LESSONS LEARNED Mark Calkins vp product development bluehost

LESSON ONE: THE BUSINESS MODEL

Business Models alex osterwalder

Business Model Canvas Customer Segments Key ActivitiesValue Proposition Customer Relationships Key Partners Key ResourcesChannels Cost StructureRevenue Streams from businessmodelgeneration.com/canvas

Identify  Who are your target users?  What value do you deliver to your customer?  What activities are necessary to delivery your value prop?  What key resources does your value prop require?  Who are your key partners? Customer Segments Key ActivitiesValue Proposition Customer Relationships Key Partners Key ResourcesChannels Cost StructureRevenue Streams

Identify  What type of relationship is required to deliver your value to your customer?  What channels will be used to deliver your solution?  What costs will be incurred to deliver your value prop?  What value are your customers willing to pay for? Customer Segments Key ActivitiesValue Proposition Customer Relationships Key Partners Key ResourcesChannels Cost StructureRevenue Streams

B2B ‒ Complex Systems Model  Target user: enterprise customers  Channel: direct sales force  Product includes: enterprise software + professional services consulting  Product integrates into a larger system  Must accommodate existing legacy systems  Examples  Financial systems  Enterprise HR application  Manufacturing requirements planning applications

B2C ‒ Volume Operations Model  Target user: end user, consumer  Channel: website, mobile phone, etc.  Product complexity: simple & easy-to-use  No integration, no legacy: offer works by itself  Examples  Online movie ticket purchasing  Game console  Mobile game  Web hosting

Scaling These Two Business Models B2B  Problem is painful & complex  Solutions are expensive & valuable  Customers pay a premium  Barriers to exit high  1000 customers spending $1M/year = $1B business B2C  Usage is at discretion of end user  Popularity establishes the premium  Often a convenience  Barriers to exit are low  10M customers spending $8/mo = $1B business

Growth Strategies (based on your Business Model) New Product Existing Product Existing Market New Market

Growth Strategies New Product Existing Product Existing Market New Market

Example: Novell New Product Existing Product Existing Market New Market NOVELL Product: Server OS + networking (NetWare) Channel: network resellers + ISVs OEM & system integrator channel

Example: Novell Acquisition New Product Existing Product Existing Market New Market NOVELL Product: Server OS + networking (NetWare) Channel: network resellers + ISVs + OEMs SuSE LINUX Product: open source server & desktop OS Channel: system integrators

Example: Novell Acquisition New Product Existing Product Existing Market New Market NOVELL Product: Server OS + networking (NetWare) Channel: network resellers + ISVs + OEMs WORDPERFECT Product: desktop word processing app Channel: computer retail stores

Example: Oculus Rift Acquisition New Product Existing Product Existing Market New Market

LESSON TWO: MARKETING STRATEGY

Getting Mass Market Adoption Build a better mousetrap and the world will beat a path to your door. “You may find an audience with innovators and early adopters, but the mainstream market, where the profit resides, will reject your product unless marketed correctly.” —Geoffrey Moore

Technology Adoption Life Cycle “The Chasm”

Crossing the Chasm Product-Centric  Fastest product  Easiest to use  Elegant architecture  Product price  Unique functionality Market-Centric  Largest installed base  Most third party supporters  Defacto standard  Cost of ownership  Quality of support The Innovators and Early Adopters love this stuff… but mass market adoption ONLY comes here!

Positioning  Is a noun – an attribute associated with your company or product  Is the single largest influencer on the buying decision  Exists in people’s heads  Is about making products easier to buy, not easier to sell “best buy for this situation”

Positioning Format For target customer who statement of need or opportunity, our product is a product category. Unlike primary competitive alternative, our product is statement of primary differentiation.

Positioning Format For home owners who want an easier way to manage their home temperature, NEST is a learning thermostat. Unlike timed thermostats, NEST helps you save money by programming itself based on your schedule.

LESSON THREE: BEING TUNED IN

YOUR OBJECTIVE The goal of a product manager is to create products that sell themselves Great products (Resonators) don’t need lots of advertising nor an expensive sales force

Be Tuned In  Identify your target user  Listen to the target user  Learn everything you can about the user  Create personas and “day in the life of” stories Suzy Socialite Nate NetGen Adam Athlete Returning Rhonda Isha Int’l Paul Postgrad Tom Technology

Be Tuned In  Provide solutions to the users’ major pain points  “Nice to have” generally won’t sell  Is the problem urgent?  Is it pervasive?  Are buyers willing to pay for it? Urgent Pervasive Urgent Not Pervasive Not Urgent Pervasive Not Urgent Not Pervasive Problem Matrix

Be Tuned In  Define markets in terms of customer value  What value will the customer derive from your solution?  How can you offer more value?  Identify alternative perspectives for delivering value

Be Tuned In  Develop solutions in the context of the total customer experience  Buying experience  Packaging  Using the product  Receiving customer service  Availability of other required resources Generic Product Buying Experience Packaging Using the Product Customer Service

LESSONS LEARNED  Business model drives strategy  Marketing strategy is as important as the product  Be incredibly tuned in to your market