Wednesday, April 25, 2012

Product Management and Innovation

In the book "CTOs at Work by Scott Donaldson, Stanley Siegel, and Gary Donaldson", Don Ferguson, CTO, CA Technologies has said: 'My folksy story for that is, product management, competitive analysis, these things are all-important for marketing, you know, market intelligence. But in 1880, if you did standard product management, market analysis for illumination, you would have gotten cheaper candles, you know, scented whale oil.'

As I read the book, I knew what was being said about product management is not true and I have a good example from my own recent experience.

Recently, there was a big discussion at my work regarding the size of the server need to host a network management software - which can monitor 50,000 devices. The discussion was purely technical - in terms of database size, memory size, I/O requirements etc. While this discussion went on, I decided to try out a different approach. I challenged the conventional engineering thought process by asking a different question: "Can we do that with an iPad?"

In other words, I challenged the current product paradigm of using heavy iron servers to manage the network infrastructure, instead use something really lightweight platform instead.

It was a bold and a open challenge to engineering. Can we change the way we do things? Can we develop the same functionality in a different way? Can we innovate?

It is not just challenging the current paradigm that leads to innovation, but the follow through on the thoughts. What happened next was very interesting. I created a small team of engineers: two engineers and myself to take a first crack at the challenge.

We huddled up in a room, and brainstormed about it using basic principles of TRIZ. At the end of 3 months of investigation and re-engineering the product, we came out with a product concept of distributed network manager - where different segments of the network are managed by a light weight application which runs on a single VM. Each of these manager apps interact with one another and with a central application on need-to basis. The central application is connected to a web page for user interaction - which could be running on an iPad.

This new idea spins the entire concept of IT infrastructure management on its head and challenges the current product with a revolutionary new approach.

It may take some more time for this concept to become a successful product. As a next step, product management will have to take this concept and develop a new product out of it.

Product management is not just about producing a cheaper/better product. It is also about looking at the very nature of customer needs and then bringing out breakthrough innovation by challenging the current product paradigm.

Product Manager's dilemma

Product Manager' dilemma arises from two conflicting demands on product management:

1. How to continually develop disruptive innovations to retain their current market leadership position?

2. How to increase profitability of existing products? Based on which product managers are rewarded?

It is challenging to meet both the objectives simultaneously within the same organization. The dilemma of developing disruptive innovations that cannibalize current products while maintaining profitability is a complex challenge that goes beyond the traditional boundries of product management, that involves organizational transformation. (Think of Nokia & its shift from Symbian to Windows)

Organization transformation requires a deep understanding of the organization's current pre-dispositions towards innovation and risk appetite. If the organization is very responsive when it comes to customer orientation - i.e., would like to listen very closely to customers, and targets early/late majority markets, then commercialization of break through innovative products is very difficult. In such cases the entire organization will be fine tuned to cutomer's needs and will not accept innovative products.

To commercialize a breakthrough innovation, the organization must have a proactive or evangelical approach towards customers, and must always target early adaptors or innovators as a customer group. Customers who are also innovators or early adaptors are more likely to adapt innovative products.

Closing Thoughts

The biggest challenge is not innovation.  Radical innovations that challenge the current product are always tough to commercialize in an existing organization - due to constrains imposed by opportunity cost models. For product management, the biggest challenge is make an innovation a commercial success, and that in most cases will require organizational transformation.  

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