priortization-ofproducts.pptx

PRIORITIZATION &
PRODUCT MANAGEMENT
Copyright © Mike Chowla 2018
Mike Chowla
Silicon Valley Product Camp
March 31, 2018
Twitter: @mchowla
Slides available at
https://www.slideshare.net/mchowla

My Background
• Education
• BS, Electrical Engineering and Computer Science, UC Berkeley
• MBA, Wharton
• Experience
• 10 years as software engineer and architect building high
performance infrastructure
• Previously product roles at AOL, StrongView, Aeris, Rubicon Project
• Currently Director of Product Management at PubMatic

Why care about prioritization?
• It’s the most important thing product managers do
• Build the wrong things and your product fails
• Gets asked about a lot in PM job interviews

Agenda
• Definitions
• Frameworks
• How Do We Create Value
• Practical Prioritization

Definition
According to Websters:
prioritize:
to list or rate (projects, goals, etc.) in
order of priority
priority:
a preferential rating; especially : one that
allocates rights to goods and services
usually in limited supply

Definition Part 2
• In the short run, prioritization is what the engineering
should work on next
• In the long run, your prioritization choices are your
strategy. If you say X is important, but keep doing Y, Y is
your strategy
• Scope of any given effort is NOT fixed. A core part of
prioritization for PMs is deciding how far to go in each area

FRAMEWORKS

Feature C
Feature C
Revenue
Revenue
Feature A 50,000
Feature B 75,000
Feature C 100,000
Feature D 60,000

Revenue vs. Effort
Revenue Effort Ratio
Feature A 50,000 25 2000
Feature B 75,000 30 2500
Feature C 100,000 50 2000
Feature D 60,000 20 3000

Limitations of Revenue
• Desired outcome is high profitability not high revenue
• Error in estimates is huge for new features or products1
• How well can your company predict revenue on existing
products?
• Add in all the uncertainties of anything new and a
revenue estimate has a huge confidence interval
• Revenue for asks for particular customer may be more
reliable
• Sales still over estimates likelihood of closure and
amounts
• Biases towards short-term & well-known items which
does not lead to differentiated product offering
1 Borrowed from Rich Mironov Four Law of Software Economics, Part 4. https://www.mironov.com/4laws4/

Weighted Scoring
• Multiple factors and weights beyond revenue
Source: https://www.productplan.com/how-to-prioritize-product-roadmap/

Weighted Scoring
• Pros:
• Considers multiple factors
• Acts as a checklist to consider important factors
• Cons:
• Scores are arbitrary
• No strategic coherence
• Assumes feature value is independent of other features
• Being really good for one segment usually involves
multiple features
• Biases towards chasing competitors

Voting or Buy A Feature
• Give stakeholders (internal and/or external) a number of
votes or a budget and let them vote on what should be
done
• Pros:
• Gathers input from stakeholders
• Stakeholders feel heard
• Cons:
• Stakeholders expect you honor the winner
• No strategic thinking
• Focuses on short term needs
• Biases towards chasing competitors

Kano Model
Customers ask
for performance
features
Diagram Source: https://www.productplan.com/strategies-prioritize-product-features/

Kano Model
• Categorizes product attributes based on how consumers
perceive them
• Threshold Attributes: Product must have these but do not
provide differentiation.
• Example: a smartphone must be able to make phone calls
• Performance Attributes: More is better, less is worse.
Customer asks often fall into this category
• Example: smartphone battery life
• Excitement Attributes: Unexpected and drive high customer
satisfaction. Often latent needs.
• Example: Orignal iPhone web browser
• Customers can not ask for something they do not expect
• Attributes shift overtime based on customer expectations.
Today’s excitement attributes are tomorrow’s threshold attributes

3 Buckets Approach (Consumer)
Created by Adam Nash
• Metrics Movers: Engagement. Growth. Revenue.
• Customer Request: Customers are actively requesting
• Customer Delight: Literally delight them when they see
them
Source: https://adamnash.blog/2009/07/22/guide-to-product-planning-three-feature-buckets/
Fun Fact: I went to high school with Adam. We would have been the same year but Adam
had skipped two grades

3 Buckets Approach (Enterprise)
• Strategic Goals, North Star, Differentiators: What we
want our product to be in 1-2 years
• Sales Friction Points: These are the items that make it
hard for the sales teams to win. Often competitive gaps
• Customer Requests and Pain Points: Ignoring causes
low customer satisfaction and churn

Why are consumer and enterprise different?
• For the enterprise, primarily business motivators
• Help get more revenue
• Help save costs
• Individual motivations are either will look good from one
of the above or will save time so I can go home to my
family sooner
• For consumer, many possible motivations like
entertainment, social connection, status
• Delight for consumers can be an end in itself but the
enterprise delight is from creating business value

HOW DO WE CREATE
VALUE

Source of Value
• Differentiated solutions create above average value
• If your offering is the same as your competitors you can
not create more customer value than them
• You can not capture more value than you create
• A couple of features will not create a differentiated offering
• Too easy for competitors to copy
• Ad hoc selecting features for short term revenue will not
get you to a differentiated offering
• A differentiated offering takes concerted effort over long
period of time & deep understand of your customer’s needs

Prioritization Requires A Strategy
• To prioritize your way a differentiated offering, you need to
be crystal clear what that offering is, otherwise known as
your strategy
• If you do not know where you are going, you can not
prioritize effectively
• You’ll trade off short-term needs against each other and
chase your competitors

Jobs to be Done
• What “job” does your customer hire your product to do?
• Often not what the vendor things they are selling
• First approximation: people don’t buy drills, they buy
holes in their walls
• Contextual factors are important and products often
have multiple jobs
• Example: Milkshakes making a long boring commute
more interesting
• Why are “jobs” important for prioritization?
• Hones in on what customer value you are creating
• In enterprise software, guidance from vendor is often a key
part of the job the customer is hiring for

Jobs To Be Done Resources
•For an in-depth treatment, read the book:
Competing Against Luck by Clayton
Christensen
•There are also multiple HBR articles such as
https://hbr.org/2016/09/know-your-customers-jobs-to-be-done

Segmentation
• Groups of your customers have different sets of needs
• Breaking them in segments is crucial for figuring out what
problem you are solving for who
• In jobs terminology, different segments are hiring your
product to solve different jobs
• To achieve high satisfaction in a segment, often requires
groups of related features
• Not thinking in segments leads an bloated and incoherent
product as you try to satisfy everyone

PRACTICAL
PRIORITIZATION

Figure Out Your Effort Ratio
• What percentage of engineering resources do you want to
spend on each bucket?
• Strategic Initiatives
• Features
• Maintenance and Tech Debt
• Moonshots / Innovation
• This bucket rarely produces anything of value. You
are probably better off doing a hackathon
• Propose at the beginning of each quarter, get buy in from
stakeholders, and then measure
• Shifts over time. Sometimes strategic initiatives take a
bigger share, other times it’s core features

Thematic Groups
• Human brain can keep track of between 4 to 7 things at a
time
• Not possible to accurately rank order a list of 50 or 100
items
• Your stakeholders are not interested in whether their
story is ranked 20 or 22
• Exec management wants to understand the big picture
• Grouping like items together gives you fewer items to
compare and makes your priorities understandable to
stakeholders

Priority Lists
• Keep an ordered list of near-term engineering priorities
• At the feature or initiative level (not the story level)
• Not more than 5-7 items
• Helpful for planning sprints
• Even more helpful for explaining why you are not doing
asks X, Y, & Z now
• Makes it clear if as executive asks to do X, it will lower
the priority of everything else on the list

Focus Narrowly or Bet Widely?
• Most organizations default to bet widely
• Any new initiative has the siren song of the possibility of
great success
• The obstacles are unknown
• Competition is under estimated
• This is the organizational version of the Dunning-Kruger
effect

Focus Is Better
“People think focus means saying yes to
the thing you've got to focus on. But that's
not what it means at all. It means saying
no to the hundred other good ideas
that there are. You have to pick
carefully. I'm actually as proud of the
things we haven't done as the things I have
done. Innovation is saying no to 1,000
things.”

How to Achieve Focus (Product
Team)
• Be willing get C grades
• In the areas of your product where you want to compete,
you want A grade functionality
• In areas which are necessary but not critical, be willing
to be just good enough
• For new functionality, PM often push towards an A
grade
• For non-differentiators, engineering effort better
spent elsewhere
• PM leaders need to stress engineering resource
efficiency.

How To Achieve Focus
(Stakeholders)
• Stakeholders will push you to add one more thing
• Ways to push back:
• Frame the discussion that the question is not whether
their idea is good idea or not but rather whether it’s
higher return than other options
• Is this more important than the X, Y & Z we have on
next quarters roadmap?
• Note: there’s lots of evidence that deciding Yes or No
leads to poor decision making and looking at multiple
options improves outcomes
• https://hbr.org/ideacast/2016/05/make-better-decisions.html

How To Achieve Focus
(Stakeholders)
• Ways to push back
• Can you test the idea with an MVP? A real MVP that’s
NOT stripped down version of the intended product and
takes 6 sprints to build

Prioritize on Customer Value
• Corporations focus on revenue because it’s close to end
goal of profit
• Revenue is the share of the value we capture
• Assessing customer value is much more reliable
• Does it solve a real customer problem?
• Does the customer really care about the problem?
• How many customers have this problem?
• If your product drives a huge amount of customer value,
you’ll be able to figure a way to capture it
• Look for reasons why value capture would be difficult but
focus on value created

Summary
• A solid product strategy is must to able be prioritize
effectively
• Products create above average value by being
differentiated and serving the needs of one or more
customer segments better
• To create a differentiated offering understanding your
customers is crucial
• Drive focus by saying no to good ideas
• Prioritize on primarily on customer value and not unreliable
revenue estimates

QUESTIONS?
mchowla@gmail.com
Twitter: @mchowla
www.linkedin.com/in/mchowla

priortization-ofproducts.pptx

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