An effective product plan is designed to ensure that a new product delivers business value to a specific set of customers and meets certain financial goals. It describes the market opportunity, profiles target customers, specifies pricing, identifies financial goals and indicates key priorities for development and enhancement. Finally, it provides a roadmap for delivery for at least the next four quarters.
A comprehensive market requirements document might serve as the product plan for a new product. But the product plan should be updated annually for each product that continues to be offered to customers. Successive plans should focus on increasing that product’s effectiveness.
Product management creates a list of potential enhancements for the plan by soliciting customer feedback, speaking with sales teams, obtaining a list of the top technical support issues, surveying competitor features and getting new ideas from the market. After that, project prioritization typically occurs due to limited development resources.
Many companies apply an arbitrary prioritization scheme based on the perceived number of times a feature or product has been requested or how much revenue they think it can generate. The product team may also make assumptions about value based on how it thinks the product should be used. The team then creates a roadmap and release schedule using these priorities and voila, the product plan is done, right?
No, the product plan isn’t complete because the company’s strategy hasn’t yet been considered. So far, it’s merely a reaction to a somewhat random set of market facts and events. How exactly does the corporate strategy relate to the roadmap? The goal of almost any technology company is to increase revenues. Without a strategy to indicate how the company plans to increase revenue, almost any product plan could arguably help the company achieve its goal. But if the corporate strategy specifies how to generate new revenue, you can develop a product plan tailored to supporting that strategy.
For instance, your company could plan to grow revenue in a number of ways: by selling the flagship product in new geographic regions; establishing a new reseller channel; enhancing existing products to appeal to a wider base of customers; or developing new products that appeal to the existing customer base. Each decision carries significant implications for the product plan.
Selling in new geographic regions requires local language support and other specific regional requirements. Selling through a reseller channel requires multi-tier administration and branding. Enhancing products to appeal to a wider customer base involves profiling new customers to understand their unique needs and requirements. And finally, developing new products requires new analysis, requirements, design and development work.
Each strategy results in a different prioritization of projects and a different allocation of resources. The previously created product plan is reactionary and haphazard, while the product plan that responds to corporate strategy is directed and intentional.
The Strategic Planning Process
So let’s take a look at what an end-to-end product planning cycle might look like when integrated with the company’s strategic planning cycle. If a company resets its corporate strategy, financial plans and product plans once per year, the planning process ideally occurs during the fiscal year’s third and fourth quarters in preparation for the upcoming year.
There are five basic steps in the planning process:
- Market review
- Financial review
- Corporate strategy
- Product strategy
- Product roadmap and release schedules
First, the product team presents a market review to executive management, sharing facts on market trends and opportunities, key customer needs, and competitor moves and positions. Although the product group keeps tabs on many of these items throughout the year, this is the opportunity to update information to ensure it’s complete and current. Other functions may be invited to provide their perspectives on the market and customers as well.
During the financial review, the finance organization presents results on the financial performance for the overall company, each sales channel and each product. Providing revenue and profitability by product is critical to making sound product decisions and developing effective strategies.
Next, the executive team outlines its corporate strategy, focusing on vision, financial goals and a plan to achieve those goals. The corporate strategy should be explicitly presented to the product management team to facilitate development of a product strategy.
The product team then develops its product strategy taking into account market dynamics, customer needs, financial goals and corporate strategy. It specifies the product changes that are needed and indicates the financial plan for each product area. Before proceeding to the next step, the executive team should review the product strategy to ensure alignment with the corporate strategy.
The final step involves developing a product roadmap and more detailed release plans for the coming quarters that are consistent with the product strategy. This roadmap becomes the official “product plan of record” and should be managed with formal change control procedures. This step is executed at the conclusion of the annual planning cycle and is repeated every three or four months—pending executive management approval—to respond to changing market conditions and deployment schedules.
The success of a product or services technology company is determined by the success of its products. Effective product plans address market and customer needs and support the company’s growth strategy. Creating effective product plans can only be accomplished if there is strong communication between the product and executive teams. The product team must clearly understand the company’s objectives in order to create product strategies and roadmaps that achieve them.