This blog is the 7th part in the series of blog posts related to ‘Pragmatic Guide for Preparation of GREAT Product Roadmap’
2nd part – Why product roadmap?
3rd part – Pragmatic purpose of product roadmap
4th part – Discovery of needs
In this part, i am elaborating about the inflection point. Inflection point is indispensable part of any product and the focus of the blog is to outline how inflection point could be tackled using product roadmap through efficient handling of technology transition.
Inflection point – Seizing the opportunity through product roadmap
Every product has an Inflection point as defined by Andy Grove in his book “Only Paranoids Can Survive”. One simple case of inflection point is technological change. Inflection point is both an opportunity (to displace incumbents) and a risk (to be displaced by new entrants or existing competitors), so it is really critical to be wary of the inflection point.
Perils of inflection point
Most of the companies in its glory of existing product success miss the inflection points. Intel was so obsessed with microprocessor business; it missed to dominate the chipset business in mobile space. Qualcomm and other players were dominating the market. Nintendo was the leading game player in 32 bit games while Sega became dominant player in 64 bit games and Nintendo lost the battle in 64 bit games. Likewise, Sony dominated 128 bit games and Sega lost the batter in 128 bit games. So clearly each of the above mentioned companies had a tight vigil on the inflection points and entered the market with a new technology. However the same set of companies missed to observe the subsequent inflection points and lost their market dominance when there is a technological change. The only error committed by those companies is to bask in the glory of existing products success; undeniably most of the companies commit such mistakes.
 Source: http://www.nasdaq.com/article/qualcomm-leads-mobile-baseband-chipset-market-analyst-blog-cm367305
Having talked about inflection point now let me revert back to the actual topic of how to tackle inflection point in roadmap. Please note that the inflection point can be caused by both technological and non-technological changes. Since I hail from high tech industry and I am obsessed with technology, let me focus my discussion on inflection point within the scope of technological change. Accordingly there are 2 situations for tackling inflection point.
- Opportunity – To displace incumbents
- Risk – To avoid being displaced by new entrants or existing competitors
In either case, it is really critical to identify the new technology that when introduced will change the dynamics of the market. However the only difference is that in former scenario, when there is lot of aggression to displace the incumbent, there would be conscious effort to identify and validate new technology to understand how new technology can change the dynamics of the market when embraced into the product offering. In later scenario, incumbents will be busy serving their customers and they might possibly duck the new technology trend as fad. Clayton M. Christensen threw lot of light on this topic in ‘The Innovator’s Dilemma’.
Assuming both incumbents and non-incumbents spot the new technology and realize the importance of embracing new technology in product offering, our discussion is primarily on how the product roadmap will address the introduction of new technology to face strategic inflection point
Opportunity – To displace incumbents
New technological introduction will either help displace incumbents (Sega displaced Nintendo with 64 bit games) or create a new segment (Nintendo WII target casual gamers). Either way, once the new technology is identified and validated, it can be directly added to the roadmap and start prioritizing addition of new technology to the product offering. In this scenario, there is less of product roadmap dilemma and more of technology dilemma (how customers would adopt new technology and what would be adoption rate). Startups or non-incumbents will leverage this opportunity to gain foothold and for them they have more to gain than lose in chasing new technology or new market segments.
Risk – To avoid being displaced
In this scenario, there is more of product roadmap dilemma and less of new technology dilemma. Adoption of any technology takes time and the adoption rate would only increase gradually. Further investing in new technology would not provide immediate gains, so trying to prioritize new technology introduction over other product features that could fetch revenue in the immediate future is a big challenge. For those reasons, it is fair to treat new technology introduction separately and not allow it to compete with existing product features. Remember the % split of roadmap across the following categories – tactical, strategic and disruptor. Even before we talk about technology adoption, first and foremost problem is to eliminate the uncertainties related to new technology and figure out how new technology can be imbibed to deliver significant value to customers.
Now coming back to the discussion of technology adoption, let us take the example of IoT. The success of IoT lays in more proliferation of connected and smarter devices, so manufacturers have to enable the smartness in the devices they manufacture. But do all customers embrace IoT immediately? Definitely not, the technology adoption cycle familiarized by Geoffrey A. Moore obviously suggests that customer adopt technology at varying intervals. So companies should most probably employ a two-legged approach (investing on both old and new technology at varying degrees) to ensure seamless transition of their customers from old technology to new technology. I honestly don’t see any other alternative to two-legged approach in addition to deriving a well-crafted strategy to increase the adoption rate. Once the uncertainties surrounding the technology are cleared and applications of technology are determined, the technology transition is not a technical problem as much as it is a business problem (how to increase adoption rate) and roadmap problem (how to balance between old and new technology). I am not undermining the efforts required to validate the new technology, what I am stressing is that in the case of embracing new technology to avoid the risk of being displaced, seamless transitioning from old to new technology and accelerating the adoption rate are major challenges for a Product Manager.
The good news is that at least in B2C segment the adoption rate of new technology is lot more quicker. May be, one primary reason for quicker adoption rate is affordability along with increase in per-capita income of the consumers. In B2B segment as well, maturity and affordability of new technology will be one of the primary drivers to increase the adoption rate of new technology along with the necessity to clearly articulate the value of product offering that imbibes new technology.
[PS: Product that incorporates new technology is being referred as new product offering]
Revenue potential of new product offering will always be too little, so allowing the new product offering to compete with traditional product for resources will spell death knell for new product offering. The primary focus for Product Manager is to resolve the resource split between old and new technology through ruthless prioritization of features of both new product and old product.
Take small and substantial steps
In case of new product offering, it is advisable to take baby steps. Start with building the most essential parts (basic functionality) of new product offering that would facilitate to enter the market and validate the product. Product Manager need not strive to build a perfect product with focus on usability, performance etc., instead build a new product with sufficient functionality that can render appropriate value to customers. The basic idea is to validate the product, solicit the feedback from customer, and iterate the product incrementally in a cyclic manner while successfully convincing the customer to transition to new product offering.
Don’t adopt herd mentality
Everyone is testing waters with new technology and none might be sure about what market needs, so just don’t blindly follow the competition. Herd mentality is riskier. Ideal mechanism is to validate the product with selected set of customers and understanding their needs to further evolve the product using the principles: Insight, Observation and Empathy as outlined by Tim Brown in his book “Change by Design”. Any technology (for instance IoT, BigData) will be rendered useless unless Product Manager wove a solution offering surrounding the technology and successfully build a product that resolves a need. Technology sans solution is no good for anyone.
Pick a customer(s) – THE Lighthouse Customer
In any technology transition phase, the bad news for incumbents is that they need to meticulously balance both old and new technology during the entire period of transition of their customers to new technology as technology traverses through various phases of the adoption cycle. But the good news is that incumbents have a customer base and they do not have to hunt for customers. It should be possible to pick the early adopters from the existing customer base for validation of the new product offering.
Measure the adoption rate of new technology
Any further changes to the new product offering will be dependent on the feedback solicited from the customer. Meanwhile Product Manager has to look out for certain signs to measure the adoption rate of the new technology. Accordingly he can plan to increase investment in evolving new product offering
- Is technology becoming cheaper?
- Is the performance curve of technology increasing?
- Are there any standards evolving for new technology?
- Are more customers interested to trial new technology?
- Are there any viable business models to sell new product offering?
- Has the company started making real money on new product offering? Or is there a clear potential to make real money?
Response to the above queries can help Product Manager ascertain whether the new technology will be adopted and at what rate. In case of substantial signs of new technology being adopted, it implies that early adopters have gained confidence on the new product offering and it should be possible to convince them to start investing on new product offering. Product Manager has to now look out for success stories of new product offering, create press releases and communicate the actual value delivered by new product offering to early majority and provide them sufficient reasons to trigger the migration
Trigger transition from old to new technology or product offering
It is during this phase that Product Manager has to aggressively evolve both product offering (in terms of functionality, usability, performance etc) and non-product offering (documentation, support, marketing, press release, case studies) of new technology while cutting down the investment on old product. It might not be wise to continue investing on both old and new product while letting customers take their own sweet time to transition. Basically the overlap period between old and new products has to be cut short. Product Managers has to develop a strategy to reduce the transition time by offering incentives to migrate through trade-ins, migration offers, early discounts etc. or by offering more value adds on new product offering in comparison with old product.
Managing product/technology transitions in roadmap
The entire purpose of this exercise is to ensure preparedness for the future while not leaving sight of the short term opportunities and to effectively manage the transition of customers from old product to new product. Please note that the old product is still the revenue generator (probably cash cow) and we could not risk the revenues of old product at the cost of embracing new technology. Product Manager has to strike a perfect balance. Since we are building the new product offering at the cost of existing product, Product Manager has to follow some ruthless prioritization of features on existing product as to deliver only the most critical product requirement and allow some space to introduce new technology.
Prioritization tips for existing product during technology transition:
During early phases of introducing and validating new technology
- Deliver features that are critical and categorized as ‘MUST HAVE’
- Deliver only core features or extensions to core features
- Most products are known to be packed with tons of features. Prioritize only those features that extend core functionality of the product.
- Deliver requirement that are applicable to wider range of customers
- Don’t focus on custom requirement – Even if they are requested by high revenue generating customers
- Use appropriate negotiation skills to either drop the requirement or trade the requirement for any other generic requirement
During customer transition period from old to new technology – As the technology adoption increase
- This phase indicates sunset mode for the product, so the focus in less on investment and more on squeezing all possible revenues.
- Even among ‘MUST HAVE’ requirements, focus only on those requirements that delivers immediate value to customers
- For instance, Product Manager does not prioritize requirements such as support for 100K simultaneous users where customer anticipates the increase of simultaneous users to 100K after an year
- Focus on features that can aid in migration
- Focus on stabilizing the product
- Smaller segment of customers might always stick to old product for little longer duration. So stabilizing the support to reduce support cost will be ideal
- There should be reversal trend of prioritizing more requirements related to new technology and less requirements related to old technology
- Entice customers to migrate by delivering more value on new technology
During the transition phase, Product Manager should not lose sight of the product revenues. The ultimate goal for the Product Manager during transition phase is to ensure that the revenues of new product offering will offset the decline in revenues of older product.