Book Review: “Empowered: Ordinary People, Extraordinary Products” by Marty Cagan and Chris Jones

The book “Empowered: Ordinary People, Extraordinary Products” by Marty Cagan and Chris Jones is a must read for all product and business leaders. Marty’s earlier book “Inspired”is probably the most-referred book for aspiring / noob product managers, authors need no introduction to the authentic insights they bring!

What follows next is my recollection of broad themes, key takeaways and compelling arguments the authors put forth. Authors have relied on their learning from 500+ organisations of different scales, what they state is generally applicable. That the book was published during Covid times is testimony to the new realities we are all living in around resilience, adaptability to change and staying true to our core values amidst volatility. Unstated but these themes keep recurring throughout the book

Cover Image of the Book: “Empowered” by Marty Cagan and Chris Jones

The book is divided into 81 chapters, although most chapters can be independently read like a well-written blog. The authors differentiate strong product teams from what they call feature teams (one striving to serve the business) and most of the book is organised around helping leaders create strong product teams in their organisations. In the strong product team, the purpose of the product org is to serve customers by creating products customers love, yet work for the business. The book also argues that the key to building strong product companies is having strong product leaders

On coaching mindset

  • Coaches roll up their sleeves and get their hands dirty, whereas mentors dole out words of wisdom
  • Developing people is job #1 for managers
  • To earn trust of the team, be interested in the team member as a person
  • While a team member’s self-assessment to develop a career plan is helpful, the manager should not hesitate from correcting the difference in perception between him and the team member. Not doing so is abdicating the responsibility!

On developing talent

  • The biggest difference between competent PMs and effective PMs is probably their people skills
  • It’s manager’s responsibility to bring a new product manager into the team and unless she is competent enough to ensure the person is NOT doing harm to the team and is making reasonable decisions
  • Constructive feedback is the main source of value you provide as a manager. There should never be surprises in annual reviews related to performance!
  • A written narrative for major decisions / products is helpful to be an exceptional product leader. It’s mostly a 6-pager doc with narrative in the first few pages followed by FAQs that might come from key stakeholders
  • An employee with an owner’s mindset takes responsibility for the outcomes rather than just the activities
  • Ability to think is the single most important behavior of a capable product person. How to assess this in interviews is by probing what the candidates do when they don’t know they answer
  • Three critical characteristics of strong product teams no matter what processes they use are
    • tackling risks early 
    • solving problems collaboratively
    • and being accountable to results
  • A product manager’s career will survive mistakes which inevitably happen if she is on the whole dependable in her commitments, always works toward the company’s best interests, and takes responsibility for her mistakes
  • Also coach your people around ethics of product management i.e. whether something should be built in addition to viability, feasibility, usability and valuable
  • As a leader, it probably helps to measure success by the growth of people one has managed or helped throughout the career
  • Also the leadership is not about you, it’s about the team member. More like an actor vs. director in a theatre aphorism “don’t fix a line”
  • Leaders need to set the expectations, establish the governance that acknowledges necessary boundaries—but removes barriers to progress—and support the teams with the necessary tools and resources

On stakeholders

  • In general the more senior an executive in the organization more likely they care about everything – customers, brand, revenue, compliance
  • Product managers need to invest in trust before they need it
  • On imposter syndrome: if I don’t do home and prepare thoroughly, the fear of looking clueless is what drives preparation. It’s not necessary something to fight against
  • Treating stakeholders like customers may dilute the role of true customer
  • On reducing number of meetings: if there is a way to make them happen asynchronously like status update is generally better

On decision making

  • The authors describe a colloquialism by Jim B, former CEO of Netscape
    • If you see a snake (i.e. an important decision to be made), kill it
    • Don’t play with dead snakes (past decisions)
    • All opportunities start out looking like snakes

On hiring

  • Hiring is the responsibility of the hiring manager and not the HR!
  • The best product companies hire competent people of character, and then coach and develop them into members of extraordinary teams
  • There are two bases of hiring 1. Competence 2. Potential. Nothing wrong in hiring basis 2 as long as hiring manager is willing to invest time to develop the person
  • Product vision is one of the most effective tools for recruiting great product managers!
  • Every new hire should raise the average of the people
  • Reference checks should be taken seriously especially to weed out toxicity in behavior which can be hidden during the interview process 

On product vision

  • Vision answers two critical questions 1. What’s the end game 2. What is my team’s contribution to it? It’s purpose is to inspire and it’s told from customer’s perspective
  • Evangelism is never finished. Just because a person is convinced one day doesn’t mean they will not be unconvinced the other day 
  • Product vision should be accompanied by product principles or tenets in order to provide guidance to PMs in decision making

On team topology

  • Establishing an effective team topology is one of the key responsibilities of a product leader
  • The best team topology will balance the needs of product, design and engineering orgs
  • Topology choice should be guided by the team empowerment, real ownership, team autonomy and alignment with other facets of the company
    • Optimise for the product team rather than executives, managers or access to customers!
  • Beware of Conway’s law i.e. shipping your org chart!
  • If you’re making changes to team topology more than once a year, something else is wrong
  • Platform teams reduce the cognitive load for experience teams in using the underlying technology whether customer facing or customer enabling

On product strategy

  • While product strategy starts with focus, it depends on insights. Product strategy requires choice, thinking and effort. For elements of the product strategy are 1. Focus 2. Insights 3. Actions 4. Management
  • Good strategy works by focusing energy and resources on few pivotal objectives whose accomplishment will lead to a cascade of favorable outcomes

On OKR framework

  • If the leaders want the product team to feel ownership of the results, then the key results must come from the team
  • The team will also need guidance from leadership on how ambitious or conservative (roof shot or moon shot) they should be in pursuing solutions
  • Activities are not key results, outcomes are 
  • All of the work need not be OKR. There could be some high integrity commitments which need to be tracked differently
    • High‐integrity commitments are intended for situations where you have an important external commitment or a very important and substantial internal commitment. They are the exceptions
  • It’s normal and often wise for different teams to chase the same objectives simultaneously
  • Technology makes many things possible, but if it doesn’t deliver on the needs of the customer, it will not deliver on the needs of the business

On product leadership

  • There are 3 things a product leader will be judged on a. Business results b. Product strategy c. Product team
  • Evangelism is one of the critical roles of product leaders in mid- to large companies
  • Top methods of evangelization
    • Use prototypes 
    • Share the customer pain
    • Share the vision
    • Share the learning i.e. information the audience needs to help come up with solution
    • Share credit generously 
    • Learn how to do a great demo! It’s sales!
    • Spend time with your developers, designers and product managers
    • Show genuine enthusiasm!
  • The best source of innovation are your engineers!

In short, a must read book for all product and business leaders. The book contains decades of product leadership experience in a very concise and easily practicable manner and you can keep it like a ready reckoner for quite some time to come!

Book Review: “The Psychology of Money” by Morgan Housel

The book “The Psychology of Money” by Morgan Housel has been a rage last year, that aroused my curiosity to read the book. Although this does not strictly fall into the domain of product management, I would cover it here since quite a few principles the book details out are applicable to many situations a PM faces. And it never hurts to get wiser about money matters, right?!

Cover page of the book "The Psychology of Money" by Morgan Housel

Image 1: Book Cover of “The Psychology of Money” by Morgan Housel

The rest of the article is key takeaways in a list format. The book is quite an easy read anyway, and one can start reading it from any chapter

The premise of this book is that doing well with money has a little to do with how smart you are and a lot to do with how you behave. And behavior is hard to teach, even to really smart people. The author calls this soft skill “the psychology of money”

  1. Generations behave differently with respect to their perspectives towards money since their view of money was formed in different worlds. And therefore a view about money that one group of people thinks is outrageous can make perfect sense to another
  2. Another important point that helps explain why money decisions are so difficult, and why there is so much misbehavior, is to recognize how new this topic is, mostly 20-50 year old compared to let’s say a 10,000 year old epoch when one can start discerning some behavior changes in species!
  3. Luck and risk are both the reality that every outcome in life is guided by forces other than individual effort
  4. As much as we recognize the role of luck in success, the role of risk means we should forgive ourselves and leave room for understanding when judging failures. Therefore we should focus less on specific individuals and case studies and more on broad patterns
  5. The hardest financial skill is getting the goalpost to stop moving that is to recognize when one has had enough money
  6. Some invaluable things in life are reputation, freedom and independence, family and friends, being loved by those who you want to love you and happiness. One should protect these things away from harm by knowing when to stop taking risks that could take them away. And knowing when you have enough!
  7. Counterintuitiveness of compounding may be responsible for the majority of disappointing trades, bad strategies, and successful investing attempts. Time is the most important factor here
  8. There’s only one way to stay wealthy: some combination of frugality and paranoia
  9. Applying survival mindset in real life boils down to appreciating three things 1. Be financially unbreakable to stick around long enough so that compounding can work wonders 2. Plan for the plan not going per the script. Having plan B is critical 3. Be optimistic about the future but paranoid about what will prevent you from getting there
  10. Short term paranoia is important for surviving long enough and exploit long term optimism
  11. Tails drive everything. The distribution of success among large public stocks over time is not much different than it is in venture capital
    • By accepting that tails drive everything in business, investing, and finance one would realize that it’s normal for lots of things to go wrong, break, fail, and fall
  12. If there’s a common denominator in happiness, it’s that people want to control their lives. And therefore controlling one’s time is the highest dividend money pays
    • Since controlling time is such a key happiness influencer, people don’t feel much happier now since over generations that control have diminished. One should use money to gain control over time
  13. The single most powerful thing to do better as an investor, is to increase the time horizon!
  14. If respect and admiration are the goals, be careful how one seeks them. Humility, kindness, and empathy will bring more respect than any horsepower ever will
  15. Wealth is financial assets that haven’t yet been converted into the stuff one sees
  16. Building wealth has little to do with income or investment returns, and lots to do with savings rate
  17. The value of wealth is relative to what one needs and therefore past a certain level of income, what one needs is just what sits below the ego
  18. Saving is a hedge against life’s inevitable ability to surprise at the worst possible moment. It is like taking a point in the future that would have been owned by someone else and giving it back to yourself
  19. Flexibility is perhaps one of most important competitive advantages, in the world where intelligence is hypercompetitive and technical skills are getting automated
  20. Do not aim to be coldly rational when making financial decisions. Aim to just be pretty reasonable
  21. Reasonable is more realistic and one has a better chance of sticking with it for the long run, which is what matters most when managing money
    • For example, it may be rational to want a fever if you have an infection. But it’s not reasonable and therefore we want to suppress fever anyhow even when it can be advantageous for us!
  22. The reasonable investors who love their technically imperfect strategies have an edge, because they’re more likely to stick with those strategies
  23. Anything that keeps you in the game has a quantifiable advantage. Become OK with a lot of things going wrong. Be nicer and less flashy!
  24. Acting on investment forecasts is dangerous. However, people try to predict what will happen next year. It’s human nature and is reasonable!
  25. The most important driver of anything tied to money is the stories people tell themselves and the preferences they have for goods and services
  26. Recessions have become more sporadic over time because 1. Maybe Fed is getting better at managing business cycles or extending them 2. Service industries which have dominated last 50 years are less prone to boom-bust cycles that heavy industries

Image 2: Recessions cycles have become more sporadic in the last 50 years. Credit: The Psychology of Money by Morgan Housel

  1. Since economies evolve, recent history is often the best guide to the future, because it’s more likely to include important conditions that are relevant to the future
  2. Unknowns —are an ever-present part of life. The only way to deal with them is by increasing the gap between what you think will happen and what can happen while one manages to survive. The concept of room for error is important. Having a gap between what one can technically endure versus what’s emotionally possible is an overlooked version of room for error
  3. One has to take risks to get ahead, but no risk that can wipe one out is ever worth taking!
  4. The biggest single point of failure with money is a sole reliance on a paycheck to fund short-term spending needs, with no savings to create a gap between current and future expenses
  5. People are poor forecasters of their future selves. Sunk costs—anchoring decisions to past efforts that can’t be refunded—are a harmful in a world where people change over time
  6. Career, relationships and money can take years of planning and decades to grow!
  7. The price of a lot of things is not obvious until you’ve experienced them firsthand, when the bill is overdue
  8. Thinking of market volatility as a fee rather than a fine is an important part of developing the kind of mindset to stick around long enough for investing gains to work wonders
  9. An iron rule of finance is that money chases returns to the greatest extent that it can!
  10. Identify what game you’re playing and what game others are. One should make sure that he actions are not being influenced by people playing a different game
  11. Real optimists don’t believe that everything will be great. That’s complacency. Optimism is a belief that the odds of a good outcome are in one’s favor over time
  12. Money and health are the two topics that will affect everyone’s life whether one is interested in them or not!
  13. In investing one must identify the price of success—volatility and loss amid the long backdrop of growth—and be willing to pay it
  14. The more one wants something to be true, the more likely to believe a story that overestimates the odds of it being true
  15. The illusion of control is more persuasive than the reality of uncertainty so we stick to stories about outcomes being in our control
  16. Respect the power of luck and risk and one will have a better chance of focusing on things one can actually control
  17. Wealth cannot be built unless one can control having fun with the money right now!
  18. “Does this help me sleep at night?” is the best universal guidepost for all financial decisions
  19. Independence, at any income level, is driven by savings rate. And past a certain level of income your savings rate is driven by your ability to keep your lifestyle expectations from running away!
  20. Good decisions aren’t always rational. At some point one has to choose between being happy or being “right”!

The author in the last chapter diverts towards how Americans behave towards money especially the post-War generations. Sharp inequality became a force over the last 35 years, when the Americans have held onto two ideas 1. That you should live a lifestyle similar to most other Americans and that taking on debt to finance that lifestyle is acceptable

The author also prophecies that the current chaotic era of radial expectations that “this is not working any more” may go longer and can get even worse. Two weeks into 2021, I couldn’t agree more!

Book Review: ‘Decoding the Why’ by Nate Andorsky

This book “Decoding the Why: How Behavioral Science is Driving the Next Generation of Product Design” by Nate Andorsky can be summed as the one attempting to bridge the gap between what is loosely known as gamifying the product experience and a typical product development in non-games companies. As you would have observed, even before Covid – product companies were focusing on driving user engagement and retention through non-monetary interventions. In a horizontal product world – everyone trying to do almost everything else – user attention is literally a currency!

Image 1: Book Cover of “Decoding the Why” by Nate Andorsky

In author’s own words, the book is intended to give readers a baseline understanding of how behavioral science integrates into the product design. What now follows is summary of the book in Q&A format

What are the limitations of an archetypal user research oriented product development process?

Basic flaw with user research could be that most of the time, one is asking users to provide explanations of behaviors they don’t truly understand themselves! OTOH, mimicking competitors’ products creates an echo-chamber of product design

Our innovations will only live up to their full potential if they are built on an understanding of the human experience. While context plays a significant role in how our behavior manifests, the underlying mechanisms remain constant and this is where behavior oriented process gives an advantage

How does the human brain function?

Tversky and Kahneman’s seminal paper, “Judgment Under Uncertainty: Heuristics and Biases,” proposed that we attack complex problems using a limited number of heuristic principles—basically shortcuts. The brain typically operates in one of two modes: automatic and reflective, often referred to as System 1 and System 2 thinking. System 1 runs on autopilot and it’s possible for these systematic errors to be understood and “predicted”. System 2 is slower, more methodical, and dedicated to solving complex problems

How does one get started on this new approach? 

The author introduces three kinds of data points one should be cognizant of

  1. SAY data: subjective information collected from users
  2. DO data are the analytics—what users are doing on the website or product
  3. The WHY data. If you understand the WHY data behind the DO and SAY data, it unlocks a world of possibilities

How do we fight inertia wrt current user behavior?

We have a bias toward the present, giving stronger weight to present payoffs than those that will happen in the future. Present Bias ties into another theory, Hyperbolic Discounting, which states that we have time-inconsistent preferences

The way we perceive our future selves is similar to the way that we perceive a stranger. The further out into the future the loss or gain happens, the more heavily we discount it. To offset Present Bias, we must close the gap between our current selves and our future selves

In general users who perceive more personal stability over time tend to behave in a more future-oriented fashion—one that aligns better with their future self. However when the reward is too far off in the distant future, one needs a substitution to fill the void

OTOH users need guidance when they make decisions. Without guidance, they can fall into Barry Schwartz’s paradox of choice i.e. when presented with too many options, we have a hard time making a decision. This is why good on-boarding and product tutorials may be sometimes critical to product adoption!

How do we design for a reward cycle?

It is important to first consider the desired action before one integrates the reward

The fundamental building blocks of a reward cycle are: trigger, action, investment and reward. Nir Eyal notes that the reward should be variable, and there should be an investment component where the user puts something into the product such as time, data, effort, social capital, or money

Dopamine is the high you get from experiencing something new and exciting. The nervous system produces dopamine during the experience of reward, but even more interesting is that the production of dopamine also happens in anticipation of a reward. The closer we get to receiving a reward and missing it, the more likely we are to engage in said behavior again. Overall, rewards and incentives don’t necessarily have to be financial as anyone who has watched Tik Tok’s growth can vouch for!

How to choose between intrinsic and extrinsic motivators?

Daniel Pink, NY Times Best Selling author opines that the three elements he believes make up true motivation are autonomy, mastery, and purpose. Intrinsic motivation drives creative tasks that are open to interpretation.

A good rule of thumb is to leverage external rewards to promote interest in an activity that is easy but may not initially interest a user. If it is a specific, relatively easy task with a concrete outcome, easy to do, and with an endpoint, extrinsic motivators would be a good place to start

Then, if possible, trigger intrinsic motivations to reinforce the action over the long term

How do we get people to keep acting on their intentions?

Commitment devices help us follow through on our intentions. A common form of a commitment device involves a person voluntarily giving up something of value that they can only regain access to by following through on their commitment. It’s more effective to structure a commitment contract where the reward money is theirs to lose rather than gain. Think of an example, of incentivising student participation in class by tying higher participation to a picnic the school will organise later in the year

Commitment contracts don’t always have to come in the form of money. These commitments can be to another person or a group of people. Goals should not be so big or far in the distant future that they feel unattainable

One should not underestimate the power of cues in precipitating an action. Others give us cues regarding what we should do. Even a small subset of a larger group making a confident move can influence the rest of the group. Social norms and the pull of the crowd can help your users follow through on their intentions. The way to drive behavioral change predicatively is by changing norms and changing the rules, effectively changing someone’s environment. Important part is to understand how to change the behavior, and the outcome will follow

Why are goals so powerful?

Regulatory Mode Theory studies the development of goal-pursuit as well as motivation. The theory lays out two main approaches from a social cognition perspective regarding the pursuit of goals: one is assessment, and the other is locomotion. Scoring high on assessment means you evaluate your options before making a decision and while scoring high on locomotion means you need to always be doing something

Streaks are a powerful way to incentivize action. They provide a sense of progress that plays into the natural way we see the world, our desire to avoid loss, and our need for growth and accomplishment

For example, the primary focus of Duolingo is to make the long-term benefits of learning a new language more immediately salient. Winning streak that increases its attractiveness as it lengthens, becoming a self-reinforcing system. On Duolingo, the grouping of these streaks is completely arbitrary. However, streak loss can be demotivating for some participants. Duolingo has countered this by allowing learners the ability to restore a broken streak

In short, people who set goals make more progress!

How do we signal trust?

We have a natural inclination to trust people who look and act like us, a bias called similarity bias. Aribnb used this to build trust between two people who have never met before in the absence of multiple reviews by creating similarity between the renter and rentee. However, if users share too little or too much about themselves, acceptance rates go down

So how did they design for this? Airbnb nudged users to write an introduction of the correct length and to include the right details about themselves. Airbnb also discovered that at a certain point, reviews trumped similarity bias. When a listing accumulated more than ten reviews, everything changed, people started trusting ratings more!

How to retain motivation?

Leaderboards spur competition, but they have weaknesses. Leaderboards can backfire. If a user gets too far ahead or too far behind, they disengage. In games, there are techniques employed like Dynamic game difficulty balancing (DGDB), also known as dynamic difficulty adjustment (DDA) or dynamic game balancing (DGB), which is the process of automatically changing parameters, scenarios, and behaviors in a video game in real-time based on the player’s ability, to avoid making the player bored (easy game!) or frustrated (hard game). Overall, a competition between users is a powerful technique to motivate action

How to leverage loss aversion to our advantage? 

Losses psychologically feel twice as great as an equal gain. Only prospective (future) costs are relevant to a rational decision, but we fall prey to the sunk cost fallacy. IKEA effect which describes the increase in the valuation of self-made products. While the participants weren’t experts, they saw their creation as ones created by experts. The more of a hand we have in creating something, the less likely we are to part with it. Fitness app Noom uses this to its advantage in their onboarding flows

Peanut effect as a way to counter big loss aversion!

The peanuts effect is when we fail to consider the consequences of small losses. In this case, it is a good thing. The peanuts effect is part of the reason slot machines steal all of our money. The decision to save is easier when framed in a way that spreads the potential losses into smaller increments. Momentum leverages the default bias and the peanuts effect to help everyday people close their intention-action gap

How to use emotions?

We process information about one identifiable person differently than information about a group of people. Identifiable Victim Effect, which seeks to understand what moves us to offer help. Think back to a powerful marketing campaign, and it would have revolved around stories. To move people emotionally, tap into layer two and convey the emotional experience to your audience. We are visual machines. The brain can identify images seen for as little as thirteen milliseconds. All types of companies can help users achieve their goals by making them the hero of their own journey – the way Pain Squad does for its users

How to integrate behavioral-first approach while building products?

The process is quite simple and can be summed as a series of steps below

  1. What is the problem you are trying to solve?
  2. Collect the SAY and DO data
  3. Compare SAY and DO data
  4. Identify potential behavioral drivers
  5. Identify potential behavioral solutions
  6. Create interventions
  7. Test interventions
  8. Iterate

As one can see, steps 4 and 5 are the most crucial ones and this is where learning and having an opinion about behavioral theories may help

Overall, we are just getting started in this interesting domain of marrying behavioral insights with product design. Academic understanding of what drives behavior precedes the implementation by about ten to fifteen years. Product managers and designers learn by taking theories and putting them into practice. Hopefully one should be able to discern where assumptions break down and where they start to work and then hypothesize why and fine-tune it!

Book Review: “Strategy Excellence for Product Managers: A Guide to Winning Markets…” by Greg Cohen

This book “Strategy Excellence for Product Managers: A Guide to Winning Markets through Product Strategy” combines practical wisdom with theoretical frameworks we are already familiar with. In that sense, it’s a valuable read. The author Greg Cohen has 2 decades’ experience in the industry and the resultant scars are visible in his writing!

The book is divided into 11 chapters, however one can start reading from any chapter. In the beginning, the author tackles the question most business books tend to understate. The distinction between vision and strategy is that although vision creates a shared picture of the future, it does not take into account the fact that markets are dynamic. The author also opines why relative growth in a competitive scenario is validation of a good strategy 

Rest of this post summarises key learning from each chapter

Chapter 1

The vision inspires the team towards a better future. The roadmap shows how the vision will be achieved over time while the strategy is about positioning ourselves where the most value will be in the long-term. There are five inputs to a product strategy exercise namely customer, market, competition, technology and business strategy

For developing customer understanding, voice of customer research helps while when doing market analysis, the objective is to understand which segments are most important for the product vision. OTOH when analysing how technology impacts product strategy, it’s important to understand capabilities, adoption rates and its cost structure 

As a product manager where often the gaps are noticed is: not realising that the choice of strategy has to be evaluated in relation to the company’s capabilities and culture. So if the company is not investing in cutting-edge tech work, product strategy has to reflect that limitation

In short, the product strategy must incorporate the business outcome a product needs to fulfil for the company and the time horizon to meet that objective

Chapter 2

The product vision is any product’s raison d’etre. It is a high-level articulation that communicates the product’s value, often by painting a picture of the future

Unlike the product strategy, which can be complex and involved, the vision is an easy-to-understand articulation of the most important parts of the plan. The vision keeps three crucial factors

  • the target customer
  • the in-scope problems that the product solves; and 
  • the most important dimensions of the product

Chapter 3

A strategic roadmap distills the product strategy into sets of capabilities that one wants to release in a given sequence over a defined time frame. Strategic roadmaps ultimately answers the questions – why and why now

A strategic roadmap helps focus all stakeholders on the pieces of the product that must be developed to achieve the strategy and the roadmap has to be vetted against the team’s capacity to produce a credible plan

The three steps to developing a strategic roadmap are 

  • Laying out the external environment i.e. tech, regulation, market trend, competitors
  • Adding product plans and strategic objectives
  • Vetting the plan with dependencies and resource constraints

Chapter 4

In this chapter, the author introduces a few frameworks for prioritising product backlogs. These are summarised as below

  1. Return on Investment: quickly understood metric for company-wide projects and also easily “sold” to management. However it can sometimes prioritise short-term over long-term sustenance and that not all decisions are ROI led. Sometimes people also forget that ROI calculations are as good as assumptions gone into them
  2. Voice of Customer (VOC): This provides a good picture into customer pain points and of course VOC is essential component of every other prioritisation method. However sometimes market shifts can be missed if one over-indexes on VoC. Customer cannot quite often tell about new segments or markets to go after
  3. Must, Should, Could, Won’t (MoSoCoW): this is often hard to apply correctly and is not quite suited for innovation-led products. However it can be useful for first-level prioritisation in a release 
  4. Kano Model: It looks at how the inclusion or exclusion of a feature contributes to customer satisfaction and how that satisfaction changes based on the level of the implementation. However it does not include product strategy or cost view. Typically any feature in this framework can be modelled along three curves: Must Haves, Delighters and PerformanceHowever one has to consider that customer expectations change over time and today’s delighters could be Must Have very soon. Besides, customers are not often a monolith – so not all features are equally important in these buckets for all 
Kano Model

Image 1: Kano Model

  1. Prioritisation Matrix: This s a lightweight, fast, and effective tool to help stakeholders make their beliefs explicit. It is also likely the best way to link product roadmap to company’s strategy, however it is subjective and doesn’t include costs 
  2. WSJF Method: Weighted Shortest Job First method prioritises those items which deliver the most value soonest. The key factors when applying WSJF are: value; time sensitivity; risk reduction and opportunity enablement; and duration/effort. However it does not take product strategy or customer perspective into account
  3. Feature Life Cycle Based Prioritisation: essentially this method buckets features into proof of concept, validated learning, minimum marketable feature and polish features. This method however considers cost and risk. And based on the company’s strategy, some risky (POC!) features can be front-loaded
  4. Value, Risk, Cost Matrix: It can help us visualize investment allocation across a “portfolio” of new features. This lens is also useful for evaluating investments across projects. However value is not necessarily connected to product strategy and value and risks assessments are highly subjective 
VRC Matrix for Product Backlog Prioritisation

Image 2: Value, Risk, Cost Matrix: Prioritisation Priorities are indicated

One has to frame prioritization in the context of product goals and corporate strategy. Overall objective with prioritization is to develop a winning plan and get stakeholders to understand the prioritization

Chapter 5

As a product manager, one needs to focus on product growth and how the product is doing relative to the market. The Ansoff Growth matrix highlights broad phases per product lifecycle

Ansoff Market Growth Matrix

Image 3: Ansoff Market Growth Matrix. Product development is a depth strategy

Chapter 6

This chapter focuses on product-market fit. PMF typically requires focusing on 3 areas: problem, product and business model. If one takes business model as constant, we have 4 scenarios which product managers find themselves in

Image 4: Problem-product Solution Mix by Greg Cohen

When the business model itself is uncertain the hardest business models to test are those involving channel distribution. It takes time to grow channel relationships, and further time and effort to get those partners active

A nifty trick author proposes when doing customer research is to probe customers around 5Ws. Probe means asking ‘why’ without sounding like a 5-year old – Whys uttered 5 times! One can use phrases like “Tell me more”, “would you describe the last time that happened”, “what is the implication of that”, “how do you deal with that”, “what do you do next”

Chapter 7

This chapter focuses on purposeful learning. The sooner companies, product teams, and product managers are willing to acknowledge that they don’t always have all the answers, nor will they have the complete set of answers upfront, the better they will do at managing the uncertainties and risks of new product development

The most we can ask of any team is to deliver validated learning at all stages of the development process. To do this, you have to do two things: become a purposeful learner and create a learning plan

Few techniques to become a purposeful learner are 

  • PDCA: Plan, Do, Check, Act. Also known as the Deming cycle.55 This model assumes the scientific method can be applied, and that a statistically significant data set can be acquired. It works very well for web analytics and quantitative studies
  • OODA LOOP — Observe, Orient, Decide, Act: OODA explicitly incorporates cultural context. With the continuous application of the OODA loop, you can navigate an ever changing landscape
  • Build, Measure, Learn. Within all these processes, the core is to describe how one believes the world works and test it frequently

OTOH learning plans have a question and a test. The team should first formulate a question and then generate a hypothesis or prediction for each test

Chapter 8

This chapter focuses on basic strategy frameworks. There are two components to strategy – where to compete and how to compete. There are 3 ways in deciding where to compete: scale, depth and innovation. Whereas in choosing how to compete – there are 3 positions: leadership, value and low cost. Leadership companies (Apple) focus on delivering superior capability or performance at a premium price. Value companies (Amazon, Flipkart) focus on delivering a high value to price ratio, and low-cost companies (Dell) look to compete almost purely on price

Niching is when a company selects to serve a narrow segment of the market with a product that matches that segment’s unique needs and preferences. Author opines that the companies choose niching when they will struggle to succeed in the mainstream market. This can be contested, niching is sometimes quite a viable strategy to outcompete a behemoth. Think classifieds as a business model are still thriving – surviving 2 decades of technology disruption!

Chapter 9

This chapter provides introduction to familiar frameworks for doing industry analysis. Porter’s five forces framework is touched viz. threat of rivals, threat of new entrants, threat of substitutes, bargaining power of suppliers, and bargaining power of customers

  • When threat of new entrants is high, profit potential becomes limited
  • Non-consumption, or doing without, is also a substitute
  • Suppliers also have power if they offer highly differentiated offering or where there are no substitutes. Scale strategies and standardizing inputs allow you to improve your bargaining position with suppliers
  • Depth strategies are a way to gain power with customers
  • Innovation strategies, along with leadership or value differentiation strategies, are a way to avoid pure price competition with rivals. Relative market share is calculated by dividing your market share by your largest competitor’s market share

Porter’s Five Forces analysis allows us to understand the pressures on the different players in the industry

Chapter 10

This chapter can be avoided without much loss of information. This focuses on market Maps – powerful visualization tools to compare companies’ strategies for deciding where to compete

Chapter 11

This chapter focuses on pricing. There are three factors that influence the price one can command for the product: value to customer, competitive intensity, and costs. As an example, airlines successfully charge travelers different prices for the exact same product, a technique known as yield management

There are three basic pricing strategies from which to start: Penetration, Skimming, and Maximization

  • Penetration pricing is when a company prices a product low relative to its value. Jio’s earlier plan in Indian telecom industry is one such example. Freemium pricing strategies are a version of this pricing strategy
  • Skim pricing is when a company targets a segment of the market with a high willingness to pay, favoring high margins over volume. Apple’s pricing strategy in India is one such example 
  • Maximization is when a company focuses on optimizing total profit or revenue. Amazon as company seems to follow this
    • Contribution margin is the money left over after all incremental costs have been subtracted from each additional unit sold. Thus, contribution margin is the money that is available to cover the fixed and sunk costs of the organisationAfter subtracting all these costs, any additional money left over is true profit. To maximize profitability, you maximize contribution margin. This decision is independent of fixed and sunk costs

How you charge for your product is a key pricing strategy decision that is as important, if not more important, than what you charge because it is easier to adjust your price than to change your pricing model

You should not miss reading the appendix of this book where the author explains different kinds of product-business fit challenges through the case study format. Overall this book is a good read for a mid-senior level product professional!