Events and
publications
June 23, 2010
Business model innovation
8.00 – 9.00 am
University of San Diego
July 23, 2010
Free
webinar: Agile Strategy for New Ventures
An introduction to applying the principles of agile strategy to maximize new
venture success.
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Maximizing the value of innovation
through strategic product management
Successfully creating, commercializing and realizing value from innovation is challenging. Most new product and service innovations either fail to earn a positive return on investment at all, or fail to realize their full economic potential.
There are many reasons for this, but in our experience, the single most common point of success or failure for most new ventures is product management. Product management is typically the least understood discipline in a new venture, yet paradoxically it is the central discipline driving value from innovation.
In this article, we will explain:
- The key disciplines needed to commercialize innovation.
- An overview of the product management discipline and its central role in an innovation-based venture.
- How product management maximizes the value of the innovation.
Key disciplines needed to commercialize innovation
Ventures based on product or service innovations face many challenges, and need to accomplish many things. To do so, ventures need to develop expertise in seven disciplines, each of which plays a critical role in launching, growing and realizing value from the innovation:
Product management – as detailed below, the key role of product management is to identify the market opportunity, define the product and business model to capture that opportunity, and guide and support the other disciplines in executing that vision.
General management – the primary role of general management is to attract and manage the venture’s core stakeholders. The most important stakeholders groups are typically the management team, the investors (whether internal corporate investment or external venture investment) and strategic partners – alliances, joint ventures, mergers and others.
Engineering – the primary role of engineering is to design and continually evolve the innovation’s core technology, product and / or service.
Operations – the core role of operations is to source, build and deliver the product or service to customers, provide ongoing support to customers, and to ensure a positive customer experience.
Marketing – the role of marketing is build market awareness and credibility for the venture and its innovation, and to stimulate prospective customer interest and enquiries.
Sales – the role of sales is win and grow customers, by helping interested prospects move through their buying cycles.
Support – the role of the support disciplines (finance, IT, HR, legal, administration) is to enable all other disciplines to operate effectively.
As noted above, of these seven disciplines, the one that is typically least understood, yet with the biggest potential to create value, is product management.
Note that we make a clear distinction between product management and general management in an innovation-based venture. In our view, product management should be responsible for the vision and business model driving the venture, whereas general management should be responsible for attracting, managing and driving results from the core stakeholders in the venture based on that vision and business model.
Overview of the product management discipline
However, for many ventures, product management is a weakness, not a strength. Common issues include the following:
- There is a lack of understanding of the true nature of product management as a holistic, strategic discipline.
- Product management is only partially implemented and key elements are missing, most commonly insufficient external, market analysis and a lack of true cross-functional coordination and collaboration.
- Product management responsibilities are unclear and are distributed amongst different people, with no one leading the discipline other than the CEO.
- Product management responsibilities are carried out in a sub-optimal way by people with little professional training or experience in the discipline.
- Product management is regarded as a mid-level, tactical function, frequently either an engineering project manager role or a product marketer supporting sales.
We believe that product management should be the central, strategic discipline driving innovation across the lifecycle, from idea to launch and full realization of value. Encompassing both strategic and tactical elements, product management both guides and enables the other disciplines to deliver optimal results. The product management discipline comprises three core roles:
