The Product Pulse

The most innovative organizations -- noted for their creative designs, unorthodox service, or energizing workspace -- make innovation a part of their culture. It is integrated into all that they do, and not just limited to the CEO or an "innovation group." Here are 9 tips for achieving Integrated Innovation in your organization:

1. Don't Underestimate the Value of Innovation
   Legendary management guru Peter Drucker said, "Only marketing and innovation produce revenue. All other business functions produce costs." While this may be an extreme view, there is no doubt innovation generates value.
   
   
2. Never Assume Innovation is a Department
   Innovation is everyone's job. It should not be relegated to a single department or specific individuals. Your organizational structure, culture, and workspace should encourage innovation in all aspects of work.
   
   
3. Give Equal Attention to the Image and Quality of Your Products and Services
   Together, image and quality form the "identity" of your brand. To think that innovation is all about appearance or design is to shortchange the importance of innovative processes, logistics, partnerships, customer service, or sales models. And quality can't be overlooked.
   
   
4. Use Cross-functional Teams to Assure an Integrated Approach
   Using cross-functional teams to review product or service plans and designs will ensure that all perspectives are considered. It will avoid situations where an unorthodox design will price the product out of the desired market, or where manufacturing complexity will not accommodate aggressive release dates. Seeing the big picture allows tradeoffs to be made.
   
   
5. Focus on Goals and Themes, Not Activities
   Empower and align your teams with prioritized goals and themes; let them take it from there. Innovation thrives on freedom and collective intelligence. Focus on outcomes, provide priorities and needs, and challenge those closest to the action to surprise you with their ingenuity. Dictating activities inhibits innovation.
   
   
6. Recognize and Leverage Different Cultures
   Understand the cultural differences across business functions and geographies. People from engineering will often have different approaches and priorities than people in marketing. People in "rules-based" countries will bring something different to your team than people from "relationship-based" countries. There are always exceptions, but knowing what to look for, and then leveraging those differences can supercharge your teams.
   
   
7. Watch Your Language
   Use questions to drive understanding and scrutinize ideas. Rather than silencing the objectors or squash someone's ideas, challenge them with questions: How would we address the xyz situation? Are there other ways of accomplishing this? How might we do it with less money? Then what would happen? And so on…
   
   
8. Broaden Your Perspective
   Use systems thinking to validate the impacts of decisions on the organizational ecosystem. Nothing happens in isolation. Decisions will impact sales, marketing, customer services, engineering, manufacturing, and many other areas. Make a list of the variables that could be impacted, and document the cause-and-effect relationships across those variables.
   
   
9. Innovation is Not Limited to the Ideation Phase
   Innovation should permeate the entire value chain; it's not limited to "ideation" or "R&D." Look at the entire delivery cycle -- from demand generation through strategic planning, execution, and customer touch points -- and ask the crucial business questions at each step. All of them are opportunities to innovate. Sometimes the smallest touches have huge impact.

Collectively, these 9 tips can help your organization build a culture of innovation from the inside out; engaging employees and customers alike. For more on this, join us at PIPELINE 2012 and view my Breakout Session: Integrated Innovation -- the Art of Balancing Structure and Creativity.

I'd love to hear from you. How integrated is your innovation process? Share your experiences by leaving a comment below.

In both operations and manufacturing, the concept of "lean," has earned its reputation as a powerful toolset that drives down cost and improves cycle-times. Lean manufacturing achieves this value through a focus on eliminating waste, standardizing processes, and creating value from an end customer standpoint. As companies strive to increase growth and profitability from their New Product Development (NPD) and innovation investments, some executives are looking to apply lean concepts in this area. But when it comes to the more creative and fuzzy practices of innovation, following lean practices without strategic direction from portfolio and pipeline management (P&PM) capabilities can have unintended consequences including: stifling ideation processes, focusing only on customer requests and not the next big innovation, over-standardization, and speeding up the wrong projects.

From our experience, lean NPD efforts without P&PM often prove ineffective because they:

• Are unable to effectively communicate the value proposition and need for efficiency improvements to the NPD audience
• Become too binary with metrics -- occasionally canceling lower "value" but strategic projects
• Expend energy improving processes that aren't the constraint or that don't deliver results
• Distract from delivering large scale, high growth innovations simply because these are not "repeatable"

Combining P&PM processes with lean practices for NPD and innovation shows companies where to focus their efforts for maximum impact, and once established, creates processes that can be further improved. P&PM ensures that companies stay true to delivering results by providing visibility into what is most important. They can then apply tactical lean approaches to help get there.

To hear more on how P&PM capabilities can help your company focus lean efforts to strategically drive new ideas to market while cutting waste -- not creativity, please join Kalypso's Pamela Soin for her session during PIPELINE 2012. Register today at www.pipeline2012.com.

40% to 75% of New Products Fail -- How to Improve Your Odds of Winning!

Innovation and new product development are risky. 40% to 75% of new products fail. This is not because people make dumb decisions; it's the nature of things when you face an uncertain future. Think about it. If you could consistently produce winners (products that meet revenue and profit forecasts) you would be very rich. The good news is that you can improve the odds of winning.

First, recognize that there will be a number of factors, like market size, market share, price and such that may be very uncertain. You can identify these using a technique called "sensitivity analysis" that identifies the impact of uncertainty on each variable in your business model. Experience shows that only three to four variables will account for 90% of the impact of uncertainty on your project's net present value. By focusing resources on these variables, you will avoid wasting time and effort on things that do not matter.

Second, success will come from assembling these carefully evaluated projects into a portfolio that compares projects based on the probability that you can successfully "pull it off" and, if you can pull it off, what the project is worth. A well-balanced portfolio will have some "sure things", but will also have a group of risky projects that, if successful, can be blockbusters.

Why a portfolio? Early on you cannot, as noted above, consistently identify individual winners. In your portfolio, some will lose and others will win; in the aggregate you will come out ahead.

In a recent white paper by Tech-Clarity, author Jim Brown introduced the subject of Advanced PPM to differentiate the use of enhanced analytics such as those described above, to provide deeper analysis of the economics and risks and uncertainties where subjective approaches like scoring rules, scorecards and questionnaires are not adequate. You can download a reprint of this white paper to learn more.

To delve deeper into this discussion, join me at PIPELINE 2012, the Online Conference for Innovative Product Development on May 10th. My Breakout Session "Winning in an Uncertain World" will provide insights to help you improve the odds of winning using the tools of Advanced PPM -- taking project and portfolio evaluation beyond scoring rules, questionnaires and other subjective methods. You can also learn more from Jim Brown who will participate in a panel discussion with Bill Poston, Managing Partner, Kalypso, and Carrie Nauyalis, Solutions Marketing Manager, Planview.

For additional information: www.smartorg.com

A hopeful but volatile 2012 confronts all product development professionals with an immutable truth: companies can no longer effectively manage their brands without proactively managing sustainability. Brand reputation and appeal increasingly depend on it. For products companies, it's the products that comprise the vast majority of total corporate environmental footprint. So it won't be the CMO or slick advertising that leads the way in persuading your customers that your company is walking the talk on sustainable business practices. It will be you, and the decisions you make -- decisions on what new products and features to approve, and how sustainably they will be designed, sourced, made, distributed, and disposed of or re-used.

Gartner, the technology analyst firm, recently released compelling new research¹ on achieving competitive advantage through sustainable business. One of their top three recommendations is building an integrated and multidisciplinary approach to sustainability. But what does "integrated" really mean from a product portfolio management perspective?

It may seem obvious that it means sustainability decisions can't be made in a vacuum. If obvious, then why are most sustainability assessments still segregated from core portfolio assessments such as overall customer impact, competitive impact, cost, and risk? Less obvious is the fact that true integration also requires something more -- something explained beautifully the other day by a very articulate VP-Corporate Social Responsibility. He said to me, "Even with all we've achieved as a sustainability leader, until now without the right portfolio management tools we didn't have a way for our product development teams to systematically encounter sustainability criteria early in the portfolio decision cycle." His engineers were culturally conscious about sustainability considerations, but needed a platform for concept evaluation to assess trade-offs within sustainability criteria as well as trade-offs between sustainability and other customer requirements; hence, systematic.

That's how a lithium-ion battery manufacturer, for example, sees that proposed new battery "Concept A" is more sustainable than what it replaces and yet still will improve customer experience on other key criteria as well, while Concept B, only slightly more sustainable, makes too many performance compromises. But the product development VP also had to know that the reason both concepts were more sustainable than their current product is lower toxicity and less energy use in production, even though water use would be somewhat higher. The key was looking at systematic trade-offs both inside and outside sustainability in an integrated assessment of the development portfolio.

Managing sustainable product development as part of a larger portfolio management system also means giving sustainability expertise a seat at the table right alongside cross-functional team members from engineering, product management, and marketing early in product development decisions before it gets much more expensive to make mid-course corrections. Back to the Gartner recommendation: multidisciplinary, which now includes sustainability -- extending across the C-suite. (I discussed the CIO role in a previous post titled, How Portfolio Management Can Maximize CIO Contribution to Shareholder Value.)

What's the return for sustainable product development? Not just stronger brands, stronger customer relationships, and the premium pricing and investor confidence that accrues to that, but also better employee attraction, retention, and satisfaction. In short, sustainability propels shareholder value and brand success. I hope they are both yours in 2012 and beyond.

¹ Gartner, Inc. (Stephen Stokes and Simon Mingay), "Achieving Competitive Advantage Through the Pursuit of Sustainable Business," December 2011.

Product Development managers know how critical it is to develop products people want. How do you figure that out without simply guessing? How do you ensure your choice of which product or service to produce wasn't just your opinion? You need customer-driven data. Here are my Top 5 Tips on how to get it right:

1. Ideation

Never underestimate the power of the masses to give you the best ideas. By opening up the question to the world, or even just your customer base, you will be amazed at how many great ideas you can generate. You can simply ask your internal customers, like sales and support, or find key constituents who are passionate about the topic. The key is to choose an audience, maybe 10-15 customers, that is varied enough to capture the true market yet narrow enough as not to overwhelm. At Planview, we use the Agile process that enables our target audience to participate throughout the entire lifecycle and see progress every two weeks. The product (or service, project, etc.) can be refined with each iteration, giving us flexibility with inevitable changes.

Refinement. Once you have the ideas, you need a mechanism to narrow down the choices. We incent our target audience to vote on them. Again, the Agile process enables our audience to remain involved in the process beyond ideation. Because we are using the same audience from the ideation phase, we can ensure we are capturing the voice of the market, not just the voices of our executives.

2. Alignment

Now that you have a list of plausible ideas, you need a mechanism to align them with your strategy. With clear strategic goals and set criteria, you can score the ideas based on key metrics, such as revenue, market share, new markets, etc. You must decide what's important and then measure the ideas to find the absolute best ones for your company. Make the criteria visible to the company so everyone can understand how each idea was scored.

3. Capacity

With your best ideas in hand, it's time to estimate your capacity to develop them. "What if" scenarios allow you to imagine specific situations and how they would affect resources, revenue, time lines, and other criteria. With this data, you can make sound decisions to prioritize ideas based on real information. Many companies still do this process manually in spreadsheets, adding tab after tab with capacity and financials. But if something changes, which it always does, it's ridiculously time-consuming to make those changes to static spreadsheets -- even with pivot tables. An automated process saves countless hours of time and risks for errors.

4. Measurement

After you develop and release the product (or service), you need to measure the results. What was the actual versus estimated revenue? How long did the project take? What did it cost to get it on the market? Actuals help you improve the next planning cycle. Comparing actual results is much easier and accurate when it is done with a product development tool rather than spreadsheets and manual reports.

5. Repeat

Although your process should remain constant, your plan will constantly change because there are so many dynamic factors in play. The ability to see where you started and track your progress throughout the product development cycle enables you to make adjustments towards best practices.

Creating a process for capturing the voice of the customer is essential to developing the products people want. In fact, we followed this process for our latest software release and incorporated 320 customer-driven enhancements.

I want to hear from you. What are your methods for capturing the voice of your customers? Share your experiences and best practices -- leave a comment below.

Several years ago, as a young programmer recently out of graduate school, I joined a small company and inherited a large amount of code that had been created by a previous employee. The code implemented a complex user interface and I had received several customer product change requests.

A sizable amount of the code had been automatically generated sometime prior to my involvement through the use of a user interface design tool. The tool allowed a non-programmer to graphically define the parameters of the user interface while magically generating working code on their behalf.

If any of you who have ever seen automatically generated code, you know that it's hardly fit for human consumption. The code typically has poor structure, much redundancy, and no domain knowledge.

After the automatically generated code was created, other programmers had made additional code changes, which meant the design tool could no longer be used, resulting in a horrific mixture of poorly generated code liberally sprinkled with many hacked-in changes.

Now back to my role in this story; I studied the code carefully and found that I could scarcely make sense of it. I could sort of see how the other programmers had tried to fix various issues, but I had no luck determining how the generated code was fully operating. It became clear that any new functionality requests could not be developed using the existing code.

Next I made the same mistake so many young, overly confident developers make. I told my boss I'd work over the weekend and fix it. He looked at me over the top of his glasses and said, "You do that."

To make a long and very painful story short, I threw away the existing code and rewrote everything from scratch with zero documentation on how the code was originally intended to function. The project impacted the company financially, operationally, and created a negative customer perception. Costs were tallied based on the missed product release deadline, numerous customer complaints, development time, missed opportunities, and some lost product functionality, resulting in frenzied hot-patching.

Today, as a much older and wiser (I hope) software development executive, I look back on this painful event knowing that my decision to rewrite the code caused a great deal of hardship, lost revenue, and costs. I also know that the code that I inherited had been so poorly maintained prior to my arrival that no other choice could have been made.

While I was clearly culpable, the culprit here is a concept known as code debt.

I invite you to read the Wikipedia article titled, Technical Debt. The article explains that code debt is commonly caused by: business pressures, lack of process or understanding, lack of building loosely coupled components, and lack of documentation.

The code I had inherited was literally a big pile of code debt. For years prior to my involvement, various programmers had been pushed hard by business stakeholders to make quick changes for near term and inexpensive customer requirements. The programmers didn't really understand the code in its entirety as no documentation existed in terms of original requirements or change requests. Programmers simply hacked in changes without complete understanding of its effects. Additionally, no time was allocated to refactor the code into something better and more maintainable.

Well designed code that is documented, understood, and surrounded by good unit tests is relatively easy and safe to change. The weeks of development work I dedicated to whip the user interface into shape was literally the interest paid on the debt. I'd also bet that the other developers prior to my code overhaul had also paid some amount of interest simply by attempting to decipher the code.

The objective cost of the interest is hard to measure, but the subjective cost of code debt is often extremely high. Code debt is responsible for many cases of late releases, buggy code, under-performing code, non scalable code, high development costs, high test costs, unhappy customers, and abject project failure.

Just like real debt, code debt is easy to ignore. Stakeholders want to hear, "I can do that in two weeks" not "that will take four months." Non-developers often take the "How hard can it be?" approach to product development. Developers are typically optimistic and want to please while customers want the new functionality tomorrow. All together, it's a recipe for building up code debt. All involved have the tendency to say, "Let's just do this quickly now and fix it all later." Doing so adds to the debt and the debt grows in some non linear fashion.

The best way I've found to avoid code debt is to use an Agile process and a focus on the following principals taken from Extreme Programming:

• Coding standards
• Simple design
• Refactoring
• Testing
• Pair programming
• Continuous integration

Code debt adds to the complexity of resource planning. As IT professionals, we are continuously challenged with making better use of limited resources and focusing those resources on work that brings value to the organization and aligns with corporate goals.

I'd love to hear from you. What are your experiences with code debt and what have you done to prevent it from taking place in your organization?

Your product pipeline might be perfectly streamlined and efficient. But if you're like many organizations, your portfolio may have some issues that are costing your organization in terms of revenue, product failures, and eventually reputation. Maybe you've wanted to implement a Product Portfolio Management Solution but haven't defined or designed your processes yet. Did you know that it's actually recommended that you go ahead and get started with a PPM solution so you can grow your processes as you go along? Here are some sure-fire ways to gauge whether it's time you invest in a software solution to improve your chances for success.

1. Failed Market Launches
   Has your organization launched unsuccessful products that have blemished your brand or product line? Have you missed critical time-to-market deadlines that have cost real money? Product Portfolio Management allows you to analyze your portfolio before you make the decision on what will be on your roadmap. It enables you to evaluate every piece of your portfolio so you have a complete picture -- the impact on your brand, competition, resources, sustainability, and bottom line. What has a failed product launch cost you? Chances are, a lot more than what it would cost to implement a solution.
   
   
2. Limited Resources
   You've repeatedly heard and our recent Benchmark Surveys have confirmed that the #1 pain point around Product Portfolio Management is too much work for available resources. You may have people presenting great ideas, but you only have a limited capacity when it comes to people. If you say 'yes' to every good idea, you spread your resources too thin and few of those good ideas actually make it to the market on time. Product Portfolio Management gives you tools to run 'what-if' scenarios before you execute. It allows you to perform comprehensive portfolio analysis to understand your current capacity, usually based on role or skill, and then evaluate all of the things in your pipeline to go on the roadmap to ensure they can actually get done on-time with the available resources. When you use your resource capacity as a filtering mechanism, you have a much higher chance of success.
   
   
3. Market and Product Conditions
   Look at the size of your product catalog and the number of markets you serve. If you have a large number of products, multiple projects that deliver a product, a large number of metrics to analyze the performance of each product, multiple markets or global markets, or if your roadmap is frequently changing, you're ready to centralize and automate your product portfolio to maximize visibility and reduce risk. Are you still updating your roadmap manually through PowerPoint? That's a not just a sign, but a neon flashing sign telling you it's time to convert to a formal solution.

Take a look at your current product portfolio and see if any of the 3 signs above are present. If so, you just might be ready to call in reinforcements!

It has been an amazing year in the product portfolio management space and it is time to reflect on accomplishments and new goals on the horizon. As the year comes to a close, I'd like to share the most popular product development resources of 2011. The list covers a variety of information on how PPM tools coupled with best practices can achieve a greater ROI while effectively managing resources to maximize productivity. It's a good set of reference material as you begin planning initiatives for 2012.

Five most widely read product development resources of 2011:

1. Navigating the New Normal: How Companies Handle the Portfolio Management Question -- The article addresses how companies are navigating the potential pitfalls and unknowns facing product development professionals today.
2. Improving Portfolio Decision Making -- Author Jim Brown of Tech-Clarity reveals how PPM plus best practice processes are a great enabler of ROI for product development firms the world over.
3. Right Resources, Right Management, Right Time -- The video highlights how to effectively allocate and manage resources to maximize productivity.
4. Play to Win with Your Product Portfolio -- The webcast shares proven strategies on how to confidently assess the value of your product portfolio and improve the odds of success.
5. Innovation Tools: Enablers or Derailers? 4 Easy Steps to Keeping It on the Rails -- The post provides answers on how to drive measurable business results through innovation processes and tools.

We want to hear from you. What resources did you find beneficial and why? Did you find a particular subject valuable that did not make the list? Tell us why by posting a comment below.

Happy New Year and I look forward to connecting with you in 2012!
Linda

Hopefully, you've had the opportunity to read Part 1 of this 2-part blog series. Carrie Nauyalis began our series with 3 of the top 5 game-changing tools that you can take advantage of to improve product management in your organization and make your life much easier. The last 2 tools are equally important.

Social Product Management -- "Are Product Managers going social?"

You bet we are. I follow a large number of blogs on a daily or weekly basis and post my own Tweets and blogs as well. Why? I can post questions and get great responses that help me better deliver products that I know customers want. Blogs also allow me to follow competitors, analysts and industry experts so I am first to know if there is an issue with our customers. It's amazing what you can learn about your company when you follow Twitter! Industry experts reveal predictions and the next big trend, while competitors use blogs to make big announcements. I'm not waiting for a formal press release… I want to know what's going on NOW.

Another key aspect for us at Planview in social product management is collaboration. If you're in the middle of a product development or sprint, you need to communicate with your global team at a moment's notice. What if you could click on a team member's name and instantly video chat with them to ask a question or get a live update? If you could do that from your product management dashboard, that's powerful. With Planview Enterprise, you can.

Product Management Analytics -- "What data do I need?"

The most important question a product manager can ask themselves is 'what data can I use to show we're doing our job and the product is performing as expected?' Real-time access to centralized data is crucial to answering this question and performing critical analysis.

Key data that we closely track at Planview:

1. Analysis of product backlog
2. Mix of Innovation vs. Enhancement vs. Customer Requirements of the product backlog or next release
3. Cost release that includes capacity planning scenarios
4. Revenue forecast by product and market
5. Roadmap by release, product, technology and market

So what is the bottom line? You need to be able to automate everything from ideation through launch -- and be able to see it and manipulate it in real-time. Product development is a key part of this automation. To be an effective product manager, you must have the analytics that back up each one of these stages. The impact of these 5 Game Changers in Product Management is the ability to take out the tactical, manual, day-to-day slogging we had to go through before Planview Enterprise and automate the process. Now it's your turn to be a Game Changer in Product Management!

Related post: 5 Game Changers in Product Management - Part 1

As a product line manager in charge of several software products, my job is challenging. It's a constant balancing act around delighting the customer, minimizing risk, maximizing revenue, leveraging resource availability, and about 12 other considerations. While I quite often think the pain of having to make difficult tradeoffs between good ideas, I have never had the opportunity to "measure" the portfolio that I didn't choose. That is… not until I got to participate and help facilitate a Discovery Lab called Reinventing Portfolio Management at this year's PDMA Global Conference in Phoenix.

The session was led by SmartOrg's Co-Founder, President, and CEO David Matheson who is a regular lecturer at Stanford on the topic of Strategic Portfolio Management. In his brief introduction to the workshop, David introduced the dice game. While the portfolio simulation sounded interesting and fun, I had no idea how enlightening it would be. While I don't think we "reinvented" portfolio management, I certainly gained a perspective on portfolio management that was new. And after 16 years in the portfolio business, new is uncommon, and delicious.

Through the dice simulation, we were tasked to pick a portfolio of R&D projects to invest in. But that left a collection of projects not included in the selected portfolio but that still clearly had some sort of value. Before evaluating the selected portfolio, we were told to roll the dice to calculate the success and value of the unselected projects. For my Type-A personality, this was a little unsettling on two fronts:

1. It's very disturbing to me to think that a "roll of the dice" could be considered an accurate metaphor representing my chances of success with my portfolio. SURELY, I was a much better product manager (with better assessment criteria) and way too controlling to leave things up to chance, right? Statistically speaking, given the number of project and product failures, it can be a less than certain game, especially with new technologies.
2. The second thing that was so disturbing to me was the fact that there was so much value in the projects that didn't get selected. When you think of that value going unrealized, it can be a bitter pill to swallow. I've never actually considered calculating the potential value associated with my product backlog. Ouch.

I think that the dice simulation really opened my eyes about the real risk and uncertainty we deal with daily in portfolio management. It seems that this dice game gave everyone in the class (see picture below -- such a good looking group!) a different insight or nugget to take home, based on the dynamics of their particular organization. Check out the post-class review video for some of those takeaways.