Case Study: How Alpha enables teams to make smarter product decisions more cost-effectively

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Data-Driven Product Management

A study by The Harvard Business Review analyzed the utilization of competitive intelligence and market insights within large corporations. They found that an astonishing 45% of analysts’ input had no impact on decision-making within the company. The primary reason, suggests HBR, is that “many executives decide on a course of action and then use competitive intelligence to ratify their choice.”

That’s unfortunate because, according to the MIT Center for Digital Business, companies in the top third of their industry who reported using “data-driven decision making” were approximately 5% more productive and 6% more profitable than their competitors.

So how do you incorporate data-driven decisions into product management? It starts with strategy.

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Setting a product strategy

Product managers take part in a number of strategic planning activities. Every company has different planning practices, but there are a few commonalities amongst the highest performing digital companies. These companies have an audacious vision, a roadmap that defines what products and features to build to achieve that vision, and a product strategy that describes how product development fits into the business strategy and company vision.

The company vision is typically set by the Chief Executive Officer, potentially with help from a Chief Product Officer or other c-level executives. The vision describes the ultimate impact the company will have in the world.

Blade Kotelly, Leader of the Advanced Concept Lab at Sonos, said that the vision should be at the bounds of what’s imaginable while still speaking to customer needs. “The best vision always speaks to enduring human needs”, he said. He elaborated, saying that if the vision is too fantastical, it’s not actionable. But if it’s too specific, there isn’t room to iterate based on customer feedback.

IKEA’s vision, for example, is to “to create a better everyday life for the many people.” This vision is not specific to the product they offer today (furniture) and is not something that can be definitively defined as achieved in the near future. It’s a north-star that inspires employees and customers.

The product strategy is typically set by the Head of Product. The product strategy describes how product management will help the company achieve the company vision and business goals.

Steven Haines, Author of the Product Manager’s Survival Guide and former Senior Director of Product Management at Oracle, described how developing a product strategy fits into a product manager’s role:

“It is vital that people who are in product roles be able to look at what’s going on with the business, identify what that future state ought to be and create a pathway to get there.”

The product strategy describes your target market and your method for achieving business goals. An effective strategy covers four key components: your customers, your competitors, your business, and the macro environment.

  1. Customers. The foundation of a successful business is a product that customers want. Therefore, the product strategy should first define who your customers are. Many companies serve multiple customer segments. For example, many banks provide services to both consumers and businesses.

    Make sure you have a strong understanding of your customers’ needs before setting a long-term product strategy or roadmap. And be willing to adjust as you get feedback from your customers throughout the product lifecycle.
  2. Competitors. Most companies have direct competitors in their market, or, at least, companies that provide a similar value proposition. The product strategy describes how you position your product to your customers given the other products and services on the market.

    In the cloud storage market, Box is more tailored to the needs of large companies than Dropbox. Airbnb provides guests with the opportunity to live like a local, while the major hotels provide a consistent experience across the world.
  3. Business. For-profit companies have shareholders that expect the company to make money and provide a return on investment. The product strategy describes how the product will make money and achieve business goals.

    Twitter is a consumer product that monetizes its user base through selling advertising space to brands. Box sells subscriptions to its enterprise customers. Companies employ a variety of different business models. It’s important to define your business so that your team understands how the product facilitates it.
  4. Macro Environment. The macro environment accounts for economic, technological, political, and cultural forces that may affect your market and your product over the short and long-term. The product strategy should account for the below factors as appropriate:

    1. Emerging markets where your product may have demand
    2. Emerging technologies that may impact your customers
    3. Economic forces that may impact your customers’ budgets or needs
    4. Evolving customer needs and behaviors

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Making a product roadmap

A product roadmap aligns product teams, key stakeholders throughout the organization, and customers on the product strategy and priorities. Creating a product roadmap is one of the most important parts of a product manager’s role.

When done effectively, the product roadmap reduces uncertainty about the future and keeps product teams focused on the highest priority product initiatives. There are always a million ideas and opportunities that product teams could be pursuing. The product roadmap shows everyone which to focus on.

In addition, the roadmap helps product leaders communicate the product vision and strategy to senior executives, sales and marketing teams, and customers, and manage expectations about when significant product milestones will be completed. When stakeholders don’t feel heard or are uncertain about where the product is going, they may begin to doubt the strategy, which can lead to a toxic work environment. The product roadmap aligns the key stakeholders on product goals, strategy, and development timelines.

The product roadmap typically illustrates the following key elements:

  • Product strategy and goals
  • What products and features will be built
  • When those product features will be built
  • Who is responsible for building those products and features
  • “Themes” or high-level priorities

Creating an effective product roadmap has many benefits for product leaders. However, the methods for doing so vary widely between organizations. Some of the following lessons will be appropriate for your organization’s culture and needs, while others may not be. Use what’s most appropriate for you.

  1. A product roadmap is not a panacea. Humans seek certainty in an uncertain world. Not knowing what the future holds can create an uneasy feeling. In theory, the product roadmap helps alleviate that stress and provides direction for the future. However, in practice, it’s hard to predict the future.

    If you’re running experiments and gathering customer feedback to iterate on your product, like most modern product teams, your roadmap will inevitably need to change in order to build the best product.
  2. Begin with a customer-focused vision. If your roadmap is not based on knowledge about what your customers needs, it’s easy for that roadmap to quickly becomes obsolete upon contact with customers. If your roadmap doesn’t align your team to build a product that solves a meaningful customer problem, it’s useless at best and counterproductive at work.

    So, have a vision: A north star that you may never reach, and make sure that north star is based on a validated customer need. The products and features you build to realize that vision may change, but the vision itself will not change.
  3. Incorporate input from key stakeholders. Responsibility for creating the product roadmap falls solely on the product manager. However, to achieve its stated purpose, the product manager must incorporate input from a number of different sources. These sources include:
    1. Customer feedback
    2. Engineering
    3. Sales and marketing
    4. The c-suite
    5. Partners
    6. Company vision
    7. Company business objectives
    8. Company and product strategy
  4. Focus on high-level priorities. Uncertainty can be stressful. But missed expectations may have even more severe side-effects than uncertainty. Missed expectations can lead to disappointment and doubt in leadership, which can be demoralizing or contribute to a toxic work environment.

    When it comes to long-term product milestones, you don’t necessarily need to map out detailed timelines specific outcomes in order to keep everyone aligned on the same priorities. It’s difficult to predict exactly what features you’ll release or when, anyways. That’s why David Cancel, CEO of Drift, recommends setting a roadmap based on “themes.”

    He starts creating the product roadmap by determining the three big things he wants to accomplish in a quarter. Then, he decides which features are best aligned with those goals. He says these themes keep the team focused on solving important problems as opposed to just building features.
  5. Be agile. Product teams that manage products in waterfall fashion decide what they’re going to build months or years in advance of the launch, and chip away at building them without much consideration for whether what they’re building will meet customer needs once it’s released. In this environment, it’s much easier to set a product roadmap for years into the future and stick to it.

    Product teams that take an agile approach to product management are constantly iterating on their product and feature set based on customer feedback. In this environment, the product roadmap is a living document that’s updated regularly.

    Rather than try to predict what features they will build years into the future, agile product managers regularly update their roadmap based on emerging market opportunities and customer feedback. By doing so, they can be more confident that they’re aligning the team and the public around features that will be successful
  6. Don’t get too into the weeds. The ultimate goal of any product team is to solve an important customer problem and achieve business outcomes as a result. What features you build to solve that customer problem are less important than solving it. Therefore, your roadmap doesn’t need to include every feature in your product backlog, or a list of bugs that need to be fixed. This information won’t be relevant to stakeholders outside of the product team, anyways.

    Make your roadmap simple and easy to understand. Communicate the most important elements of your strategy, goals, and development milestones, and leave out the rest. The details are likely to evolve as you get feedback from customers, anyways.

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Informing decisions with data

Emerging technologies such as artificial intelligence, virtual reality, chatbots, blockchain, and connected devices present a new universe of opportunities for product managers. Modern product teams have an abundance of ideas on how to improve customer experience and reshape industries using these technologies.

The challenge, however, is that most products fail to achieve meaningful customer adoption. The lack of customer adoption is often a result of building a product that customers don’t actually need. You can reduce the risk of this by conducting product research and running experiments throughout the product lifecycle.

If you conduct product research the right way, you will identify market opportunities and gain meaningful customer insights that will help you make decisions with confidence. Product research can help you early in the product lifecycle, to test value propositions and identify ideal customer segments, and later in the product lifecycle, to hone your usability and branding.

Once you’ve identified what you need to research, it’s time to pick the right approach for the job. Fortunately, there’s a strategy for answering just about any product question you’d want to answer.

 

  1. User discovery. User discovery tests are great for validating that users have a given problem and getting initial feedback on solution ideas. This type of research is typically conducted through surveys and interviews. That doesn’t mean that you simply ask users what they want. The value of the insights you gain from this research is dependent on the questions you ask.
  2. Competitive analysis. Competitive analysis can help you learn what users are currently doing to solve the problem your product solves. It shows you how users are acting, rather than just what they’re saying. If you have an idea for a chatbot to help people find the right doctor, and you learn that users are already using products to find doctors, you’ve validated that there is some demand to solve that problem.
    Getting feedback on competing products can also help you identify gaps in the market. For example, you might learn that your target users aren’t satisfied with the product recommendations they receive when shopping on Amazon and that they’re actively seeking a different shopping experience with better recommendations. This insight might encourage an e-commerce product team to test a new personalized product recommendation feature on their store.To conduct competitive analysis, survey users about their experience with your competitors or ask them to use your competitors’ products and provide feedback. 
  3. Product concept testing. Surveys, interviews, and competitive analysis help you learn more about your users’ pain points and what they’re currently doing to solve the problem that your product solves. Once you’ve discovered that there could be a market opportunity, it’s time to start testing your product idea.

    Rapid prototyping enables you to provide users with a visual representation of your product idea without having to spend all the engineering hours that would be required to actually build it. This enables you to gain insights that are more specific to the solution than the insights you gain from surveys or interviews.

    Prototyping is ideal for testing value propositions, onboarding flows, and feature sets. A prototype can be as simple as a static landing page that displays the value propositions of the product or as complex as a multi-page mobile onboarding experience.
  4. Feature prioritization. Does your restaurant discover app need to include a feature that enables users to share their location with their friends when they’re meeting at the restaurant they’ve selected? Does it need to include a feature that enables users to make restaurant reservations from within the app? Will any of these features make users more inclined to sign up and use the product?

    Split testing landing pages is a great approach to prioritizing your feature set. Send 100 users to a landing page that includes the location sharing feature and another 100 users to a landing page that doesn’t include the location sharing feature. See which one more users sign up for and get their feedback on the feature. While the results of a single test of this nature are not sufficient to provide a definitive answer to whether you should include the location sharing feature, it will provide you with a direction for further testing and identify any glaring risks.
  5. UX refinement. Identify reactions to individual page elements and designs to improve the UX of a product. The user experience (UX) is the user’s entire journey of using your product. This includes every touch point they have with your brand both online and offline. Refine the UX of your products by conducting surveys, conducting moderated testing sessions, and visiting users in their homes and offices.
  6. Usability testing. Usability testing helps you put the finishing touches on your product. This includes honing your branding, design, and copywriting. If you’re wondering what color your sign up button should be, this is the test for you. Ask users to complete an action on your app, such as searching for a restaurant, and get feedback from them in real-time. Consider a split test if you’re deciding between two different color schemes.

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