Tuesday, January 04, 2011

Product Management in Startups

India has seen several great success stories in the technology world - particularly in computer software. But almost all the success stories has been in services and very few - a handful of success in software products. In last 3+ years I have seen about 200+ startups in Bangalore region alone. Many of these startups died along the way and those that survived had transformed to IT services companies.

What ails Indian Startups?

There are two main reasons for death of Indian startups: Lack of funding and lack of product management capabilities. In many cases, the lack of product management capabilities has led to cash burn - which in turn leads to lack of funds & inability to raise funds - thus killing the venture.

The eco-system needed for a successful startups in India is still evolving. The main deficit in the eco-system has been lack of product management discipline. In Indian startups, most founding are from services background - as a result, the organization gets built on a services mindset - which in a product world turns fatal.

Startups are often centered around an idea - usually this idea comes from the founders - who will form the company, get some funding and hire people to develop that idea into a finished product. But along the way, other stake holders jump in with their own additions to the orginal idea. And at this point, the company ususally makes the fatal mistake of adding new ideas/features/functionality into the product which results in a grandiose product that will never see the light of the day. The product requirements would have bloated - and engineering teams are burning cash trying to implement all the features before they can launch the product. The product launch gets delayed which causes more cash burn. And finally, if the product is finally released, customers don't like it as it has too many features that they do not need and that would often be the final nail in the coffin.

To understand the importance of product management in startups, one needs to understand the basis of a start up: I got a "Great Idea" & "I am the end user"

Great Idea Syndrome

The most common trigger for starting a venture is an idea. Founders of the company develop an idea for a business, and have a strong itch to make it happen. Founder(s), jump on the idea and start off a business. Here in lies the first fundamental flaw of the start up - they started the company without validating their "Great Idea".

The business has been started without proper validation of the real customer use cases and without validating the idea. In their eagerness to start the venture fail to check with the actual customers.

The fundamental aspects of product management - What are the basic business life cycles in this business? Who are the actual users? Who will pay for this product? What are the real life problems customers have? When, Where & who will buy the product? What is their buying process?

These basic aspects of product management must be answered before starting the venture. Though these things looks like basic common sense, it is shocking to find out that many startups do not have answers to these questions.

The basic process of validating the product idea is a must for any venture. The process of validating the product idea is not an one time affair either - it needs to be constantly revisited during the course of product development just as check to see if the product development is on the right track and the external market conditions are still conducive for the product.

I am the end user syndrome

As the founders are often hypnotized by their great idea - they begin to think "I am the end user" and start developing the product in a world seperated from reality. Having a proper product mangement discipline will ensure that the real customer needs are being addressed in the product development process.

This problem of not understanding the customer is more acute in start up where the founders have deep technical expertise in their field. The founders are so deeply aware of the technical issues and often make an assumption that the problem they are seeing is what everybody sees, and hence end up developing a solution that solved the problem envisioned by the founders - but failed to solve the real customer problems.

In case of high tech product startups, the most common product failure happens with the product usability. (This happens more in software companies than in other areas.). Since the founders are experts in their area, they tend to think that if they can use the product, then the whole world can use it in the same way.

Founders fail to understand that the rest of the world are not as knowledgeable as assumed, and customers really do not want to memorize a 20 different options in a command line to use the product.

The end result of not developing a product that customers can't use and that kills the product.
Real hard nosed product management discipline is needed here to avoid "If I can use it, the whole world can" attitude in the startups. Product must be designed with the average end user in mind and there must be strong will to over come the "I am the end user syndrome"

Discipline of Product Development

Once the decision to develop a new product is taken, the next step is to have a product devleopment plan - starting with a product feature prioritization for various releases, project planning, writing up a product requirement document, developing product design specifications, project execution etc. All these activities need strong product mangement skills to address the challenges of product development:

1. Write up a market requirement document which documents the customer requirements over a period of time - typically a 2-3 year time frame.

2. Convert the market requirements into product roadmap which is a phased approach to meet the market requirements through series of releases.

3. Product roadmap then drives project plans. Project plan is a time bound activity to implement the prioritized features for the planned releases.

4. Continiously scout the market to study the market needs - and identify any changes in the customer requirements. Conduct market research to ensure that the product being developed is actually what the customers really want.

5. Product roadmap and a phased release mechanisms will will help manage sales pressure - by developing the important features first and avoiding scope creep.

6. Run alpha/beta programs at customer sites - to evaluate the product acceptance.

7. Direct the creation of product documentation and marketing collateral required for product launch.

8. Gauge the product's acceptance in the market, and make changes to roadmap accordingly to make the subsequent releases better accepted in the market.

Closing Thoughts

Startups ecosystem in India are still evolving & as of today there is a general lack of product management discipline in startups. In any startup the first order of the day is to figure out the market requirements. The need for product management is needed for both small & large companies. Large companies can afford to a few mis-steps in product development cycle & can wait around for few versions, but a startups cannot afford to get it wrong. Startups need a much greater discipline when it comes to product management inorder to be successful in the market place.

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