced levels of risk
Scale the sales operation very quickly in response to new or
unexpected demand
A well-defined channel plan outlines all the various channels that
encompass the partners or resellers with whom the company works to
successfully extend sales coverage and reach.

17.6.3 Pricing Comparison Chart

A meaningful pricing comparison chart should contain pricing options
available based on the usage of the product. For instance, a table showing
the right options and features for small business or big business, or
comparing the configurations for teachers against those for students.

If the product has multiple versions or bundles—Basic, Advanced, Deluxe

—then the pricing comparison chart should also help compare those
options side by side. TurboTax® is a great example of this type of
comparison, making it very easy for customers to buy.[56] At the back of
every TurboTax product is a listing of the options and features available
—“Which TurboTax is right for you?”—helping customers make the right
decision quickly. Three to five bundles is probably best; more than five is
overwhelming.

17.6.4 Product Demos

The challenges most product and marketing teams face include letting
potential customers experience the product without giving it away or
explaining a complex product in a simple yet effective manner.
Alternatively, some organizations offer a variation on this theme by
allowing users to access a downgraded version of the product as a
demo/trial.

Product Demos are becoming an increasingly critical part of a company’s

marketing arsenal due in part to more savvy and well-educated buyers.
Many companies spend time and money on website and marketing
material explaining why their product is better than competitors.

But what if some buyers only want to see a demo, skipping all of the
marketing speak and metaphors on the website? Expectations about what
potential buyers can see and experience about the product is increasing
daily. Many buyers want to learn about new products taking the “just show
me” approach. Unfortunately, this is where a lot of companies fail in the
online product experience.

What does an effective product demo do? It provides an introduction,

presents a challenge, offers a solution, walks the buyer through the
resolution process, and summarizes the benefits. A demo should:

Last no more than five minutes. Cut out all unnecessary content.
Answer the buyer or user’s most critical questions and demonstrate
results in the shortest time possible.
Tell a story. Don’t just click and navigate to hit every feature. Make it
as real as possible with use case scenarios. What was their problem?
How did they use the product to solve it?
Make the product exciting. Show people using the product. Try to
show how using the product resulted in a happier customer. People
like to see real results even in a virtual world.
Show live people in a demo. Showing individuals talking about a
product and/or using a product in the demo strongly engages users
and strengthens the connection with the people on screen. People are
less likely to click away from an on-screen personality looking them
in the eye, compared to viewing text or narration.

17.6.5 Analyst Strategy and Briefings Plan

Before the product has launched and is gaining traction in the marketplace,
the product team should develop an analyst strategy that will continue to
promote and support the product momentum. An analyst briefing is an
opportunity for product vendors to present their products, services, and
business strategies with analysts that cover either the vendor specifically
or a related technology or market. During an analyst briefing, the flow of
information predominates from vendor to analysts and is not particularly
interactive. Analysts may ask questions of clarification during a briefing
session; however, analyst feedback is not the goal of this meeting.

Analyst firms like Gartner and Forrester schedule briefings based on an

interest in the company, technologies, and marketplace, not because of any
fee or contractual relationship, which gives them credibility as an
impartial third party. The product team can make the most use of this
forum by highlighting the problems the product solves and how it makes
the customers’ lives easier.

The product team should make a list of all the key influencers and leading
analysts in the space who can act as product champions. They should
develop a briefing deck that addresses the value proposition and clearly
explains why the product is different from the competition.

So what does a typical analyst briefing entail? The list below includes
some of the topics that may be covered in these briefings:

Company Overview — brief history, financial performance, operating

principles, organizational structure, value proposition, vision
statement
Market Positioning — assessment of market drivers or business
issues, category description (software integration, consultant, data-
mining solution provider, etc.), competitive position, description of
target markets, go-tomarket strategy (direct, indirect sales model),
partner strategy, points of differentiation
Capabilities — customer benefits, delivery model, methodologies,
portfolio review, success stories, tools
Strategic Intent —growth plan (organic, partners, acquisitions),
investment strategy, vision for future directions

Some other best practices for effective analyst briefings are as follows:

Supporting Materials — E-mail the presentation materials to the

analysts attending the briefing at least three days in advance of the
scheduled briefing. If certain information is confidential or
embargoed, that should be noted on the document and cover letter.
Web Demos — What kind of demo is most appropriate for the
audience and can be delivered reliably? Web demos should be used to
demonstrate software, databases, and tools only. Electronic slide
 presentations should still be e-mailed to the vendor briefings
specialist and the attending analysts in case analysts are unable to
access the web demo due to technical difficulties or travel. Analysts
prefer the electronic presentation as they can write comments while
the briefing is taking place and presentations are posted to their
archival database.

17.6.6 Public Relations and Media Plan

As the product is gaining traction in the marketplace, a well-planned
public relations campaign is critical to sustain the momentum and growth.

The product team should consider the following steps when planning and
developing an effective public relations (PR) and media campaign:

Step 1: Define and write down the objectives for the publicity or
media plan. In order for the PR and media plan to be successful it is
very important to first determine and define the objective. With a
clear objective in mind, the product team lays the ground work for an
effective PR and Media plan. Consider the following question: Why
is the product team designing the plan? Is the primary objective to:
Establish expertise/thought leadership among peers, the press, or
potential clients or customers?
Build goodwill among customers, suppliers, or the community?
Create and reinforce the brand and professional corporate
image?
Inform and create good perceptions regarding the company and
services?
Assist the company in introducing a new service or product to
the market?
Generate sales or leads?
Mitigate the impact of negative publicity and/or corporate
crisis?
 Step 2: Define the goals to achieve the above objective. It is
important that the goals be specific, measurable, results-oriented, and
time-bound. These goals must be in line with the overall business,
marketing, and sales objectives.
Step 3: Determine the target audience. Who does the product team
want to reach with the PR campaign? What are the key messages?
Step 4: Develop a schedule for the public relation campaigns. Create
synergy by coordinating the public relations plan with other
marketing and sales efforts.
Step 5: Develop the plan of attack. What communication vehicles
will be used to get the message to the public? Select from the
following list and begin researching and developing the approach:
Press Releases
Bylines and Articles
Customer Success Stories
Blogs
Press Conferences, Interviews, or Media Tours
Radio, Television, or Press Interviews
Seminars or Speaking Engagements
Event Sponsorships
Step 6: Build a media area on the web site. Assuming the press and
analysts will write about the product, the best screen shots, official
icons, and promotional product art need to be available. A media area
doesn’t have to be only for the press and analysts. Assume social
media followers, bloggers, and customers will go there too.
Step 7: Put measures in place to track the results of the PR
Campaign. Review the results after each campaign. Were the defined
objectives and goals of this campaign achieved? Should the product
team consider modifying the PR plan?

17.7 The Retire Phase

Most of product management is focused on planning and delivering
products, but the importance of a plan for retiring products is often
underappreciated. When the financials no longer make sense, it’s time to
retire (or “sunset”) the product.

17.7.1 End-of-Life Plan

The End-of-Life Plan (EOL) outlines the plan for gracefully withdrawing a
product from the market. It is, in its most basic form, the reverse of a
Launch Plan. The plan describes the sequence of events that need to be
executed by the product manager with the support of cross-functional
teams to withdraw a product from the market while minimizing the impact
to the organization, customers, suppliers, and distribution channels.

The EOL describes internal impacts to the company, including impact on

revenue, manufacturing, operations, customer support functions, and
external impacts, such as minimizing excess inventory for suppliers and
distribution channels. It also can describe the level of support required to
migrate customers to a replacement product. It identifies internal
communication and key activities needed to avoid serious economic
impact to the organization.

The general questions the EOL Plan should answer are:

Which product or product line will be withdrawn from the market?

Why is it being withdrawn from the market?
What is the impact to the company’s product portfolio?
What is the preferred strategy for this product: divest, spin off,
harvest, or retire?
What are the legal implications?
What are the key risks to the plan and how will the risks be
mitigated?
How will the revenue stream impact be offset?
Who are the impacted customers and end users?
 Which internal functions are impacted by this action?
What key resources need to be redeployed or repurposed?
Which partners, suppliers, and distribution channels need to be
informed?
Will there be a replacement product? If yes, include a brief
description. What level of support will be provided to help customers
migrate to the replacement product or solution?
What are the key milestones and critical dates? Who owns these
activities?
What are the critical success factors?

An effective EOL Plan includes all of the following:

Product or product line name — list of SKUs or product IDs

Reasons for withdrawing from the market
Description of selected strategy — divest, spin off, harvest, or retire
Brief description of any replacement product or solution – proposed
migration plan
Internal communications plan — planned end-of-manufacturing date,
planned end-of-sales date, planned end-of-support date, planned date
for discontinuing renewal of contracts, planned discontinuance date
External communications plan — what will customers and channel
partners be told, and when?
Description of external impact — customers and users, distribution
channels, key partners and suppliers
Description of internal impact — revenue, excess inventory,
marketing and sales, customer and technical support, development,
manufacturing, operations
Cost analysis — inventory write-off, support costs, maintenance costs
Risk analysis — risk factors and impact
A strong EOL Plan has a number of finite characteristics. The plan must
be:

Clear and concise — Everyone on the team ranging from senior

executives to those supporting the product’s market withdrawal must
be able to understand the plan and get behind it. This includes clearly
spelling out key milestones, owners, and critical dates.
Complete — The EOL plan needs to contain all the necessary
information to ensure an effective implementation.
Realistic — There is a tendency to be overly optimistic when drawing
up end of- life plans. The timeline for market withdrawal should be
carefully vetted to ensure that the period of time allocated will allow
deeply entrenched customers, who may use more than one of the
company’s products, sufficient time to migrate to another offering or
be carefully terminated.
Implementable — The plan must be able to be implemented with the
existing technology, skills, and capabilities of the organization.
Low impact — Eliminate or minimize the impact to customers and
the organization. The plan needs to address overlapping customer
relationships where clients may utilize more than one of the
company’s products as well as the impact to the company’s revenue
stream. It must also take into full account critical risk factors and
address any gaps in the company’s product portfolio.

Retiring a product from the market is one of the most difficult challenges
a product manager will face.
Appendix A:
Contributors and Reviewers of ProdBOK® Guide
– First Edition
The following individuals served as members of the project team for the
inaugural edition of The Guide to the Product Management and Marketing
Body of Knowledge. Each individual listed below played an important role
writing or reviewing components of the ProdBOK manuscript.

Significant effort was undertaken to ensure a broad base of industry

participation spanning academics, analysts, associations, authors,
bloggers, consultants, thought leaders, and practitioners within the product
management community.

Additionally, the editorial team worked closely with thought leaders from
the adjoining professions to ensure a balanced view of how product
management and the various disciplines of business analysis, product and
program management, and user experience should interact in pursuit of an
organization’s product goals and objectives. Future editions will continue
to expand upon these cross-functional interactions and additional
functions that are not covered in this edition.

The editors would like to acknowledge Steven Starke and Don Vendetti for
having made special contributions to this edition.

Contributors in Alphabetical Order

John Armstrong Steven Eppinger Jack Hilty

Jama Bradley Mark Floisand Peter Hiscocks
Kevin Brennan Greg Geracie Matt Jackson
Jose Briones Stacy Goff Steve Johnson
Hari Candadai Linda Gorchels Holly Joshi
Sharon Carmichael Tom Grant Lee R. Lambert
Sara Cleary Paula Gray Richard Larson
Greg Cohen Rich Gunther Jeff Lash
Bill Cohn Ken Hanley Edward MacBean
Nick Coster George Hechtel Neal McWhorter
Hector Del Castillo Gary Heerkens Linda Merrick
Jack Duggal David Heidt Rich Mironov
Barbara Munderloh Trevor Rotzien Adrienne Tan
Purnima Nath Guenther Ruhe Sean Van Tyne
Bill Needham Frank Saladis Don Vendetti
Therese Padilla Jennifer Schroeder Nina Villacci
Roman Pichler Scott Sehlhorst Beth Waibel
David Radzialowski Carol Smith Steve Wells
Kathleen Riley Cindy F. Solomon
Johanna Rothman Steven Starke
Appendix B: References
Chapter 1. Introduction

No references for this chapter.

Chapter 2. Product Management and Product Marketing Management

[1] Stewart, T.A. (2006, June). Growth as a Process, An Interview with

Jeffrey R. Immelt. Harvard Business Review, 63–64.

[2] Dyer, D., Dalzell, F., & Olegario, R. (2004). Rising Tide: Lessons from
165 Years of Brand Building at Procter & Gamble. Boston, MA: Harvard
Business School Press.

[3] McElroy, N. (1931). Procter & Gamble company memo, May 13, 1931.

[4] Pepper, J. (2005). What Really Matters. Cincinnati, OH: Procter &
Gamble Company.

[5] Rutherford, D., & Knowles, J. (2007). Vulcans, Earthlings and

Marketing ROI. Waterloo, ON, Canada: Wilfrid Laurier University Press.

Chapter 3. What Is a Product?

[6] Kotler, P., & Keller, K. (2008). Marketing Management (13th ed.).
Upper Saddle River, NJ: Prentice Hall.

[7] Kotler, P., & Keller, K. (2008). Marketing Management (13th ed.).
Upper Saddle River, NJ: Prentice Hall.

[8] Ogilvy, D. (1985). Ogilvy on Advertising. New York, NY: Vintage

Books.

[9], [10] Kotler, P., & Keller, K. (2008). Marketing Management (13th
ed.). Upper Saddle River, NJ: Prentice Hall.

Chapter 4. What Is Product Management?

No references for this chapter.

Chapter 5. Common Product Management Roles

[11] Lysonski, S. (1985, Winter). The Boundary Theory Investigation of

the Product Manager’s Role. Journal of Marketing, 29–41.

[12] Gemmill, G. R., & Willemon, D. L. (1972). The Product Manager as

an Influence Agent. Journal of Marketing, 36, 26–30.

[13] Schwaber, K., & Sutherland, J. (2009). Scrum Guide. Retrieved from
http://www.scrum.org.

[14] Pichler, R. (2010). Agile Product Management with Scrum. Boston,

MA: Addison-Wesley.

[15] Schwaber, K. (2007). The Enterprise and Scrum. Redmond, WA:

Microsoft Press.

[16] Leffingwell, D. (2011). Agile Software Requirements. Boston, MA:

Addison Wesley.

Chapter 6. Aligning ProdBOK with Other Existing Processes (and

Why It Matters)

[17] Porter, M. E. (2006). What is Strategy. Harvard Business Review,

74(6).

[18] Porter, M. E. (1998). Competitive Strategy: Techniques for Analyzing

Industries and Competitors. New York, NY: Free Press.

[19] OECD. (2005). The Measurement of Scientific and Technological

Activities: Guidelines for Collecting and Interpreting Innovation Data:
Oslo Manual (3rd ed.). Oslo, Norway: OECD.

[20] Christensen, C. (1973). The Innovator’s Dilemma. New York, NY:

Harper Paperbacks.
[21] Geracie, G. (2010). Business value creation: Collaborating with
project management and business analysts to achieve sustainable market
success. Chicago, IL: Presentation at the Project Summit and Business
Analyst World.

[22], [23], [24], [25] Rothman, J. (2007). Manage It! Your Guide to
Modern, Pragmatic, Project Management. Raleigh, NC; Dallas, TX: The
Pragmatic Bookshelf.

[26] Beck, K., Beedle, M., van Bennekum, A., Cockburn, A., Cunningham,
W., Fowler, M…Thomas, D. (2001). The Manifesto for Agile Software
Development. Retrieved from http://agilemanifesto.org/.

[27] Schwaber, K., & Beedle, M. (2002). Agile Software Development with
Scrum. Upper Saddle River, NJ: Prentice Hall. pp 24–25, 106–108.

[28] Cohn, M. Retrieved from

http://www.mountaingoatsoftware.com/topics/user-stories. To learn more
on user stories, refer to Cohn, M. (2004). User Stories Applied for Agile
Software Development. Boston, MA: Addison-Wesley.

[29] Cohen, G. (2010). Agile Excellence for Product Managers. Cupertino,

CA: Super Star Press.

[30] Beck, K. (1999). Extreme Programming Explained: Embrace Change.

Boston, MA: Addison-Wesley Professional.

[31] Womack, J. P. Retrieved from http://www.lean.org/common/display/?

o=1366. To learn more, refer to Womack, J. P., & Hones, D. T. (2003).
Lean Thinking: Banish Waste and Create Wealth in Your Corporation. New
York, NY: Free Press.

[32] Reinersten, D. G. (2009). The Principles of Product Development

Flow: Second Generation Lean Product Development. Redono Beach, CA:
Celeritas Publishing.

[33] Ibid, p. 56–57.

[34] Ibid, p. 58.

[35] Kanban, Japanese for “visual cards,” is a Toyota-created visual

scheduling system that outlines what to produce, when to produce it, and
how much to produce.

[36] Not to be confused with the Kanban Method, which also uses a
kanban board. The Kanban Method is a Lean change management
methodology developed by David Anderson and described in his 2010
book Kanban: Successful Evolutionary Change for Your Technology
Business.

Chapter 7. Product Management’s Relationship with Other

Disciplines

[37] Some of these other standards include Association for Project

Management (U.K.) and International Project Management Association, or
American Society for the Advancement of Project Management, IPMA-
USA’s ICB and National Competence Baselines.

[38] North Carolina State University, Center for Universal Design,

www.design.ncsu.edu/cud.

[39] Norman, D. (1999). The Invisible Computer: Why Good Products Can
Fail, the Personal Computer Is So Complex, and Information Appliances
Are the Solution. Cambridge, MA: The MIT Press.

Chapter 8. Introduction to the Product Management Lifecycle

Framework and Process Groups

[40] Jacka, J. M., & Keller, P. J. (2009). Business process mapping:

Improving customer satisfaction (2nd ed.). Hoboken, NJ: John Wiley and
Sons Inc.

[41] Geracie, G. (2010). Take Charge Product Management. Chicago, IL:

Actuation Press.

Chapter 9. The Fundamentals

[42]-[43] Kotler, P., & Keller, K. (2011). Marketing Management (14th
ed.). Upper Saddle River, NJ: Prentice Hall.

[44] Christensen, C. (1997). The Innovator’s Dilemma. New York, NY:

HarperBusiness.

[45] Rogers, E. (2003). Diffusion of Innovations (5th ed.). New York, NY:
Free Press.

[46] Moore, G. (2002). Crossing the Chasm. New York, NY:

HarperCollins.

[47] Ansoff, I. (1957). Strategies for Diversification. Harvard Business

Review, 35 (5), 113–124.

Chapter 10. The Conceive Phase

[48] iTunes and iPod are registered trademarks of Apple Inc.

[49] Actuation Consulting and Enterprise Agility. (2012). The Study of

Product Team Performance, 2012. Chicago, Illinois: Actuation Press.

[50] Consumer Reports is a registered trademark of Consumers Union of

United States.

Chapter 11. The Plan Phase

No references for this chapter.

Chapter 12. The Develop Phase

[51] Nielsen, J., & Landauer, T. (2000). Why you only need to test with 5
users. Jakob Nielsen’s Alertbox. Retrieved from
http://www.useit.com/alertbox/20000319.html.

Chapter 13. The Qualify Phase

No references for this chapter.

Chapter 14. The Launch Phase

No references for this chapter.

Chapter 15. The Deliver Phase

No references for this chapter.

Chapter 16. The Retire Phase

No references for this chapter.

Chapter 17. Product Management Tools

[52] Isaacson, W. (2011). Steve Jobs. New York, NY: Simon & Schuster.

[53] Osterwalder, A., & Pigneur, Y. (2010). Business Model Generation: A

Handbook for Visionaries, Game Changers, and Challengers. Hoboken,
NJ: John Wiley & Sons.

[54] Moore, G. (2002). Crossing the Chasm. New York, NY:

HarperCollins.

[55] Amazon, Kindle, Kindle Fire, the Amazon Kindle logo, and the
Kindle Fire logo are trademarks of Amazon.com, Inc. or its affiliates.

[56] TurboTax is a registered trademark of Intuit Inc., registered in the

United States and other countries.
Appendix C: Glossary of Terms
This glossary includes many terms that are unique or directly associated
with the field of product management. As a result, all of the terms listed
below are nuanced to reflect their connection with the product
management profession and may vary from other definitions found in
common everyday use.

Agile An umbrella term used to describe a group of iterative incremental

product development principles and methodologies that support the Agile
Manifesto.

Agile Manifesto A conceptual framework that emphasizes four central

values and twelve supplemental principles encompassing an iterative and
people-orientated approach to product development. (Also called the
Manifesto for Agile Software Development.)

Agile Theory Holds that Agile is designed to follow a non-linear path

more closely approximated to that of new product development instead of
the more predictable path of manufacturing, which typically follows a
serial process.

Alpha Test An initial in-house-only or controlled test of a product or a set

of product capabilities.

Ansoff Matrix A tool designed to illustrate a range of possible corporate

growth strategies for an organization’s current and potential
products/markets. These strategies include: market penetration, market
development, product development, and diversification.

Behavioral Design Creating a cohesive conceptual model for the product

that is easy to learn and understand. Behavioral design meshes the task
requirements of a product with the skills, knowledge, and capabilities of
the intended users.

Beta Plan Alignment around the purpose of the beta test; clarifies the
goals of the testing to be performed and the logistics of how the test is to
be conducted.

Beta Test A formal, structured, and controlled test of a new product or

product capability in order to determine market readiness.

Body of Knowledge (BOK) A Body of Knowledge codifies the concepts,

definitions, processes, and activities of a given profession.

Boston Consulting Group Market-Share Matrix (BCG Matrix) A

commonly used growth-share framework that categorizes products within
a company’s portfolio according to growth rate, market share, and positive
or negative cash flow.

Boundary Role A position or role that sits at the intersection of two

points. In the case of product management, between the needs of the
market and those of the organization.

Brainstorming A commonly used technique for developing creative

solutions to problems or to generate new ideas.

Brand An identifying mark, label, trademark, imprint, or name that

distinguishes the originator, creator, or manufacturer of a product or
service.

Branding Originating, building, improving, and safeguarding a name or

symbol representing a specific product or service.

Brand Equity The quality associated with a brand based on value assessed
over a significant period of time; the affirmative perception of a brand or
service based on customer loyalty and the positive reputation of a service
or product.

Brand Extension Introducing a new or improved product by associating it

with an established brand image.

Brand Identity A logo, slogan, moniker, or mark associated with a

product or service by consumers that sets it apart from competitors.
Brand Positioning Optimizing a brand by having a clear concept of its
strongest points and placing it among similar products to accentuate its
superiority and uniqueness in relation to competitors.

Burndown Chart A visual tool used by Agile product development teams

that represents the amount of work left to do versus time.

Business Analysis The practice of analyzing business needs and

identifying viable solutions in order to enable organizational change and
deliver value to stakeholders.

Business Analyst An individual that uses a prescribed set of business

analysis tools and techniques to understand business needs and identify
viable solutions that will maximize the value delivered by an organization
to its stakeholders.

Business Case A well-structured document that provides the overall

justification for a product or product investment and clearly demonstrates
a cost benefit analysis.

Buyer A person or organization that acquires or seeks to acquire a product

or service in exchange for money or some other consideration.

Buyer Personas A representation of a specific group or groups of buyers

who influence or make purchasing decisions about a product. Buyer
personas are used to make informed product, marketing, and sales
channels decisions.

Category Extension The use of an existing or parent brand to launch

products in other categories.

Channel Conflict A situation resulting from the producer of a product

competing, either inadvertently or through intent, with other parties
distributing the same product to a targeted group of customers.

Closeout Refers to the processes used by a project manager to bring a

project or project phase to an organized and well-planned conclusion.
Conceive Phase The first phase of the product management lifecycle
where product ideas are generated and assessed for market viability. This
phase is sometimes referred to as the fuzzy front end.

Concept Definition A set of activities that occur once a specific product

concept has been identified for further exploration and analysis.

Concept Identification A set of activities focused on finding new market

opportunities that may be addressed by a new product or product
development activity.

Consumer Products Goods and services purchased by final consumers for

personal consumption.

Convenience Products Items bought on a regular basis to meet immediate

needs.

Corporate Strategy Defines the overall scope and direction of a company

and details which markets the company competes in and how it will
leverage company assets and capabilities to achieve success.

Customer Value Hierarchy A concept introduced by Philip Kotler that

suggests that there are five levels of a product. These five levels include:
the core benefit, the basic product, the expected product, the augmented
product, and the potential product.

Daily Scrum A daily 15-minute stand-up meeting where team members

share what they did since the last meeting, what they plan to do before the
next meeting, and discuss any obstacles blocking progress.

Decision Matrix A tool used to evaluate a series of inputs in order to

objectively prioritize a set of requirements or criteria for making a
decision.

Decision Points Critical business decision-making junctures within the

product management lifecycle used to optimize performance, scrutinize
product development investments, and increase the quality of execution.
Commonly referred to as gates.
Deliver Phase The sixth phase of the product management lifecycle where
product managers seek to optimize the successful growth, profitability,
and longevity of a product.

Develop Phase The third phase of the product management lifecycle

where promising product concepts and plans are converted into a
marketable product.

Disruptive Innovation An innovation that disrupts and eventually

displaces entrenched products in established markets by creating a new
market and value network. (Term originally coined by Clayton
Christensen.)

Distribution Channel The path through which products and services

travel from the producer to the consumer.

Downstream Activities focused on the active lifecycle management of

existing in-market products.

Durable Goods Goods whose usefulness continues for a number of years

and which cannot be consumed.

Early Adopters Customers that are willing to utilize a newly available or

partial product that delivers a core benefit, and are willing to sacrifice
attributes of the product or other commonly associated expectations in
order to be first in obtaining the product.

Earned Value Management A technique that objectively compares

planned and actual results to determine whether variances exist and what
their magnitude is. Corrective actions are taken based on the outcome of
variance analysis.

Elevator Pitch A quick but comprehensive statement of your product’s or

offering’s intrinsic value.

End-of-Life Plan A retirement plan for a product nearing the end of its
useful life.
Equitable Use A principle used to guide the design of a product that is
both useful and marketable to people with diverse abilities. This includes
providing the same means of use for all users—identical whenever
possible and equivalent when not—and making provisions for privacy,
security, and safety.

Estimating Analyzing components, circumstances, and characteristics to

achieve specified product goals or features by fully taking into account
effort, duration, cost, and benefits.

External Assessment Analysis focused on attempting to understand

market trends and dynamics that have the potential to affect an
organization’s existing business or provide insight into new market
opportunities.

External Product Roadmap Planned product development activities for

the foreseeable future, normally on a rolling or calendar basis, and
intended for external audiences.

Extreme Programming (XP) An iterative incremental approach to

product development typically used by software development teams who
face less-defined or rapidly changing requirements.

Feasibility Study Analysis and evaluation of a proposed effort to ensure

that any product development activity undertaken is feasible on a
technical, financial, and operational level and will result in a viable
product or capability.

Finished Goods Products or services that are available for immediate

sale.

Five Forces Model A strategy tool developed by Michael Porter that is

commonly used to help evaluate market attractiveness and aid in decision
making and planning. The five competitive forces are: supplier power,
buyer power, competitive rivalry, threat of substitution, and threat of new
entry.
Functional Requirement A document that clearly states the capabilities
and functions that a system must be able to successfully perform.

Fuzzy Front End A term used to describe the early stage of product
development where the outline of a future product is unclear. This term
coincides with the Conceive phase of the product management lifecycle.

Gate Reviews Critical business decision-making meetings used to

optimize product/portfolio performance, scrutinize development
investments, and increase the quality of development execution. Also
referred to as Decision Points.

GE-McKinsey Matrix A systematic portfolio management approach used

to determine where cash should be invested for the best return based upon
relative business strength and industry attractiveness.

General Management Encompasses strategizing, planning, organizing,

staffing, executing, delivering, and providing the proper infrastructure to
support the continued growth of the organization.

Graphic Design A creative process that combines words, symbols, and

images to create a visual representation of ideas and messages.

Ideation The structured process of creating new ideas within an

organization with the goal of bringing new capabilities or innovations to
market.

Increment The quantifiable outcome of each iteration.

Incremental Innovation A small advancement beyond what already

exists. Incremental innovations maintain or improve a product or service’s
competitive position.

Industrial Design Creating and developing concepts and specifications

that improve the aesthetics, ergonomics, functionality, and usability of a
product.
Industrial Products Goods used by an industry or business, rather than by
an individual.

Information Radiator A wide range of visual tools that enable team

members and management to see how Agile product development projects
are progressing and act quickly when needed. The actual display can range
from handwritten to more sophisticated electronic displays.

Initiation Refers to the activities associated with defining and approving a

new project or determining whether a project should continue into the next
phase as a current phase is nearing completion.

Intangible Product A product that lacks a physical presence.

Internal Product Roadmap Planned product development activities to be

undertaken on a rolling or calendar basis, but used solely for internal
purposes and not shared with external audiences.

Internal Assessment Internal analysis that reflects how the overall

product, product line, or product category looks from the market
perspective, specifically the customer perspective.

Internal Product Manager An individual that is responsible for a product

or group of products and whose customers reside inside of the
organization.

Iteration The cyclic nature of a process in which activities are repeated in

a structured manner.

Iterative A product development method that timeboxes the length of the

development cycle and produces an increasing set of capabilities with each
successive cycle.

Iterative Incremental A product development methodology that produces

the product in a series of short timeboxed cycles and in small, defined
pieces until the fully envisioned product is constructed.
Joint Application Development (JAD) A method for implementing
solution ideation through structured workshops, where a group composed
of internal and external team members and market participants are brought
together specifically to inform the design and development of a product.

Kanban A Lean scheduling system that is used to determine what to

produce, when, and in what quantity.

Kanban Board A tool used by Lean product development teams to

visualize flow through the system and enforce work-in-progress limits.

Key Performance Indicators (KPIs) Measurable metrics for tracking

progress toward stated goals and objectives.

Latent Need Needs that customers are not consciously aware of or able to
effectively communicate.

Launch Phase The fifth phase of the product management lifecycle,

which is focused on the mechanics of successfully bringing a product to
market.

Launch Plan The specific tactical activities to be undertaken in support of

the launch of a product or service. Plan components include key messages
and positioning along with the necessary tactical activities required to
support a successful launch.

Launch Strategy The launch approach to be utilized; frequently coupled

with a high-level set of tasks and costs to support the business plan
objectives.

Lean A methodology whose central tenant is to create the most value for
customers with the fewest resources by eliminating waste and
implementing continuous improvement across entire value streams.

Line Extension Adding new versions, types, or varieties of existing

branded products or services.
Market Anywhere buyers and sellers conduct transactions, and where the
dynamics of supply and demand operate. From a marketing perspective, a
market consists of groups of customers (current or potential) who have
specific unmet needs that could be met by products or services.

Market Investigation Activities undertaken in order to understand, in

detail, the overall needs of a targeted market segment and the market gap
that’s being addressed by the product concept.

Market Positioning Using research, trend analysis, and investigation of

competitive products and services to set targeted products and services
apart from and above the competition.

Market Requirements Document (MRD) Market segment-specific

definition of needs, which focuses on describing the market problem, gap,
or need to be addressed. Other common names for an MRD include:
Business Requirements Document (BRD) and Customer Requirements
Document (CRD).

Market Segment A targeted group of buyers that share some similar

characteristic for which products and services are developed to meet their
specific wants and needs.

Market Segmentation Segregating specific parts of a market based on

criteria such as age, socioeconomics, behavioral patterns, or spending
habits.

Market-Facing Product Manager An individual that is responsible for

managing one or more products with customers outside of the organization
and with whom they work closely to satisfy unmet needs.

Marketing The process of identifying unfulfilled needs and desires by

defining, measuring, and quantifying market potential. Marketing narrows
an organization’s focus onto clearly defined market segments that can be
served by its products and services.

Marketing Innovation Applying a new marketing method involving

significant changes in product design or packaging, product placement,
product promotion, or pricing.

Marketing Mix Controllable components of a product’s marketing plan

that can be adjusted until the right combination is found to efficiently
deliver the optimal amount of value to both customers and the
organization. Commonly referred to as the 4Ps: product, price, place, and
promotion.

Marketing Strategy Enables an organization to concentrate its resources

on the greatest opportunities to increase sales and achieve a sustainable
competitive advantage.

Minimum Viable Product (MVP) The minimum amount of functionality

that you deliver to the market with the specific intent of testing that you
correctly identified the problem and core benefit with customers before
investing more heavily in producing the full product.

Mission Statement The statement of a company’s purpose; its reason for

existence.

Mock Up Non-working models created early in the product development

process to facilitate decision making or to illustrate how a product may
eventually look or function.

Models Basic, visual guides used to suggest the layout and placement of
fundamental design elements and elicit feedback on conceptual user
interactions.

Non-Functional Requirements Qualities and constraints placed on a

product in order to specify “how well” a system needs to perform.

Open Innovation A methodology that harnesses an open community of

customers or partners to purposely capture and infuse knowledge in order
to increase a company’s rate of innovation.

Organizational Innovation Executing new methods in an organization’s

business practices, workplace organization, or external relations in order
to achieve competitive advantage.
Penetration Pricing Setting a relatively low initial entry price, often
lower than the market price, in an attempt to accelerate customer
acquisition and penetrate a targeted market.

Perishable Products Goods that can spoil or decay easily and that do not
have long shelf lives.

Personas Fictional representations of different types or groups of users

being targeted in the design, development, and marketing of a product.

Phase-Gate A serial product development process that is broken into

clearly defined phases utilizing gates as a means to control the exit from
one phase of the process to the next.

Pilot A full end-to-end test of a product or system within a limited or

controlled environment prior to full-scale deployment.

Portfolio Analysis An analysis of the components of a company’s product

and service mix to determine the optimum allocation of its resources.

Pre-Production Prototype A fully functional implementation that is still

in the testing or validation stages prior to formal release. Often used for
beta testing.

Primary Research Going directly to actual or potential customers in

order to gain first-hand data or information.

Problem Scenarios A high-level method for describing the typical

situation that a persona encounters and illustrates the market problem to
be solved.

Process Innovation Implementing a new or substantially improved

production or delivery method.

Product Can be either tangible or intangible. Tangible products have a

physical presence. Intangible products lack a physical presence.
Regardless of tangibility, products are purchased by consumers to meet
needs and wants.
Product Backlog A term used by Agile product development teams to
describe a prioritized list of user stories or features that have not yet been
incorporated into a sprint cycle.

Product Concept A conceptual product or solution that addresses an

identified and/or specific market need.

Product Lifecycle The evolutionary steps a product passes through

beginning with market introduction and ending with decline.

Product Lifecycle Management The process of actively managing a

product through its marketable life.

Product Line Extensions The creation of new products in the same

category using the existing brand name.

Product Lines A group of products, categorized by a business unit or

company that are closely related because they function in a similar
manner, are sold to the same customer groups, are marketed through the
same types of outlets, or fall within given price ranges.

Product Management The organizational function within a company

dealing with the thoughtful and proactive management of a product or
group of products throughout all stages and phases of the product
management lifecycle.

Product Management Lifecycle An integrated framework of stages and

phases that all successful products must progress through.

Product Manager An individual whose organizational responsibility is to

create and maintain the optimal amount of value for a product or group of
products throughout the entire product management lifecycle.

Product Marketing A set of responsibilities encompassing go-to-market

activities, increasing the rate of product adoption, and supporting product
management and the sales team’s market-facing efforts.
Product Marketing Manager An individual that is primarily tasked with
helping define and manage a product’s image in the market. Product
Marketing Managers bring increased focus to “go-to-market” activities by
supporting customer acquisition and in-market activities during the
Launch and Deliver phases of the product management lifecycle.

Product Owner A clearly defined role on a Scrum team responsible for

the success of the product. The product owner manages and prioritizes the
requirements in the product backlog to maximize the value of the team’s
efforts and acts as the customer proxy.

Product Plan An integrated document suite that includes all the major
components of a successful product.

Product Portfolio The entire range of products and services developed

and distributed to consumers by an organization.

Product Portfolio Management Refers to the strategic process of

proactively managing the overall health and value of a company’s
portfolio of products. Careful consideration is given to appropriately
allocating investments in order to optimize the sustained growth of a
company’s revenue stream and profits.

Product Portfolio Manager An individual that is responsible for a group

of products typically organized by business line or segment.

Product Production Process A structured process of documenting the

stages, phases, owners, contributors, and deliverables required to bring a
product to market in order to clarify roles and ensure smooth hand-offs
between the various cross-functional parties.

Product Requirements Document (PRD) A document that contains

product specific definitions of the conceptual or planned product and thus
is more focused on the solution to be delivered. Other common names for
the PRD are Functional Requirements Document (FRD), Functional
Requirements Specification (FRS), Functional Specification (FS), and
Software Requirements Specification (SRS).
Product Roadmap The visual representation of a series of planned
product development activities illustrating future product releases on
either a calendar or rolling-year basis.

Product Strategy The strategic approach to be undertaken in order to

achieve a product’s goals in support of the overall business objectives of
the organization.

Product Vision A defined, aspirational future state that a product manager

wants the product to achieve in support of the overarching goals of the
business.

Program Management The activity of actively managing a group of

related projects coordinated to achieve benefits and control that could not
arise from managing each project separately.

Program Manager An individual that is responsible for a group of related

projects coordinated to achieve benefits and control that could not occur
from managing each project separately.

Project A temporary effort undertaken to create, support, or retire a good,

service, or result.

Project Execution The phase of a project that is focused on managing and

controlling the underlying activities defined in the project plan in order to
achieve a project’s requirements.

Project Management The profession of applying a prescribed set of

knowledge, skills, tools, and techniques to a specific project or set of
projects to meet a set of defined requirements.

Project Manager The person responsible for ensuring that a project’s

scope, schedule, and cost are actively managed in support of the project
objectives.

Project Planning Involves defining the scope of the project and the
underlying actions that must be taken to achieve the established objectives
codified in the project plan.
Project Portfolio Management A centralized approach to managing a
group of current or pending projects based upon a predefined set of
common characteristics.

Prototype A rudimentary working model of a product, usually built for

demonstration purposes or as part of the product development process and
used to elicit feedback from customers to validate that the model will
meet their business needs.

Qualify Phase The fourth phase of the product management lifecycle,

which outlines the steps that need to be taken to ensure that the product is
ready to launch.

RACI Matrix A tool used by product and project managers to clearly

define the parties that will be Responsible, Accountable, Consulted, or
Informed on a particular activity or set of activities.

Radical Innovation A non-linear change that redefines the attributes

concerning the way something is defined or that significantly transforms
existing capabilities by a magnitude of five times or more. Other terms
used to describe this type of innovation are discontinuous, breakthrough,
transformational, or disruptive innovations.

Rapid Prototype A group of techniques used to quickly fabricate a scale

model of a part or assembly using three-dimensional CAD data, such as
through a 3D printer.

Rational Unified Process (RUP) An adaptable iterative software

development framework that utilizes four phases of development. Each
phase is organized into a number of separate iterations that must satisfy
defined criteria before the next phase is undertaken. The phases are:
inception, elaboration, construction, and transition.

Requirements A clearly defined set of actionable, measurable, and

traceable criteria, typically distilled via customer engagement that is to be
turned into a product or a set of product capabilities in order to capitalize
on identified customer or business needs.
Retire Phase The final phase of the product management life cycle where
a product is formally withdrawn from the market.

Retrospective A brief, dedicated period at the end of each sprint cycle

used to reflect on the effectiveness of the sprint and to find ways to
improve.

Rough-Order-of-Magnitude (ROM) An initial high-level estimate of the

cost and timeline for a particular product development project. Typically
expressed in terms of months or quarters for the project to deliver to some
milestone, and often contains ranges or confidence level of the estimates.

SMART An acronym used to set and define organizational objectives that

meet five criteria. The criteria need to be: Specific, Measurable,
Achievable, Relevant, and Time-bound.

Secondary Research A method of collecting information that relies upon

indirect methods, such as published reports, public or commercial
databases, websites, agencies, etc.

Scrum An iterative incremental software product management

methodology that utilizes small teams composed of a product owner,
scrum master, and team members.

Scrum Master A person who ensures scrum practice is followed and

facilitates so the team can identify areas of improvement and remove
roadblocks to its progress.

Serial Process A product development process that proceeds through a

series of linear steps commonly associated with manufacturing processes.
These types of processes are often referred to as Waterfall.

Serviceable Available Market (SAM) An estimate of how much of the

market an organization can realistically access. Also called Served
Available Market.

Services Intangible products sold to meet a customer’s needs.

Shopping Product Goods that require research and analysis before
purchase.

Single Piece Flow The ideal state in Lean product development where
parts are manufactured one at a time and flow throughout the
manufacturing and supply chain as a single unit.

Soft Launch A controlled or limited launch with the objective of

assessing the product, its performance, and some adoption and conversion
factors before moving to the more formal broad launch.

Solution Scenarios Illustrates the user activities that would result from
each of a selected set of candidate solutions.

Specialty Product Goods and services that are either unique or have such
a clear brand identification that a consumer is willing to make a
significant effort to purchase them.

Sprint A term used by Scrum product development teams to describe a

timeboxed and protected unit of development that lasts no longer than 30
days.

Sprint Burndown Chart A publically displayed graphical representation

of the work remaining in a Sprint.

Statement of Direction A document that contains a high-level narrative

discussion of planned product development activities. An alternative to the
traditional tactical product roadmap.

Storyboard A visual representation of the intended use of a product that

people from different functional backgrounds can intuitively understand.

Story Point A method used by a Scrum product development team to

estimate the relative amount of effort required to complete a work effort
as compared to other possible work efforts that could be undertaken.

Strategy A method or plan chosen to bring about a desired future, such as

achievement of a goal or solution to a problem.
SWOT Analysis A strategic planning tool used to identify the Strengths,
Weaknesses, Opportunities, and Threats that exist inside and outside of the
organization.

Task Board An Agile product development tool designed to help the team
self manage the workload and monitor the status of each requirement.

Technical Product Manager A product management role that typically

requires a detailed understanding of the technological aspects of a product.
In certain organizations the technical product manager has both market-
and internal facing responsibilities. In others, the technical product
manager is more internally focused and partners with a market-facing
product manager to serve the needs of the market.

Technical Support Services Services that often accompany complex

products. These services are offered either directly from the manufacturer
or through a third party provider.

Technical Writing A form of written communication that presents

technical information about a product or service in a manner that is clear
and easy to understand by a user.

Test Plan Details how the product will be verified and ensures that the
requirements have been met. It may also include the test cases used to
verify the product. The test plan should provide specific reference back to
the product requirements for traceability.

Total Available Market (TAM) An estimate of the maximum revenue

number or total customers available to all competitors in the segment for
all competing solutions. Also called Total Addressable Market.

Unsought Product Goods and services that a consumer either doesn’t

know about or want to think about.

Upstream A term used to describe a set of activities, including portfolio

management, product strategy, and new product development, which
commonly concluding at product launch.
Usability The ease of understanding and learnability inherent to an
experience or a product.

Usability Engineering The field of developing effective usability for a

product by systematically approaching, improving, and (if possible)
measuring usability.

Use Case A discreet unit of interaction between users and the product
(system) in order to achieve a goal that is well-defined and meaningful
from the user’s perspective.

User The person who will directly use or interact with a product’s
functionality or capabilities.

User Acceptance Testing (UAT) The final phase of the testing process
where actual users test the product to make sure it can handle required
tasks in real world scenarios and according to specifications prior to
market introduction.

User-Centered Design A multi-stage problem-solving process that not

only requires designers to analyze and predict based on ergonomic design
principles and likely usage of a product, but also to test the validity of
their assumptions in real-world tests with end users.

User Experience (UX) A person’s perceptions and responses resulting

from the use or anticipated use of a product, system, or service. User
experience includes all of a person’s physical and psychological responses
that occur before, during, and after use. UX also refers to the concept of
placing the end-user at the focal point of design and development efforts.

User Persona A fictional representation of a specific group of users that

will use a product in different ways or have different expectations of it.

User Research A range of methods utilized to gain insight into user needs
and behaviors.

User Stories An Agile product development method of capturing

functional requirements by succinctly outlining the who, what, and why
from the user’s perspective.

Value Creation Process A term used to describe the way the product
manager and the product team organize around the work that needs to be
completed in order to create the most value for the customer and the
organization across the span of the product management lifecycle.

Value Proposition A statement that summarizes the value a customer will

receive by buying and using a product in comparison to other available
options.

Voice of the Customer A widely practiced market research approach that

relies on seeking direct input or data from customers in order to create
new products or improve existing products.

Waterfall The name given to a serial product development process that

follows a series of prescribed linear steps.

Wireframe A guide that visually represents the structural or skeletal

framework of an emergent product. Wireframes are often used to lay out
base functionality or content early in the product development process.

Work in Progress (WIP) Partly finished products that are at various

stages of the production process, but are not yet finished. Excess WIP is
viewed as an indicator of bottlenecks in the production process and/or
supply chain that can lead to undesirable waste and inefficiencies.

Working Prototype A functioning item that may not be fully operational,

be designed and engineered for manufacturability, or have the final
appearance required.
About the Editors

Greg Geracie is a recognized thought leader in the field of product

management and the President of Actuation Consulting, a global provider
of product management training, consulting, and advisory services to
some of the world’s most well-known organizations. Actuation Consulting
provides popular training courses for product managers and product teams
and publishes the global Study of Product Team Performance annually.

Greg is also the author of the global best seller Take Charge Product
Management and led the development of The Guide to the Product
Management and Marketing Body of Knowledge (ProdBOK) as editor-in-
chief. He is also an adjunct professor at DePaul University’s College of
Computing and Digital Media where he teaches graduate and
undergraduate courses on high-tech and digital product management.

Greg is a regular contributor to a wide variety of industry publications and

a former board member of the Business Architecture Guild. As a Guild
member Greg actively contributed to the development of the product
chapter of the BIZBOK™ Guide. Greg has also been asked to contribute
his product management knowledge to a growing list of other professional
bodies of knowledge, including the Institute of Electrical and Electronics
Engineers (IEEE) first ITBOK and the latest BABOK Guide. Greg’s
articles have been published by the Silicon Valley Product Management
Association, the Boston Product Management Association, the Association
of International Product Marketing and Management, Project Times, the
American Society for the Advancement of Project Management, the
International Project Management Association, and the Business Analyst
Times.

Greg earned his undergraduate degree from the University of Vermont and
continued his executive education at Harvard University, the
Massachusetts Institute of Technology (MIT), and the Wharton School.

You can learn more about Greg and Actuation Consulting at

www.ActuationConsulting.com.

Steven D. Eppinger is professor of management science and innovation at

the Massachusetts Institute of Technology (MIT) Sloan School of
Management. He also holds the General Motors Leaders for Global
Operations chair and has a joint appointment in MIT’s engineering
systems division. He is the co-director of MIT’s system design and
management program, and served as deputy dean of the MIT Sloan School
from 2004 to 2009. Before joining the faculty, he received bachelor’s,
master’s, and doctoral degrees from MIT in mechanical engineering.

Professor Eppinger has created an interdisciplinary product development

course in which graduate students from engineering, management, and
industrial design programs collaborate to develop new products. He also
teaches MIT’s executive programs in product development and complex
project management. Professor Eppinger has co-authored a leading
textbook entitled Product Design and Development (5th edition, 2012,
McGraw-Hill) that is used by hundreds of universities around the world.

Professor Eppinger is a renowned researcher specializing in development

of complex technical systems. He has published dozens of articles in
academic journals and technical conferences, including many papers that
have advanced the design structure matrix methodology. His book based
on this research is titled Design Structure Matrix Methods and
Applications (2012, MIT Press).

Have comments or feedback for the Editors? You can contact us at

[email protected].
 Table of Contents
Foreword
Section 1: Understanding Product Management
Chapter 1: Introduction
1.1 What Is The Guide to the Product
Management....
1.2 Introducing a New Standardized....
1.3 The ProdBOK’s Audience
1.4 Laying the Groundwork for
Certification....
1.5 The ProdBOK Guide Structure in
Summary
Chapter 2: Product Management and Product Marketing
Management
2.1 The Current State of Product
Management
2.2 The History of Product Management
2.3 The Evolution of Brand and Product
Management
Chapter 3: What Is a Product?
3.1 Goods and Services
3.1.1 Goods
3.1.2 Services
3.2 Brands
3.3 Product Lines
3.4 Extensions
3.4.1 Brand Extensions
3.4.2 Line Extensions
3.4.3 Category Extensions
Chapter 4: What Is Product Management?
4.1 Internal and External Aspects of Product
Management
4.2 Structure of Product Management
 4.2.1 The Upstream/Downstream Product
Management Model
4.3 Product Management Structure within
Organizations
4.4 Product Management’s Relationship to
General Management
4.5 Managing and Marketing Goods and
Services across All Industries and
Companies
4.6 Variations by Industry and Maturity
Chapter 5: Common Product Management Roles
5.1 Product Manager
5.1.1 Market-Facing
5.1.2 Internal
5.1.3 Technical
5.1.4 Service
5.2 Product Marketing Manager
5.3 Product Portfolio Manager
5.4 Product Owner Outside of Scrum
5.4.1 The Product Owner and Scrum
Chapter 6: Aligning ProdBOK with Other Existing Processes
(and Why It Matters)
6.1 Strategy and Innovation Processes
6.1.1 Strategy
6.1.2 Innovation
6..2 Value Creation Processes
6.2.1 Serial Processes: Waterfall and Phase-
Gate
6.2.2 Iterative
6.2.3 Iterative/Incremental Processes—
Agile, Scrum, Extreme Programming (XP),
and Lean
The Agile Theory
Chapter 7: Product Management’s Relationship with Other
Disciplines
7.1 A Closer Look at Project Management
Methods and Their Application within the
Product Management Framework
7.2 Core Project Management Methods and
Processes
7.2.1 Methods and Processes Used in Project
Initiation
7.2.2 Methods and Processes Used in Project
Planning
7.2.3 Methods and Processes Used in Project
Execution, Monitoring, and Control
7.2.4 Methods and Processes Used in Project
Closeout
7.3 Applying Project Management during the
Conceive Stage (“Fuzzy Front End”)
7.4 Applying Project Management during
Product Development
7.4.1 Project Management Activities in the
Develop Phase
7.5 Project Management in
Commercialization/Operations
7.5.1 Potential “Projects” Related to Product
Commercialization
7.5.2 Potential “Projects” Related to Ongoing
Operations
7.6 How Program Management Relates to
Product Management
7.6.1 Core Project Management Methods and
Processes at the Program Level
7.6.2 Sound Program Management Practices
7.6.3 Dedicated Project Management
Personnel (Where Appropriate)
7.7 How Project Portfolio Management
Relates to Product Management
7.8 Business Analysis
7.8.1 Business Analysis Governing
Organization and Body of Knowledge
7.8.2 Product Management and Business
Analyst
 7.8.3 Business Analysis Skills and
Knowledge
7.8.4 Scenarios for Leveraging Business
Analysis
7.8.5 The Role of the Business Analyst in
Product Design
7.9 User Experience and Product
Management
7.9.1 A Closer Look at User Experience
7.9.2 Product Management and User
Experience
Section 2: The Product Management Lifecycle Framework
Chapter 8: Introduction to the Product Management Lifecycle
Framework and Process Groups
8.1 The Advantages of Implementing a
Standard Product Management Lifecycle
Framework
8.2 A Common Lexicon
8.3 The Product Management Lifecycle
Framework
8.4 Defining Roles within the Product
Management Lifecycle Framework
8.5 Mapping a Product’s Production Process
8.6 Product Management Processes for a
Product
Chapter 9: The Fundamentals
9.1 Levels of Product
9.2 Product Lifecycle
9.3 Market Segmentation
9.4 Innovation Types
9.5 Levels of Strategy
9.6 A Closer Look at Product Portfolio
Management
9.6.1 Portfolio Analysis
Chapter 10: The Conceive Phase
10.1 Setting the Stage
10.2 Product Concept Identification
 10.2.1 External Assessment
10.2.2 Opportunity and Threat Identification
10.2.3 Internal Assessment
10.2.4 Product Strategy Options
10.2.5 Create the Product Concept
10.2.6 Product Concept Approval
10.3 Product Concept Investigation
10.3.1 Document Naming Conventions
10.3.2 Establish a Cross-Functional Product
Concept Team
10.3.3 Market Investigation
10.3.6 Create Overall Project Charter
10.3.7 Create Preliminary Business Case
10.4 Exiting the Conceive Phase
Chapter 11: The Plan Phase
11.1 Plan Phase Activity Groups
11.2 Product Definition Activities
11.2.1 Product Requirements
User Experience and User Interface
11.2.2 Product Roadmap
11.3 Project Plan Activities
11.3.1 Development Plan
11.3.2 Other Supporting Functional Plans
(Preliminary)
11.4 Marketing Plan Activities
11.4.1 Product and Marketing Strategy
(Updated)
11.4.2 Launch Strategy (Updated)
11.5 Business Case Activities
11.5.1 Financial Analysis (Detailed)
11.5.2 Business Case (Updated)
11.6 Create Preliminary Product
Management Plan
11.7 Exiting the Plan Phase
Chapter 12: The Develop Phase
12.1 Develop Phase Activity Groups
12.2 Product Development Activities
 12.2.1 Product Implementation
12.2.2 Product Requirements Refinement
12.2.3 Product Verification Activities
Release and Configuration Management
12.3 Market Validation Activities
12.3.1 Beta Plan/Market Plan
12.3.2 Usability Testing
12.4 Launch Planning Activities
12.4.1 Launch Plan (Detailed)
12.4.2 Other Supporting Functional Plans
(Detailed)
12.5.1 Review Checkpoints
12.5.2 Business Plan Update
12.6 Exiting the Develop Phase
Chapter 13: The Qualify Phase
13.1 Market Validation Activities
13.1.1 Beta or Market Test
13.2 Launch Preparation
13.2.1 Marketing Launch Preparation
13.2.2 Manufacturing and Operations Launch
Preparation
13.2.3 Sales and Channel Launch Preparation
13.2.4 Customer Support Launch Preparation
13.2.5 Product Documentation Delivery
13.3 Launch Readiness Assessment
13.3.1 Business Plan Update (Final)
13.3.2 Launch Decision
13.4 Exiting the Qualify Phase
Chapter 14: The Launch Phase
14.1 The Importance of Market Type in
Setting Launch Strategy
14.2 Product Launch Activity Groups
14.2.1 Launch
14.2.2 Post-Launch
14.3 Exiting the Launch Phase
Chapter 15: The Deliver Phase
15.1 Product Deliver Stages
 15.1.1 Growth
15.1.2 Maturity
15.1.3 Decline
15.2 Controlling the Length of Product
Lifecycle Stages
15.3 Exiting the Deliver Phase
Chapter 16: The Retire Phase
16.1 End-of-Life Plan
16.1.1 External Areas of Impact to Consider
in End-of-Life Plan
16.1.2 Internal Areas of Impact to Consider
in End-of-Life Plan
16.2 Phase Review
Section 3: Key Product Management Tools by Product Lifecycle Phase
Chapter 17: Product Management Tools
17.1 The Conceive Phase Tools
17.1.1 Product Portfolio Management
17.1.2 Product Concept Identification
17.1.3 Product Concept Investigation
17.2 The Plan Phase Tools
17.2.1 Product Requirements Document
(PRD)
17.2.2 Project Planning
17.3 The Develop Phase Tools
17.3.1 Usability Evaluation Methods
17.3.2 Alpha and Beta Plans
17.3.3 Launch Plan
17.4 The Qualify Phase Tools
17.4.1 Launch Readiness Checklist
17.5 The Launch Phase Tools
17.5.1 Product Launch Plan
17.5.2 Messaging and Positioning Platform
17.5.3 Sales and Channel Readiness Plan
17.5.4 Demand Generation Plan
17.5.5 Analyst Relations Plan
17.5.6 Public Relations and Media Plan
17.6 The Deliver Phase Tools
 17.6.1 Market Analysis Template
17.6.2 Channel Strategy and Plan
17.6.3 Pricing Comparison Chart
17.6.4 Product Demos
17.6.5 Analyst Strategy and Briefings Plan
17.6.6 Public Relations and Media Plan
17.7 The Retire Phase
17.7.1 End-of-Life Plan
Appendix A: Contributors and Reviewers of ProdBOK® Guide – First
Edition
Appendix B: References
Appendix C: Glossary of Terms
About the Editors
List of Tables and Figures
Figure 5-1. Product Managers Perform Their Role at the Nexus
between the External Market and Internal Constituents
Figure 5-2. Product Owner Hierarchy
Figure 6-1. Common Processes and Bodies of Knowledge That
Operate within the Product Management Framework
Table 6-1. Comparison of Manufacturing and Product
Development Considerations
Table 6-2. Value Creation Processes
Figure 6-2. Serial (or Waterfall) Model
Figure 6-3: Traditional Software Development Assumes a
Defined Sequential Process
Figure 6-4: Software Development Follows an Empirical Process
Figure 6-5. Agile Release Burndown Chart
Figure 6-6. A Simple Task Board
Figure 6-7. Scrum Process Diagram
Figure 8-1. The Stages of the Product Management Lifecycle
Figure 8-2. The Seven Phases of the Product Management
Lifecycle
Figure 8-3. The Combined Stages and Phases of the Product
Management Lifecycle
Table 8-1. Abbreviated RACI Matrix – Technology Industry
Example
Figure 8-4. Product Production Process Example41
Figure 9-1. Kotler’s Five Levels of Product
Figure 9-2. Product Lifecycle
Figure 9-3. Diffusion of Innovation Bell Curve
Figure 9-4. Ansoff Matrix
Table 10-1. External Assessment: Inputs and Outputs
Table 10-2. Opportunity and Threat Identification: Inputs and
Outputs
Table 10-3. Internal Assessment: Inputs and Outputs
Table 10-4. Product Strategy Options: Inputs and Outputs
Table 10-5. Create the Product Concept: Inputs and Outputs
Figure 10-1. Only the Strongest Product Concepts Survive
Through to the Launch Phase
Table 10-6. Product Concept Approval: Inputs and Outputs
Table 10-7. Product Concept Team: Inputs and Outputs
Table 10-8. Understand the Target Market: Inputs and Outputs
Table 10-9. Illustrate the Market Problem: Inputs and Outputs
Table 10-10. Analyze the Competition: Inputs and Outputs
Table 10-11. Document Market Requirements: Inputs and
Outputs
10.3.4 Solution Investigation
Table 10-12. Identify Solution Candidates: Inputs and Outputs
Table 10-13. Study Feasibility and Alternatives: Inputs and
Outputs
Table 10-14. Document Initial Product Requirements: Inputs and
Outputs
Table 10-15. Obtain Market Feedback: Inputs and Outputs
Table 10-16. Assess Operational Impacts: Inputs and Outputs
10.3.5 Develop the Product and Marketing Strategy
Table 10-17. Set Product Vision and Strategy: Inputs and Outputs
Table 10-18. Set Preliminary Value Proposition and Positioning:
Inputs and Outputs
Table 10-19. Set Product and Marketing Objectives: Inputs and
Outputs
Table 10-20. Create Preliminary Launch Strategy: Inputs and
Outputs
Table 10-21. Identify Product and Market Risks: Inputs and
Outputs
Table 10-22. Create Product and Marketing Strategies: Inputs
and Outputs
Table 10-23. Create Project Charter: Inputs and Outputs
Table 10-24. Create Preliminary Business Case: Inputs and
Outputs
Table 11-1. Product Requirements: Inputs and Outputs
Figure 11-1. Product Roadmap Example
Table 11-2. Product Roadmap: Inputs and Outputs
Table 11-3. Development Plan: Inputs and Outputs
Table 11-4. Preliminary Functional Plans: Inputs and Outputs
Table 11-5. Updated Product and Marketing Strategy: Inputs and
Outputs
Table 11-6. Updated Launch Strategy: Inputs and Outputs
Table 11-7. Detailed Financial Analysis: Inputs and Outputs
Table 11-8. Updated Business Case: Inputs and Outputs
Table 11-9. Preliminary Product Management Plan: Inputs and
Outputs
Table 12-1. Product Implementation: Inputs and Outputs
Table 12-2. Product Requirements Refinement: Inputs and
Outputs
Table 12-3. Product Verification: Inputs and Outputs
Table 12-4. Release and Configuration Management: Inputs and
Outputs
Table 12-5. Beta Plan: Inputs and Outputs
Table 12-6. Usability Testing: Inputs and Outputs
Table 12-7. Detailed Launch Plan: Inputs and Outputs
Table 12-8. Detailed Functional Plans: Inputs and Outputs
Table 12-9. Documentation: Inputs and Outputs
Table 12-10. Review Checkpoints: Inputs and Outputs
Table 12-11. Updated Business Plan: Inputs and Outputs
Table 13-1. Beta Test: Inputs and Outputs
Table 13-2. Marketing Launch Preparation: Inputs and Outputs
Table 13-3. Manufacturing and Operations Launch Preparation:
Inputs and Outputs
Table 13-4. Sales and Channel Launch Preparation: Inputs and
Outputs
Table 13-5. Customer Support Launch Preparation: Inputs and
Outputs
Table 13-6. Product Documentation Delivery: Inputs and Outputs
Table 13-7. Final Business Plan: Inputs and Outputs
Table 13-8. Launch Decision: Inputs and Outputs
Table 14-1. Launch Activities: Inputs and Outputs
Table 14-2. Post-Launch Activities: Inputs and Outputs
Table 16-1. External Areas of Consideration for an EOL Plan
Table 16-2. Internal Areas of Consideration for an EOL Plan
Table 16-3. End-of-Life Plan: Inputs and Outputs
Figure 17-1. BCG Growth-Share Matrix
Figure 17-2. Profits from Cash Cows Fund Investments in
Question Marks and Stars
Figure 17-3. Progression from Star to Dog over Time
Figure 17-4. GE-McKinsey Matrix
Figure 17-5. SWOT Matrix Example
Figure 17-6. TOWS Matrix with Strategy Options
Figure 17-7. Example Idea Prioritization Matrix
Figure 17-8. Example Competitive Analysis Matrix
Table 17-1. Positioning Statement Framework