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May 2009

Top 12 Mistakes (3,4, 5)

I wanted to continue my analysis of Marty Cagan's Top 12 Product Management Mistakes. I already analyzed the first two mistakes here, and I included an introduction to jobs-to-be-done terms. I think it is helpful to look at the rest of the mistakes and offer ODI-based solutions. 

Mistake 3. Confusing Yourself With Your Customer

Marty identifies the third mistake as thinking "of yourself as more like the target customer than you are." This is a good mistake to avoid, but there are two dimensions to this mistake. The first is the functional job that the customers are trying to get done. Without a detailed understanding of the job, all the process steps in the job, and all of the needs in the job, it is almost impossible to make sure that your solution will meet the customer needs. The second is the consumption chain jobs (install, interface, learn-to-use, maintain, etc.). In this mistake, Marty is really talking about the consumption chain jobs (the "usability" in Marty's terms). 

Confusing yourself with your customer is only part of the reason usability testing fails to uncover flaws in the product. The real reason is because the product does not satisfy the functional job and the needs. Customers don't buy product to interface with them or to learn to use them. They buy products to get a functional job done. So it is no surprise that usability testing, no matter how much of it you do, fails to prevent a flawed product launch.  What is needed is testing of the features against the needs in order to validate that the feature satisfies the functional job's needs. And because needs in the job are metrics, satisfaction levels can be measured accurately. 

Continue reading "Top 12 Mistakes (3,4, 5)" »

Venturesome Consumers: The v1.0 Mistake

I'm reading Amar Bhide's The Venturesome Economy and he mentions Apple's iPod as an example of "the venturesome spirit of U.S. consumers".  He quotes a WSJ article about Apple:

"Steve Jobs can introduce 'clumsy, overpriced, 1.0 versions[s] and trust that the army of several million Apple true believers will rush out and buy. That is the crucial, often overlooked, key to Apple's continuing success."

I could not disagree more. Apple's success is not based on clumsy 1.0 versions at all. This is a simplified explanation of why their products often define new categories, and this type of thinking is why entrepreneurs and venture investors think the "fail fast" strategy will work. Focus on the early adopters and iterate the product until it is ready for the mainstream. 

The problem with this analysis is it does not focus on the job that Apple helps consumers get done. Consumer jobs are complicated and each one has  50-150 different metrics (needs) related to performing the job with speed, efficiency, and predictability. 

So why does Apple succeed? Because it focuses on the job the customer is trying to get done, and it is exceptionally good at identifying underserved jobs and satisfying the metrics (the needs) related to getting the job done. Think about the jobs they addressed with the iPod: storing music, listening to music, finding music, organizing music. The reason iPod v1.0 was successful was not because "true believers" bought it. It was because it got those music related jobs done better. 

I still use my v1.0 iPod as a music storage system for my car. And in 2009 it still works as well as it did when I bought it because Apple helps me get the job done better.

Why Apple Wins: It's the Job

Apple's winning streak over the past decade (OS X, iPod + iTunes, iPhone) is based on helping customers get jobs done better. Of course, their user interfaces are legendary, but customers don't buy products to interface. They buy products to get functional jobs done. 

This iPhone ad is a great example. The focus is on the jobs you can get done.

93% Chance of Getting It Wrong

Traditional startups are constantly iterating their strategy to find one that works. So it is no surprise that business plans are a waste of time for fundraising. VCs are really investing in the people, as they will readily admit. But it turns out business plans are a waste of time for product development as well. I have been looking for data to support this, and I finally found it. 

A study done by Amar Bhide, found that 93%(!) of successful startups reported that "the strategy that led to their success was largely different from what they had originally planned."
So now we know: a strategic plan won't get you funded and it won't lead to a successful product. What is an entrepreneur to do? There are two possible conclusions. 
First, get rid of planning altogether and just wing it. This is the fail fast strategy: build and ship quickly and cheaply to see it anything sticks. By definition this strategy will only work if you can make more bets and hope that a few win. In other words, this strategy doesn't change the success rate, it just changes the number of bets and hopes a very small number of successes make up for all the losses. It is basically a lottery. See Y Combinator and Tech Stars
The second option is to fundamentally change the way strategic planning is done. From the perspective of the entrepreneur, this is the only option because starting and running 20, 30 or 100 companies is not possible. The starting point has to be a different unit of analysis for strategic planning. And that unit of analysis has to be the job the customer is trying to get done. 

Why Virtual Is Real: It's About the Jobs

Bill Gurley has a great post about monetizing social networks. He analyzes TenCent, a Chinese IM company, and uses virtual world examples to demonstrate how social networks could monetize their huge base of users. The model has a few different names: freemium, digital item, micropayments. The New York TImes also has an recent article on digital goods.

Bill writes: 

It is my perception that most U.S. executives have trouble conceiving and believing in the digital item model. For starters, they simply think it’s strange. “Why would someone buy clothes for their virtual avatar? That’s weird.” What they fail to realize is that U.S. consumers pay for “virtual” things all the time.

And he gives a good example of consumers buying brands that are basically virtual, i.e. non-functional. For example, the willingness-to-pay for a pair of Channel sunglasses drops significantly if the Channel logo is removed. "People are buying an image" because they "care greatly about how they want to be perceived."

So yes, customers do by products that project an image about themselves in both the virtual and real worlds. In other words, they have emotional jobs that they want to get done in both worlds (and these jobs can be personal or social). 

The crucial distinction is between the functional and the emotional jobs, not the physical and the virtual worlds. In both worlds customers will need to get functional jobs done to accomplish goals and complete tasks, and they will need to get emotional jobs done (personal jobs to improve how they feel about themselves and social jobs to improve how they are perceived by others). 

If social networks want to analyze the opportunities for monetization, they need to focus on the functional jobs for two reasons. First, because these are the jobs that customers are more likely to have a willingness-to-pay for, and second, because it is much harder to consistently build solutions to satisfy emotional jobs (think about how fast brands and trends come and go).

It would be interesting to look at all the virtual products that have been sold by TenCent, Second Life, and ChangYou and divide the revenue and margins into functional and emotional job buckets (i.e. how much revenue has been generated by functional jobs vs. emotional jobs). 
I suspect that the opportunity for solutions to functional jobs is much higher than that for emotional jobs.