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Managing People & Processes
in Product & Innovation Companies
A NASSCOM Workshop
Mar 30, 2010 - Chennai
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About
• Bala Girisaballa
– Entrepreneur
– Advisor on business & go-to-market strategy
– Led CRM Product Strategy @ Oracle – Blogger / Speaker
www.linkedin.com/in/girisaballapardonthedust.blogspot.com 2© 2010 - Bala Girisab
alla
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Workshop Organization
Session 1
How Product Companies Differ From Service Companies
Session 2
The Role of People And Processes In Products
Session 3
People
Session 4Processes
Session 5
Case Study – Leadership in Software Development 3© 2010 - Bala Girisaballa
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• Please keep it interactive
• There will be “food for
thought” segments
• This presentation will be
made available after the
workshop (so save yourself the
effort of noting down)
• Use the provided
notepad for jotting
down comments
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PRODUCT COMPANIES:COMPARISON
Session 1:
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PRODUCT VS. SERVICES COMPANIES
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How Are Products Different From (Pure) Services?
C a s h F l o
w
Time
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What Differentiates Product Business?
• Higher gross margin
• Higher revenue multiplier
• Higher valuation• Higher risks
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Product Vs. Services Margins
Product Service
Revenue 100 100
Cost of Revenue 20 60
Gross Margin 80 40
Non-Direct Cost 40 20
Net Margin 40 20
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Product Evolution
Hardware
Time
Platforms
Applications
Services
Hardware
Embedded
Systems
Hardware
Independent
Systems
Platform
IndependentApplications
Application
Independent
Services
Technology Driven
Services Driven
(Soft IP : Business Models,
Processes, People)
(Hard IP: Technology, Code)
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Drivers For “Service”tization of Products
Causal force Impact Effect
Commoditization of products Falling license prices
Develop services/maintenance business
with higher margins and predictability.
Oracle
Availability of reliable,
affordable, ubiquitous high
speed internet connectivity
coupled with cheap hardware
Internet connected high
powered device explosion
Move from desktop to web basedapplication.
Rise of cloud computing Acceptability of data &processes on the internet
- Business model moving from license
based to utility/subscription based.
- IT investments moving from Capex toOpex for better alignment with business
growth.
Salesforce.com
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Drivers For “Service”tization of ProductsCausal force Impact Effect
Mainstream adoption of open
source software
Erosion of license fee based
model with open source
competing favorably on quality
and performance
Implementation and support
wrapped around free open
source software
Red Hat
Increasing cost and complexity
of IT
Hurts adoption particularly in the
SMB space
Bundled solution – which
included hardware, software andservice packaged together
(Tivo, phone)
Rampant and uncontrollable
piracy
License revenue erosion Subscription fee / Ad based
business models
Google, Yahoo
Popularity of Web services &
interoperable software
Ready-made integration &
software assembly becomes
critical
Move from “product” centric
approach to “solution” centric
approach
Widgets, Toolkits
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Nature of Product’s Services Revenue
0
50
100
150
200
Year 1 2 3 4 5 6 7 8 9 10
License Revenue Implementation Revenue Maintenance Rev
Year 1 2 3 4 5 6 7 8 9 10
License Revenue 100 100 100 100 100 100 100 100 100 100
Implementation
Revenue 100 130 155 155 155 155 155 155 155 155
Maintenance Rev 0 20 40 60 80 100 120 140 160 180
Assuming constant
License revenue,
maintenance (or
Subscription)
revenue stream is
incremental &
cumulative
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Product /
Technology
Configuration, Web
Services, SaaS, Open Source,
Bundled solution
Service
Value added
services, co-
innovation, design
outsourcing,
reusable toolkits
ServicesProducts
Servicetization of Products Productization of Service
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What do you think?
• Are they converging?
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Key Differences
Still Exist!
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People Process
TechnologyMarkets17© 2010 - Bala Girisaballa
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People Process
TechnologyMarkets18© 2010 - Bala Girisaballa
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Service Companies Product Companies
People
Process
Technology
Market
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After Break : Session 2
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Rigid Performance Metrics Soft Performance Metrics
Service Companies Product Companies
People
Process & Delivery Focus Initiative Focus
Skill Based Learning Based
Functional Cross-Functional
Within-The-Box Outside-The-Box
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Clear Specs; strong change
control
Fluid specs; flexible change
control
Service Companies Product Companies
People
Waterfall Agile
Project Management Product Management
Risk Control Risk Selection
Process
Execution Efficient Innovation Efficient
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Technology Stack Dictated Choice of Technology
Service Companies Product Companies
People
Rigid Technology Adoption Flexible & Evolving Technology
Rigid Technology CostsHighly Variable Technology
Cost
Software Reusability is a
Byproduct
Designed for Software
Reusability
Process Technology
Insulated From Obsolescence High Obsolescence Risk
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Customer Pays For CodeCustomer Pays For
Functionality
Service Companies Product Companies
People
Strong Internal Alignment Strong Market Alignment
Requirement Are SacrosanctRequirements Must Be
Challenged
Build To Order Build To Demand
Process Technology Market
Linear But Predictable GrowthExponential But Unpredictable
Growth
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There’s More…
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Ownership
Products fail not because of the questions askedbut because of the questions not asked
Products do not succeed because people met their SLAs
They do because people didn’t care about them
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Risk
Products succeed not because your people didn’t failbut because they failed internally many times before going to the market
Make mistakes
but learn to fix them before market notices you
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Adaptability
The only customer paying for stupidity is You!
If you think you found the perfect solution, you are wrong.
Innovation is going from a more imperfect solution to a less
imperfect solution
Sometimes innovation is in following what others do
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In a service company, at least the customer gets billed.
In a product company, you don’t have that luck!
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Solution?
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Process
Alignment
Product
People
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Questions..
• How do you see alignmentin your organization?
• Do you rate yourgroup/organization aspeople centric or processcentric?
• Do the team members havemarket visibility?
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After Break : Session 3 - People
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Session 2:
People
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Critical People Skills
-Communication
-Co-ordination
-Independent thinking
-Analytical
-“Big Picture” thinking-Cross functional sensitivity
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How Does a Product Team Organize?
• Non-hierarchical
• Self-regulating
• Market oriented
• Cross-functional
• Problem oriented
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Non-Hierarchical Team
• Mix of experience levels
• Mix of domain expertise with technical depth
• Clearly defined Functional Roles
• Self-sufficient
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Self-Regulating Team
• Strong peer reviews
• Benchmark performance against industry
standards
• Measure performance based on market
position/ results
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Market-Oriented Team
• Measure performance based on market
position/ results
• Feature costing against revenue upside
• Feature mapping to customer problem
• Creative solutions – building feature is the last
option
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Cross-Functional Team
• Functional experts leading complementaryaspects of product development
– Design / Architecture
– Product management – Development/delivery
– Testing
– Release
– Security• Holistic view of the product & how it fits in the
internal ecosystem and external ecosystem
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Problem-Oriented Team
• Feature mapping to customer problem
• Creative solutions – building feature is the lastoption
• Cost of a feature = – Design (x)
– Development (3x)
– Integration (5x) – Release (7x)
– Support (10x)
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Th C F ti l P d t T
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Product
ManagementProduct
Development
QA
Security
Marketi
ngSales
Architec
ture
Board
Technol
ogy
Foundat
ion
Release
The Cross-Functional Product Team
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TALENT MANAGEMENT
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Success = Intelligence + Access
Increasing
Organizational
Talent
Maturity
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Defining Competencies
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Defining Competencies
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Behavioral Styles
AnalyticalThinking
Past
DriverAction
Present
AmiableRelationship
Empathetic
ExpressiveIntuition
Future
Tell
Control
Ask
Emote
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PEOPLE & ROLES
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Role: Product Management
• Product Management is a unique discipline – Strategic
– Technical
– Business
– Evangelistic• Few high-level executives truly understand the role
• PM’s get pulled into other roles based on need orincompetence of existing personnel
• PM need, impact and success is dependent oncompany size and leadership
• Managing expectations is key to a successful PM career
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Product Management Role
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Prod Mgmt : Engg Interface
• Engineering sees Product Management as ProjectManagement – Coordinating engineering meetings
– Note taking
– Issue Management – Tactical, not strategic
• PM should focus on “release management”
– Whole product definition
– Packaging
– Licensing/Pricing
– Coordination of Product Availability (service, support, salesreadiness, etc.)
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Prod Mgmt : Sales Interface
• Sales Engineering/Pre-sales either lacksknowledge or skill to support sales
– Product Management is tapped to fill the void
– The more PM steps in the more Sales will ask for PMassistance
– The more PM steps up the less PM they do
• PM should visit customers regularly
– Not to sell, but to gather usage scenarios – Identify customer requirements and to set priorities
for new product development
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Prod Mgmt : Marketing Interface
• Is there a problem with a blended role? – No, but the skill sets are quite different
• Common in early and mid-stage ventures
• Requires an extrovert personality• More tactical and creative (from a promotional
perspective)
• Closer to a sales personality than engineering
• Must like trade shows, speaking in public anddemos
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Software Development Interfaces
• Architecture Board
– How does it fit in with internal ecosystem
– Browser, client baselining
– Translation / Localization considerations
– Security considerations
• Technology Foundation
– Reusable components evaluation
– Techstack baselining
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Software Development Function :
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Software Development Function :
Caveats
• Less Geek, more business thinking required• Discipline to stick to technology & process
compliance
• Ability to challenge requirements
• Remember that there’s many than one way toskin a cat
• Remember that market drives product and notthe other way around
• Remember that a “bad feature” is far worse than“no feature”
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Role: QA
• Unique aspects of QA – Validation of business requirements
– Developing real life use cases
– Role playing customers – Why was this built?
– For who is this built?
– User training considerations
– User experience considerations
– Feature usage frequency considerations
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QA Interfaces
• Security
– Application security considerations
– Network security consideration
– Secure coding compliance
• Release
– Software configuration considerations
– Integration
– Regression testing
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QA Function: Caveats
• Should be the product gate keeper
• Remember to challenge (and not second
fiddle) product management
• Should go beyond functional testing – focus
on negative testing (security, performance)
• Need to be more skilled in technology,
performance, security, benchmarking issues
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The Role of HR
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The Role of HR
PeopleProcesses
Future / Strategic Focus
Day to Day Operational Focus
Strategic Partner • Strategic HR Planning• HR as Business Partner• Culture and Image
Change Agent • Staffing• Organizational design• Survey action planning• Performance measurement• Training and development
Employee Relations Expert • Employee relations• Labor relations
• Safety & workers’ compensation• Diversity and EEO
Administrative Expert • Compensation• Benefits
• HR information systems• Compliance
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Questions..• How would you describe your
product team today?
• Can a dev manager double up as
product manager? If so, when?
• List some areas of tensions
between PM, Dev, QA & any other
function
• What are the critical factors for
building confidence & respect
among cross-functional team
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People Summary
• Product teams are highly cross-functional,non-hierarchic, competency based & marketoriented
• People within cross-functional team do gothrough healthy mix of respect and tensionwhich must be channelized appropriately
• Tensions arise due to the self-regulatingnature of the team organization as well ascross-functional sensitivity issues
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After Break : Session 3 - Process
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After Break : Session 3 Process
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Session 3:
Process
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“It is not the strongest of the
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Charles Darwin, “On the Origin of theSpecies by Natural Selection”, 1859
It is not the strongest of the
species that survive,
nor the most intelligent,
but rather the one most
responsive to change.”
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Process orientation
M a r k e
t o r i e n t a t i o n
Fluid Rigid
Problem
oriented
Disciplined
Feature
oriented
Customer
Oriented
Right Balance
Lags MarketDOA
Custom
Software
C-Sat Issues
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Hierarchical
Teams
Cooperation
WorkflowsCoordination
Incoherent Coherent
Ambition
Trust
Confidence
Acceptance
Distrust
ResentmentResignation
Cynicism
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Role of Processes
• Processes arenecessary evils
• They are typically
aligned with hierarchy
• To be effective, theyshould be aligned withfunctions &relationships
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Software Development Methodologies
• Waterfall
– Traditional
– Mostly linear with some scope for iteration
– Effective for large organizations
– Leads to large development lifecycle (design to
launch can be between 6 months – 2 yrs)
– Effective for complex, large, integrated software
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Software Development Methodology
• Agile
– As the name suggests – built for flexibility &
adaptability
– Smaller Iterations – Effective for smaller, co-located teams
– Shrinks development lifecycle (2 weeks – 4 weeks)
– Based on building incremental feature set – Effective for applications that can be incrementally
built & maintained
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Tools Used
• Document mgmt
• Version control
• Bug tracking
• Project mgmt
• Wiki
• Host of other development tools
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Low
High
Decentralized Centralized
SmallerOrganizations
Large
Organizations
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Low
High
Decentralized Centralized
•Agile
•Low Code
Reuse
•Waterfall
•High Code
Reuse
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P A R i d
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Processes Are Required
• Ensure right person is doing the right role
• Streamline repetitive tasks
• Organize priorities
• Strategic decisions are top-down
• Execution decisions are bottom-up
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P C
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Process Caveats
• Mature products require stronger process forchange management
• Nascent products require stronger process for
market validation
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C ifi i i P d C i
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Certifications in Product Companies
• Certifications – ISO
– CMM
– PCI
– Other industry cert
• Drivers
– Product acceptability
– Hygiene factor – Brand image
– Industry drivers
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TYING IT ALL TOGETHER
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Market
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Right People Right Process Right Products
Technology87© 2010 - Bala Girisaballa
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People
• Need to be cathedral builders!
– Empowered
– Entrepreneurial
– Enthusiastic
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Questions?
www.linkedin.com/in/girisaballa
pardonthedust.blogspot.com90© 2010 - Bala Girisaballa
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Case Study
• Leadership in Software Development
– Mary Poppendieck, Google