"Where Does (Should) Strategy Live in Your Company?" from SDForum Marketing SIG, 4/12/10. Tackles key cross-functional inputs for a strategy, who needs to participate, and where (in a start-up or small company) this should be located/managed from. Highlights product management as typically missing in small Silicon Valley companies.

1. Where Does (Should) Strategy Live in Your Company?Rich MironovSDForum Marketing SIGApril 12, 2010

2. About Rich Mironov Veteran product manager/strategist Business models, pricing, roadmaps “What do customers want?” Agile meets business Repeat offender at software start-ups “Product Bytes” blog since 2002 Chaired product stage at Agile 2009 and 2010

3. Agenda What’s strategy made of? Where should strategy live in… Pre-revenue start-ups? Small single-product companies? Large divisionalized corporations? Take-Aways, Q&A Where Does Strategy Live?

4. Strategy Is… Disciplined thinking about meeting market needs with products (services) that could make money Cross-functional A process of discovery as we interact with markets and segments

5. Strategy is Not… A one-time event Property of a single genius Mysterious Just an hour of brainstorming Something that happens only in a conference room Something to delegate to “strategy folks”

7. Funding?

9. Technical advantages?

10. Unique talents/IP?

12. Will customers pay for this?

13. Use cases?

14. Competitors?

16. “But We Don’t Have Time!” Steps for barely sufficient strategy Gather handful of key contributors Talk through and write down assumptions about products, markets, use cases, delivery dates Elapsed time: 4 - 8 hours Revisit monthly (start-up) or quarterly (product line) Decent strategies savetime Identify (and usually postpone) strategic issues Delegate implementation issues Problem: Who does ongoing customer validation?

17. Latest / Loudest Problem Salespeople and CEOs naturally generalize from their most recent meeting “Our target segment should be regional not-for-profit hospitals” “We need to offer hardwarealongside our database software” Each new idea is just asseductive as the last A decent strategy lets us ‘buffer’ ideas and compare them against each other

18. Discovery vs. Theories Markets turn out to be complex and surprising You learn about the world by leaving your office “What’s the pattern?” “Who are the outliers?” “How would a customer fit us in?” Rule of thumb: you need 8 to 20 in-depth interviews to start seeing patterns Good segmentation is a creative process

19. How to Learn from Customers Find prospects not currently being sold Arrange 45 to 90 minutes, ideally in person Don’t pitch your product Ask open-ended questions,get the customer talking Listen and take good notes Ask customer to draw it Shut up and listen some more Write up your notes and share with the team

20. Avoid Post-Course Corrections When NASA wanted to put a man on the moon, they planned a series of mid-course corrections…

21. Agenda What’s strategy made of? Where should strategy live in… Pre-revenue start-ups? Small single-product companies? Large divisionalized corporations? Take-Aways, Q&A Where Does Strategy Live?

22. Pre-Revenue Start-ups Founding team and early believers Usually very engineering-heavy 6-10 in Development, 1-2 in Finance/HR/Ops, 1 in Sales, may have 1 in Marketing Typically no formal product management Strategy likely to be scattered in… Brains of the founders Assorted VC pitches Outdated revenue forecast Drafts of marketing collateral/website

23. Typical Pre-Revenue Start-Up CEO/Founder CTO/ Founder Mktg? Sales CFO HR/Admin Dev’t (6-8)

24. Strategic Failures for Start-Ups “We’ll talk with prospects once the product is ready” “Our target segment is every company (or every consumer)” “We’ll figure out how to make money later” “There aren’t any competitors” “Our customers will be smart, technical, and figure out what to do with our product”

25. Who Will Play Product Manager? Someone usually fills the product void Technical founder Marketing founder Someone who’s been a PM (or CEO) before Must stand up for long-term viability of product Must document and recall previous decisions Must help sort issues Urgent tactical Strategic, needs thought / input / consensus Urgent strategic

26. Product Management Executives Development What Does a Product Manager Do? strategy, forecasts, commitments, roadmaps,competitive intelligence budgets, staff, targets market information, priorities, requirements, roadmaps, MRDs, personas, user stories… Field input, Market feedback Mktg & Sales Markets & Customers software Segmentation, messages, benefits/features, pricing, qualification, demos…

27. Be Informed, Not (Just) Smart Our product ideas are usually simplistic, biased Every customer is a special case Patterns need a dozen instances What’s common about use cases? Where’s the real pain? Real savings? What integration or infrastructure is normal? Who (within the customer) is our champion? How would we qualify a customer? Someone needs to talk with lots of prospects

28. How To Start a Strategy… Designate someone as “keeper of the strategy” Gather cross-functional leaders for a day Argue through to a decent shared theory What we’re building A few personas or detailed use cases How customers will justify paying us (ROI) Sales model (direct, channels, OEM) Ship date Assign someone to test theory with 8+ prospects Schedule next half-day strategy meeting

29. So Start-Up Strategy Lives… CEO/Founder Here CTO/ Founder Mktg? Sales CFO Here Here HR/Admin Dev’t (6-8) Process and owner are more important than location

30. When to Hire a Product Manager My personal bias Full-time product manager no later than employee #25 Reports to Marketing or Engineering (whichever has stronger PM background) PM probably also covers Product Marketing, technical Business Development for a while

31. Agenda What’s strategy made of? Where should strategy live in… Pre-revenue start-ups? Small single-product companies? Large divisionalized corporations? Take-Aways, Q&A Where Does Strategy Live?

32. What’s Different Now? Single product company has… A shipping product Revenue Sales and Bus Dev tackling live accounts Lead generation programs from Marketing A couple of reference customers Some lost deals

33. A Bigger Functional Organization CEO CTO VP Eng VP Mktg Sales CFO Dev/QA Team (8) Lead, Web (2) Finance (2) Direct (4) Dev/QA Team (8) Product Channels Support /Ops (2) HR /Admin Channels Int’l Arch, UI, Docs (3) Bus Dev Sys Ops

34. Organization-Level ‘Strategies’ Every group has its own local strategy… Build & Test strategy Product roadmap Lead Gen strategy Channel Sales strategy Financing plan Sales forecast These don’t necessary fit together

35. You’ve Hired a Product Manager Your product manager should Gather and evaluate useful customer input Different from “hot pursuit” selling Own the requirements and roadmap Own the use cases and personas Co-own pricing and revenue forecast Provide content for Sales and Marketing Manage (but not own) the strategy Defend the strategy

36. New Failure Modes Confusing early wins witha segmentation plan Making promises about new versions without a commitment Growing sales staff/channels ahead of repeatable sales processes Assuming exponential growth Underestimating competitive moves Mistaking success for strategy

37. So Strategy Should Live… CEO Here Here CTO VP Eng VP Mktg Sales CFO Lead, Web (2) Finance (2) Direct (4) Dev/QA Team (8) Here Product Channels Support /Ops (2) Dev/QA Team (8) HR /Admin Channels Int’l Arch, UI, Docs (3) Bus Dev Sys Ops Process and owner are more important than location

38. Who Drives Strategy Now? Executive team is still responsible for success Can delegate strategy process to Product Management Continuous gathering of market facts (with Sales and Marketing) Continuous gathering of technical facts (with Engineering) Pipeline updates (from Finance) Executives still own the strategy

39. Agenda What’s strategy made of? Where should strategy live in… Pre-revenue start-ups? Small single-product companies? Large divisionalized corporations? Take-Aways, Q&A Where Does Strategy Live?

40. Big Companies, Big Org Charts Multiple product lines or divisions Complex sales/channel model Deep functional organizations Silos of information, expertise Product strategies, portfolio strategies,vertical strategies,solution strategies, M&A strategies…

41. A Classic Divisional Organization Board of Dir CEO/Chairman Corp Strategy VP/GM, Div #1 VP/GM, Div #2 VP/GM, Div #3 Corp Marketing WW Sales Finance & Ops Eng’g Finance Mktg/PM Mfg/Ops Support HR Eng’g Finance Mktg/PM Mfg/Ops Support HR Eng’g Finance Mktg/PM Mfg/Ops Support HR PR/Adv Lead Gen Events Mkt Strat Research Creative US Direct US Channel Intl Direct Intl Channel Bus Dev Sales Ops Planning Acct’g IR Facilities HR Training

42. Formal Strategy Owner(s) Corporate Strategy team Reports to CFO, CEO or CMO Divisional strategy teams Report to GM/Divisional VP Product-level strategies Product Management reporting up to GM/Divisional VP Corporate strategy reviewed annually Typically tied to annual budget cycle

43. New Failure Modes “Ivory Tower” strategists Disconnected divisional strategies Sweeping (but meaningless) corporate mission statements Poorly communicated cross-dependencies Expensive search for ‘synergy’ and ‘leverage’ Strategies that don’t exclude anything

44. Big, Pricey Assistance Available Big corporate strategy is a big organizational problem Specialty consulting firms aggressively market their paradigms Out of my league

45. Agenda What’s strategy made of? Where should strategy live in… Pre-revenue start-ups? Small single-product companies? Large divisionalized corporations? Take-Aways, Q&A Where Does Strategy Live?

46. Take-Aways Strategy is an ongoing process, not an event Must include participation from key functions Product Management is a natural coordinator Customer insight comes from customers Rapidly changing strategies are usually not strategies

47. Q&A

48. Contact Information +1-650-315-7394 rich@mironov.com www.mironov.com/articles/ feeds.feedburner.com/RichMironovProductBytes @RichMironov www.linkedin.com/in/richmironov