Business opportunities: gut vs. numbers

Recently I have been interacting with small to medium-size business owners to discuss the topic of business opportunities whether it is an expansion of their current business or an evaluation of parallel income opportunities (like diversification). Our discussion usually starts with the business objectives and their assessment of the opportunity, I noticed that all of them, without fail, are using back of the envelope calculations, and nothing more, to evaluate their opportunity. No a single cash flow spreadsheet was used, the due diligence was a personal visit with the other company (to meet the owners, partners, etc).

This way of doing business clashes to some degree to what you see in business schools - where there is no investment without a lot of due diligence. We can learn from these successful people and use our gut to make business decisions. In our big corporations by having some degree of freedom in what bets we allow our trusted employees to place.

Like in everything, there is a threshold to the amount of money you can trust to your gut. If the amount is large enough, use the tools that MBAs, M&A people, investment bankers, VC have always used to evaluate business decisions. The amount should depend in your company's cash flow and in its risk culture.

Deciding on controversial features for products

I’ve just discovered that leaving your account logged on Facebook allows CNN.com to somehow connect to it and see who of your friends have linked to CNN stories. To say the least, I was a little surprised to see a friend’s name with a link to a CNN.COM article, since I wasn’t logged into CNN and they didn’t ask for permission to connect to my Facebook account. My first instinct was to see behind my shoulder to see if the illuminati were behind me.

I did a little experimenting, logging out of Facebook and reloading the CNN page got me blank box with the caption that friends’ links would be shown there. Logging to Facebook again reintroduced the news about my friend’s link. Somehow they were getting access to my friend lists.

From the Product Management perspective, how do you decide on this type of features? I can think of several people who will love it, and a many more that will hate it. Obviously you want your product to remain competitive and offer features that go the extra mile for your customers. At the same time, if it takes a PhD to customize your preferences that would be a turn off.

To address this type of features, the steps I would follow would be:

• Prototype the hell out of it.

• Use customer’s panels and demo it in front of large groups

• Announce it and highlight it when it is shown for the first time.

• Build a “quick kill” or “shut down” button into the feature.

• Prepare for fallout in case it goes the wrong way.

Obviously I am simplifying the situation but the approach may help your company avoid Facebook-like privacy problems.

Blog post for Author's Globe & customer's rights

The blog post for Author's Globe was published yesterday here . It was a tremendously informative conference by Dan Ariely. I had a lot of fun writing the post.

On a separate note, I have been having a difference of opinion with a service provider and wanted to share it with you. The situation is this, I have contracted a series of services from provider "A", and for the past 3 months one of the services has been unavailable, after a lot of going back and forth I found out that the service in question is subcontracted and the reason for the lack of availability has been that the service provider "A" hasn't been paying the subcontractor - according to service provider "A", they forgot to pay (for two months the story was very different and I did everything I could to help restore the service). Now, service provider "A" has paid his past dues and the service will be restored in the future (there is a built in one month delay to reactivation).

After learning all of this I substracted the amount for the services that I did not receive from my next payment and informed service provider "A" of the adjustment. The amount substracted is less than 5% of the total service bill. Service provider "A" is now in a tiffy as to the amount substracted - mind you that he didn't complain about getting paid for services he was not providing.

This situation got me thinking: What are your customer's rights? Does your company offer a customer's bill of rights? Explicity stating what your customer are entitled to (friendly customer service, 24 hour response to inquiries, automatic deductions from lack of service provided) will help create trust in the relationship . Think about how you are today defining your relationship with your clients; and how clear statements about how you are offering to treat your customer would go a long way to create a mutually beneficial association. In this case, service provider "A" has ensured that I know he is not interested in keeping me as a customer, and that I will be looking at every aspect of the service and payments with a magnifying glass. Ours will not be a relationship with trust in it, and may end up being cut short as a result.

Do you taste your own service?

How do you know your service? Do you test it? How do you test it? When I speak to companies about testing their service I usually get a positive answer ("yes, we do QA"). Excuse me, but testing the service is more than doing QA. I propose that you taste all aspects of the service from OUTSIDE your corporate wall - that means: experiencing the service using conditions similar to your clients, and calling customer service with real problems. To see how good do you taste, do the following:

• Use your service from outside your corporate network - use your customer's PC/device if possible. What if there are problems with their ISP? or some other thing outside your corporate network? Do not use any corporate advantage or identify yourself as an employee - do not seek preferential treatment. No VIP pass for you.
• Taste during high peak times - no experimenting at 3 AM when the servers are at 0.0001% utilization (unless that is your peak time). Do not use an super-machine with an infinite bandwidth connection (routed through NASA and a private line to the president).
• Call customer support with real problems - but use the customer's line (don't listen from the call center or call from HQ). I recently had a call with a company's customer service. I am pretty sure my call was between me in the US, one customer rep in India and another company's customer rep in the US. The quality of the call was horrible and it dropped several times.
• Do experiment with different ways to use the service: PC, iPad, Laptop, old PC... and call from landlines, cell phones, international phones (get your overseas relatives involved). 

Live your service from the outside. Get the real picture and the real taste.

Don't let Customer Service ruin your customer's experience

There doesn't seem to be a customer service bone in some companies this day. I sent a scathing letter to an airline after five consecutive trips where every trip was either delayed or canceled – Their response was that they didn’t have time to answer my letter because they have received so many complaints lately that they couldn’t respond to them all.
After the initial shock was a sense that the company was no longer interested in customer service. The text of the response was neither apologetic nor palliative. It was matter of fact with no promise to address issues in the future. It was a customer’s dead end.

I have to wonder where does Customer Service at this airline sits with Product Development and Marketing – Is Customer Service even present when the company is addressing service problems. My guess is no. The communication showed no interest in their product, no Product Manager that I know of would sent that letter; and no rational Marketing person would sent such a diminishing communication. Their customer service board must have been asleep at the wheel on this one.

Stopping the launch of weak products

A weak Product Management function can result in features that are not introduced in response to customer needs but in response to internal wish lists (that may be out of touch with the market), or in cost structures that are not being revised strategically to enhance profit margins (like outsourcing vs. internal development). To change a Product Management function takes making an assessment, mapping out where we are today, where we want to go be and what are the best practices in what we need.

After the initial assessment and once you understand where you are and where you want to be. Choosing the right framework will be one key to your success. There are several frameworks about what Product Management should be, for example: the PDMA model has one, author Steven Haines documents another, and author Marty Cagan shows us yet another one. All frameworks list a set of skills and functions that every organization should have. But just using any of these frameworks will not work for a company, as with everything in life, each situation is unique and your framework should be tailored to your needs. Best product management practices will come from a consultant (you are hiring one, right?), current literature and studies on the matter.

Another big factor is if your company wants to change its culture – for example, is the organization willing to let a Product Manager team define and control the product? Or are they convinced that it is a function of the Marketing department? Whatever the answer to the culture question, it will mean a lot of changes to marketing, product development, service desk, platform development, etc. If your company is not willing to change the culture, the best way is to look for a framework that will reinforce current weaknesses and strengthen what is being done today.

Product Management & its strategic implications

Product management is a market-driven approach to develop and manage products or services:

• Defines what the product should be – is accountable to users for feature sets, navigation, quality, and overall experience

• Is a cross-functional discipline: involves strategy, product development and marketing

• Is accountable for overall product direction, key decisions, including in some cases full P&L control or at least budget control
  

• Ensures that the final product meets specifications

• Evangelizes product to internal and external stakeholders

The strategic implications of a robust Product Management function are many: from increasing the value of the company, understanding the customer today and in the future, ensuring that all possible revenue is being captured, guiding future product investments and controlling the current cost structure of the products, to name a few. For any organization, it is imperative that these and other issues are being taking care of in the Product Management function.