Frank Lio: Practical Product Management, Marketing, Strategy, and Life
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Think Big & Act Small - 5 Lessons from Leslie Koch

6/26/2013

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1. Ask the right questions & listen.
  • People actually don’t listen – especially Marketing & Sales!
  • We don’t ask right questions. 
  • We don’t watch body language.

2. Get to understand the customer, product, and market (and be honest).
  • Who is using your product
  • Why are they using your product
  • Your strengths & weaknesses
  • Your competitors (it is more than direct competitors)
  • The larger market

3. Develop a strategy and stick to it (but ensure that your mother can understand it).
  • Avoid jargon and lingo – they automatically distance you from customers.
  • Ask yourself – do you actually understand what it is and is what you are doing maps to human behaviors that are comprehensible.
  • Everyone in your organization needs to know and act according to the strategy.

4. Think big and act small.
  • Get stuff done but ensure that it relates to your strategy.
  • Don't let planning get in the way of doing. 
  • Get something done everyday.

5. Marketing is All.
  • Marketing is like history, shopping – how you understand what motivates people to do something and how you organize your product, company, vision to map to how people work and think.

Listen. Ask the right questions. Understand. Get the little stuff done every day, and make sure what you're doing maps to the strategy you laid out.



Leslie Koch, President of the Trust for  Governors Island, is responsible for the planning, redevelopment and ongoing operation of Governors Island, a 172-acre island in New York Harbor. Originally an abandoned military base, she led the creation of a master plan for the island's park and public spaces - no small feat having to deal with multiple interests in New York City.

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Visualize Your Product Pricing and Value

6/20/2013

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Economic Value Analysis
Economic Value Analysis (EVA)
Customers will only buy your product or service if they:
  • understand the value that you offer
  • feel that they have a reasonable chance of receiving that value after purchase

Remember that customers do not buy features, they buy benefits – and they select a product or service based on the total value offered.

Paraphrasing & Quoting Wikipedia:
Value is the relationship between the consumer's perceived benefits versus perceived costs of receiving these benefits. It is often expressed as the equation:


Value = Benefits / Cost

The customers get benefits (e.g. productivity, additional revenue, labor savings, etc.) and assume costs (e.g. purchase price, implementation, training, maintenance). Value is subjective (i.e., a function of the customers’ estimation).

Quite simply, a business wins an order by convincing a customer that they provide more value than other businesses.  Customers, particularly those technically inclined, do not buy based on fluff and tend to rationalize any buying decisions.  I have heard too many product and marketing managers justify their pricing premium with broad statements such as “We’re the name brand”, “We have the best specs”, “We’re easy to use”.  Those statements and $2.50 will get you a ride on the NYC subway. Sounds like motherhood and apple pie.

You need to quantify for the customer and yourself what are the unique differentiators and the value that they bring to the customer versus the next best alternative.


Let's use a new car purchase as a simplified example:

You are looking at justifying the purchase of a Ferrari.
  • You consider the best alternative, e.g. a small Honda Civic compact car. This is your reference price.
  • A new Ferrari purchase will offer you faster commutes to work, fun weekends, less stress, ability to pick up good looking girls - things that the alternative compact car do not.
  • However, the Ferrari will cost you extra huge insurance premiums, premium gas, extra maintenance costs, and a private parking space so it won’t get keyed. These are the unique costs which are negatives.
What you end up doing is quantifying the net value of the new Ferrari purchase against the extra costs in comparison to the purchase of a Honda Civic.  
This is the basic idea of an Economic Value Analysis (EVA).

Economic Value Analysis (EVA)
By using an Economic Value Analysis (EVA), you can determine how much value you offer, how much more it costs a customer to work with you, and what your net positive unique value is to a customer.  Many of the values change depending on customer and marketing segmentation. An EVA avoids fluffy propositions and forces you to "put your money where your mouth is".  You attach a dollar value to each product feature/benefit to help quantify its worth to a customer.  You can also consider it as visualizing your pricing and value positioning.


For an EVA, you need to determine :
  • The Reference Price that a customer will compare your product pricing against. This can be a competitor’s price or the best alternative (which could be to maintain status quo and buy nothing - a price of "zero").
  • Total Differentiation Value – the gross sum of all the unique differentiation value that you bring. This could be cost savings, increased revenue, increased productivity, less rejects, etc. Use a common Unit of Measure to quantify this value and map this Unit of Measure to a metric that has meaning to the customer, e.g. a KPI (Key Performance Indicator) or cost.  You can attach a benefit and value to less tangible or concrete items such as Brand Name if it is meaningful to the customer. In the Ferrari example, one unit of measure may be satisfaction from use of the product.
  • Total Negative Differentiation Value – the unique costs of having your product and buying from you, e.g. maintenance, training, installation, warranty, disposables costs.
  • Net Unique Value - the positive differentiating value that you offer over the competitor or alternative after the unique costs of doing business with you are factored in.  This is your sweet spot, what you have to promote and base your pricing on.  This is what shows up on sole source bids.
         
 Net Unique value = Total Differentiation Value - Total Negative Differentiation Value
  • Economic value (EV) - the maximum amount a customer should be willing to pay, assuming that s/he is fully informed about the benefits of the product and the offerings of competitors.  A customer may believe that he/she is getting a fair price if your sell price is at or below the EV (getting more than what he/.she pays).
           EV = Reference Value + Net Unique Value

Determine the Economic Value before negotiating with your customers. An Economic Value Analysis will help you substantiate your net unique value in quantifiable units of measure that a customer cares about and will help justify your premium.

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To Be Creative & Productive - Stop Thinking About Bill

6/17/2013

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  • Do you wake up in the middle of the night thinking about things?
  • Do you often say "Oh yes, that reminds me to..."

To quote David Allen:
"Want to know one of the easiest ways to act on your creative ideas? Stop trying to hold them in your mind. Your mind is a great place to have ideas, but a terrible place to manage them."


As many of you know, I am a practitioner of David Allen's GTD system and I've used the following to illustrate life for most of us (I've always seen smiles and nods when I show this):
Picture
Picture
Here, we have Bill interrupt our thoughts at least 4 times... without a productive end result. It's natural and it's real.

So remember, your mind is for creating ideas, not to hold them. Get a system to organize your tasks and day - and stick to it...so you don't wake up and think about Bill at 2 AM in the morning.


The website 43Folders.com is a great introduction to GTD (Getting Things Done) or search this blog for earlier GTD articles.
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What My Dad Taught Me: Being Present & Mindfulness

6/4/2013

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Qualifies as fair use under United States copyright law
"There's a lot of beauty in ordinary things. Isn't that kind of the point?"
- Pam's final line in “The Office”

How many of us half-jokingly feel that we are in the movie “Groundhog Day”, repeating the same day over and over?  Do you sometimes just “go through the motions”? How often do you treat a person coming into your office, a phone conversation, or an email, as an interruption or just something to take care of? Have you ever been treated like an interruption?

I learned about awareness, being fully present and mindfulness from my dad - but not in the way most would think.  Life changed when my father was diagnosed with Parkinson’s Disease.  He knew that he had arthritis but we never told him about the Parkinson’s.  I could see that his steps were getting slower and smaller, getting up from the couch was increasingly more difficult, his speech more slurred, yet he always had his smile and laugh.  Each visit home was a chance to see and be with him one more time.  Dad tended to repeat his stories about his past.  He would regale about “the good old days”, being in the Merchant Marine, on British convoys being attacked by German subs, recalling the speed of the destroyers, working in Russia (“it was so cold that you can see your urine freeze as you pee'd”).  I would always laugh and ask questions so that he could talk more.  Someone suggested that I record the conversations for posterity but I just could not.  A part of me felt that listening to them later in life would be too painful; I also felt that no recording would ever be able to capture how special those moments were to me.  It was important for me to be fully present, to live the father-and-son moments.  I made an extra effort to imprint those conversations and our connection into my brain and my heart.  Perhaps that is why I can picture him on his couch right now looking at me, smiling and happily recounting his adventures.

Awareness, being present, mindfulness is the practice of paying attention to what is happening to you from moment to moment.  It’s the old phrase: “Stop and smell the roses”.  A manager at a major internet company sadly told me about her international travels – she hated it because all she ever saw were airports, hotels, and offices.


It’s also about respect and honor – for others and one’s self.  I learned the importance of seeing each person as worthy of my undivided time and attention.  I refuse to gaze over to a ringing phone or flashing PC calendar – the individual talking to me is the most important person to me at that moment.  It is a privilege not an interruption.  Managers (especially technical people) tend to try to solve the problem in mid-conversation, to interrupt and be impatient.  I learned not to be judgmental, to do what Stephen Covey calls “Seek first to understand, then to be understood”. The same applies at home. No matter how tired I am, I try to live the moment with my family trying to imprint the time reading with my boys or just going to the playground.

 It also means transparency and honesty, to only make those commitments that I can keep and to push back when I know that I cannot deliver.

“I've learned that people will forget what you said, people will forget what you did, but people will never forget how you made them feel.” ― Maya Angelou
Being present and mindfulness means taking the time to acknowledge, connect with others, to thank them, to touch base, to genuinely care about someone's family or something of importance to them, to show them that you value and appreciate them.  It's about thanking the cleaning lady and returning the shopping cart at the parking lot - all people at all levels.  These personal connections and conversations have led to better understanding and more productive and fulfilling relationships. Colleagues and customers have become friends and people whom I truly care about.

Finally, awareness, being present, and mindfulness means to be grateful for all you have received and to repay those who helped you in your journey.  Pay it forward by helping others through acts of kindness, good deeds and charity.

The character, Jim, in the final episode of "The Office" said: "I wish there was some way to know that you're in the good old days before you leave them."  
Try to be fully present, aware, and mindful.  What you are looking for is often already around you - you were too busy looking to see it.

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    Frank Lio is a Product Manager, Strategist, and Change Agent in the Hi-Tech industry. His growing track record of successes include creating 3 winning software products, leading nationwide seminars, and turning around a failing business unit.  He is currently serving a dual role as Product Manager and Business Team Support Manager at Instron ITW.

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