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Top 10 Mistakes Startups Can Avoid

Being a consultant and a coach for companies both large and small gives me the opportunity to learn of challenges first hand at several places, situations and from talking to colleagues. I also have been dedicating a part of my time in mentoring startups in India. I have participated in several mentoring sessions organized by Google Launchpad, TiE Boot Camp, TLabs here in Bangalore over the past few years. Many of the startups have tremendous opportunity ahead. However, due to various reasons including their background or skill set or lack of exposure to business, they tend to carry baggage that slow down the speed of growth. After working with several startups and discussing with fellow practitioners, there seems to be a common set of problems that keep coming up from time to time. Here are the top 10 mistakes early stage startups can easily avoid. These are common mistakes that one can easily watch out for and may even serve as a ready made checklist for early stage startups to determine their course and take corrective measures.

Here they are:

1. Not enough understanding of the business model

Several startups have found their original idea is not big enough or not exciting enough anymore or will not scale or will not work for various reasons and now they are looking for direction literally on what to do with their startup and where to go next. It’s a big predicament because their current product is not bad but either they are operating in a mature market or the technology has become a commodity diluting their original value proposition. They had the grit and guts to set sail from the land but now they are adrift in the open sea with not a sea gull in sight. Now what? There are only 3 options – to double down on your current business model, pivot or close down. But the bigger question, how can we avoid getting to this space? It’s a really tough one as you will find convincing cases of success on either sides of the debate.

I will share my perspective of evaluating market opportunity more from user demand initially. What most marketers forget to consider is something that I call “user fatigue”. User fatigue is what users go through while fulfilling their goals with the currently available solutions. For e.g. job search, house search, school search etc. If your solution is not 10x better than currently available methods, then you are not moving the needle on user fatigue. Hence even if it’s marginally better with a different UI or UX but still saddled with the incumbencies of marketplace dynamics, you will soon face saturation. I found this situation commonly in markets where they were mature with lot of players already entrenched in the market or the value proposition was not strong enough.

A good starting point would be to flush out the business model using Alex Osterwalder’s original business model canvas or Ash Maurya’s Lean Canvas. If you need a link to any of the above or a copy of my adapted canvas, let me know.

 2. Doing everything your first big client says

This is a major issue with several startups that struggle to get their first big break and still find their two feet to stand. Startups need to get smart at how to handle their first big client. Even though the startup may be dealing with a large brand, you have to look at the visibility of your offering in your prospect’s organization. The key thing to watch out for and push back is the tendency of investing too much into a proof of concept. If the conversation is not yielding good results with a quick show down of your value proposition, understand why and make future bets. Opening up your technology platform to changing scope in the hope of getting a contract without explicitly having a pricing agreement is very risky.

This is also one of a mindset issue where we confuse requirements from a prospect with willingness to buy. As a product vendor, remember it’s still your prerogative of what to build, for whom, why and when. There are two aspects to this situation; first, the eagerness to close the deal and generate revenues and second, understanding whether your value proposition is resonating with your first prospect. The pressure to generate revenues is so high that we tend to entertain splitting the current business model into services and products, in an instant. As a result, when the prospect says “what you have is nice, but can you do this, this and this?” we jump on it and agree to everything. Is this really necessary? Building custom solution is like playing devil in the product’s world. Yes, you are thinking, sometimes a known devil is better than no revenues (read salaries and food on the table). It’s a tough call to make. Whether you consciously build custom solutions or not, if you want to build a product what you need to do is to understand why your prospect is interested and estimate the size of the market or aggregate need for each request coming in. Then take a call to build it or defer it or trash it.

3. Going for the big launch without any real customer input

There are several startups that are going for the big launch without any customer input. “The product is not ready for customers yet” is an oft-heard phrase. What we need to shoot for is a good enough product that builds on the core value proposition as layers. And, with so many online services for creating landing pages (e.g. instapage.com) and A/B experimentation (e.g. wingify), it would be very risky and expensive to launch before seeking real customer input. There is also an aspect of maturity in how we handle rejections from customers. Just being open to their feedback and working on it will result in wonders than trying to assume our limited understanding of any customer. It’s a natural tendency to make up requirements sitting in our offices, assuming we know our customers. I love the quote “Answers don’t lie in the building”. Doesn’t matter if we are a consumer or an enterprise shop, talking to customers and getting their inputs with an open mind should be a top priority for any organization.

 4. That is one helluva MVP!

Minimum Viable Product or MVP has become a buzzword and also a highly misinterpreted and abused term. Everyone has their own definition on what is a MVP. MVP comes from Lean Methodology where it actually began to describe the first version of the product that tests the most important assumption of the idea with minimal effort for maximum validation. Other variations based on MVP I have heard are Minimum Compelling Product, Minimum Desirable Product, Minimum Sellable Product. I guess there is a lot of confusion around first what we mean by VIABLE. As a result there are several features added to the first few versions but still gets referred to as MVP. Doesn’t matter what you call your product version. There are two simple things you need to consider. First, validate your problem statement; Second, validate your solution to the problem so you can achieve problem/solution fit. To validate the problem statement, you don’t need to write a single line of code. To validate the solution, you need to demonstrate how the product could work and hence need to build something minimal so you can get maximum and quick validation. Once you achieved problem/solution fit, go out and build the rest of the product.

5. That is one helluva MVP – Reloaded

A common situation is to know when to stop calling the product MVP. The reason is we are not sure what to call the product beyond MVP. For some reason, we like to use the term MVP even if our product versions are at 3.0 or 4.0. If you look at the stages of a startup, they go from problem/solution fit to product/market fit and then start scaling. What lies between problem/solution fit and product/market fit? I’d like to combine frameworks at this point to bridge the missing piece. Geoffrey Moore’s framework of Core product and Whole Product is very interesting.

The Core Product demonstrates core value proposition. The Whole Product makes the product available for customers. A very simple example is the automobile. Nobody buys an automobile without warranty and most don’t buy without financing. In software, often the core value proposition is the algorithm. The whole product consists of user interface, user experience, delivery channels, API for partners, communities, ecosystems etc. After the MVP, it’s time to think about and build the whole product towards achieving product/market fit.

6. Designed for yourselves

Design has taken center stage. It’s suicidal to compromise on user experience design even in the first version of the product.  Especially in mobile if the user finds your app confusing to use for some reason he/she is not going to come back. Most startups when feeling the crunch for good designers tend to design themselves. Similar to making up requirements, designing without the user in mind is disastrous. We need to unbox our minds and step in to the user’s shoes. Coming up with personas and understanding user behaviour through ethnographic studies can be very useful here.

 7. Going after too many things

When you are a startup, you are open to a lot of opportunities and many of them are right around your original vision. It is very enticing and sometimes tiring to entertain these various possibilities because at the end of the day, you have limited resources and time. So, instead of going after too many things that may spread the focus too thin, the top management needs to develop a continuous process of evaluating business ideas and arriving at quick decisions whether to pursue, defer or trash. Using the business model canvas is a good way of doing due diligence for every opportunity. Trying to open up multiple lines of the already cash starved business in the hopes of hedging can be counter-productive if you are a startup. It may work for large companies since they may need to diversify to grow. Even then, remember what Steve Jobs said on what he is proud of. He is proud of the 95 things out of 100 that he had to say no to than the 5 things he said yes to.

8.  Not having a real vision

I ask a lot of startups what is their vision and most of them give me a roadmap. Very few get what a vision is. A very simple way to describe your product vision is to imagine how the world would look like after everybody on this planet who could use your product is using your product. What would that world look like? It takes time to develop a strong and real vision, sometimes going beyond your original target segment. For example, my design consultancy’s vision is to “Live in a Thoughtful World”. And how are we going to achieve that vision? By helping our clients with designing thoughtful experiences!

9. Not having a clear monetization strategy

While it is true that if you are a consumer startup you will spend a lot of time, money and energy on building the user base before monetizing on them, it does not and should not preclude one from having a good idea about how you will monetize and from when. If your value proposition is so compelling that the customers would be willing to pay, you should go ahead and charge them from day one. If you are an enterprise startup, it is imperative to begin with a revenue model and a few well tested pricing plans before reaching out to your customer segment. A recent survey indicated that the more your web site visitors spent time on your pricing plan page, the more they are likely to convert.

 10. Not measuring product usage

It’s disappointing to see several startups not tracking product usage; especially when there are free and powerful services like Google Analytics.  The old adage “that which you cannot measure, you cannot manage” applies to every business. Knowing how your customers are using the product is critical. The other part that startups need to strongly consider is get serious on measuring customer satisfaction routinely. Customer satisfaction scores should be part of the executive dashboard that the top management should look at every day. The success metrics of a product should be defined and measurable goals set before launch of the product. This reinforces the belief in the product. If the success metrics and goals are transparent and exciting for the whole product team, it makes a lot of difference!

Hope this helps build powerful and thoughtful products!

Season’s greetings and wishing success in the years to come!

Good luck.

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Top 10 Expectations from Digital Banking Users

Digital banking has caught the fancy of every bank in the world, from small to large. Digital, which assumes internet connectivity, allows customers to avail of banking services anytime, anywhere from their digital devices. Digital devices include laptops, tablets, mobile phones, ATM, Kiosks and may be even large touchscreens. Every time a customer or a prospect is interacting with a digital device and learning more about a bank or transacting with a bank, the bank is providing an experience (even if the bank knows it or not). Whether that experience is making it easy for the customer to remember, come back, start a process, complete a process, ask for support, recommend to a friend etc. is what defines the essence of digital experience.

In other words, digital banking experience is a series of interactions a customer has on his/her digital device. Most of us would pay attention to the “series of interactions” and forget about the “customer” part. We need to look at the experience from a customer’s perspective. What’s missing in most of the digital banking experiences is the emotional aspect. We don’t need to run a Yash Raj Films musical score in the background while banking. But, are we able to empathize with our customers in a way that we can capture their intent logically and emotionally and solve it so that they can be both successful and happy after the interaction?

Why is this important? There is a huge realization that if banks don’t get their digital banking strategy and execution right, their customers might leave them for another bank that does get it right. Banks have realized that digital is a fundamental new challenge for them. It is also a huge opportunity to re-imagine customer experience. So, what does a digital banking user want or expect the bank to provide? There are many things, but we need to remember, everyone in this world has a relationship with money. And they need help to manage that relationship so as to maximize their wealth. Digital makes that possible like never before.

But, are banks ready? It all depends on how well we know our users. So, here are top 10 things a digital banking user expects based on my observations. Some of the examples and jargons used like NEFT are familiar in the Indian context. But, the principles remain the same for any global bank.

#1 Digital user has a goal to accomplish. Digital banking is pretty convenient in terms of time and effort. It beats driving to the bank and standing in line any day (nothing personal). To provide the best customer experience online, we need to know why is the user visiting the web site or mobile app? Do they want to transact, as in check balance or transfer funds or do they want to shop for loans and fixed deposits? It’s very easy to find out depending on what they choose to click (or touch). Unfortunately, there is a lot of information thrown at the user. This causes cognitive overload and the unintended effect is that the user will learn how to ignore everything except a sequence of clicks built into muscle memory to get their jobs done. So, are we helping the user get their jobs done or are we throwing hurdles along the way? Next time you login, count the number of horizontal scrolls, vertical scrolls, flashing news, ads, popups and extra pages you see on the way to checking your balance! To get this right, we need to provide relevant information based on customer intelligence. For this to happen, we need to begin with really understanding the users.

This requires deep capabilities in product management and a product mindset.

Yes, the hidden question is, so how do we market our billion other products now that we have the attention of the customer? Agreed, the website is a great channel to market new products, but we need to first focus on making the customer successful in their intended jobs.

#2 Digital user expects anytime, anywhere, anywho service. This is a very basic expectation from internet services. The beauty of digital bank is that it’s always there with the customer wherever they go and whatever the time or day of the week is. So, for example, instead of saying NEFT option of funds transfer is not possible now (after entering all the details) since its beyond office hours, how about providing the user with a workable set of options based on the time of login, from the moment they choose to transfer funds?

It was funny to find out that NEFT (before RTGS came along) couldn’t batch my requests to transfer funds beyond office hours. I recently found out NEFT and RTGS are platforms that are government owned and operated. Commercial core banking system vendors can only do with what is possible. So, the interesting bit was the online fund transfers are timed for clearance at the same time as the manual cheques! Internet runs 24×7. Think Flipkart or Google.

There are times when the user wants to communicate with the bank via their preferred option of email, facebook or twitter. It is not important who they communicate with or when but that their problem gets solved. For this to happen, banks should put in place mechanisms to create an integrated session across multiple channels of communication. Banks should also stop viewing emails, facebook or twitter as silos and have an integrated strategy in communication.

This requires deep technology platforms and robust customer data.

#3 Digital user expects banks to simplify the security process and yet keep it 100% secure. Two factor authentication is becoming the world standard for secure logins. More and more banks are deploying this measure for greater security. It is no doubt commendable that banks take our money deposited with them seriously and put strong security measures around them. Still, there are too many passwords to remember. I bet most senior citizens are writing down the passwords somewhere and reading from it. Hence, banks need to consider biometrics based logins urgently for mobile apps. Not sure if Aadhaar can verify biometrics but that’s a start for leverage.

However, there are some pretty confounding security measures followed by some banks. For example, a few banks don’t allow you to copy and paste (Ctrl-V is disabled) credit card or account numbers. In some cases, the account numbers are treated like passwords and masked. But there is another field right below that asks you to confirm the account number, which is not masked. Even OTPs are masked. I am not sure what’s the rationale behind this but isn’t it better if data doesn’t get transduced for integrity? May be someone can enlighten me behind the security use cases that demand masking every input. It will be great if banks develop a sense of graded risk tolerance. Once the user is authenticated and authorized there can be a scale down in terms of masking inputs or asking more passwords. Knowing user location can also help in grading risk tolerance. For example if the user is checking in from home it is much safer than from anywhere else outside.

A few banks want to educate the customers. Unfortunately, users have neither the time nor the inclination to read user manuals or attend workshops or watch videos just to figure out how to login! This is true for any digital service not just for banks. An eclectic mix of design and security can keep the vaults unbroken forever.

To build this capability you need to innovate rapidly or invest in a promising startup.

#4 Digital user expects that you don’t make them think. This is taking words from the title of a book by Steve Krug on how the best user experience designs don’t make the users think. This is true for even first time users. The questions in user’s minds are intuitively answered through thoughtfully designed interfaces. Getting to this point is an iterative process but this needs to be understood before growing the customer base. A very simple example is the design of choosing payees in some online banks. You are asked to remember the beneficiary id (numeric). It’s scary enough to remember your wedding anniversary. Who remembers beneficiary ids? Seriously! It’s incredibly over-engineered! I have figured out some short cuts – like for example, you can click on Search without giving any inputs and it will show you all the current payees.

Another example is interchanging the location of Change and Confirm buttons in subsequent pages in the same process flow. These are all actually hygiene factors in good design. It gets even more critical when you design mobile apps with limited real estate and shorter attention span.

Another example is NEFT, RTGS, IMPS are great technology platforms but for an average banking customer, they sound like jargons. How about showing a default (recommended option) along with other available options at the time of transaction with clear charges?

To build this capability you need a strong design organization. Banks may consider hiring a Chief Designer too!

#5 Digital user expects omnipresence. Omnipresence means being available and usable across all digital points of interaction. This is applicable for marketing channels across digital devices. A Facebook user may be looking for home loans for his/her new apartment. How can banks identify, participate in this conversation and help him/her make a decision? Are you there when the customer is looking for you? Think about rural users with feature phones. The second scenario is when the user is already a customer and needs to interact over their preferred choice of digital device. For e.g. how many users are using Windows Phone? Users would very much appreciate a consistent user experience in terms of layout, style, fonts, colors, design etc across all digital points of interaction. The third scenario is customer support when the user has a grievance and there are no easily available redressal mechanisms, the user has the power to vent on twitter letting the whole world know what a shameful service he/she is getting.

Having a presence is one thing and being effective is another thing. For example, it sounds like some banks that have twitter presence have given out a Standard Operating Procedure to their twitter reps of entrusting the responsibility of solving the customer’s problem back to the customer itself by asking them to navigate through their organizational maze. Wouldn’t it be great if these twitter issues and sentiments are also tracked and ticketed? All the bank needs to do is to link the twitter handle to the account and your twitter rep can solve the problem!

To build this omnipresence capability requires not only an integrated technology platform that bridges all silos but also an organization that is empathetic and aligned towards customers.

#6 Digital user expects “You must know me by now”. You would think that simple things like choosing “No Thanks” to downloading mobile app should be recorded but they keep showing up every single time you login! Going from fixing this to recommending the most relevant product based on my age, profession, income, savings, loans, where I live, my spend history, family information and a dozen other parameters; would be an ideal trajectory. Banks need to focus on conversions than clicks. Few and most relevant messages would be more meaningful than throwing a dozen messages and hoping for the best.

To build this capability, consider Predictive analytics and a robust customer database platform.

#7 Digital user expects that you are rethinking the WHOLE process and not just mirroring offline processes. Digitization of business processes presents a tremendous opportunity for improving efficiency. This should not be lost by simply taking the existing process with a mix of manual and semi-automated process and offering the same experience online. Digitization needs to be thought through in disruptive ways and this is certainly in the realm of several technology platforms available today. Digital needs an end-to-end perspective. For example, a few banks expect paper letters to initiate or re-initiate logins and request certain documents. It sounds like this is to ensure the person requesting is the same who owns the account but that should be obvious with a few security checks online.

To build this capability, we simply need better empathy of users that can be woven into product features and design! There may be a need to make core banking systems more open in terms of API support, but I will leave it to the experts.

#8 Digital user expects speed… and they get it! The speed of online banking is one thing that banks do get right. Speed is something that a digital user has been pampered with thanks to Google, JustDial or even online display ads served within 200 milliseconds from inMobi and the likes. Here speed should be viewed not just in terms of online site or mobile app responsiveness which is pretty good, but broadened to include overall online process duration. For example, time taken to approve a loan online or open a bank account online.

This highly engineering scalable capability is already or mostly built!

#9 Digital needs to augment hybrid experiences. Customers, retail or merchant, may need to visit a branch for various reasons. The frequency and the need may have already reduced and may further reduce. But, I think branches are not going away anytime soon. When the user visits a branch, is it possible to predict their questions given their historical pattern or an open case? How wonderful if this information was ready at the fingertips of the bank staff to satisfy the customer’s questions immediately. For example, every year around tax time, I need to make 2 visits to the branch to get a tax document. The first visit, I need to submit a written letter asking for the information and then come back the next working day. This needs to get online immediately but until then assuming regulatory procedures can this be solved in one visit? You can use the rest of the time in understanding your customer’s upcoming growth plans or life events and thereby using this opportunity to share more information about your other services (up-sell/cross-sell). This is probably the best outcome you can get out of face time!

To build this capability, bank staff needs to be equipped with customer intelligence management tools.

#10 Digital user expects you to be there for him/her. Just like personal relationship banking, digital doesn’t take away the need for the user to know a human on the other side. Adding a human relationship element in the world of bits and bytes is going to be a key differentiating factor in a bank’s success. The scope and quality of the conversation needs to be reconsidered once the basic transactional experiences are taken care of.

To build this capability, you just need good leadership!

In summary, be bold to put customer success first. WhatsApp founders were bold to say no to ads and the result is a super clean interface that is simple and powerful. In the words of Steve Jobs, Simplify, simplify, simplify and hide the complexity behind this simplification. It is not the customer’s job to understand how we work. It is our (as in the creator/service provider’s) job to understand what customers need and deliver value. To re-imagine a superior customer experience we need a holistic approach that spans business, products, design technology, analytics, marketing, support and most importantly new skill sets for the people who run and represent your banks.

What do you think?

To know more how you can go about building these capabilities and to improve customer experiences, email [email protected].

The author is the founder of Pravi Solutions, an Innovation and Marketing Consultancy enriching digital experiences!

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Roadmap To A Cashless Country

Denmark is well on its way if not already the first country in the world to go 100% cashless. Sweden is not far behind either and in fact may be ahead of Denmark in cashless behaviors. The governments of the two NORDIC countries are enabling and encouraging cashless mechanisms through legislations. That means, all payments towards a cup of coffee or a house will be through cards or mobile wallets. This is an amazing development in our life times as we go from touch and feel experience of money to just clicks on our digital devices.

This got me thinking if India will ever go cashless. My prediction is that at least in the foreseeable future, India will never be 100% cashless. Just one glance at the collections in temples will show how small change matters. But over the next decade we will see strong pockets of cashless transactions by use cases. A recent report showed Cash On Delivery (CoD) still reigns supreme with 55% of overall e-commerce transactions. This is a good metric to follow on how the nation is doing with regards to cashless transactions. The tipping point towards cashless would be a sharp decline in CoD mode of payment.

In most cases, the choice of CoD is just habitual and easier, fuelling the habit. The challenge for any online business is to shift the default from CoD to digital payment modes including credit cards, debit cards or mobile wallets. Businesses don’t make it any easier with more number of instances of broken credit card machines that occasionally remind you to carry cash at all times. This along with having to remember a million passwords for both offline and online transactions easily makes cash the default king even if having to run to the nearest ATM! Cash has another benefit that is hard to beat – there is no digital footprint of the source and destination. Also, there are no fees to transact in cash unlike credit cards where some party needs to bear the cost of infrastructure.

Advantage Cashless

Uber, the taxi app set the bar high in showing us how incredibly easy the customer experience can be when it all works fine. Uber asks you to pre-register your credit card with their service when you install their mobile app. Uber is one example of a superior customer experience through the use of a payment platform from Braintree.

There are three trends that give hope to rise in cashless payments. They are mobile smartphone owners, rise in payment technology platforms and consumer behavior trends.

Mobile smartphone users in India have reached 111 million and expected to exceed 200 million by 2016 according to eMarketer. Ecommerce companies are saying majority of the purchases (CoD despite) are coming from mobile. Mobile wallets are at the least occupying the mind share of users, thanks to airtel money and PayTm. I am sure the companies will have more to say about actual usage trends.

Payment platforms are making a splash thanks to Apple which pretty much reinvigorated the space with Apple Pay. Tap and Pay is a cool platform that allows buyers to simply tap their mobile phone over a NFC enabled device installed by the business. National Payments Corporation of India (NPCI) released RuPay cards which offers much lower transaction costs that helps the Indian government and businesses to reach all sections of society in its ambitious financial inclusion program. In summary, there is a lot of innovation happening in this space that will be interesting to watch on simplifying payments.

Consumer behavior trends show Gen Y and Z, people born and waking up with mobile devices will be comfortable with mobile communications, transactions and payments.

Why small to large businesses should promote cashless?

The benefits of cashless transactions to businesses are that it saves time and money that is today spent in end of day accounting, safe storage, transportation and handling.

Why government should make it easier?

The clear benefit to government is in moving towards a more white money economy and curbing black money. Of course, governments may be tempted to react to increased visibility into billions of every day micro-transactions at grocery stores, newspaper vendors etc. Increased visibility in large transactions such as buying real estate will help curb corruption and create a fair marketplace for all sections of the society.

RBI certainly would appreciate the savings from not having to mint so much money. The impact of a majority cashless economy on monetary policy is an interesting question and may be worthy of seminal research.

Society would appreciate sharp declines of bank robberies and ATM heists. (Hang on to your copy of Butch Cassidy and the Sundance Kid). However, there are risks and the biggest is the electronic fraud. There will be many attempts to hack in to the digital vaults and steal. The nature of insuring digital banks that support cashless economies needs to be reconsidered.

Why you should pay cashless?

As someone who values money, cashless allows you to track every paisa spent and received quickly and easily, thereby allowing you to make better decisions on short term, mid term and long term financial futures. Cashless also allows you the convenience of not having to worry about carrying enough cash.

Conditions that must exist before a country can go cashless

  1. The biggest condition that must exist is Trust. Trust between the parties to give and take money through digital modes; Trust with the payment platform provider that the transactions are secure; Trust in governments to honor the transactions and also safeguard user data as every transaction leaves a digital footprint.
  2. Ease of Use in cashless payments through better user experience design and a holistic customer experience. Right from easy one click logins to finding the service you are looking for, to raising issues with customer support all done through mobile apps will be the way to go. But, several of the digital banking applications are learning the hard way about the need for solid customer experience design. My consultancy Pravi Solutions offers workshops and consulting services to create the best customer experiences.The challenge is to provide a simplified experience while still working within the regulatory framework.
  3. Scalable back-end payment systems with a ready non-cash alternative in case of emergencies. There have been internet outages even in large companies in developed countries. Even in cashless countries, there have been instances of total meltdown in taking payments. There has to be very clear government mandated and honored alternatives in case of emergencies.

In summary, the road map to a cashless country is one which will ride on the mobile internet wave and as consumers start to enjoy and appreciate the ease of use of mobile apps and the convenience of not carrying cash, it will be a matter of time businesses of any size from micro to extra large will start supporting mobile payments. Governments only need to create enabling mechanisms and institutions that safeguard citizens interest in this brave new digital world.

What do you think?

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The Operating Model for Product Companies

The missing bridge between strategy and execution

MANHATTAN (4)Building an IT product business can be quite challenging if you don’t have certain foundational elements well understood and institutionalized. This applies to not just startups but large organizations too. The goals in any sized company are similar. For example, getting a new idea out to market, entering new markets, trying to achieve scale, reducing cycle time between idea to market, reaching the right set of customers etc. Large organizations will need to maintain their leadership positions by continuously innovating, whereas startups agile nevertheless, have a lot less room for errors due to scarce resources. Some of the symptomatic situations of a shaky foundation are; building a new product with several features without involving potential customers; depending heavily on sales to gather customer requirements; misaligning outsourced development outcomes; mixing custom solutions and products while positioning etc.

There is an implicit operating model in product organizations, which has rarely been explored or discussed so far. An operating model describes how organizations execute. Imagine a product team – what conversations do they have to execute their goals and strategy? How are information and decisions flowing between team members and with their external stakeholders? Is it aiding or impeding their speed of execution and thus eventually their business? This is not to be mistaken with functional best practices in creating or marketing a product successfully, rather this is more foundational for any product organization. There are four factors for that make up the operating model for product companies and they are product mindset, organizational design, development model and decision making structure.

Product Mindset

Mindset is the basis of culture. Product mindset can best be described as the set of beliefs and assumptions that power the creation of inspiring products. Our beliefs and assumptions are hidden deep in our psyche and it takes a conscious effort to realize and shift to the mindset needed. The challenges are in unpacking the beliefs and repacking them with new ones that enable creating products. The mindset drives how we perceive success, failure and efforts in every aspect from deliverables to revenues.

For example, if the customer asks you to add a feature for them, do you jump on it and implement or do we understand why do they need it and how does it help them? Do we also pause and collect data points from other customers on similar needs and then begin to work on it? It is easy to mistake a customer’s ask for Promise to Pay. Instead we should explicitly check for Willingness to Pay before launching the product.

There are three assumptions we need to watch out for. First, are we paying too much attention to what the customer is asking us to do instead of understanding what they really need? Second, are we jumping into technical solutions before spending enough time trying to understand the problem and reframe the problem in multiple ways? Third, are we building for each client instead of exploring repeatability for many?

A good product organization considers product failures as valuable learning lessons (as long as you can afford it) and success only when you have happy, paying and returning customers. Shifting to product mindset requires sustained effort. Ideation or brainstorming is one of the ways. Exposure to inspirational stories is another. Several companies encourage new ideas through internal hackathons but fall short of nudging their employees to think bigger and from a customer point of view.

Organizational Design

Organizational design looks at reporting structures and size of teams. Engineering, Sales and Marketing are well defined organizations. Product companies need a Product Management organization that reports to the CEO. This is not to be confused with the Marketing organization, which is essentially Sales in internet consumer companies. It is important to balance the perspectives of engineering and sales with a product management team. Very simply put, product management organization is responsible for representing customer interests during product development. A good Product Manager recognizes and navigates through the dynamics while diligently advocating for the customer regardless of reporting structures. It is not easy to balance with generating revenues or feasibility constraints.

A typical product team consists of a product manager, designer and several engineers. Product ownership is critical and a basic ingredient to making the product a success. Some very successful global product companies have figured out that a good team size is which can be fed with two large pizzas. That’s roughly 8 including engineering, quality assurance, designer and product manager. Being able to do “more with less” is an oft-heard statement. Most founders in startups are the first product managers but quickly exceed their bandwidth. An easy milestone for the founder-CEOs to know when you need a product manager is when you are not able to spend enough time with the customers. Even though customer empathy and advocacy is something that the whole organization should embrace, a product manager can greatly help drive the process.

Development model

Product companies must build in-house engineering talent which they usually do. For startups, it is becoming increasingly expensive as well-funded companies are going all out to attract top talent with much better compensation. Large companies may also want to hire someone outside for temporary work to rapidly build a proof of concept. So, there have been and will be situations that require the team to outsource development. When product companies outsource development, there is a great amount of risk in velocity. The difference between the client and the vendor is in operating rhythm. The outsourced vendor expects a well-defined Statement of Work with fixed scope to ensure quality and timely deliverable. This is the antithesis of product development where scope is inherently flexible and changes during development are almost a given in the first few versions when working closely with customers. One way to getting around this problem is for vendors to innovate their business models and/or engagement models so that the lines are blurred between consultants and core team members. For this to happen, the conversations between the client and vendor needs to change from time and materials based outcomes to value based outcomes.

Decision making structure

There is always an element of continuous discovery and refinement in the product world that demands continuous decisions. We need to embrace this uncertainty at the same time work towards minimizing the risk. Modern methodologies like The Lean Methodology greatly help in minimizing the risk by cutting down the time taken between implementation and feedback. Also, with the advent of experimentation tools in the market, it is easier to compare user behaviours. For e.g. do the users click more when presented with a green button or a red button. Product level decisions should be clearly aligned with business goals set by the executive leadership. It becomes easier to evaluate and track product performance and impact on annual targets which is also very rewarding in high performance teams since they are visible and recognized. Most product organizations have a flat hierarchy that enable easy collaboration and brainstorming.

In summary, it may be useful for product organizations to pay attention to their operating model while working on strategy and execution.

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Product Camp brings hot product topics to the fore

Product camp is a unique event format where attendees get to drive the agenda. It is borne out of the bar-camp or un-conference movement that started in US and spread to other countries across the world a decade back. Traditional conferences do not allow attendees to provide inputs to the agenda. P-Camp gives them a direct opportunity to create the agenda, choose the topics and the speakers.  Product camps have spread in popularity across the world.

The next P-Camp, hosted by eBay/PayPal and supported by ecosystem partners iSPIRT, NASSCOM and OCC is on Sunday September 7th 2014, starting 9:30 am. Anyone can register for FREE.

This is the third product camp happening in Bangalore, organized by IPMA, and only the fourth in India. Here is a peek into the agenda that is still shaping up on indiapma.uservoice.com with top 4 voted topics.

Product Camp

These are the issues that the community is grappling with and would like to learn more from others who are doing it really well.

This Product Camp is seeing a total of 23 topics proposed by the community. 23 is a healthy number and the highest we have seen so far.  However, due to limited time only the top 9 will be chosen. The P-Camp organizers including the team at eBay/PayPal have pulled out all stops to ensure a smooth and fun day that includes lunch and beverages for hundreds of eager campers, surprise goodies and office spaces for break out sessions.

Attendees also get to meet and hear from Ravi Gururaj (NPC Chair) Ram Narayanan (GM eBay/PayPal) and Piyush Shah (VP of Products, inMobi) as well.

So, this Sunday, forget the malls and TV and the couch. Instead, camp out with your product guys and gals at the eBay office in Bangalore.

 

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Future of Mobile Apps

The future of mobile apps is linked to how humans have evolved and communicated with tools.

Consider an inverted pyramid as shown in the image above, with two dimensions growing simultaneously. The first being awareness and the second inter-connectivity. Awareness can also be perceived as manual vs automatic interactions with little input from user. Inter-connectivity is communication between apps or devices. When considered with the number of apps available in the market today, it is a straight pyramid with the bottom of the pyramid containing a lot more ID aware apps than the top with very few self-aware apps. When considered with the dimensions awareness and inter-connectivity, it is an inverted pyramid.

The bottom of the pyramid contains apps that are all about empowering the individual in ways to communicate, shop, purchase, consume etc. This is driven by understanding each user (business or consumer) and is largely driven by attributes of the user. For e.g. location attribute. These are the apps that we are exposed to currently. Let’s call these “Identity Awareness” apps as they are all about empowering one’s identity with the use of apps on mobile devices. The communication is similar to a hub and spoke model where the user is the hub and the apps are spokes.

How can the apps evolve from here? One possibility is where the apps shall enable “Situational Awareness”. As a small example, why should the owner of the device set their mobile on vibrate mode or silent mode? Why can’t the app figure it out by looking up my online calendars and determine the right mode? Initially, the apps may take advantage of naturally or publicly available data such as time of day, precise location of the user, etc. Aviate (getaviate.com), the company that was recently acquired by Yahoo is a good example of situation awareness. It automatically reorganizes your apps based on time of day and user behaviour with apps. Imagine the possibilities with more situation awareness eventually recognizing user cognition.

The top of the pyramid in the evolution of apps shall enable “Self-awareness”. Analogous with spirituality, self-aware apps shall realize greater interconnectedness when working with Internet of Things. In this case, not only are the apps situation-aware, but also can communicate with other peer apps and orchestrate to optimize your world in real time.

Couple this development with the trends in miniaturization and convergence of hardware devices and the future of mobile apps looks more integrated into human lives, providing naturally expressive extensions of user’s perceptions.