Who owns the product? Who listens to the market? Functions and malfunctions at B2B software companies.
How different from the diagram below you organisation is?
In a Sales-Driven organisation, “Build” and “Sell” are siloed:
- BUILD: Developers builds products that they believe catering to “The Customer”. They often spend time in fighting with sales (which ask: “how long it will take to do what X is asking for? I need to close the deal!”). As soon as the estimate is out, sales sell that feature to all customers. That feature becomes a liability. And that customer doesn’t even use it, as often it turns out (Features built to one customer’s specification silently, bur very rapidly kill your product)
- SELL: Sales Channel know how our product answers the problems of potential buyers. At least in theory. They have clear financial objectives to meet (i.e. a quota). When in desperation, they will do anything to sell, including forcing development to build a feature that one loud, key customer is yelling about, or even using a roadmap as a contract.
- Marketing: often equals Marketing Communications, that is, “Promotion” as is seen by non market-driven companies. They polish a message that come from sales or that they just make it up. They run costy ads, generate a few leads, support sales as they can. They don’t spend any direct time with buyers and customers. Sales arethe only source of customer information. Sales and Marketing are on a continuous fight as well. Worst, Marketing people are often asked by management to create the need for their products. The product doesn’t sell? Make it look great (which is like putting lipstick on a pig). Make better brochures. But guess what: buyers don’t need what they don’t need.
And by the way, who are these buyers again?
Now, I bet (and I hope) this pretty sad representation is not what you do at your company. However, how many times we have seen product decisions influenced by loud individuals and by single, although important, “mission critical” sales opportunities?
Thee reality is that most software companies start with that simple approach. Someone who builds, someone who sells. Plus, someone who spends a fortune in logos, web redesign, costly Adwords campaigns for a generic audience. Sometimes it’s a small group of developers and someone that wears many hats including sales and business development. Nothing wrong with that. Except that too many companies keep such sales-driven approach forever. Well, at least, until things get broken. Then we hear “the product doesn't sell” or in “our competitors are killing us”. The reason in almost always the same:
The product is no longer connected with the market. There is a lack of deep understanding of customers
The company has retreated into a cave and that has been happening for a while now.
What is the market anyway?
The market is made of groups of people (potential buyers) that have a common sets of problems that are critical, urgent and that they are willing to pay to be solved. It’s NOT made of (just) existing customers!
As a matter of fact, potential customers are those who we need to focus on, not existing ones. Who are they? Potentials and evaluators. They have not bought anything. They may be shopping, or just ignoring the problem. Or they think that solution is hard or expensive. They often don’t know we exist.
Existing customers: we will hear from them anyway. Be aware that listening only to our existing customers “wants” usually gets us into the so called customer-driven spiral of death (*).
But who are these potential customers exactly?? That’s the big question. In a market-driven company, who owns the product must spend much of his time in understanding who they are. Who is doing that at your company?
Market Driven Organizations
They look like this:
Market-driven organizations are connected with customers, especially potential ones. They highly value customer discovery and outside-the-building initiatives, such as customer interviews.
Who manages the product if that shouldn't be neither sales or development?
In early 2000's product management and marketing training pioneers, such as Pragmatic Marketing, have filled this void by defining product management and product marketing in a very clear and widely adopted way.
Product Management is more an inbound role.
A strategic Product Manager identifies a market problem, quantifies the opportunity to make sure it’s big enough to generate profit, and articulates the problem to the rest of the organization. He communicates the market opportunity to the executive team with business rationale for pursuing the opportunity including financial forecasts and risk assessment.
A technical Product Manager communicates the problem to Development in the form of market requirements, user stories, user personas. He maintains feature logs and facilitate decision making by using the voice of the market. In SCRUM, this is called Product Owner
On the other hand, a Product Marketing Manager:
- Communicates to marcomm (e.g. messaging, web content) and field marketing (e.g. campaigns) by building or using positioning documents, one for each type of buyer. Empowers the sales effort by informing the sales process, supported by the required sales tools so the prospect customer can choose the right products and options, guided by sales.
- A product marketing manager knows that win/loss interviews and analysis is critical to develop a deep understanding of Buyers (Buyer personas development). He lives in a world of prospect buyers.
A Market Driven organization
Define offerings based on what the market wants to buy (because we solve critical, pervasive and urgent business problems). Mainly for buyers (that have that problem and have budget)
It is not driven on what we have already (at least, not only)
Instead of talking about the company and our products, the successful marketing leaders talk about customers and their problems
Fall in love with problems, not solutions!
Intuit Mantra
Market-Driven leaders:
- Drive the company by offering the perfect solution to a specific problem. A product/service that people want to buy without being coerced.
- An offering that establishes a real and direct connection to what your market values most.
- An idea that people immediately understands, that has value to them even if they never heard of your company or its products/service.
- In fact, Market-driven leaders never focus on competition. They focus their energies on the problems that buyers are willing to pay to solve
well, it looks obvious…
Right. It is simple and it does sound pretty obvious. Still, the majority of new products fail. Harvard Business Review, Forbes and several other talk about 80-90%
Why?
It is an organizational issue
Most execs struggle to answer simple questions:
- What business are we in?
- What business are we NOT in?
- Who are your buyers?
- What’unique about our offering? That is valued by your customers?
- What is our positioning strategy?
- How do we compete?
- Why the other guys seem to win more often?
- How we can turn a profit?
And, do you know why?
Because most organizations are still inside out.
They develop offerings within their own walls (caves) entirely based on what they already know.
They spend lots of money to take dissonant ideas into the market (instead of focusing on buyers which by the way is far less expensive).
Further readings I recommend:
Here is the place where I have learned most of what I know today as a product manager, since 2001: pragmatic marketing
And, here are my top, favorite Product Managers:
