Wednesday, May 26, 2010

Fidelity or Convenience: Which Path Are You On?

On June 2nd, I'll be attending an open session hosted by the Silicon Valley Product Manager's Association (SVPMA) entitled Best Practices for Product Management for V1 Products.  (If that link is out of date, it's because the SVPMA doesn't create unique URLs for its workshops.)

Having a mere few years of direct product management experience, this workshop interests me considerably.  It's not that often that PMs get to work on V1 products.  The ability to discuss and define the business objectives, to formulate a strategy, and to work with a clean slate presents itself.  Having managed Vx products, this seems like such a novel and exciting idea.  Of course, it's also fraught with peril.

I recently read the book Trade-Off by Kevin Maney in which he explores two factors that can determine whether a product is successful or not: Fidelity & Convenience.  The idea is rather simple; successful products either have high fidelity (quality, caché, brand, and often price) or high convenience (simplicity, ubiquity, often low price).

Ferrari, for example, is the quintessential high fidelity automobile.  New models are infrequent.  Supply is limited.  Performance is extraordinary.  Styling is unparalleled.  Price is prohibitively expensive.  Honda, on the other hand, is among the most convenient automobiles.  Modestly priced.  Common amenities.  Available almost everywhere.  You probably know a few people who drive Hondas.  You probably don't know anyone who drives a Ferrari.

Maney illustrates the fidelity/convenience trade-off using an axis, represented in the following graphic (my own image).


This is not to say that high fidelity products have no convenience factors, or vice-versa.  Rather, when defining a product, it is important to know which axis will be the basis for your product.  Are you aiming for high convenience (such as iTunes) or high fidelity (such as a Sota turntable)?
 
If you attempt to define a product that has both high fidelity and high convenience, you are grasping at what Maney calls the Fidelity Mirage; an unattainable position that results from the inherent incompatibility between high fidelity and high convenience.

Starbucks coffee is now chasing the fidelity mirage.  At one point, Starbucks was the definition of high fidelity coffee; it was to coffee what Sam Adams was to beer back in the early 1990's during the microbrewery explosion.  However, Starbucks is now everywhere.  They no longer hire or train real baristas; they bring in high school students who learn fast-food-like routines and have very little knowledge of coffee or coffee culture.  Starbucks recently launched a line of instant coffee called VIA.  Let me repeat that: instant coffee.  Starbucks is reaching for uber-high convenience, and as a result, its image as a high fidelity product is suffering.  They are at risk of becoming the next Dunkin' Donuts.

The axis also contains an area called the fidelity belly; this is where mediocre products languish, failing to develop a strategy that moves along either the fidelity or convenience axis.  The Laserdisc was a classic fidelity belly item.  It was not as convenient as VHS tapes (laserdiscs were cumbersome and expensive, and there weren't enough titles available) and did not represent sufficiently high fidelity to make the transition worthwhile.  It wasn't until DVDs came about that the mighty VHS (which crushed BetaMax, another fidelity belly product) met its demise; losing out in fidelity and ultimately convenience too.  Ironically, DVDs are in the belly today; on-demand video (Netflix, Hulu, et al.) is more convenient, and Blu-Ray is higher fidelity.  Looking forward, it won't be long until on-demand video surpasses physical media all together.

When defining, designing, and delivering our products the fidelity vs. convenience trade-off must be taken into consideration.  Who is it that you're targeting?  Is your product on a clear path toward convenience or fidelity?  The answer should not, and Maney argues cannot, be both.

Wednesday, May 19, 2010

Social CRM: Putting Customers First

Last night I attended Social CRM: Putting Customers First, hosted by the San Francisco chapter of the Social Media Club.  It was a great event, and I'll briefly recap some of the discussion and my observations.

The panelists were first asked why Social CRM (SCRM) was relevant.  Their answers were as follows:
  • Vendors need to know who their customers are out there on the social web.
  • Vendors need to be able to identify customer pain points from conversations on the social web. 
  • Vendors need to know what to do with these conversations on the social web.  These discussions are the center of business today; their importance cannot be understated.
  • The social web grows too fast for vendor solutions to keep up.  Therefore, vendor solutions must embrace the social web, and learn how to crowdsource.  There is no way that you can scale communities and community managers that fast.
  • Customers don't care about your organization structure, they just want answers and solutions.
One of the things that leaped out right away was how much of the conversation revolved around collecting customer data from the social web, opposed to traditional vendor-owned community sites.

When a customer engages a vendor (or vice versa), the vendor should be equipped with that customer's full range of relevant information—call records, emails, tweets, blog posts, facebook status updates, etc.—so that the vendor can better understand the customer's sentiment, concerns, and needs.

Of course, this is not always feasible or easy.  Identity disambiguation is a big challenge.  Carnegie Mellon University is currently researching this, and what they're finding is that identities can be determined by their unique social network imprints; an individual's social network map might be the closest thing to a social "fingerprint" that exists online.

One interesting question that came up was: Who owns the data collected from the social web?  For example: if Vendor B watches all tweets about "Vendor B", and is able to map that to some customer ID and store it in the SCRM system, does the vendor actually own that collected data?  It's a legal gray area, but it would initially appear that the vendor would in fact own that data.  Finders keepers.

Another topic that came up was incentives.  Studies have shown that monetary incentives are a terrible idea; even incentives with tangible rewards can be a bad idea because it encourages the wrong kind of participation.  You don't get the "good" data that you're after; instead you get reems of low or no-quality data submitted by members who are after a prize.

In the spirit of the recent Facebook media fiasco, there was a healthy debate over privacy.  Of course, vendors feel that they want all that information on the social web and that they're entitled to it.  Many customers feel otherwise.  There are potential abuses of such data; such as health insurance companies bumping premiums on people who announce that they ate half-a-dozen doughnuts or who post pictures of themselves smoking/drinking.  The panelists all felt that data collected from the social web should be used as a means to a) better understand their customer and b) reward their customers with responses and feedback.  There seemed to be no interest among the panelists in using that data to punish customers.

The panelists all expressed confidence about the emergence of SCRM, but acknowledged that vendors that don't have social cultures will struggle with this.  Vendors need a social strategy for employees within the organization and for engaging customers outside the organization.

The SMC folks said they were going to try to broadcast a video of this event online.  If they do, I'll be sure to post a link.

Cheers!

Tuesday, May 18, 2010

Why Have a Product Strategy?

About two weeks ago, I attended my first event hosted by the Silicon Valley Product Manager's Association (SVMPA). The main speaker was Barbara Nelson, a consultant for Pragmatic Marketing who gave a presentation entitled "Why Have a Strategy?" What follows are some takeaways from that presentation.

One would think that by now, most organizations would know precisely why a strategy is necessary. When I say organization, I don't just mean high-tech companies, as many in the valley naturally assume. This applies to all organizations; large, small, corporate, non-profit, etc.

Think about it for a moment. Think of all the activities that your organization is engaged in. Are they strategically aligned to accomplish a goal? What is the strategy? Is there even a goal or a vision in place?

A 2006 study titled "Making Strategy Execution a Competitive Advantage" showed that only just over half (54%) of companies surveyed have a strategic execution process in place. Of those, only 5% of the companies communicate that strategy to their employees. That means that 95% of the employees at companies with strategies in place are working in the dark. When you factor in the employees at companies without a strategy in place, the over-all percentage of employees without a strategic reference climbs to nearly 100%. It's a wonder that anything gets accomplished at all.

During my Software Project Management sequence at UC Berkeley Extension, one of my teachers shared the following anecdote. During the 1960's, a national news crew was interviewing a machinist of sorts in Maine. When asked what he was working on, he replied that he was working on the Space Program; the initiative set by President John F. Kennedy to put a man on the Moon. The important thing is that the man did not say he was fabricating metal tubing, or he was working for the local plant. He understood exactly what he was working on. He understood the vision; the ultimate goal towards which his efforts were contributing in a strategic, systematic manner. Therefore, he was highly motivated and proud of his work.

Having a stated strategy is good for morale. It's also essential for maintaining efficiency. Strategies do not merely help you determine what are going to do, but sometimes more importantly, what you are not going to do.

Without a strategy in place, organizations waste valuable time and resources grasping at straws and get sucked into diversions that often undermine the original goal. I once worked with an organization that had seven major initiatives on a limited budget. During a strategic planning session, we examined each initiative and asked ourselves, does this fit in with the stated goal? As it turned out, very few of them did. The lack of a strategy cost this organization many hundreds of thousands (perhaps millions?) of dollars and several person-years of wasted work.

Product managers play the pivotal role of bridging strategy with execution. Without a clear understanding of both the goal and the strategy for accomplishing that goal, a product manager cannot move a product or a company forward.

If you are a product manager, ask yourself: Do you know what the goal is? Do you know what the strategy is for achieving that goal? If the answers to these questions are "no", then stop reading this blog, get up, and go find out now. Ask your boss. Ask your CEO or Executive Director. Ask your Board of Directors.

It's entirely possible (although frightening) that perhaps even they don't know the answer to those questions. If so, then you've got to stress the importance of having a strategy. Perhaps you are the person to help lead that discussion.

With a clear understanding of your goal and strategy, a product manager is effectively the "Product President". Without this understanding, you are merely the "Product Janitor".