Product Management For Version 1 Products: Creating Something from Nothing

Copyright © 2009 YourVersion
Dan Olsen
Dan Olsen
CEO, YourVersion
CEO, YourVersion
Nov 2, 2009
Nov 2, 2009
Creating Something from Nothing:
Product Management for v1 Products

What I
What I’
’m Covering
m Covering
„ Understanding customer needs
„ Prioritization and maximizing ROI on
engineering resources
„ Validating your product concept
„ UI design
„ Usability testing
Will post slides to slideshare.net/dan_o

My Background
„ Education
„ BS, Electrical Engineering, Northwestern
„ MS, Industrial Engineering, Virginia Tech
„ MBA, Stanford
„ PHP, MySQL, JavaScript, XHTML, CSS, UI design
„ 18 years of Product Management Experience
„ Managed submarine design for 5 years
„ 5 years at Intuit, led Quicken Product Management
„ Led Product Management at Friendster
„ Olsen Solutions LLC, PM consultant for startups
„ CEO & Founder of YourVersion, real‐time discovery startup

For a v1 Product,
Which is More Important?
Qualitative
Qualitative
Information?
Information?
Quantitative
Quantitative
Information?
Information?
or
or
“When you’re Small,
start with Qual!”

How is developing a v1 Product Different
from developing a Later Stage Product?
„ With a v1 stage product, you have
WAY MORE uncertainty about:
„ Who your target customers really are
„ Which customer needs you should address
„ How to best meet those needs
„ What product design works best
„ These are qualitative learnings/decisions
„ Quantitative is also valuable (later)

What’s the Formula
for a Winning Product?
A product that:
„ Meets customers’ needs
„ Is better than other alternatives
„ Is easy to use
„ Has a good value/price

„ Russians: pencil
„ NASA: space pen
($1 M R&D cost)
Example:
„ Ability to write in space
(zero gravity)
Problem Space vs. Solution Space
„ Problem Space
„ A customer problem,
need, or benefit that the
product should address
„ A product requirement
„ Solution Space
„ A specific
implementation to
address the need or
product requirement

Product Level
Problem Space
(user benefit)
Solution Space
(product)
TurboTax
TaxCut
Pen and
paper
Prepare
my taxes
File my
taxes

Feature Level
Problem Space
(user benefit)
Solution Space
(feature)
Gmail
importer
Make it easy
to share a
link with my
friends
Allow me to
reuse my
email
contacts
Design
#1
Design
#2
Design
#3
Design
Preview with
checkboxes
User can edit
before import
#1 No No
#2 Yes No
#3 Yes Yes

The Customer Benefits “Ladder”
Higher
Higher‐
‐level
level
benefit
benefit
(more abstract)
(more abstract)
Quicken makes it easy for me
Quicken makes it easy for me
to balance my checkbook
to balance my checkbook
…
…which gives me a clear picture
which gives me a clear picture
of how much money I have
of how much money I have
…
…which makes me feel more in
which makes me feel more in
control of my finances
control of my finances
…
…which means one less thing to
which means one less thing to
worry about in my hectic life
worry about in my hectic life
Lower
Lower‐
‐level
level
benefit
benefit
(more specific)
(more specific)

How Do You Prioritize User Benefits
and Product Features?
„ Need a framework for prioritization
„ Which user benefits should you address?
„ Which product features to build (or
improve)?
„ Importance vs. Satisfaction
„ Importance of user need (problem space)
„ Satisfaction with how well a product meets
the user’s need (solution space)

High Importance + Low Satisfaction =
Opportunity
Importance
of
User
Need
Importance
of
User
Need
User Satisfaction with Current Alternatives
User Satisfaction with Current Alternatives
Competitive
Market
Opportunity
Low
Low High
High
Low
Low
High
High
Not Worth Going After

Kano Model: User Needs & Satisfaction
User Satisfaction
User Satisfaction
User Dissatisfaction
User Dissatisfaction
Performance
(more is better)
Delighter (wow)
Need
Need
not met
not met
Need
Need
fully met
fully met
Must Have
Needs & features
migrate over time

Importance vs. Satisfaction
Ask Users to Rate for Each Feature
98
87
84
86
79 84
70
55 80
72
80
75
41
50
55
60
65
70
75
80
85
90
95
100
40 50 60 70 80 90 100
Satisfaction
Importance
Recommended reading:
“What Customers Want” by Anthony Ulwick
Bad
Bad
Great
Great

Prioritization and Scope
„ Customer value is only half the equation
„ How much engineering effort will it take?
„ Need to consider value and effort (ROI)
„ Ruthlessly prioritize: rank order
„ Be deliberate about scope & keep it small
„ It’s easy to try to do too much
„ Strategy = deciding what you’re NOT doing
„ Break features down into smaller chunks
„ Smaller scope → faster iterations → better

Prioritizing Product Ideas by ROI
Prioritizing Product Ideas by ROI
Investment (developer‐weeks)
Return
(Value
Created)
Idea C
Idea B
Idea D
Idea A
Idea F
1
1
2
3
4
2 3 4
?

The Art of Estimating Customer Value
for a Particular Product Idea
„ For any product idea, the Customer
Value it creates is higher:
„ The higher the importance of the user need
„ The lower the user satisfaction with the
status quo
„ The higher the # or % of users to which the
idea applies
„ The more frequently the product idea will
be used by users

Have to Prioritize Across Multiple
Dimensions At The Same Time
Customer
Value
Customer
Value
Time
Time
Customer
Customer
Understanding
Understanding
Functionality
Quality
Ease of Use

Case Study: Product Validation
Summary
„ My consulting client, CEO of TrustedID,
had an idea for a new product
„ Team: me, CEO, head of marketing, UI
design consultant
„ 4 weeks from 1st meeting to validated
product concept
„ Paid prospective users $1,500 ($75 x 20)
„ 1 round of iteration on product concept

„ Product Concept was a “marketing report”
that let consumers more directly control the
direct mail that they receive
„ Concept was fuzzy with various components,
so we broke it into 2 different “flavors”:
„ #1 “Shield”: Service to reduce/stop junk mail
„ #2 “Saver”: Opt in to receive money‐saving offers
„ Within each concept, got feedback on modules
that mapped to a specific user benefit
„ Worked with UI designer to create paper
mockups of pages for each concept (5 pages
each)
Developing Product Concept

Clustering Potential User Benefits to
Create Product Concepts
Reduce
Junk Mail
Find out what
“they” know
about you
Money
Saving
Offers
Compare
Yourself
to Others
Social
Networking
Marketing
Report
Marketing
Score
Marketing
Profile
Save
Trees
“Shield” Concept “Saver” Concept

„ Telephone recruit of prospective customers
„ Wrote screener using intuition for psychographic
segmentation
„ Wanted users who work full‐time & use internet
„ Fit for opt‐in concept: use coupons, Costco membership
„ Fit for anti‐junk mail concept: use paper shredder, block
caller ID
„ Recruiters used screener to recruit
„ Scheduled 3 groups of 2 or 3 people to discuss
each concept for 90 minutes
„ Moderated each group through the paper
mockups to hear their feedback
Recruiting People

Findings on Concepts &User Benefits
Reduce
Junk Mail
Find out what
“they” know
about you
Money
Saving
Offers
Compare
Yourself
to Others
Social
Networking
Marketing
Report
Marketing
Score
Marketing
Profile
Save
Trees
Legend
Strong appeal
Somewhat positive
Low appeal
“Shield” Concept “Saver” Concept

Learnings from Research
„ Learned that “Shield” (anti‐junk mail) concept was
stronger than “Saver”
„ People didn’t like many of the “Saver” concept
components
„ Learned users’ concerns / questions about “Shield”
concept
„ Refined “Shield” concept:
„ Removed irrelevant components
„ Improved messaging to address user concerns / questions
„ Validated revised “Shield” concept with quick 2nd
round of tests
„ No customer concerns
„ Clear willingness to pay

Summary
„ 4 weeks from 1st meeting to validated
product concept
„ Cost $1,500 to talk with 20 users ($75
each)
„ 1 round of iteration on product concept
„ Identified winning concept that users are
willing to pay $10/month for
„ Trimmed away non‐valuable pieces
„ You can achieve similar results

User Benefits vs. Ease of Use
„ Q: If two products equally deliver the exact
same user benefits, which product is better?
„ A: The product that’s easier to use
„ ‘Ease of use’ provides benefits
„ Saves time
„ Reduces cognitive load
„ Reduces frustration
„ Not many companies excel at UI design
„ ‘Ease of use’ can be differentiator

The UI Design Iceberg
The UI Design Iceberg
Visual
Design
Interaction
Design
Information
Architecture
Conceptual
Design
Recommended reading: Jesse James Garrett’s
“Elements of User Experience” chart, free at www.jjg.net
What most
people see
and react to
What good
PMs and
Designers
think about

Elements of User Interface Design
Consists of Three Distinct Elements:
„ Information Architecture
„ Structure and layout at both site and page level
„ How site is structured (sitemap)
„ How site information is organized (site layout)
„ How each page is organized (page layout)
„ Interaction Design
„ How user and product interact with one another
„ User flows (e.g., navigation across multiple pages)
„ User input (e.g., controls and form design)
„ Visual Design
„ “How it looks” vs. “What it is”, often called “chrome”
„ Fonts, colors, graphical elements

The Value of Usability Testing
„ Critical to talk with customers 1‐on‐1
„ Gain better understanding of
„ Usability issues with your product
„ Customer needs and problems
„ What alternatives customers are using,
pros & cons of each, customer preferences
„ QA: use cases & bugs you haven’t seen
„ Really a “user learning” session
„ Make test as real for user as possible

“Ramen” Usability for Startups
„ Anyone can do it!
„ Ingredients:
„ 1 user with their laptop
„ 1 desk
„ 1 person to conduct usability
„ Pen and paper
„ N optional observers
„ N+2 chairs

Typical Format for Customer Session
„ 5 ‐ 10 min: Ask questions to understand user
needs and solutions they currently use
„ 30 ‐ 50 min: Usability test
„ Non‐directed as much as possible
„ When necessary, direct user to attempt to
perform a specific task
„ 5 ‐ 10 min: Wrap‐up
„ Answer any user questions that came up
„ Point out/explain features you want to highlight

Dos & Don’ts of Conducting Usability
„ Do
„ Explain to the user:
„ Their usability test will help improve the product
„ Not to worry about hurting your feelings
„ “Think Aloud Protocol”
„ Ask user to attempt the task, then be a fly on the wall
„ Ask non‐leading, open‐ended questions
„ Take notes and review them afterwards for take‐aways
„ Don’t
„ Ask leading questions
„ “Help” the user or explain the UI (e.g., “click over here”)
„ Respond to user frustration or questions (until test is over)
„ Get defensive
„ Blame the user

And now,
And now,
for something completely
for something completely
different
different…
…
Quantitative!
Quantitative!
(finally)
(finally)

Approaching Business as an
Approaching Business as an
Optimization Exercise
Optimization Exercise
Given reality as it exists today,
Given reality as it exists today,
optimize our business results
optimize our business results
subject to our resource constraints.
subject to our resource constraints.

Profit =
Profit = Revenue
Revenue ‐
‐ Cost
Cost
Unique Visitors
Unique Visitors x
x Ad Revenue per Visitor
Ad Revenue per Visitor
Impressions/Visitor
Impressions/Visitor x Effective CPM / 1000
x Effective CPM / 1000
Visits/Visitor x
Visits/Visitor x Pageviews
Pageviews/Visit x Impressions/PV
/Visit x Impressions/PV
New Visitors
New Visitors + Returning Visitors
+ Returning Visitors
Invited Visitors
Invited Visitors + Uninvited Visitors
+ Uninvited Visitors
# of Users Sending Invites x Invites Sent/User x Invite Conv
# of Users Sending Invites x Invites Sent/User x Invite Conversion Rate
ersion Rate
Define the Equation of your Business
Define the Equation of your Business
“
“Peeling the Onion
Peeling the Onion”
”
Advertising Business Model:

How to Track Your Metrics
„ Track each metric as daily time series
„ Create ratios from primary metrics: X / Y
„ Example: How good is your registration page?
„ Okay: # of registered users per day
„ Better: registration conversion rate =
# registered users / # uniques to reg page
Date
Unique
Visitors
Page
views
Ad
Revenue
New User
Sign‐ups
…
4/24/08 10,100 29,600 25 490
4/25/08 10,500 27,100 24 480
…

Sample Signup Page Yield Data
Sample Signup Page Yield Data
Daily Signup Page Yield vs. Time
New Registered Users divided by Unique Visitors to Signup Page
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
1/31 2/14 2/28 3/14 3/28 4/11 4/25 5/9 5/23 6/6 6/20 7/4 7/18 8/1 8/15 8/29 9/12 9/26 10/1
0
Daily
Signup
Page
Yield
Changed
messaging
Added questions
to signup page
Started requiring
registration

Continuous Feedback and
Continuous Feedback and
Improvement
Improvement

Adding Metrics and Feedback to your
Product Process
Plan
Plan
Design
Design
Develop
Develop
Business
Objectives
Product
Objectives
Prioritized
Feature List
Scoping
Requirements
& Design
Code Test Launch
Site Level
Feature
Level
Optimize
Optimize Metrics & User
Feedback

Optimization through Iteration:
Optimization through Iteration:
Continuous Improvement
Continuous Improvement
Measure
the metric
Analyze
the metric
Identify top
opportunities
to improve
Design & develop
the enhancement
Launch the
enhancement
Learning
Gaining knowledge:
• Market
• Customer
• Domain
• Usability

v1 Product Management Cheat Sheet
v1 Product Management Cheat Sheet
„ Truly understand your customer needs
„ Get clear on your value proposition
„ Prioritize your feature set based on ROI
„ Validate your product concept with users
„ Launch v1
„ Talk with users 1‐on‐1 and get feedback
„ Learn and iterate

„ Great way to stay on top of your interests
„ Real‐time discovery engine
„ Discovers new, relevant content tailored to your
specific interests
„ News, Blogs, Tweets, Webpages, Videos, Products
„ Bookmark and share via email, Twitter, Facebook
„ Launched in Sep at TechCrunch50
„ Free iPhone app
„ Check it out at www.yourversion.com

Questions?
@danolsen
dan@yourversion.com www.yourversion.com

Product Management For Version 1 Products: Creating Something from Nothing

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Product Management For Version 1 Products: Creating Something from Nothing