McKinsey Digital
Apr 24, 2018 · 5 min read

by Mason Adair, Digital Product Strategy at Digital McKinsey

In the first article in this two-part series on Agile Commercialization, I suggested re-imagining the approaches that many larger companies impose upon new products.

Companies simply cannot afford to invest heavily in new ‘digital factories’ which innovate and develop products at startup-pace while leaving intact slow-moving commercialization bureaucracy. A nimbler commercialization process is needed if companies are to truly unlock the value of digital transformations.

After overcoming often divergent attitudes and expectations, sales reps, product managers and product marketing managers can collaborate as members of an Agile Commercialization Team (ACT), whose charter is the development of a mature product pitch through iterative tests involving real customers making real purchase decisions.

image credit: Mason Adair, Digital McKinsey

Successfully deploying Agile Commercialization for new products will involve a mix of performance incentives, people and process measures. With these conditions in place, product pitches and the products themselves will mature sooner, and with less investment as a result of their early exposure to the market as well as systematic incorporation of the type of learning that only real-world experience can offer.

Here are the 10 keys to putting Agile Commercialization in practice

1. Adjust Sales Incentives

To counterbalance the relative difficulty of selling new products, it’s fair to reward the sales reps that volunteer to lead the charge. Performance incentives such as ‘spiffs’ will formalize the special nature of MVP sales activities and provides justification for the additional work of collaborating with product teams, developing the message, and selling.

2. Screen your Sales Reps

The additional incentives will make the ACT attractive for many of the more adventurous sales reps, but there shouldn’t be an open-door policy. For practical considerations, the ratio of sales reps to product managers should be roughly 4:1. The reps that do make the cut would be those that manage relationships to early-adopter customers and who also have a personality that’s compatible with the challenges of MVP sales.

3. Hire ‘Story-Teller’ Product Managers

A trait that the product management community has determined is critical for early stage product managers is a strong capacity for ‘narrative,’ or ‘story telling.’ Product managers who have this ability are better at providing direction for their teams and at expressing a compelling product vision externally. Companies would do well to staff narrative-capable product managers for new MVP efforts and members of the ACT.

4. Convene the Agile Commercialization Team

With participants carefully selected, the agile commercialization team can begin working. They will start by deciding how they will interact, selecting an iterative working model based on methods like Kanban or scrum. Their chosen process will determine how they collaborate, but in all cases, there should be some form of a ‘backlog’ of pitch development tasks as well as a ‘product,’ which will be the collection of materials and content that represent ‘the pitch.’

5. Split the Pipeline

Early adopter prospects for minimum viable products look different than customers for established products and, as such, should be qualified, approached, and managed differently. Bi-weekly pipeline meetings aren’t appropriate for the high-touch, high frequency interaction that both customers and the ACT team will need. Companies concerned about reputation damage due to ‘spillover’ of early stage products and pitches into sensitive accounts might also want to limit MVP sales activities to customers via specific channels, verticals, geographies or other ways to target MVP-friendly prospects.

6. Pitch to Exactly Five Customers per Iteration

As this is intended to be a lean market validation exercise, it’s important that the insight is reasonably broad but also as concise as possible. There is a general consensus that product usability research should be conducted with no more and no fewer than five participants. The rationale for this magic number of usability test participants can be quantified as follows:

“Given that the probability of a user encountering an error during testing is 31% … testing just 5 users would turn up 85% of the problems in an interface. A Poisson Distribution with a 31% binomial probability shows that once you add more than 5 users to a test group, returns diminish drastically.”

Jeff Sauro

I’m not aware of a generic estimate of the ‘error rate’ or, more appropriately, ‘customer objection rate’ specifically for product pitches, but absent a better number, borrowing the ‘rule of 5’ from other qualitative product validation methods is reasonable.

7. Make Them Pay

This cannot be a theoretical exercise. Customer pitches need to be developed on the basis of a real tradeoff of value for investment. It’s not possible to obtain good feedback on the tradeoff inherent to the pitch if customers aren’t being asked to make an investment that at least approaches the cost of their alternative solutions to their problem.

8. Bring Product Managers to the Table

One reason to have the ACT pitching to customers before the first product release is that the first rounds of customer feedback on the pitch will likely also yield a valuable of insight that product managers may choose to incorporate into the actual product. While they shouldn’t participate in every customer meeting, product managers should visit customers during each iteration.

“You cannot be sure you really understand any part of any business problem unless you go and see for yourself firsthand. It is unacceptable to take anything for granted or to rely on the reports of others.”

- Eric Reis

The ACT may choose to have the product manager attend more meetings early on and reduce the frequency of their attendance during later iterations, but it is nevertheless critical that product managers are exposed to customer reactions to the pitch firsthand.

9. Version Control the Pitch

As customer feedback is collected, new learning will be incorporated into each pitch iteration. The worst case for any research effort is testing with the wrong stimuli, so it will be important that each customer is presented the most current version of the pitch. To ensure this, the ACT team should establish a structured way to publish and distribute updated pitch materials, which will occur a much higher frequency than reps will be used to and legacy methods accommodate.

10. Have an End in Sight

Product managers can’t spend time in the field indefinitely; and anyway, the objective of developing a mature pitch is to help sales be self-sustaining. For these reasons, there should be a targeted end date for the ACT. Teams can choose to extend as appropriate, but this should be a conscious decision and should be connected with a retrospective discussion of the causes of the extension and how those can be mitigated.


REFERENCES

The Lean Startup | The Movement That Is Transforming How New Products Are Built And Launched. (2011). Theleanstartup.com. Retrieved 23 April 2018, from http://theleanstartup.com

The importance of narrative in product management. (2013). Mind the Product. Retrieved 23 April 2018, from https://www.mindtheproduct.com/2013/08/the-importance-of-narrative/

Poisson Distribution — from Wolfram MathWorld. (2018). Mathworld.wolfram.com. Retrieved 23 April 2018, from http://mathworld.wolfram.com/PoissonDistribution.html

Header image from Unsplash

McKinsey Digital Insights

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Creating value by reinventing the core, together. http://www.digitalmckinsey.com

McKinsey Digital Insights

Going beyond our insights and knowledge to connect you with McKinsey Digital.

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