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There was an article in from Entrepreneur.com entitled “What Not to Do.” I was intrigued by it because it was about the most common mistakes that start-ups make and how to avoid them, plus a few other things that one could do to ensure the success of your business. The Author, Mark Henricks described his entrepreneurial style and shared his list of 17 mistakes.
After I read the article, I couldn’t help but smile. If we espouse that the product manager is the ‘mini-ceo’ and is the leader of a cross-functional product team, why would this be any different than that of any entrepreneur?
The mistakes that are articulated in the article reflect the very things that contribute to the success or failure of any product or service concept. Whether you’re in a start-up or in a large corporation, you’re concerned with making sure that you’ve done your homework before deciding to create and launch a product and that once you’ve launched the product, that you’re prepared to manage it like an on-going business.
Some companies may even do a good job of defining products for appropriately targeted markets, but once the product is launched, the team goes onto the next product update without emphasizing the optimization of the product or products they’ve launched.
One of the mistakes Mr. Henricks found is that companies don’t spend enough time researching the business idea to see if it’s viable. We have observed this behavior for many years. Larger organizations have so many different product and project ideas, that they often go on what they feel the market needs, or what the engineering community thinks is right, but don’t do enough homework to validate assumptions.
Furthermore, they miscalculate the size of the market and the potential share of the market. They create volume and revenue forecasts that are completely unrealistic. I recall attending many venture capital presentations given by a host of series of start-ups and hearing how a given company would have their development completed within months and that an army of sales people would be just writing orders hand over fist, and that the company would have 50% market share in less than a year.
There was no mention of how long it would take to hire and train those people or whether the product would actually be ready for launch, or any of those trivial launch planning details — which brings us to the third, fourth, and fifth mistakes cited, and that is that companies underestimate financial requirements, over-project sales, volume, and timing, and make cost estimates that are too low. Therefore, all of the errors thus far seem to coalesce into one morass of poor product and market planning.
The one that really stands out though, is the one where he cites that some neglect to manage the entire company as a whole. If there is anything that product managers can learn from this is that products are like small businesses. They require a miniature
Board of Directors (the cross-functional team), and that their charter should be to optimize the performance of the products and services.
The holistic approach considers all factors in the management of the firm. Things like understanding the strategies, product and portfolio plans, internal capabilities, resources and technologies of the enterprise.
Some of the other important mistakes expressed can be grouped into focus and vision.
Companies often get so wrapped up in so many conflicting and changing priorities that they forget the simple dimension of ‘vision’ because they get distracted. The product team, if appropriately empowered, should be making the decisions for the business.
If the CEO of the firm wants to please one customer and the Sales VP’s want to promise other things and the R&D heads want to push their new platforms, then it’s easy to lose focus. This is why we believe so strongly in the work structure called the cross-functional team. Properly endorsed and supported by upper management, and staffed with those who can work together on behalf of the business, have a better chance of introducing and managing successful products and services.
Within the article mentioned above, are a few tips that are suggested by Peter Russo, director of Boston University’s Entrepreneurial Management Institute.
Within the context of the article, he suggests:
1) Know your goals (for the venture)
2) Recruit and hire the best people
3) Develop a forgiving strategy
4) Be honest with yourself
5) Commit to the business
If you are a product manager, or you’re supporting a Product Management organization, wouldn’t you want to adopt some of these values?
We have a lot to learn from people who have started businesses, succeeded, and failed, and we have much to do to bring about the right changes to our organizations to instill the Product Management function as the critical centerpiece of business success.