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.
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
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
4. di ff usion of innovations Competitive advantage Commodity Total Addressable Market (TAM)
5. technology adoption lifecycle Geo ff rey Moore, Crossing the Chasm
6. old way
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.
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?
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
10. risk matrix probability impact low probability low impact high probability low impact low probability high impact high probability high impact
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/
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
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
14. di ff usion of innovations MOST IDEAS FAIL!
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?
16. explore vs exploit
17. three horizons Baghai, M., Coley, S. and White, D., The Alchemy of Growth
18. Intuit horizons and metrics
19. optionality Nassim Taleb, Antifragile
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
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
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.
25. @jezhumble v-model
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
27. @jezhumble http://www. fl ickr.com/photos/subtle_devices/849361922/
28. Testing Business Ideas, Bland / Osterwalder, px
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
30. @jezhumble releasing frequently 1. build the right thing 2. reduce risk of release 3. real project progress
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
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
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