Friday, August 12, 2011

Let me give you the BOOT! - A real world pricing example.

So the other day I injured my calf and the doctor gave me this boot to wear. I originally had crutches but after fumbling around with them, I asked for a boot. So as I leave the doctors office and sign the paperwork I noticed that the boot costs $160 dollars. At first I thought "I should be in the boot making business! That's way too much for a bunch of velcro, foam, with a little bit of metal on the bottom"

But then the product manager in me asked the classic question "What value does this boot provide me and would I be willing to pay $160 for it?" We'll let's see here's the value that it provides:

  • Comfort - Way more comfortable that crutches
  • Prevents excruciating pain when bending ankle - That's pretty valuable, who likes pain?
  • Reduces Healing time - by preventing me from reinjuring myself I can get to normal fun activities much sooner
So now I thought to myself "Is the boot worth $160?" and the answer is YES! Also, if you wear glasses or contact lens, think about how much those cost to make vs. how much they charge.

I would also say that perceived value has an emotional side to it. Think about all those Apple fans who have an emotional relationship with their iPhone, iPod, MacBook,  etc. That increased emotional tie leads to higher perceived value which ties into a higher price. As you design your product, think about the emotion you want your customers to have!

Monday, August 8, 2011

Kanban - Some Open Questions?

So this topic has come up some here and there (I remember studying it a bit in my Supply Chain class) and I've been thinking about it and researching it a bit more and I have some open questions about it. So here you go:

Question #1 - Without a sprint commitment, what motivates the team?
The typical answer to this sounds like "The team is excited and aligned to the vision of the product owner so much that they will be motivated to see the team (and company) succeed". I agree...but without a commitment will they be as motivated? Let say for example, I join a gym that is $1 per month. If I go, then great, if not, then I've only lost a buck. Now let's say I join a gym that is $100 per month. If I don't go I'm wasting a lot of money and I'll either quit my membership or start going. The size of the commitment impacts how I act. With no commitment how will the team act?

Another way I started to think about this question was to go back to the roots of Kanban (manufacturing cars...learn more here). When manufacturing cars, a person will stand on assembly line and repeatedly perform the same task over and over again while the cars move down the assembly line. There is a key point here...each worker has a specified amount of time to perform very specific steps. That sounds very different than software development. Also, what motivates the assembly line worker will not necessarily motivate the software developer.

Question #2 - How can you understand your team's throughput when not every story is the same size?
Let's go back to another common question "How will you know if the team's performance is improving?" and the typically Kanban answer is that the amount of time per story will decrease thus increasing their throughput. But here is where I get confused...

Let's once again go back to the origin of Kanban building cars on an assembly line. The worker on an assembly line knows exactly what their task is and will always be and knows exactly how long it will take. That is not to say that improvements cannot be made to decrease the time it takes to perform a task, but rather that there is uniformity in the task. Compare this with software development where stories are introduced to the Kanban team. Some stories may be minor...and if a team gets a string of these stories in a row it will appear to the outside observer that the team is really performing since their throughput has increased. Now, suddenly they get some larger stories thrown in the mix and their throughput drops as the tackle these more difficult stories. Is the team performing poorly due to the non-uniform task size? Imagine if you will that same assembly line worker getting a 4 door family sedan and then a 2 door sports car, and then a 4 wheel drive truck and then the factory wonders why it takes they have a different throughput?

These are just some thoughts....Not sure if they are meaningful to the broader lean/kanban I welcome answers to the questions above! Please help! I definitely see Kanban's potential value and want to consider it more deeply, I'm just trying to answer a couple of questions, so go easy one me.

Thursday, August 4, 2011

Marketing and Schrodinger's Cat?

Being a former geek (and still trying to retain my geek credentials) I like to watch Through the Wormhole to help me live vicariously through these great scientists. So this is my attempt to combine 2 of my favorite subjects (physics and marketing) and somehow not alienate either the marketing folks who read this and the physics folks (assuming either marketing or physics folks read this blog)

On one of the recent shows they explain the famous Schrodinger's Cat paradox (for those that are unfamiliar with this paradox click here). In this case the cat is both alive and dead and you don't know what state the cat is in until you open the box.

This reminds me a lot of how some folks approach marketing. They don't know if their efforts and dollars are effective because until they "open the box" on the results. But many of them don't bother to even open the box and think that they are succeeding!

So this ends my poor attempt at comparing quantum mechanics and marketing...but for some reason I want to continue typing away.

So don't forget it isn't marketing unless you have a goal in mind at the beginning and that you measure yourself against that goal. After you measure your results you now know whether or not achieved your goal, but one question still remains...Why? Why did you achieve your goal? (which is different than "What did you do to achieve your goal?"). You have to think about both.

For example, let's say your goal is to get more paying customers and you determine the best way to measure that goal is to compare the number of paying customers you get this month vs. what you got last month and the same month 1 year ago. So far this is pretty easy! Let's say you decide that in order to achieve your goal you will:
  • Drive more people to the purchase page
  • Have a 1 month special discount
Great you now have your tactics down. At the end of the month you look at the numbers and you have achieved your desired results. You can point back to your tactics to help you answer the question about what you did to achieve your goal. Great! Now ask yourself why did more people visit the purchase page and why did they decide to purchase? What factors drove them to convert? Suddenly the answer is not as could be any one of the following:
  • The lower price
  • The features of your product 
  • Dissatisfaction with their current provider
 Or it could be any combination of the 3??

Once you understand the why it can impact your tactics in the future to help you refine your marketing.