Wednesday, November 21, 2012

Project Management & Change Control

In any new product development project, the market conditions are constantly changing & hence there will be need for changes to the project requirements & deliverables even during the execution of the project. Successful project management is all about understanding the need for changes and dealing with it i.e, Deciding on when & how to make the required changes in the project.

Any change to the project requirements can have an impact on the project cost & schedule. It is therefore important to understand the importance of the change & the impact to the current project of the change is agreed upon. And once a change is approved, the project plan may have to be revised and the revised project plan will have to be communicated to all stake holders.

In the initial days of project management, it was the role of project manager to decide on the required changes, but today, it is common to have a larger group called as Change Control Board (CCB) to manage all the requested changes. CCB is a decision-making body controlling all project changes. The CCB must consider & review each planned or unplanned change. The name for this group could vary, but the function it provides does not. The main objective of CCB is to control the change process in a disciplined, visible, and traceable manner.

This article is about the role & process used by CCB.

Formation of CCB

Who should be the members of CCB? Ideally, the members of CCB should include the key stake holders & decision makers for the project. Ideally, the CCB consists of project/program manager, product/account manager (who represents the customer), Project's engineering lead, Project's QA lead, Product Marketing lead (for product development projects), Project's financial controller. Other members may be included - based on the project's specific needs.

Once the CCB is established, a standard process for the operation of CCB needs to be established. Normally, the CCB mechanisms are standardized by the PMO office.  The PMO office establishes the CCB charter and the rules of engagement at start of the project.

Planned & Unplanned Changes

As the project progresses, there could be changes introduced into the project requirements. These changes could be planned changes or unplanned changes.

Planned changes are those that occurs in the project from orderly progress of the project - i.e, as the project progresses from: (1) requirements definition, (2) preliminary design,
(3) detailed design, (4) coding, (5) production/deployment, and (6) operational use.  These planned changes in project do not have an impact on the project schedule.

However not all projects progress in an orderly fashion. Additional requirements may be added by the customer, or upon detailed design - new requirements/test cases are identified etc. Such changes are unplanned changes and may have an impact on project schedule.

CCB reviews all changes - planned & unplanned and constantly reviews the project cost & schedule impacts due to these changes. CCB also documents all the change requests and minutes of meeting for future needs.

Activities of CCB

Program Management office works with CCB to define the main activities of CCB. The main activities of CCB are:

  1. CCB meets regularly to review all change requests. CCB members consists of customer or customer representative - so that the customer is aware of the review meetings & its decision. This provides the customers an insight into project progress to support more effective decision making.
  2. Establish Norms for requesting any changes. CCB can publish a standards/templates to make any change requests.
  3. CCB review & triage the impact of all change requests: Any addition or deletion of functional features, changes in project plan, project execution sequence etc. CCB may ask for impact analysis on the proposed changes from the execution team and based on joint review with customer or customer representative - may approve or reject the change request.
  4. Upon triage of all the change requests, CCB can recommend project management to bundle up a number of small changes into one big change in the project and re-plan the project if necessary.
  5. Once the change request is approved, the execution team implements the change & upon implementation, publishes a project change notice and documents the changes done in the project.
  6. CCB should also review the project viability at every stage gate - as the project moves from one stage to another. This is the review of a planned change & the review is to see if the project is progressing as per plan and does the project makes sense to continue on.
  7. CCB also publishes a change freeze date for the project. After this date, no change requests will be entertained. All proposed changes to the product development will be deferred to the next version of the product.
  8. Record & document minutes of every CCB meeting for future needs. Program Management Office can use this records for future use.

Closing Thoughts 

CCB plays a very important role in project management, especially in new product development projects. When developing new products, there is a constant pressure from customers or product managers to add new features, but making that change can have adverse impact on the project schedule & costs. CCB acts as a judge, reviews the requested change and weighs the consequences and them makes the final call.

Program Management office establishes the CCB. The CCB provides a vital function in project management in managing all the changes to the project. CCB provides a controlled approach to deal with all the changes to the project requirements and works as a communication platform between the project team and customer.

Samsung's Big.Little ARM chip

Samsung makes ARM processors called "Exyonos" that powers  Google's new Chromebook, the Nexus 10 tablet and even Mont-Blanc's upcoming supercomputer!

Big.LITTLE pairs the high horsepower Cortex-A15 MPCore with the ultra-efficient Cortex-A7 processor – allowing mobile devices to automatically select the right processor for the right task based on performance requirements.  Big.LITTLE's one half is a quad-core, 1.8GHz ARM Cortex-A15 that will do all the heavy lifting, while the other is a quad 1.2GHz Cortex-A7 that takes over in quieter moments.

Given Samsung's huge manufacturing muscle and its product portfolio: Camera's, Cell Phone, Tablets, PCs, TV,  etc, It makes sense for Samsung to enter into the big league of 64-bit server markets – better still Samsung can create big time game changer in consumer product space with a 64 bit processor.

I can imagine Samsung developing 25M+ pixel cameras which connect directly to web via 3G/LTE, or develop a cell phone sized servers or convert the TV into an entertainment cloud server etc. The potential for new product innovation with this 64-bit compute power is immense!

Given the pace of new product introduction at Samsung – I am sure that Samsung has a slew of products that can use the Big.little processor in ways that was never thought of before. For example, a cell phone with a video projector built into it – where the projector & video streaming works when the device is plugged in etc.

Competitors like Apple, Nokia, HP, Dell, and even Intel will have to take notice of this development and try to match or beat Samsung in this interesting innovation race.


Google released Android 4.0 Mini PC few months back, and I got to see it now. From the first look to the first test drive, I am very much impressed with this innovation. The Mini PC looks like a USB dongle, but it's a PC!

Hats off to the engineers at Google for thinking up this new form factor.

This small handy device comes with a 1GHz CPU (overclocked to 1.5 GHz), 512MB RAM, 4GB Flash memory, extendable via MicroSD slot. Android 4.0 & can run all the Android Apps.

The Mini PC does not ship with a screen, no key board or a mouse, but you can connect it to the Mini PC and start using it as a PC! Mini PC has USB ports to connect a mouse & key board, and HDMI output to connect to a TV screen, and it also has a MicroSD slot to add more memory. It sports WiFi connectivity for Internet.

Android OS was initially not designed to replace a traditional PC and Mini PC cannot replace a PC in true sense, but then this little wonder can kill the low end PC desktops at internet browsing centers and this tiny $38 device can do all the things my mother does on her PC! 

The innovative form factor make this tiny device a giant killer. I can dream of 100s of new applications for this tiny PC – which a traditional PC cannot. For example, I can take this MiniPC on a road trip & convert the hotel TV into a PC for the night, check my emails, watch You Tube or review the pictures/video I had taken earlier in the day on my camera. 

I can use this Mini PC to stream the video content from a surveillance camera, I can convert any Television into a Remote Desktop and work on Adobe or MS office Applications. I can convert any TV into a browsing station & the list goes on!

Adding to the value of this Tiny powerhouse is the Android platform – the wide plethora of Apps, and new Apps that can be developed for this device – which can make this tiny device  even more useful.

This tiny low cost PC has the potential to kill the traditional home computers in most of the market segments and could truly emerge as the tiny David that killed the mighty Wintel Goliath!!

Where to buy?

1. Amazon  for $38!

Monday, November 19, 2012

Eight factors to ensure New Product Success

The last 5 years, we are seeing a huge surge of software products, the sheer number of new products being introduced in last 5 years is greater than what was done in last 25 years!

The new technologies: Smart phones, Tablets, Social Networking, Green IT has created huge opportunities for software products and I have see a lots of new products failing in the market for varied reasons:
1. Bad timing or released prematurely
2. Not-enough resources to meet demand,
3. Bad user experience
4. Poor Marketing
5. Wrong Platforms and host of other reasons

This article is not about why products fail, instead I will talk about how to create a successful product. When we look at software products - there are eight key factors that must be executed flawlessly for success - getting the right balance of these 8 factors is the key & remember that there are no short cuts for product success.

Factor-1: Market Research: 

Start with Market research. Identify the product needs through extensive market research. Identify the potential customers, understand their real needs, estimate the volume shipments, identify the proper marketing communication channels to reach out to these customers. Interact with potential customers & users.

During this stage one must also research on the competition & supplier. Having a very good understanding of the supply chain is critical for any hardware products. Know the competition, understand what other competitive products that exist in the field and why those products fail to meet certain customer needs.

If you are a start-up, spend time to analyze your own capabilities to meet those needs

Factor-2: Design. 

Products is all about design. When you think about design, I urge you to think like Apple. Apple's design plays a BIG part in the product success. If you are designing a product, think about Apple, and ask yourself - "Will Apple use this design?"  "Will Apple design it like this?".

Think about all aspects of the design: Usability, Ergonomics, Aesthetics, Durability, Ease of learning, packaging, Cultural messaging, etc.  For physical products - design involves ease of manufacturing, shipping and handling.

Remember that the product design creates the first impression & it better be a good one!

E.g.: Sony PlayStation-PSP, Gmail etc.

Factor-3: Innovation.

All products must have some innovative features that will allow the product to stand out from competition and differentiate itself. Pricing is not valuable differentiative factor, especially in IT (software and hardware) sector.  Your new product must be different from all the competition & yet meet the end customer needs. Innovation is the key to product differentiation and product success.  Innovation can be in many forms: Functionality, Usability, Design, etc.

Avoid cosmetic innovation - i.e., innovation that adds little or no value to customer.

E.g.: Apple Siri, Kindle, Galaxy Note etc.

Factor-4: Product Name

Product manage is very important for success. If your product has a catchy name then consumers will advertise your product for you free via 'word of mouth' but if they can't  pronounce the name or remember it they will not talk about it. So take great care in choosing the name.

Remember Name is the brand, which leads to tangible value.

E.g.: Talking Tom, Farmville, Sims City, iTunes etc.

Factor-5: Quality.

Test the product extensively. Customers don't entertain product malfunctions, product recalls or frequent patches. In IT software/Hardware, one also has to test for product security.  Shipping out defective products - no matter how innovative it is will not please the customer. The products must be tested with actual customer usage and not just an assumed simulation use cases in the labs. Have a beta test program to test the product with customers.

In case of hardware, quality testing also involves testing the packaging, product shipping & handling - to ensure that the final product arrives at the customer's hand in the way it was intended. Extensive Testing is expected from all vendors. Today customers will not entertain defective product.

Remember that quality is not just about testing. Use only quality parts, deal with quality vendors, hire quality employees. In short quality must be ingrained within the entire organization.

Factor-6: Selling

Selling a product to the customer, the buying experience, plays a big part in the actual purchase process. For physical products, the retail experience in crucial. Today, selling is not just about handing over the goods and collecting money. Today, selling is about greeting the customer, educating the customer, answering customer questions, enabling the customer to use the product and finally solving customer's problem.

So selling involves selecting the right sales/distrubution channel, enabling the sales partners, educating the field sales force etc.

Here again, think like Apple. Apple does not launch a product and dump it into the dealers, Apple has made shopping a pleasurable experience.

Factor-7:  Customer Support

Customers are giving hard cash for the product and hence deserve a  commitment from the vendor to support the product. A good customer support will result in a long time commitment from consumers to the product.

Remember that customer support is not an after sales activity - it is actually a sales enabler. Today many customer call up the product support to check on the level & quality of support before buying a product.

Factor-8: Product Launch 

How a new product is launched in the market plays a vital role in the product success.  Product marketing is the name of the game. Knowing who your customers are and reaching out to them, enticing them to see, try and buy your product -  is when it actually becomes successful.

Product launch must be carefully planned and money has to be spent. Cutting back on product launch will surely kill a product, no matter how good, how innovative it is.

Closing Thoughts

Launching new products is like a ballet. Every move must be well coordinated and executed flawlessly. Here in this article, I have highlighted 8 critical factors that cannot be avoided. Entrepreneurs and product managers alike must find the right balance between these success factors to ensure the new products are successful .

Monday, October 15, 2012

Product Management - How to increase Product Value

Product management is not just about looking at new requirements and new development. The major role of product managers is to increase the value to the product - i.e., increase profitability of the product, thus increase shareholder returns.

From a product management perspective, there are several levers one can exercise to improve the value of a product.

1. Change Product's Price 

Increasing or lowering a product price will change the customer's perceived value of a product. Often times, we see prices being lowered to encourage sales volume increases.  But there are cases when the price is increased to reposition the product into a different market segment. For example Hyundai increased the pricing of Sonata car  to India reposition the car as a premium product.

A common way to change product pricing is to introduce a new SKU at a different price point and withdraw a similar SKU. For example, in consumer products such as Soaps, companies introduce a different package - say pack of 3 instead of 4, and lower the price per pack - which effectively increases the actual product price.

2. Improve Current Product

Adding new features or functionality that customers will truly value enhances the product value - which can translate to higher sales or higher margins. Many times, even improving product design for esthetics and/or for usability will give the biggest bang for the buck.

3. Introduce New Products or Product Variants

With time all products become old and stale. To keep up the product's relevance to market, new products has to be introduced. These new products can either be:

a. New product or product variants that fill gaps in the current price/performance space.
b. New products or product variants that address the needs of  new market segments;
c. Existing products with new designs and/or with updated features;
d. Radical innovative products that leapfrog existing products;
e. New SKU's that create new market segments or create new value segments;

4. New markets for current products

Finding new markets for current products is also a popular way to enhance the product value. Initially, the product is often sold only in the home markets, later new opportunities can be found by exporting, or setting up marketing/sales/manufacturing in other countries.

5. Improve Customer Service & all aspects of customer interactions

The value perceived by customers can be drastically enhanced by improving customer service. For example, setting up a toll free number to address all after sales issues, or providing after sales training, or support in product installation, or on-site service etc. Improvements in on time delivery, streamlined ordering, billing, & other transactions will enhance the product value with customer and thus strengthen customer relationships.

6. Supply Chain optimization 

Once the product is released and has customer acceptance, it is time to optimize the cost of operations. This is done by supply chain optimization - by finding out new ways to reduce manufacturing/distribution/sales costs - without impacting the quality of the final product or the customer service/interactions.  Optimizing the operation costs directly adds to the bottom line and hence to the value of the product.

7. Marketing & sales initiatives

Marketing & Sales initiatives can create new markets for the product. New advertisement campaigns can increase sales, New sales channels can increase market penetration and address new markets. Marketing messaging and product positioning has be constantly monitored and tailored to create positive image for the product, reinforce the competitive advantages, and influence/change the way customer's purchase decision.

Closing Thoughts

Product managers can use any of these levers in any combination to increase the product value. How these levers can be used and what parameters to choose is often guided by the overall product strategy.

As there are no easy way to choose these levers, it takes a whole lot of experience, customer interactions and deep business knowledge to be successful product managers.

Innovation & Recession

There are two truisms about Innovation & Recession.

1. Innovation, when done right, will help you beat the recession.
2. Innovation can trigger a recession for the competition.

A classic example in recent times is Nokia Vs Apple Vs BlackBerry Vs Samsung.

The last 4 years in the mobile markets has seen a rapid market transformation - caused by a disruptive innovation in smart phones. The innovators, namely Apple and Samsung/Google have seen their sales & profits increase in double digits, while Nokia and BlackBerry are saw a rapid decline in revenue & profits. All this happened at a time when the global economy was barely growing, while Europe & Japan were in recession.

The story of innovation and market disruption in smart phone markets will be studied extensively and there few things that has to be noted about the winners in this battle.

On one hand Apple was the disruptive innovators, who challenged the status quo with touch based mobile phones. Samsung on the other hand was a fast imitator. Samsung's innovation strategy can best be called as Innovation by Imitation .

Japanese and Koreans have mastered the art of Innovation by Imitation, and Samsung was relentless in developing new models & variants of Android OS based touch phones. To the extent that for every one model released by Apple, Samsung released 8-10 models of touch phones, and in the process became a market leader in Android OS based smart phones.

Consumers were enamored by the touch phones with its jazzy Apps, which helped Apple and Samsung increase their revenue and profits. This was a case where companies were able to innovate their way out of recession.

The success of Apple & Samsung had a negative fall out on Blackberry and Nokia. The success of iPhone and Samsung Galaxy forced a recession on Nokia, Blackberry, Sony-Erricson, & Motorola. It was not that Nokia or Blackberry or Motorola were not innovating. These companies were slower on innovation and concentrated on optimizing the value chain to drive down costs. Nokia was spending immense resources to develop low cost phones for developing countries on its Asha range of phones. Blackberry was developing new range of technologies to improve and optimize the Blackberry network for enterprise data communications. By the time Nokia and Blackberry reacted to touch phones - with their own versions of touch phones, it was too little & too late.

Though Motorola was an early adapter of Android OS and released Droid phone, Motorola could not keep pace with Samsung and eventually Motorola was sold to Google.

Lessons to be learnt

One key lesson to be learnt from this experience is:

1. Disruptive Innovation can help companies beat recession.
2. If you are not a disruptive innovator, be a fast imitator.

Tuesday, October 09, 2012

Innovation in Marketing - Facebook launches "promoted" posts

Facebook recently launched a new feature - where one could promote their post of Rs 99 in India or $7 in the U.S. In return for the money, Facebook ensures that the 'promoted' post remains at the top of the 'wall' of all 'friends', thus increasing the likelihood of your 'friends' and 'subscribers' seeing it.

This is definitely opens a new avenue for companies who want to advertise to their 'fans' - but this could also turn people away from Facebook, and customers may choose not to follow a particular business.

Facebook's new feature solves one of the problems noticed by the users:

"Every day, news feed delivers your posts to your friends. Sometimes a particular friend might not notice your post, especially if a lot of their friends have been posting recently and your story isn't near the top of their feed," wrote Facebook's Abhishek Doshi in a post announcing the test.

Stressing the need to promote a post, Doshi adds, "When you promote a post – whether it's wedding photos, a garage sale, or big news – you bump it higher in news feed so your friends and subscribers are more likely to notice it."

However, I don't think individual users like you & me will be the ones who will pay to promote their posts on Facebook, instead it will be the companies which have their Facebook pages who will be paying to market their products/services on Facebook. Companies will be able to target their messages to their customer - who have 'liked' the company's Facebook page. If Facebook offers access to the data analytics on how the 'promoted' posts are faring - then it will make it even more attractive to advertisers.

Facebook should ensure that users can turnoff the promoted posts - if they don't want to see it at the top on their wall. Giving control to users is the key to success. Else user walls' can get swamped by promoted posts & crowding out the real posts from 'friends'.

This opens up a new challenges & opportunity for advertising over social media. If Facebook executes well on this, then Facebook can become a serious competitor to Google.

Friday, October 05, 2012

Role of Program Management Office

Recently a Fortune-500 company started a new product development of a new software that will manage multiple data storage system and data management system run on a cloud. This was a multi-year endeavor. Developing the final product will require several software development projects, product integration and testing. The product will be developed by multiple teams working in many countries.

From a product development perspective, One of the major challenges here is project management. Managing a complex development and keeping everything on schedule is a huge task. In order to ensure successful development of the new product, Product managers will have to rely on Program Management Office(PMO), to oversee all the associated projects and present the overall program status to product management and top executives.

As product managers, it is important to know the role of PMO and the value it provides. In this article, I will describe the role of PMO in new product development.

Program Management Office

Developing complex products involves multiple projects. These projects have several interdependencies. The top management cannot dive into each project and understand the project operations, instead a Program management office is created as an intermediary between various project managers and top management to help top management make the right decisions.

The PMO is created with certain objectives:

1. Provide Business stake holders a complete dashboard on the status of each program.
2. Resolve & manage all inter-project dependencies.
3. Plan all project deliverables that are directly linked to strategic objectives
4. Prioritize and optimize the entire project portfolio
5. Ensure that all projects are handled in a repeatable & predictable process  i.e., establish standard process, methods,  tools and procedures to manage all projects
6. Communicate the program/project status across the business
7. Build & mentor project management capabilities
8. Own, Create and Manage project delivery infrastructure.

To deliver on these objectives, PMO is empowered to do the following:

1. Create PMO Process & Governance for all programs & projects
2. Develop standard tools, process, procedures & templates for all programs & projects
3. Maintain Chart of Authority
4. Create & review project benefits & value scoring mechanisms
5. Review Project opportunities
6. Communicate program & project goals
7. Prioritize and provide approval to projects
8. Review business cases for new projects
9. Manage project budgets
10. Approve or deny projects based on business case
11. Conduct check-gate reviews for each project with gate staging process
12. Approve & Coordinate inter-project communication.
13. Create & manage Change Control boards for each project
14. Review post project completion analysis
To ensure smooth project delivery, project managers who oversee individual projects have certain roles & responsibilities:

1. Identify Projects
2. Define benefits or values of the project
3. Gather supporting data and assumptions
4. Review business case alignment with project
5. Create project charter
6. Initiate detailed project planning
7. Monitor project progress & project resources
8. Communicate project status to PMO
9. Create & execute Change control boards
10. Close projects

PMO reports to the business management or product managers. The business management or product managers now have the visibility to the overall program status and can take appropriate decisions regarding budgeting, resourcing, staffing, Go/No-Go decisions etc. in a timely manner such that the project schedules are not impacted.

Value of PMO

PMO provides a very valuable role in business. PMO ensures that all projects are aligned with the strategic objective. PMO ensures that all assumptions made in the business cases are validated and appropriate decisions are made during the development stage in a timely manner. The benefits of PMO:

1. Empowers the business to make Go/Kill/Fix/Hold decisions on projects/programs
2. Provides an early warning of any potential problems in projects/programs
3. Provides all relevant project/program information to stake holders
4. Gives a better understanding of resource utilization, ensures right staff is deployed on the right projects
5. Helps stakeholders understand the financial impacts of an under performing project.
6. Optimizes resource utilization - by moving resources quickly based on accurate real-time information.
7. Helps board level executives to take better & faster decisions based on real time data.

Closing Thoughts

Identifying market opportunities and creating new products that exploit market opportunities can be a daunting task. Organizations can become bogged down with several projects and projects may get mis-aligned with the strategic objectives. Program Management Office is required to ensure that all the ongoing projects are aligned with the strategic objectives and empowers top management to take the decisions in a timely manner.

PMO plays a very important role is creating a repeatable & successful product development process, identifies project deficiencies and helps take the quick decisions as a team. This helps in a big way to make successful product development a repeatable process.

Thursday, October 04, 2012

Improving Innovation with Diversity

Recently, I was giving a talk on innovation and a person in the audience asked me the question: Why diversity is important for Innovation?

Many people in the audience were initially amused by the question. It sounds so obvious that diversity helps innovation, but when I turned the question back to audience, they was whole lot of discussion on the subject. The outcome of this discussion is documented in this article.

Today, in the global world, everyone agrees that successful innovation is the key to profitability. And innovation requires smart people with better ideas. Herein lies an intuitive and the most powerful force for innovation: Workforce diversity.

Almost everyone agrees that diversity is good for innovation, but most people cannot reason out on how diversity helps innovation or explain why diversity helps innovation.


At the first glance, innovation has nothing to do with diversity. A lone inventor working in a lab gets his "eureka" moment and he goes on to create a path breaking invention. In that environment there was no diversity & yet innovation happened. So at the first glance, diversity has little to do with innovation. This was the situation in the industrial age (1850-1920). Thomas Edison, Henry Ford, Alfred Diesel, Nikola Tesla, were all strong individuals who were the beacons on invention. The term "innovation" was not invented yet.

But then, when we look little deeper at the invention, and the process of invention - the need for diversity becomes clearer. Let take a simple example of Edison's invention of light bulb as an example. The first light bulb created by Edison was made of a carbon fiber held between to electrical points in a vacuum glass bulb. Thomas Edison did not even invent one single item that made up the light bulb, his invention was in effect a recipe of putting various things together that made the light bulb work. Edison worked on proven concepts and ideas. Humphry Davy from UK has proved that electricity can be converted into light - by passing high voltage current through a filament of platinum. Another British scientist Warren de la Rue demonstrated that vacuum environments is necessary to longevity of the filament. American inventor John W. Starr proved the use of carbon filaments in light bulbs. The glass itself was originally invented by Arabs and perfected by Venetians. Now when we look at all the people involved in creating various components that make up the light bulb, it becomes clear that a lone individual could not have invented the light bulb. The final invention was a culmination of efforts of a diverse set of individuals.

Now in 21st century, things are not too different - though the pace of innovation has increased tremendously. What used to take a decade to develop in 1900 is now developed in a year.  The technical complexity needed to solve a problem has also increased tremendously. The only way to address the need for faster pace and handling technical complexity is talent. We need more number of intelligent people to innovate. Getting the best talent means getting people from different parts of the world - in other words get a diverse set of people to work on the big problem.

For innovation to happen people have to share their knowledge and work together.

Basic definitions

To understand the benefits of diversity in Innovation, first we need to define and understand a few key terms:
1. Diversity
2. Innovation
3. Successful Innovation.

What is diversity?

Diversity is defined as a group of  people who have differences in race, gender, ethnicity, physical capabilities, and sexual orientation - social or political differences.

What is Innovation?

Innovation is defined as development of new solutions that needs the needs of customers, where new solutions offer greater value to customers. Innovations can be a mix of products, services, technologies and ideas. Innovation differs from invention in that innovation refers to the use of a better and, as a result, novel idea or method, whereas invention refers more directly to the creation of the idea or method itself. (source: Wikipedia)

What is Successful Innovation?

Successful innovation is the innovation that gives greater value to the innovator - i.e., the innovation that gives greater profit/benefit to the innovator than the other alternatives. Often times successful innovation is most often characterized by financial success.

Why have diversity?

Diversity is a good thing, but are there reasons to have diversity? In my opinion, there are three major reasons for diversity:

   1. Speedup Innovation
   2. Tap into specialized Skills
   3. Get different perspectives.

Speedup Innovation

Innovation requires quality talent and in right quantities. As the pace of innovation increased, there is the pressure to innovate faster, this implied that more talented people are needed. Good talent is tough to find in one single location. Immigration laws have hindered people movement, companies are forced to open multiple R&D centers all over the world to attract the best talent. Companies such as Intel, Cisco, Microsoft, Google, EMC, GE, Roche, etc., have setup R&D centers all over the world. Now companies have centers in USA, UK, France, India, China, Israel, Russia, Australia, Korea, Brazil and host of other countries. These global R&D centers collaborate to speed up innovation.

Tap into specialized Skills

When we look around the world, we find that not all the skills are available in all countries in equal measures. Some countries have specialized in certain technologies or certain skills. This specialization has allowed countries to create a competitive advantage. For example, France has specialized in Aviation & Nuclear energy. Germany has specialized in Automobiles and heavy engineering. USA has specialized in Software, Biotechnology, & Semiconductors, India has specialized in software and heavy engineering. China has specialized in manufacturing.

Innovation needs multiple skill sets. So when companies look for skills, they need to set up R&D centers in countries which has those skill sets or get people to immigrate to a central R&D center. For a long time California was a hot bed of innovation - because companies could get people from all over the world to work in California, but with changing immigration rules, companies are forced to set up multiple R&D centers.

Get different perspectives

Today. Customers are global, products are global. A new product - say Samsung Galaxy phones are being used world wide over and by people of all ethnicity, cultures, genders, etc. So when the products have to be sold to a diverse set of customers, the product development team will need different perspectives - and the best way to get that is to have a diversity in the innovation teams.

People with different skill sets and with different cultural backgrounds see different problems and solutions. Getting multiple perspectives to the problem helps to create new and better solutions. To understand this, consider the example of Samsung's Galaxy cell phones. Samsung understood the need to have a global perspective for its smart phones and developed phones with different designs - There are several designs of smart phones instead of having one standard design. The phones in some markets allow dual SIM, so that people can use the same phone with multiple carriers, the user interface & screens are customized, and the phones are priced differently as well. The range and diversity of Galaxy phones led to the success of Samsung in Smart phone business.

Diversity also brings in sensitivity towards different customers & markets. This helps in avoiding cultural blunders when developing new products. If GM had Mexican engineers in its team in 1970's - it could have avoided the 'Chevy Nova' branding blunder.

How diversity helps in creating successful innovation?

We know that diversity can help innovation, but can diversity help in successful innovation?

To answer this, we need to understand the word "success".

In simple concepts of economics, success is maximizing the increase in economic output with minimal increase in inputs. Where the economic inputs are capital & labor, and output is sales revenue.  This basic principles explains why governments and companies like to increase  spending on education and R&D.

Economic success through diversity has three distinct aspects:

1. Synergy from different combination of ideas
2. Enhance Organizational Efficiency
3. Increasing corporate profits

Synergy of Ideas

Diversity brings in different perspectives and different ideas and these ideas can be combined in many ways. Diversity helps pick the right combination of ideas that can address different markets. For example, at EMC, two teams of engineers developed two products - Atmos, a cloud storage system and Smarts a network management software. Another team saw both the ideas and saw value in combining the two products that enhances the value of Atmos. The new idea did not cost much - but the value was very high.

Enhance Organizational Efficiency

Diversity also improves organization efficiency in many subtle ways.

1. Easier to attract talent.
Having a diverse workforce will help attract talent - which lowers cost of hiring & helps towards innovation. 

2. Management Processes
People from different cultures bring with them different management processes and techniques. 

3. Understand market requirements & help enter new markets
People who share the same cultural background as the customer will understand the needs and nuances of the market better.

4. Improve customer service.
Better understanding of customers leads to better quality of service

5. Improves investment climate.
Diversity in the management & leadership levels will make it easier to attract capital from different markets/investors.

Overall, diversity helps lower the cost of operations. This helps improve operational efficiency.

Increasing corporate profits

The big benefit of diversity is that when innovation projects are well managed, it helps increase market size, lowers costs of development and can increase revenue in a big way. With proper management, diversity can be used to increase corporate profits & shareholder value.

Closing Thoughts 

The globalization of business has created a hyper competitive and a complex business environment. To be successful, companies now need to create new products and services while lowering the cost of development. The best way to do that is to have a global, diverse workforce.

A diverse R&D team is a necessity for innovation and to develop global business strategies. Having multiple voices will lead to new ideas, new services, and new products, and encourage out-of-the-box thinking. Today, companies no longer view diversity and inclusion efforts as separate from their other business practices, and recognize that a diverse workforce can differentiate them from their competitors by attracting top talent and capturing new clients.

Innovation provides the seeds for economic growth, and for that innovation to happen depends as much on collective difference as on aggregate ability. If people think alike then no matter how smart they are they most likely will get stuck at the same locally optimal solutions. Finding new and better solutions, innovating, requires thinking differently. That's why diversity improves innovation.

Monday, October 01, 2012

What is a New Product?

Product managers are responsible for driving new product development. In the world of product management, there are several types of new products.  There are many different types of new products.  New products fall into six major types:

1. New to the world products

These are really revolutionary products that breaks new ground in terms of innovation. For example Sony Smart Watches, Instagram, Yahoo Search, Hotmail, Apple iPad, Garage Band etc. These products create a new markets for the product. Today, such new products constitute ~10% of all product releases.

Developing such new products are extremely risky and only 4 or 5 out of 100 will survive the first two years in market.

2. New to the company products.  

These are products that helps company enter new market segments. The market For example,  Blackberry Storm was the first touch phone for Blackberry.  These new products are often seen as me-too products, and if the new product does not offer value to the customer  & does not distinguish from the current market leader then it will fail in market place.  So companies spend lots of money/efforts on market research and product development to create truly differentiated products.  E.g.: Gmail, Google search, Android - are all new to the company when introduced and Google spent a lot to make these products better than the current market leader.

On the other hand, there are companies that try to draft behind the market leader by creating a lower cost, imitation products that typically follows a me-too market strategy. This typically happens if the entry barriers are low and  the products does not have strong differentiating features.  E.g.: Rediff Email, ZTE cell phones, etc.

3. Additions to existing product line

Companies often add new products to existing product line to address needs of adjacent markets - the markets that is currently not being served by the current range of products. For example, Samsung Galaxy Note was a product like extension, but it addressed the needs of business users of Smart Phones.  Another example is Amazon's Glacier storage service - which is an extension of Amazon's Simple storage Service.

4. New SKU's

Companies can create new products by introducing newer SKU's of existing products.  For example, Software companies such as Microsoft sells software packages based on number of users, so there will be different SKU's for 50 user license, 100 user license 1000 user license etc.  By creating new SKU's companies create product differentiation in terms of pricing. Typically a smaller SKU will have a lower price, which attracts newer sets of customers.

5. Improvements and Revisions to existing products 

When a company introduces its first version of its product to the market, it may not have all the features or functions needed, Often times the first version of the products may not even succeed in the market. But companies can keep improving the product and release several revisions to the existing product and succeed.

For example, Samsung's Galaxy S line wasn't an overnight sensation. But the company coupled steady improvements to its flagship Smartphone line with a steady drumbeat of commercials, billboards, banner ads, and other promotional effort to build up its reputation. Now, it's second only to the iPhone in its ability to draw the attention of consumers.

Product revisions are done to all products - software, hardware, automobiles etc.

6. Cost reductions or Price revisions.

Once a product is proven in the market,  the seller may redesign/rebuild the product such that it costs less to manufacture. A part of this cost reduction could be passed on to customers - thus lowering the price and changing the market segment into which the product could now be sold to. For example, the price of laptops have dropped steadily - this with every drop in selling price, the laptop computers gained more market share from the desktop users. Large Screen Televisions: LED/LCD/Plasma TV's from Sony or Samsung have also followed this price skimming strategy - where the price of the TV drops steadily and with every drop, it attracts customers from a newer and a bigger market segment. Large screen LED TV prices have dropped from $15,000 to $1000 in last 7 years. In the process, the large screen TV's moved from a niche luxury product to mainstream product.

Closing Thoughts 

Introducing new products is one of the major roles of product management. But new products may not always mean developing new technologies. Often times it could just mean a product revision or a product extension or new pricing or new packaging. All these activities must be planned by product managers and direct its execution.

Why Are People Angry at Apple?

In last two weeks, Internet was flooded with articles, blogs & videos on Apple's blunder with Maps and other bugs. The customer reaction on Apple's iPhone5 launch was not what was expected based on previous launches. So I took a deeper look as to why people gave a negative response to iPhone5 in the media, but the sales numbers indicated otherwise - Sales of iPhone5 broke all previous records.

After deeper analysis, I found a few startling facts:

1. The most loyal customers were the ones screaming the loudest.
2. Customers are still buying Apple's iPhone5, but they are not as excited/happy about it as before.
3. This is an early warning to Apple to fix a few things.
4. Apple is behaving like a Goliath & People despise Goliath.

Apple has cultivated an eclectic mix of customer - from techno geeks, businessmen, & artists. These customers are also the most demanding customers. So when Apple makes small mistakes, they get very angry, express it very vocally and have the means to express it loudly. The geeks, artists & journalists - in particular have the ability to shout the loudest in the Internet world, and have used it to raise their voice of complaint on product's short comings.
Also see:
Apple is Losing its Innovation Edge
Apple loses its way with Maps

In last five years, Apple has not developed iPhone's user experience. When iPhone was first introduced, it heralded a new era of multi-touch interface and opened a new world of Apps. Since then Apple has done little to improve the user interface and user interactions on iPhone. The only commendable enhancement was 'Siri'. Apple has not fixed various 'quirks' in the product - like the need for iTunes to mange iPhone, limiting 5 iOS devices per user account etc. As a result, for the most demanding customers, Apple is not innovating enough, customers are getting bored and are irritated. So when a small thing such as Maps fails, customers are getting agitated and are making big noise about it.  Apple's customers are bored after 5 years of the same user experience. Customers are looking for something that is new & exciting.

Apple is also slowing down the pace of product innovation and is now seen as a laggard than a leader. To illustrate, consider this:

1. Apple iPhone was not the first to support 4G LTE & still does not support all forms of 4G.
2. iPhone is copying Samsung with a bigger display.
3. iPhone was not the first to have multi-core processors. Apple lags behind Android phones when it comes to CPU & Memory capabilities.
4. iPhone's memory of 16GB, 32GB, & 64GB was good 5 years ago, but with faster Internet and millions of apps, the iPhone is running out of memory, and iPhone does not allow extending memory.
5. Power users want true multi-tasking, and iOS does not deliver.
6. Business users are finding several limitations on device security & usability.
7. Apple still does not support stylus inputs - like Galaxy Note.
8. Apple lags Windows 8.0 in terms of support to Office suite, and Windows 8.0 has better integration with other Windows based business applications.

With this kind of limitations, Apple cannot hold on to its claim of Technology leader and command a premium market position. (See: Apple's market positioning)

Apple's iPhone is falling behind in terms of technology and usability when compared to its competition. So many of Apple's leading customers are unhappy and are making big noise about it.

iPhone now has a much wider customer base, and Apple's tight control over the App market space is not helping. Apple's insistence on 'Disney' like standards was good five years ago, but as the customer base grew, not all customer like to toe the 'Disney' line. Customers are demanding access to a much wider choice of apps and app market places. Customers now want access to a much wider range of apps & access to multiple App stores. People don't like to be constrained by Apple's restrictive & closed market ecospace.

Lastly but very importantly, Apple public behavior against Android is making people hate Apple. American public in general like the notion of supporting the little 'David' against the fight with  'Goliath'. For a long time, Apple portrayed itself as the 'David' in computing field and customer went with it. So when iPhone was release, iPhone was the 'innovative David' and consumers embraced it. But in last two years, Apple is behaving more like Goliath, suing every other Android phone vendors - who are much smaller players in US market. All the legal disputes are done in public domain and Apple is going after Google's free Android has made US consumers belch in disgust. The nastiness of Apple's behavior in the legal disputes is making a serious dent on Apple's image in the minds of US consumers.  So when the new Goliath makes a small error, people are jeering at Apple .

Apple has been extremely successful in last 5 years. Now, Apple is the world's largest technology company, the worlds most valuable company and is no longer a little maverick who was challenging the dominance of IBM/Windows. Apple now dominates the market and is being seen as the new Goliath - which could be very bad in terms of public image and customer relations.

Closing Thoughts

The recent public outburst against Apple was just a warning sign of some deeper problems in the iOS world for Apple. Slow down in the pace of innovation and having a very restrictive terms is creating user discontentment. If these problems are not addressed immediately, Apple will lose its prominence in mobile computing space.

Also see:
1. Apple's market positioning
2. Apple is Losing its Innovation Edge
3. Apple loses its way with Maps

Friday, September 28, 2012

Leadership Skills for Innovation

Innovation at the organization levels starts requires a strong leadership. People at all levels are creative & have ideas - many of them are afraid of expressing their creativity and express their ideas for various reasons (see Unleashing Creativity: Common mind blocks ), but the bottom line is that employees are innovative.

If an organization is not innovative, then the problem lies squarely on the top leadership: CEO, COO, etc

Having laid the blame on the top management, the question arises - what should be done to infuse innovation. The answer to that question is not easy, but there are some obvious starting points.

1. Start with a vision for Innovation & Change

You cannot expect your team to be innovative if they do not know the direction in which they are heading. Innovation has to have a purpose. It is up to the leader to set the course and give a bearing for the future.
You need one overarching statement that defines the direction for the business and that people will readily understand and remember.

Great leaders spend time illustrating the vision, goals and challenges. They explain to people how their role is crucial in fulfilling the vision and meeting the challenges. They inspire men and women to become passionate entrepreneurs, finding innovative routes to success.

2. Fight the fear of change

Innovative leaders constantly evangelize the need for change. They replace the comfort of complacency with the hunger of ambition. They'll say, "we are doing well but we cannot rest on our laurels, we need to do even better." They explain that while trying new ventures is risky, standing still is even riskier. They must paint a picture that shows an appealing future that is worth taking risks to achieve. The prospect involves perils and opportunities. The only way to get there is by embracing change.

3. Think like a venture capitalist

VCs use a portfolio approach and balance the risk of losing with the upside of winning. They like to consider lots of proposals. They are comfortable with the knowledge that many of the ideas they back will fail. These are all important lessons for corporate executives who typically consider only a handful of proposals and who abhor failure.

4. Have a dynamic suggestion scheme

Great suggestion schemes are focused, easy to use, well resourced, responsive and open to all. They do not need to offer huge rewards. Recognition and response are generally more important. Above all, they have to have the wholehearted commitment of the senior team to keep them fresh, properly managed and successful.

5. Break the rules

To achieve radical innovation you have to challenge the assumptions that govern how things should look in your environment. Business is not like sport, with its well defined rules and referees. It is more like art and is rife with opportunity for the lateral thinker who can create new ways to provide the goods and services customers want.

6. Give everyone two jobs

Give all your people two key objectives. Ask them to run their current jobs in the most effective way possible and at the same time to find completely new ways to do the job. Encourage your employees to ask themselves: 'What is the essential purpose of my role? What is the outcome that I deliver that is of real value to my clients (internal and external)? Is there a better way to deliver that value or purpose?' But most people never ask the question.

7. Collaborate

Many CEOs see collaboration as key to their success with innovation. They know they cannot do it all using internal resources. So they look outside for other organizations to partner with. A good example is VBLOCK. EMC, VMWare & Cisco collaborated to crate VBLOCK

8. Welcome failure

The innovative leader encourages a culture of experimentation. You must teach people that each failure is a step along the road to success. To be truly agile, you must give people the freedom to innovate, experiment and to succeed. That means you must give them the freedom to fail, too.

9. Build prototypes

Develop an appetite to test new ideas. "Don't debate it, test it," Should be the motto. Try the new idea at low cost in a section of the market and see what the customers' reactions are. You will learn far more in the real world than you will in the test laboratory or with focus groups.

10. Be passionate

Focus on the things that you want to change, the most important challenges you face and be passionate about overcoming them. Your energy and drive will translate itself into direction and inspiration for your people. It is no good filling your bus with contented, complacent passengers. You want evangelists, passionate supporters. You want people who believe that reaching the destination is really worthwhile. If you want to inspire people to innovate, to change the way they do things and to achieve extraordinary results, then you have to be passionate about what you believe in and you have to communicate that passion every time you speak.

Marketing Functions of Product Management

In the world on enterprise software, Product Managers have to wear several hats - one of them is a "Marketing Hat", and perform marketing functions. Product managers support marketing in following areas:

1. Retain existing Customers. 

  • Add new features/functionality: Listen to customers and enhance current products
  • Product Sustenance  Direct customer support teams when needed
  • Provide upgrades: Encourage customers to upgrade to newer & better products
  • Develop product integration solutions: Integrate current product with other adjoining products for deeper customer penetration

2. Selling more to all Customers

  • Add new products into the solution mix.
  • Increase the wallet share

3. Establishing the Brand Value

  • Deliver on the promise: Ensure products perform as promised
  • Run Beta programs. 
  • Match the price the product with customer affordability
4. Acquire New Customers

  • Do product demo
  • Support product road shows
  • Support customer POC
  • Develop Marketing Collateral: Help develop Product Videos & white papers

Not all product managers do all the above marketing activities, but these are the most common marketing activities.

Thursday, September 27, 2012

The Value of Design: Key to product success

What's the first thing a customer sees in a product? What creates the first impression in the customer mind? What influences the final buying decision?

The answer to these questions is Product Design.

To illustrate this point, consider two cell phones in 2008: Blackberry and Google Nexus. Both the phones had same functionality. Users can do all the functions on both the phones, but the customers just flocked to Nexus. Even today, Blackberry phones can do pretty much everything an iPhone can do, but customers still prefer the "touch" phones over the full keyboard phones. There are innumerable examples of how companies used product design & user experience to win in the market place.

As a product manager, let me explain what are the aspects of product design, which when done right leads to a winning product.

A new product must create a positive response at the first interaction with the product. This can be achieved with product design. In the world of physical products this is called as "Industrial Design" and "User Interactions", in the world of software, it is called as "User Experience (UX)"

Product design plays a major part on customers' buying decision, therefore it important to know various aspects of design that must be considered during the product development stage.

As a product manager, let me explain what are the aspects of product design, which when done right leads to a winning product. During the design stage, there are two major aspects of design: Features of Design & Value of Design.

Features of Design:

Features of a Design essentially creates the necessary conditions of the product and product development. There are five aspects to this:

1. Feasibility.
2. Utility
3. Desirability
4. Usability
5. Affordability

Feasibility is essentially the limiting factors - i.e, defining the boundary within which the product must be designed. It is important to identify the boundary or the limiting conditions  which the design teams have to operate. The five common areas of feasibility are:

1. Technical Feasibility: Establishes the technical limitations.
2. Economic Feasibility: Establishes the cost limitations
3. Legal Feasibility: Establishes the legal limitations, including Intellectual property rights
4. Operational Feasibility: Establishes how well the product works or solves the problem.
5. Schedule Feasibility: Establishes the timelines within which the product must be developed

Utility is usually a product requirement and it sets the base line for the product in terms how well the product should perform, and what activities/jobs/uses the product must do. For example, A Swiss Knife as mulit-utility device - because it performs many functions.

Desirability is a psychological factor which drives human behavior. In product design, desirability is the ability to make customer buy the product. There are several psychological factors that drive desirability - depending on the market demographics. I.e, each market segment has a different  psychological factors that drive desirability. Understanding this correctly and delivering it will make customers say "Wow!" by just looking at the product.

Usability defines how usable the product is. Usability is all about getting the right user experience. Usability of a product has to be developed from the customer perspective. One needs to understand how customers use the product and then look at various means/options to enhance that.

Affordability helps define the selling price. Affordability is a measure of how many customers are willing to pay what price for the product. A highly priced product will have less number of possible customers, i.e., low affordability; while a low priced product will have large number of possible customers. So for a given product and market segment, the affordability for products changes.

Value of Design

Product has value only when buyer sees an advantage in using the product. For example Vertu makes designer cell phones which has an exclusive set of customers. The cell phone from a functionality point of view is same as a Nokia phone, but it is design that sets Vertu apart.

The Value of design is seen when it:

Changes the purchase criteria: Make people choose the product based on user experience over product functionality. iPhone & Vertu is a classic example of this. Mac Book Air is also a good example where product design (form factor) changed customers' buying decision.

Enforces Brand Experience: Every brand is a promise. The product design must deliver on that promise, which create experiences during interactions with handling the product for the first time. For example, Bose sound systems must deliver on the brand of offering superior audio quality.

Segments the market: Product design by itself can create a new segment in the market. For example, Vertu created an upmarket, designer cell phone market segment. Bose created elegant and high-end audio system market. Sony PlayStation created a new segment in video gaming market.

Designers can created value to products by:
1. Enhancing price/performance: Create products that shatter all the established Price and performance expectations of customers.

2. Adding soft values such as: Convenience, Ease of service, rewarding customer loyalty, Product Customization, Life-style enhancers etc. Soft values are often not the attributes of the product itself, but it more about the product eco-system. For example iPad leveraged the existing Apps ecosystem of distribution, ease of usability, customer loyalty etc.

Product Design & Profitability

Product has also be designed for profitability. Once the product's economic feasibility and affordability is defined, the product must be designed to meet the internal profit margin requirements.

A number of design approaches can be used to lower product costs, including:

1. Intelligent specifications which cost less
2. Design-driven cost reductions;
3. Increased commonality and design reuse;
4. Product architecture planning;

In order to make objective trade-offs between cost and value, a means to quantify the impact of design choices on customer value is needed. Established methodologies like QFD, Conjoint Analyses, and Pugh Matrices make it possible to provide the objective linkages between design and value.

In most cases, product design choices is cost-engineered bottom-up, the cost of the finished product and then analyzed for the expected impact on customer value. Ideally, one should start with the product value point and then engineer the product for costs. When products are designed for value, then  it is possible to take better decisions regarding specific design choices.

The Design Team

It takes several teams to build products. Important among them are:

Design: Whose job is to make Products Useful & Desirable
Engineering: Whose job is to make products Possible & Affordable
Marketing: Whose job is to make products Saleable & Distributable

When all the three teams work together for a common purpose, then there will  be successful products.

Closing Thoughts

Product design is not just a one-off effort, but it is an ongoing, systematic approach to improving the product value and profits. As products evolve, the design boundaries are continuously tested and the product value proposition must be constantly improved, design improvements are done for improving profits.

Wednesday, September 26, 2012

Apple loses its way with Maps

Today Apple's iPhone5 is a hot news - albeit for wrong reasons. Critics and users are screaming mad about Apple's decision to abandon Google Maps and replace with their own product. Apple acquired 3C Technologies in October 2011  for its mapping software. Apple was hoping to recreate what Nokia accomplished by acquiring Navteq for map application

It was not the first time Apple had made such a blunder, Apple has made many, many mistakes before: See: Blunders of Apple.

But this blunder stands out from the rest mainly because the decision to change the maps app was a strategic, egoistic blunder. The other mistakes were either with product design or material or manufacturing.

Agreed that changing business conditions forced Jim Cook to move far away from Google, but then it was Apple's decision to sue (indirectly) Google or any company that used Google's Android. Steve Jobs once commented that he was willing to go thermonuclear on Android and the Maps App became a "collateral damage" in this war.

What should have Apple done?

From a product management perspective, all product decisions must be in-line with the company's strategy. So the replacement of Google Maps was inevitable, but product management could have done either one of the two things:

1. Delay the replacement of Apple's Maps Software till it catches up with Google.
2. License Nokia's Map software and offer that as replacement to Google Maps.

Since Apple's map software was clearly not ready for release, product management should have delayed the Map App changes in iOS 6. ( It takes a lot of guts to stand up to the CEO and say that, but that was the right thing to do)

Now that things are out in open, Apple faces two choices:

1. Quickly fix the mapping App. Which is not an easy option.
2. Allow users to install Google Maps, like YouTube app.
3. Drop C3 mapping technology & License Nokia's Navteq maps or MapInfo from Pitney Bowes. (MapInfo is commonly used as Microsoft Maps)

Given the three options, it looks like Apple will try option-1, i.e, fix the mapping software. Only under intense pressure from customer & customer groups, Apple may allow users to download a Google Map App. In case Apple is unable to fix the Map App, then Apple will license the technology from other company (which is highly unlikely)

Closing Thoughts
The errors in the Map App will not affect iPhone5 sales. People will buy iPhone5 irrespective of the app. Customers will always find a workaround - just use the Google Maps in the  browser. So from user perspective this is not a show stopper.

The glitches in Apple's Map App was blown out of proportion, and media made a big noise. But in the end, all the negative publicity on Maps helped Apple push up iPhone5 sales to a new record for a new smart phone. Apple sold 5 Million units of iPhone5 in just 3 days!

Building an Organization for Successful Innovation

Six years ago, EMC's India COE had just started and within a short span of three years, the Indian center became the leader in number of innovation ideas submitted. In 2011,  EMC  held its annual innovation summit meeting in Bangalore, moving it from Hopkinton for the first time. This was a considerable achievement given the fact that EMC is a global organization with R&D Centers in 11 countries.

The success of  innovation at  EMC  Center in India is a result of a sustained efforts and concentrated activities which led to an organizational process and part of organization culture. The success seen at  EMC  center in Bangalore can be replicated in any organization.

Organizational Capabilities

At the organizational level, there are four necessary capabilities that forms foundation for innovative culture.

1. Customer Insight

Great innovations start with customer insight. Organization have to work closely with customers and have multiple channels open to interact and gather information about and from customers, and distribute this information widely within the company. Organization also need to create opportunities for customers to participate directly with employees in product development process. This helps diffuse the knowledge gained from customer insights among all employees. Also see: Anthropology

2. Global Network

In today's global world,  "headquarters knows best" mentality  will not work. Global units must be encouraged to collaborate together and leverage knowledge that may be dispersed across the globe. At EMC most developmental projects require interacting with people from other geographic locations. This helps  integrate multiple sites into a seamlessly managed innovation network.

3. Supporting Organization

Organizations must be structured such that there are dedicated groups and tools to foster innovation. At  EMC, the Chief Technology Office (CTO) is dedicated to develop innovative products. HR conducts training programs on Innovative, creative thinking, patent laws etc. IT creates and maintains dedicated tools for collaborating and innovation management.

4. Vision for the Future 

Vision for the future sets the direction for innovation. Without direction, there will be thousands on innovative ideas which will go no where, and all innovation efforts will be wasted. At  EMC, the top leadership and all internal communication points to the central vision of Cloud Computing & Big Data. Three years ago,  EMC did not have much products for the cloud, the vision of the cloud based future set the trend & direction for all innovation activities.

People Skills for Innovation 

It is not the organization that innovates, it is the people who innovate. This implies that certain people skills must be developed in the organization as well. The basic skills sets needed for innovation are:

1. Leadership: Ability for individuals to take leadership in each innovation project

2. Curiosity: Be eager to know what's happening around us and understand what is needed.

3. Creativity: Ability to think of differently but in a constructive way and be of value to the organization

4. Learning: Ability to learn new technologies, tools and methods on one's own initiative - with or without formal training programs.

5. Agility: Ability to quickly develop a solution and implement it.

6. Sensitivity: Understand the cultural and technical limitations of current & proposed solutions and ability to work within those limitations.

The employees of the organization must have the above skills. It may not be possible to have a formal training program to imbibe these skills to employees. Instead try to hire people who have the right skills for innovation and assist them with formal training, mentorship and guidance as needed.

Closing Thoughts

If Innovation has to become a core competence of any organization, then one has to start with building the right organizational capabilities and follow it up with people skills. Remember that people are inherently creative and innovative, its only the organization and channeling that innovation into successful products/services will lead to profitability.

End Note: In last five years, EMC has been consistently growing at 10-12% year on year. The profitability, revenue growth and market share is steadily increasing - all this is due to its core organizational capabilities and innovation.

Tuesday, September 25, 2012

Writing a Good Statement of Work (SOW)

In the world of software development, bulk of the software being developed in customer software. Where the software is being developed to meet specific needs of only one customer. In such cases, the starting point for the project planning is the SOW and is fundamental to the success of the project.

Writing a good statement of work is no easy task. Having an vaguely worded SOW is an invitation for a project failure and is often the reason parties end up in a dispute.

A best practice is to have a joint team from both the developer & customer organization to write an SOW. This will reduce the likelihood of conflicts during the project startup stage.

From project management perspective, a good SOW must have the following features:

1. Background

The SOW should explain the background of the project explaining why the project is necessary and critical for the organization. Having the business background for the project is important so that everyone in the project team understand the bigger picture and the goals for the project, i.e., the project success criteria must be clearly articulated in such a way that every one in the project team understand what has to be accomplished.

The SOW sets the context of the project by defining the purpose, objectives, scope, constrains, assumptions and reference documents.

2. Points of Contact

Specify points of contact, including who will be the customer [project] managers interfacing with seller personnel during work accomplishment. At a minimum, a point of contact who has decision-making authority during work accomplishment should be specified. This individual will participate in CCB meetings and will be empowered to provide direction to the seller during work accomplishment.

3. Task Specifications & Deliverables 

This is the main section of the SOW. The SOW should specify the individual tasks that has to be done by seller/developer and by the buyer/customer. In a custom software development, there will be inputs & tasks to be done by the buyer.

For each of the tasks, there must be an associated deliverable, which lists out when & how that task is associated with the list deliverables. The SOW must also list out the dependencies (if applicable) for each task.  These tasks will be rolled into the project plan.

All deliverables must have specific dates. But this date could be changed only upon the approval from the CCB.

4. SOW $$ Value

The SOW should have financial information:

1. Total value of the contract
2. Payment terms, schedules & conditions.
3. Limits for certain types of expenses.

The financial information provides the limits of the project and gives the buyer an idea of the total costs involved. The pricing of such custom software development projects can be in terms of: Fixed Price or Time & Materials billing. Financial terms sets the ground for project planning.

5. Project Life Cycle

Though SOW is written for a one-off development, there could be multiple deliverables and maintenance works associated. Defining the life cycle of the software being developed will give developer and buyer various options for risk mitigation, and also gives greater flexibility to add new features as business conditions change. For example, customer wants a billing system to be built and maintained for a period of 5 years. During the period, vendor/developer is asked to release patches & upgrades every six months. This system will give greater flexibility for the buyer in terms of getting new/additional features, and also serves as a risk mitigation strategy in cases where when there is a feature schedule slippage, or when customer finds a bug in actual production usage.

6. Change Control Board

Change Control board and Change control mechanism must be explicitly defined in the SOW. The change control mechanism must be understood by all stake holders & team members. All changes to the initial SOW must be approved by the CCB and must be documented and tracked to a particular change request ID. CCB also provides as a channel for customer-vendor dialogue and interactions.

7. Risk Assessment & Risk Mitigation plan

SOW must have section in which the known risks at the start  are documented and appropriate risk mitigation strategy defined. For example, changes to taxation rules could be risk to the billing software project. In addition, the SOW must allow the seller to assess the risks involved in accomplishing the work as per SOW.  The Project plan will have the complete risks documented and risk assessment plans documented.  Also see: Risk Assessment in Software development

8. Joint Project Management Office

Since custom software development is a joint activity of the buyer & developer, a joint project management office will be required. The working details, authority & responsibility between the buyer & developer must be documented in the SOW. Having a pre-stablished Project management policies will help speed up decision making during project execution.

9. Existing Seller Practices

Today majority of software service providers e.g.: IBM, HP, Accenture, CSC etc have an established engineering practices and organizational policies and procedures that sellers are supposed to follow. The SOW must have a reference these items. Developers follow their internal policies & procedures and this in some cases may impact the project or may be impractical for the project or could be in conflict with the buyer's policies.  So having an clear reference to the vendor practices, policies, & procedures will help avoid future conflicts and when required the SOW can specify which of the vendor practices, policies, & procedures that must be changed or waived for this current development.

Closing Thoughts 

In the world of custom software development the SOW is the starting point for the project. Having a well defined SOW is critical for the project's success. In many cases, there will be master agreement between the vendor and buyer, which provides details on Joint Program management policies, pricing & payment mechanisms, and project governance details. In such cases, the SOW should have a reference to the relevant sections of the master agreement.

Having a well defined SOW forms the solid foundation upon which the project will be completed.

Sunday, September 23, 2012

Software Product Management & Product End of Life

No software product can be sold and supported forever. All software products must be phased out in a planned manner - which must be planned at the time of product release. An outdated software can turn into a maintenance & support nightmare. Knowing when to discontinue a product is vital for company's profitability.

A key aspect of product management is to determine when and how a product must be retired.
How to decide?

How do you kill a product that is no longer profitable? And how do you know that it's time?

To know when to retire a product, one needs to understand the underlying costing of software products,  Product life cycles and opportunity costs.

Product Costs Model

In a software product life cycle, the majority of costs are incurred during the product development phase. Once the product development is completed, the cost of making subsequent copies is zero, but there are other costs associated with the software product. These costs are not obvious but are substantial.

The two biggest costs are: Cost of selling and Cost of customer support. These two costs tend to have a "U" curve behavior. The costs of selling is very high at the launch of the product and goes down as the product becomes more popular. But as the product ages, the product becomes outdated and the cost of sales start to climb up. Similarly, product maintenance costs - i.e, customer support will be very high when the product is launched and customer discover various bugs or need help/support to implement the software. As the usage increases and bugs are fixed, customers also develop best practices, the product support costs reduces. But as the product ages, the system environment (Hardware, OS, databases etc) changes and the older software may not be compatible with the new environment - which prompts increased support calls & hence increasing support costs.

Another factor to consider is the opportunity costs. Companies can persuade customers to upgrade to a new version of the product - that can bring in additional revenue only if the current product is killed. So if the company continues to sell an old product, it can often eat into the potential sales of new product.

When, the cost of sales + Cost of support + opportunity costs = Net revenue; for a product, It is time to retire the product.

Companies such as Microsoft, Oracle, HP etc.  routinely announce EOL for their current products and also have replacement products for their customers. For example, Microsoft announced the EOL for Windows XP after releasing Windows 8, so customers can upgrade to Windows 8.

Product Strategy Directive

The final factor to consider is the overarching product strategy. This is probably the easiest to decide. When a product no longer fits into the company's distinctive competence & market strategy, it is best to kill the product. (regardless of the profitability and costs).

Usually product managers know when a product is past its prime and well managed products are retired. But there are cases when products are maintained beyond its useful life - mainly due to the political pressures:

1. The product is a pet project for one of the founders or CEO or VP.
2. The product is critical to one or few customers.
3. Salesforce resist removing the product from their list of products in their bag. In large companies with direct salesforce, salesmen often use some software products as a deal sweetener: "Sign the deal by this date & get this software free" offers.

The best way to plan for the product retirement is to build a financial data based reports for each product in the portfolio and then retire the product before it becomes no longer profitable. The costs of sustaining a product can be estimated ahead of time & based on these estimates the product can be retired. Most companies review their product portfolio on a quarterly basis to determine the support costs and decide when to retire a product.

For example, if it costs roughly $150,000 per technical employee per year to support the product, so if the product is bringing in less than $200,000 per year then it is time to kill the product.

Once the decision to retire a product is made, the next challenge is how to implement it?

Ideally, a product must be retired without losing any customers. So when a product is retired, customers must move to another product which has higher profitability. This is usually done my offering upgrades to a newer product which is better, has more features/functionality and has a larger user base (thus increase the wallet share).

Companies accomplish this by releasing a newer version of the product - Oracle 9.0 was replaced by Oracle 10.0 etc.

EOL communications 

First, an internal communication must go to all sales & customer support about the product's EOL and date. This helps removing the product from all sales pipelines and manufacturing plans (in case the product is still shipped as physical kits in CD/DVD). After the EOL date sales will not get any commission for selling the product. If there is an alternate or a replacement product available, then sales teams must be trained about the new product that will replace the one being retired.

Next, communication to all customers, customer support teams, external sales partners, channel support partners, value-added-resellers must be sent about the planned EOL and its replacement product.

Usually, EOL is implemented in two phases:

1. End of Sale
2. End of Support

End-of-Sale: After a particular date, the retired product cannot be sold. The existing customers are encouraged to migrate to the newer/replacement product at the earliest.

The next important date is End of Support. This marks the true EOL for the product. After this date, the product will no longer be supported. Customer can continue to use the old product at their own costs. The product support teams will no longer offer support or provide bug fixes to the retired product after this date.

In case the EOL decision was based on strategic direction and there is no replacement product, then tell all employees and customers that this product is no longer viable for the company and hence will be discontinued. Company may choose to provide technical support and bug fixes for some more time till "End of Support" is reached.  This notification is usually done via letter or e-mail to the buying contact in the client site.

If the product is an service, then End of Life communication must provide a time frame for customers to retrieve and transfer all data/services to an alternate provider. Also after the EOL, customers must be provided with an option of retrieving their data (at a cost)

In case the EOL decision was based on strategic direction and there is no replacement product, then there is a potential risk of losing customers for good. Losing a customer for one product may trigger a "run" response from the customer and customer may opt to exit all other products from the same company/vendor as well. Care must be taken to retain the customer while retiring a product. This is best accomplished by tying up with an alternate vendor who has a similar product/service - which customers can migrate to, and provide necessary help for migration.

Pre-planned EOL

Today, with Agile product management strategy, products come with a predefined EOL. The product's EOL dates are defined at the time the product is launched and is written into the product agreements. Typically, the product use agreement would state that the current product would automatically hit an End of sale, once the next version of the software is released and the product will be supported for a fixed period of time after it hits the End-of-sale date; i.e, Version 1.0 will not be sold once Version 2.0 is released and Version 1.0 will be supported for next 18 months only.

This pre-planned EOL is a good practice, especially for  mature products which undergo periodic upgrades. Today companies have predefined EOL policies in place. Example of an EOL:


Closing Thoughts 

End-of-life planning and execution is a critical function in product management. The main objective of EOL is to maintain product profitability while enhancing sales by moving customers to newer products. Retire the product, Retain the customer is the mantra for all EOL activities.

Product EOL is also a good time to fire/eliminate unwanted customers. There may by customers who may not be worth keeping. Such customers can be eliminated by offering a very high cost of upgrade/replacement - which will force them away from your products.

For customers who are worth retaining, special services may be offered like: Free upgrades, or free technical services for the upgrade, or extended support on older product till the customer upgrades etc.

In enterprise software, EOL is not a blanket activity, it needs to be planned carefully and executed well to retain valuable customers. All products must be retired before the profitability is affected. It is always a rational financial decision.

"A product whose costs exceeds its revenue must be retired."