Unit 1. Introduction to the Product Lifecycle.

In our first class, we’ll discuss the various characteristics and types of products, paying particular attention to the product lifecycle. We’ll introduce the idea of a business model, and discuss the various risks that products might face in different parts of the product lifecycle. We’ll review a brief history of project and product management, and discuss the differences between the two.

Transcript

1. i290 lean/agile product management
   
   
   unit 1: foundations
   @jezhumble
   
   
   https://lectures.leanagile.pm/
   
   
   humble@berkeley.edu
   This work © 2015-20 Jez Humble
   
   
   Licensed under a Creative Commons Attribution-ShareAlike 4.0 International License.
   

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2. grasp the history of project management
   
   
   understand the lifecycle of products
   
   
   be able to perform basic risk analysis
   
   
   know the di
   ff
   erence between product and project
   
   
   understand the forces acting on products now
   
   
   learning outcomes
   

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3. by type: web service, user-installed, embedded
   
   
   something people will give you money for
   
   
   goods and services
   
   
   by lifecycle stage: disruptive, incremental, commodity
   
   
   by market: b2b (enterprise); b2c (consumer)
   
   
   product
   

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4. di
   ff
   usion of innovations
   Competitive
   
   
   advantage
   Commodity
   Total Addressable Market (TAM)
   

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5. technology adoption lifecycle
   Geo
   ff
   rey Moore, Crossing the Chasm
   

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6. old way
   

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7. new way
   What are the most important costs inherent in our business model?
   Which Key Resources are most expensive?
   Which Key Activities are most expensive?
   Revenue Streams
   Through which Channels do our Customer Segments
   want to be reached?
   How are we reaching them now?
   How are our Channels integrated?
   Which ones work best?
   Which ones are most cost-efficient?
   How are we integrating them with customer routines?
   For what value are our customers really willing to pay?
   For what do they currently pay?
   How are they currently paying?
   How would they prefer to pay?
   How much does each Revenue Stream contribute to overall revenues?
   Channels
   Customer Relationships Customer Segments
   channel phases:
   1. Awareness
   How do we raise awareness about our company’s products and services?
   2. Evaluation
   How do we help customers evaluate our organization’s Value Proposition?
   3. Purchase
   How do we allow customers to purchase specific products and services?
   4. Delivery
   How do we deliver a Value Proposition to customers?
   5. After sales
   How do we provide post-purchase customer support?
   Mass Market
   Niche Market
   Segmented
   Diversified
   Multi-sided Platform
   examples
   Personal assistance
   Dedicated Personal Assistance
   Self-Service
   Automated Services
   Communities
   Co-creation
   For whom are we creating value?
   Who are our most important customers?
   What type of relationship does each of our Customer
   Segments expect us to establish and maintain with them?
   Which ones have we established?
   How are they integrated with the rest of our business model?
   How costly are they?
   Value Propositions
   Key Activities
   Key Partners
   Key Resources
   Cost Structure
   What value do we deliver to the customer?
   Which one of our customer’s problems are we helping to solve?
   What bundles of products and services are we offering to each Customer Segment?
   Which customer needs are we satisfying?
   What Key Activities do our Value Propositions require?
   Our Distribution Channels?
   Customer Relationships?
   Revenue streams?
   Who are our Key Partners?
   Who are our key suppliers?
   Which Key Resources are we acquiring from partners?
   Which Key Activities do partners perform?
   What Key Resources do our Value Propositions require?
   Our Distribution Channels? Customer Relationships?
   Revenue Streams?
   characteristics
   Newness
   Performance
   Customization
   “Getting the Job Done”
   Design
   Brand/Status
   Price
   Cost Reduction
   Risk Reduction
   Accessibility
   Convenience/Usability
   categories
   Production
   Problem Solving
   Platform/Network
   types of resources
   Physical
   Intellectual (brand patents, copyrights, data)
   Human
   Financial
   motivations for partnerships:
   Optimization and economy
   Reduction of risk and uncertainty
   Acquisition of particular resources and activities
   is your business more:
   Cost Driven (leanest cost structure, low price value proposition, maximum automation, extensive outsourcing)
   Value Driven (focused on value creation, premium value proposition)
   sample characteristics:
   Fixed Costs (salaries, rents, utilities)
   Variable costs
   Economies of scale
   Economies of scope
   www.businessmodelgeneration.com
   The Business Model Canvas On:
   Iteration:
   Designed by:
   Designed for:
   Day Month Year
   No.
   types:
   Asset sale
   Usage fee
   Subscription Fees
   Lending/Renting/Leasing
   Licensing
   Brokerage fees
   Advertising
   fixed pricing
   List Price
   Product feature dependent
   Customer segment dependent
   Volume dependent
   dynamic pricing
   Negotiation( bargaining)
   Yield Management
   Real-time-Market
   This work is licensed under the Creative Commons Attribution-Share Alike 3.0 Unported License.
   To view a copy of this license, visit http://creativecommons.org/licenses/by-sa/3.0/
   or send a letter to Creative Commons, 171 Second Street, Suite 300, San Francisco, California, 94105, USA.
   

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8. risk management
   product development is primarily about
   risk management. what are the risks? what
   are the probabilities and economic
   impacts? which ones do we care about?
   how can we measure and mitigate them?
   

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9. 3. contingency planning. What do we do if the risk
   materializes?
   1. risk discovery. Initial analysis, then ongoing
   
   
   2. exposure analysis. quantify risks
   
   
   probability [0-1] x impact [$]
   5. ongoing monitoring. Track risks, look for
   materialization, mitigate.
   4. mitigation. Make sure planned contingency
   actions will work
   measuring risk
   

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10. risk matrix
    probability
    impact
    low probability
    low impact
    high probability
    low impact
    low probability
    high impact
    high probability
    high impact
    

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11. 3. feasibility risk (whether our engineers can build what we
    need with the time, skills and technology we have)
    1. value risk (whether customers will buy it or users will
    choose to use it)
    2. usability risk (whether users can
    fi
    gure out how to use it)
    
    
    4. business viability risk (whether this solution also works for
    the various aspects of our business)
    measuring risk
    https://svpg.com/four-big-risks/
    

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12. exercise
    visit https://bit.ly/lapm-risk
    
    
    • 5m to come up with ideas individually
    
    
    • 10m to create risk matrix as a group
    
    
    • 5m to present back to rest of group
    

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13. exercise
    Third parties mess with you
    
    
    It's too hard to use
    
    
    You can't actually build it
    
    
    The law of unintended consequences
    
    
    Your business runs out of money
    
    
    Your supply chain is disrupted
    
    
    No one wants it
    
    
    You can't sell it pro
    fi
    tably
    
    
    It's dangerous
    
    
    The government intervenes
    
    
    Acts of god
    

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14. di
    ff
    usion of innovations
    MOST IDEAS
    FAIL!
    

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15. key transitions
    1. problem/solution
    fi
    t
    
    
    - do we have a problem worth solving?
    
    
    2. product/market
    fi
    t
    
    
    - is there strong demand for our
    product?
    

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16. explore vs exploit
    

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17. three horizons
    Baghai, M., Coley, S. and White, D., The Alchemy of Growth
    

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18. Intuit horizons and metrics
    

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19. optionality
    Nassim Taleb, Antifragile
    

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20. SAGE console
    By Joi Ito from Inbamura, Japan - USAF/IBM SAGE, CC BY 2.0, https://commons.wikimedia.org/w/index.php?curid=2106156
    

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21. Margaret Hamilton
    (Director, Software
    Engineering Division,
    MIT Instrumentation
    Laboratory) in 1969
    with source code from
    the Apollo Project
    
    
    (bit.ly/agc-code)
    
    
    http://bit.ly/2ciNWcY
    

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23. waterfall
    “Managing the Development of Large Software Systems” by Dr Winston W Royce. 1970
    I believe in this concept, but the
    implementation described above is
    risky and invites failure.
    

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25. @jezhumble
    v-model
    

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26. @jezhumble
    Shareholder value is the dumbest idea in
    the world … [it is] a result, not a strategy
    … Your main constituencies are your
    employees, your customers and your
    products.
    Jack Welch | http://www.ft.com/cms/s/0/294ff1f2-0f27-11de-ba10-0000779fd2ac.html
    Bernard Gagnon
    

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27. @jezhumble
    http://www.
    fl
    ickr.com/photos/subtle_devices/849361922/
    

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28. Testing Business Ideas, Bland / Osterwalder, px
    

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29. We must set measurable objectives for each next small
    delivery step. Even these are subject to constant
    modi
    fi
    cation as we learn about reality. It is simply not
    possible to set an ambitious set of multiple quality, resource,
    and functional objectives, and be sure of meeting them all as
    planned. We must be prepared for compromise and trade-
    o
    ff
    . We must then design (engineer) the immediate technical
    solution, build it, test it, deliver it—and get feedback. This
    feedback must be used to modify the immediate design (if
    necessary), modify the major architectural ideas (if
    necessary), and modify both the short-term and the long-
    term objectives (if necessary).
    Tom Gilb, Principles of Software Engineering Management (1988), p91
    

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30. @jezhumble
    releasing frequently
    1. build the right thing
    2. reduce risk of release
    3. real project progress
    

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31. manufacturing vs software
    Manufacturing Software
    Must be completed before it can be
    used
    Can start using it from early on in
    product development process
    Must avoid signi
    fi
    cant “discoveries”
    once design complete
    Cheap to change if we discover
    problems early enough
    Doesn’t change much once
    completed
    Successful products evolve
    enormously
    

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32. apple macintosh
    “Instead of arguing about new software ideas,
    we actually tried them out by writing quick
    prototypes, keeping the ideas that worked
    best and discarding the others. We always had
    something running that represented our best
    thinking at the time.”
    
    
    “The Macintosh Spirit” | http://www.folklore.org/StoryView.py?
    project=Macintosh&story=The_Macintosh_Spirit.txt
    

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33. product vs project
    • projects have an end-date and a single
    customer, and we care about scope, cost,
    quality, and hitting the date.
    
    
    • products are evolving continuously, we have
    multiple customers, and we care about a
    broader set of risks
    

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