Eric Ries recently asked for favorite MVP stories on his blog, The Leadership Guide. Here is what I submitted.
Back in 2002 I was involved with a company that had some interesting Flash technology around which we built an Email Marketing Agency. In 2002, Email Marketing was not the Juggernaut it is today, and we were able to build small, one-off, rich-media email campaigns for our customers. However, the agency model was not very scalable and we found ourselves in need of a pivot to survive.
Our biggest client, a large cruise line company, did most of their own creative work and was beginning to think that maybe they were spending too much money with us since our fees were primarily for our creative services. We began to wonder if we could sell our email services separately as a SaaS offering. We had a pretty good backend for sending and managing email, but in order to sell it as a Service, we needed to answer a couple of questions:
- What kind of UI would be needed to allow customers to be totally self-service?
- How fast did the system need to be?
- And, how much would customers pay for such a service?
Remember, this was before Email Marketing was a thing. Before MailChimp, ExactTarget, StrongMail, or Constant Contact even existed. So, we had 1 potential client and a handful of questions to answer. MVP time…
So in short order we built what you might call a “man behind the curtain” solution. A very simple web page – an HTML form actually – to collect all the data necessary to set-up an email campaign. The customer would need to give it a name, tell us when to send it, what the subject line would be, etc. They could then upload a csv file of recipients, and an HTML file for the email itself.
The web form, when submitted, would send all the data via email to our lead Engineer, who would immediately grab all the data, upload the file of recipients, manually transform the HTML into a multi-part email document, rehost any images, manually create any landing pages and redirect pages (for tracking clicks) and fire the whole thing off. We used a simple ASP script to fire off the emails 1 at a time. We tracked the opens and clicks using our web server and could upload the stats daily to our “app”.
We showed our app to the customer and they agreed to use our software to send their next campaign to a list of 3 million of their customers. If I remember correctly, we charged them a $3 CPM (cost per thousand), for a total of $9000. Considerably cheaper than the Agency fees we would have normally charged.
The campaign was a success and we were able to get answers to our 3 basic questions. From that first campaign we knew that at a minimum we had to automate the process, provide an Email content editor, provide image hosting, proper reporting, and basic CRM capability. But our idea was viable, and people would pay for it. We used that MVP, and the lessons learned, to build out one of the industry’s first Email Marketing SaaS platforms.
disingenuity: noun; dis·ingenuity; \dəs, (¦)dis+\
disingenuous state, behavior, or act
This is my new favorite saying. “Disingenuity cost”. It came up today when a colleague and I were discussing personalization in email marketing (I’m sure it applies to other things, I just can’think of any right now). We’ve all gotten that email that starts off with “Hi Brad” and thought, “You don’t know me…“. Some of us have probably sent that email.
It seems reasonable to assume that personalization is a good thing – better to establish trust, get the conversation going. The problem is – disingenuity. It’s good if you actually know somebody, but completely disingenuous if you fake it.
My colleague had gotten an email from his bank about “historically low interest rates!”. The “personalized” email even addressed him by name. The problem was, the opportunity didn’t apply to him. The bank knew his name, but not the details of his loan. Disingenuity cost.
Never use personalization simply because you can. It’s kind of disingenuous to go out of your way to prove to me that you don’t know me by pretending that you do.
Update: Just after writing this post, I started reading a great book – “The Hard Thing About Hard Things: Building a Business When There Are No Easy Answers” by Ben Horowitz, and stumbled upon a quote that really articulates what I am trying to say with this post. I decided to add the quote to the top of this post:
“It turns out that is exactly what product strategy is all about—figuring out the right product is the innovator’s job, not the customer’s job. The customer only knows what she thinks she wants based on her experience with the current product. The innovator can take into account everything that’s possible, but often must go against what she knows to be true. As a result, innovation requires a combination of knowledge, skill, and courage.”
What customers want. Does it matter? Depending on the kind of business you are trying to run, it may matter less than you think.
Is there a difference between a Customer-driven business and a Product-driven business? After all, there is really only one goal – happy customers. Right? You either make things that people want, or make people want the things you make. Business experts would postulate that there is a big difference. And those differences are critical to how managers should run their business.
T0 the Customer-driven business, customer feedback is the cornerstone of success. The entire product pipeline is based on information gathered on customers, and the focus is first and foremost on the customer. How to make the customer happy, how to meet or even exceed their expectations. This type of business often operates under the assumption that it can only survive if the customers are satisfied.
In terms of marketing, the Customer-driven business is not greatly invested in marketing the product. After all, the product has been designed and created with the customer in mind, so it goes without saying that there is already a market (and customers) for it.
Speed and flexibility become the pillars of the Customer-driven business. Unfortunately, in many cases the Customer-driven business is heavy on Sales, heavy on Marketing, and a little thin in Product and Technology. Product Management is well poised to offer the benefits of process and discipline, but methodologies such as Agile and Lean are misunderstood and often shunned by Sales and Marketing heavy businesses. Without such discipline, products become ad-hoc and meandering under the load of unending customer requirements.
The Product-driven business, on the other hand, cares much less about customer feedback. Why? The Product-driven business works under the assumption that with great products come great customers. The Product-driven business exists to expand and create markets, create customers, and thereby create profits. They are highly dependent on marketing since they make people want things rather than make things that people want.
In an existing Product-driven business, customer feedback at the aggregate level is crucial, but feedback at an individual level is almost irrelevant. The Product-driven business is laser focused on the market they are trying to create. Outliers most often point to customer-product mismatches. Aggregate feedback should be used to validate the new market – not market fit. Market fit implies that the target market already exists, which it does not.
Lean and Agile processes are essential to the Product-driven business because the new markets and customers are, in a manner of speaking, an educated guess. The technology teams need to be flexible and fast as knowledge about the new market and new customers emerge. MVP’s (minimal viable products) and validated learning cycles are the essential processes for the Product-driven business. Sales teams need to be able to say “no” and move on quickly on the quest for the defined but unknown customer. And Marketing is the portal through which these new customers will come.
One process internal, one external. Both require different approaches. Often times a hybrid approach results in an in-between process that serves neither. Product Management needs to provide the leadership to help the company clarify the type of business, and then provide the tools and processes for success.
As a Product Manager, ask your self the following questions:
- Is yours a Customer-driven business? If yes, then
- Customer feedback is crucial
- Understand the role of Marketing. If your business is truly Customer facing, then you should already know who and where your customers are. Use marketing to build awareness, not to build a market.
- Implement an Agile process for speed and flexibility. Customer feedback should be coming in fast and furious, you will need resources and process to deal with it.
- Is yours a Product-driven business? If yes, then
- Use customer feedback to support validated learning. Focus on finding new customers and creating or expanding markets.
- Rely heavily on Marketing to bring in the customers who need you, but probably don’t even know you exist
- Implement an Agile process.
- Create beta programs, identify evaluation customers, build MVP’s and Validated Learning loops
And remember attempts at hybrid models tend to die in an unlivable no-man’s land between product and customer-driven territories.
So yes, it matters what customers want. But more importantly, know what you want from your customers.
The Three Levels of Prioritization:
- Must haves
- Nice to haves
- Wish we could have
I wrote some time ago about Themes in Scrum. The focus of that blog post was to address the issue of lower priority items in the Sprint backlog. The idea was to be purposeful in planning around potentially low priority topics such as help and tutorial pages, or documentation. Click here if you are interested in reading.
Over the years I have learned much about prioritization – both as it applies to backlog grooming, and how it applies more generally. Proper prioritization is the key to keeping your sanity as a Product Manager. The magic of good prioritization:
- Forces stakeholders to think about what they truly need and what they can truly live without.
– the problem isn’t identifying the top priority, it really is identifying priorities 2, 3, 4, and so on. And most importantly, which items are the lowest priority – which items will not make the cut if push comes to shove.
- Sets expectations
– everything can’t be top priority. If we agree to work on the top priority items, that means we are not working on the lower ones. At least not right now.
- Manages scope and feature creep
– when new priorities pop up – or stakeholder focus shifts – always ask the question “is this important enough to stop what we are doing now?”. Or, “if we work on this, what can drop off the list of deliverables?”
- Always deliver on time
– It’s virtually impossible to deliver both a promised set of features AND on a promised delivery date. However, a hard delivery date can always be met if the feature set is flexible, and the feature set is always flexible in Agile – it is the Product Manager’s job to convince the Stakeholders of this.
How to always deliver on time
After you have forced your stakeholders to think about what they truly need and can truly live without, then managing scope creep and delivering on time are all a simple matter of proper prioritization. .The first step is to construct a long-term, agile roadmap. Remembering that in Agile, requirements and priorities can change sprint-to-sprint. This does not mean you should avoid creating a long-term roadmap, it simply means that it must be constructed in such a way as to maximize flexibility and minimize wasted development cycles. Use the following three steps to create a flexible, agile, roadmap:
- Identify the Minimum Deliverable Feature set
– sometimes called the MVP – Minimal Viable Product. If production where shut down unexpectedly, which features would allow the product to still be delivered in some form or another?
- Identify dependancies
– which features provide basic functionality that can be built upon in future iterations, You do not want to start with standalone features that don’t support the broader functionality of the product.
- Prioritize the major features into 3 categories:
- Must haves
- Nice to haves
- Wish we could have
While items 1 and 2 deserve attention (maybe in a future post), let us focus on item 3 – the 3 categories for prioritization. Must haves are features that the product can not live without. These define our MVP. Nice to haves are features that we would really love to build – features that add real value, maybe features that differentiate our product from the competition – but are not part of the MVP, and at the end of the day, we could deliver without. Wish we could haves are the “wish list” items. Everybody agrees these features would be great, these features add pizazz and polish to the product, but expectations are low that these will ever be delivered.
The Wish we could have list is the most difficult one to create. Some might be tempted to put fit-and-finish issues – the polish – into this category. However, prioritization is dependent on the goals for the product. Are you trying to simply get to market quickly with an MVP? Or differentiate your product from the competition with attention to detail? Apple, for example, would probably consider fit-and-finish as a Must have feature, whereas a start-up company with a brand new technology that just wants to get a foothold in the marketplace might define only basic functionality as the Must haves – fit-and-finish is on the wish list.
With this prioritization scheme in place, it is now easy (relatively) to commit to a delivery date. The commitment date will include all of the Must haves, as many of the Nice to haves as possible, and maybe some of the Wish to haves. Always schedule time and resources around the Must haves and the Nice to haves. That way, the Must haves will always be delivered. Unexpected roadblocks might result in some Nice to haves getting dropped, while any overestimations in time or resources allow some of the Wish we could haves to be delivered.
The 3 levels of prioritization as a fractal
To achieve the greatest level of success with this methodology, make sure you apply it to every level of the planning process. Apply it to the MVP and the high-level roadmap. Then apply it to the Epics within each major product feature, and again to each User Story within each Epic. Finally, use the 3 levels in Sprint planning to fill each Sprint with Must have and Nice to have stories. Time permitting, bring in extra Wish to have stories, or drop Nice to haves when things don’t go quite as planned. As priorities change over the course of the project, you as the Product Manager can reshuffle what is being worked on without sacrificing the Must have features and stories, and will be able to articulate at any point in the project what is being worked on, what is being delivered, and why.
Autonomy, Mastery, and Purpose. Motivation and the Podular Organization, optimizing for innovation rather than efficiency.
Today I would like to talk about a couple of principles and a couple of books that have had an enormous impact on the way I work. The first is “Drive – The Surprising Truth About What Motivates Us” by Daniel H Pink, which is a brilliant look at how the “carrots and sticks” motivational techniques of the past are no longer valid and why we need to think about intrinsic – as opposed to extrinsic (external) – motivators. The 3 pillars of motivation are:
- Autonomy – the desire to direct our own lives.
- Mastery – the urge to make progress and get better at something that matters.
- Purpose – the yearning to do what we do in the service of something larger than ourselves.
The other book I want to talk about deals primarily with the last point – “Purpose”. Once properly motivated, how do we get everyone in the organization to feel ownership of the business? The solution is to create a “business within a business”. And this is the subject of “The Connected Company” by Dave Gray where we examine the concept of the podular organization and optimizing for innovation rather than efficiency.
These principles fit in nicely with the basic tenants of Agile – the idea of self-organizing and cross-functional teams. As with other Agile processes, it seems (although it is not true) that these principles are much more applicable to smaller, leaner, more start-up like companies. I have seen firsthand how Agile organizations fall back into old Waterfall traps as the organization grows, middle management grows along with it, and communication, motivation, and innovation become secondary to efficiency and predicability. In a world that increasingly requires people to think creatively, solve problems and remain flexible in uncertain environments, hierarchical, multidivisional organizations and extrinsic motivation just don’t work. The answer is to build flat organizations around small, self-governing “business within a business” units, or “pods”.
My experience applying these principle has primarily been with Software Develop teams. While Software development seems particularly suited to these principles, it is left as an exercise for the reader to think about how they might be applied to other business’s such as hardware development, or service organizations.
Organizing a large company into a series of “business within a business” pods, allows each pod to function as a stand-alone business unit, ideally only answering to its customers. These customers may be inside or outside the organization, but each pod delivers its own business value thus giving its members real, motivational ownership of the pods success. This is how a company optimizes for innovation over efficiency.
Within the pod, team members are motivated by the intrinsic value of the units success. Developers, designers, sales, support – every member of the team must feel ownership of the teams success. Autonomy and Mastery come into play as each member of the team is encouraged to identify and provide working solutions to the day-to-day challenges of creating success. The parameters for success become clear, aligned with the goals of the larger business, thus empowering every member of the team.
“The great innovators in business did not succeed on creativity alone,” Gray writes, “their success was a blend of creative thinking and business logic.”
A great article on Fast Company sums it up nicely:
“So if you want to set a context to bring out your teams’ inner Edisons, you need to align their incentives in three ways:
- Incentives need to breed visible impacts on the business as whole
- Incentives need to balance short- and long-term thinking
- Incentives need to reward people for doing what makes the business as a whole more successful and healthier
In this way, a person’s individual work is linked to the collective endeavor. They get personal expression and collective validation. They’re incented to do their best work, for themselves and for the organization.”
So the big news this week in the world of Email Marketing is that Gmail will begin to use an image proxy server for all images in an Email Message.
The Good the Bad and the Ugly
What does this mean to the Email Marketer? Well, the most obvious ramification – and where most of the wringing of hands and gnashing of teeth is coming from – is that it may become much more difficult to track recipient Open Rates since the tracking image that is typically used will no longer be coming from the Marketers server, at least not in the same way it has historically. While this will only apply to Gmail, Gmail’s market share continues to increase and accounts for around 3% of opens (www.emailclientmarketshare.com).
- Gmail users will now see images by default in their emails
- Good for users – an arguably better user experience
- Good for marketers – more of the marketing message is now visible by default
- Good for marketers – possibly more accurate unique open rate measurement (what?)
- Marketers may have to change the way they track unique opens
- Multiple opens will be harder to track – but not impossible (read on)
- UserAgent data will be suppressed – or worse, invalid. This means no Geo data, no browser data, no referer data, no time data.
- This move has the potential to increase Spam and increase the amount of irrelevant marketing messages recipients see
The Bigger Picture – Privacy vs. Responsible Marketing
I am sure if you are interested you can find your fill of articles on the interwebs about the death of open-rate tracking as it relates to this action by Google, and how to work around it. But I have seen little to no discussion on the arguments for even tracking open-rates at all. The subject is almost universally viewed as a necessary evil for Email Marketers. However, I’m going to go out on a limb here and claim that not only is email open tracking essential for marketers, it is essential for consumers!
I have had the opportunity to have this discussion with Google themselves. I spent some time consulting with them on their own Email Marketing efforts, and a significant amount of that time was spent convincing them that they needed to track opens. As responsible marketers, it is essential to track opens. What is the difference between a “spammer” and a responsible marketer? Both use tracking images – one nefariously, the other to measure engagement. Where good marketing breaks down and where consumers start to get resentful, is when that marketing isn’t targeted, or becomes irrelevant. For example, tampon ads during the Superbowl. Nobody objects when they are thinking “I’m thirsty”, and then notice that their favorite beer is on sale.
Responsible marketers want to know how to target their messages. Not because of the ethics or the morality of sending Spam, but because of the ROI. The most profitable and affective Email Campaigns are those that are highly targeted and relevant. How do they get that way? With intensive testing and measurement. The very definition of Spam is messaging that is unwanted, unasked for, or irrelevant. As responsible marketers, knowing when, how often, and who is opening a message is essential in determining whether or not to send the next one. Knowing how – or if – any particular recipient interacts with a message is at the very core of making sure that future messages are as closely aligned with that recipients interests as possible. Responsible Marketers track email opens because Responsible Marketers are not Spammers.
So what are marketers to do? Well, I think that in the long-term the move by Google could actually help marketers. Just the fact that Gmail recipients will see images by default should be a boon for click-thru rates. Email Marketers will need to make sure that their tracking images are properly configured. It turns out that tracking images will still work pretty much as it has in the past if ESP’s have their servers configured properly. Useragent data may also still be possible to retrieve if everything is done properly.
If you are interested in a discussion on how to continue to use tracking images effectively, here is an article that I found interesting.
The relationships that companies have with their customers is based on trust. What this means for the Email Marketer is that they need to continue to put their best efforts into understanding their customers and delivering the most relevant messages possible. It is good to understand that modern Spam filters have evolved away from simplistic checks like opt-out language and tracking-images, and now rely heavily on transparency. Trusted sources, closed-loop DNS records, reliable reply-to addresses, and CAN-SPAM compliance are what get emails delivered. Circumventing these measure will continue to erode the trust of consumers. At the end of the day, this move by Google should give consumers more reasons to trust the marketers whose messages they have let in to their inboxes.
Do not be afraid of change. Different isn’t always better, but Better is always different.
Companies that cannot embrace change cannot be innovative. In order to move any product forward, it must change – hopefully for the better. Customers will resist change, even while asking for it. Innovative change must move a product forward, and must enable a company to acquire new customers. This will inevitably mean the loss of some existing customers. A company that cannot embrace this “two steps forward, one step back” mentality, cannot innovate.
Change. It does the body good.