The Product Operations Manifesto, and why you should Reverse Egg-ineer your Ideal Customer Profile
I was recently speaking to a company leader suffering from a disconnect between their idea of the product strategy and their Head of Product’s idea of the product strategy. This is, of course, not an uncommon concern from ambitious Heads of Product, who want to be the Alpha and Omega of their product strategy, fully empowered and immune to the whims of HIPPOs.
I was a little curious as to what the state of play was out there in the wild so, as ever, I ran a poll.
I felt a bit sad looking at the 18.5% “All delivery, all the time”, although actually surprised it wasn’t a little higher. I also felt equally sad looking at “100% me”, because that doesn’t feel quite right either! For me, the perfect spot is “Mostly me, with input” - i.e. the product manager is ultimately responsible for driving the product vision and strategy, but with substantial input from business stakeholders. Hopefully, over time, we can push that 32% up!
A message from our sponsor
Yes, yes, I’m sponsoring myself again but, hey, my kids need to eat. As you probably know, I've moved into freelance coaching and consulting for B2B product companies. I want to help your company, your team and your... well, you, get better at product management. If you want to chat with me about what I can do for you, why not head over to book a call with me? We can discuss your needs and how I can help.
New Podcast Episode: Achieving Product Excellence with the Product Operations Manifesto
I finally released a new podcast episode! It’s a good one too - I spoke with Antonia Landi, a Product Operations coach and consultant, all about… well, Product Operations. We went deep into the philosophy of Product Operations, how companies might know when they need a Product Ops team, and why she felt it was important to co-create the Product Operations Manifesto.
Check out the episode on your favourite podcast app, or get it right here.
Product Ops is not the revenge of project managers & "process people"
There are some crossovers with agile coaching, project & programme management but we should also reclaim the word "process"… process isn’t always bad - it just needs to serve you, not the other way around.
Reverse egg-ineering your Ideal Customer Profile - How and Why?
I got this question in a coaching session recently:
“We started out selling to anyone we could, which means we’ve got a dispersed set of customers and we don’t know who we’re building for anymore. We don’t know what to prioritise or what our positioning is”.
This is the problem of revenue debt, which I’ve spoken about before. You’ve grown organically and you never had much of a strategy beyond the next set of opportunities that came up. You’ve now got loads of totally different types of customers, and it’s quite likely your product doesn’t serve any of their needs as well as it could.
As we chatted this through during the coaching session, I did some doodling to try to explain how to approach this from a product management side. I ended up with an egg. I’m going to try not to labour the analogy but, I promise you, this is no yolk.
The Quiz Question
Let’s start with a quiz question. You can ask yourself this, but it’d also be interesting to ask as many of your colleagues as you can:
“If we absolutely had to focus on one customer segment from today, which would it be?”
(Warning: Some people will get pretty sensitive about this question and think that you’re trying to mount a coup - try to pre-empt this and reassure them with whatever words you can).
Aggregate the results and see how much uniformity there is, or if there are wide swings between teams, or even within them. You might expect to find the Sales team most divergent here, as they may be tasked with (and bonused on) selling to different sectors. But, overall, this is a fantastic temperature check to see how aligned your company is around who its best customers are.
Why do we need an ICP?
Your Ideal Customer Profile (ICP) represents the segment of a market that is expected to contain your best customers. This segment contains customers that have enough characteristics to have broadly similar needs. A product that works for one customer in the ICP is likely to work well for another. Messaging and selling are (in theory) easier because they all talk the same language and have very similar pain points and jobs to be done.
Now, the classic Crossing the Chasm advice is that startups need to start out hyper-focused on as small a niche as they can. It’s easier for them to build for that niche, and it’s easier to own a smaller segment than a larger one. You can get really, really good and become a leader within your niche and you’ll end up with a great, proven product that you can then expand horizontally or vertically.
This is a great idea, but your company has too much revenue debt, and 25 totally different customer segments that you’re selling to at once. It’s too late to start from scratch.
Retro-fitting your ICP
So, we have to work backwards. How? Well, we need to look at the data. What data? All of it!
Hopefully, your company has a lot of data on its customers. Given that you have so many different types of customers and so many different use cases and problems to solve for them, you need to get a hold of data to work out who your best-fit customers within your current and potential customer base are.
You can get CRM data, helpdesk data, finance data, product development data, market data, and any other relevant data. Your goal is to try to work out things like:
Sales cycle length
Annual contract value (ACV)
Amount of professional services/implementation required
Amount of costly custom feature requests
… and any other data that contributes to lifetime value (LTV) for your company
Slicing it up
You’ve got the data, so now start slicing it. If you’re B2B, you’re slicing based on firmographics, not demographics. Explore your data!
Some easy things to start with:
Company size (people)
Company status (private sector, public/governmental etc)
… and whatever else is interesting based on your past performance in the market
You may find that there are some interesting intersections in there. You’re looking to find the smallest contiguous segment you can that has the perfect combination of attributes to make them look like a winner for your company and your product.
OK, but now what? (or… back to the egg)
Well, the first thing you need to do is get broad alignment from your company’s leadership team so that they’re prepared to focus and target their efforts. You don’t need permission to run the analysis, but actioning it requires some hearts and minds work. You’ve got the data, so now you have to sell it. As with selling any type of change, the first step is to get the leadership team to admit that there’s a problem with the current approach in the first place. If they don’t even agree with that, they’re not going to change anything.
If there is an appetite for change, work with your commercial leadership to get agreement on the following principles:
The Yolk - This is where all product initiatives and strategic efforts will be focused. These are the customers we are actively trying to sell and market to.
The White - These are the customers that can get some value out of our solution. We will not prioritise their requests, nor actively sell to them, but we’ll take inbound as long as they can take the solution as is.
The Frying Pan - These customers are more trouble than they’re worth and will most likely be happier with an alternative solution. We will not put any effort into these customers at all, and will actively qualify them out of the sales process early.
There may be several rounds of negotiation. You might have to stretch your definition of “Ideal”, but hopefully you can come to some kind of agreement and focus everyone’s efforts going forwards. Also, don’t be afraid to use this initial analysis as a precursor to some more in-depth analysis - i.e. this ICP may only be a first shot. It’s still incredibly valuable.
What next? Never rest on your laurels
When talking about Product/Market Fit, people often obsess over the product part, but markets change too. You need to do a periodic review of the same data that fed your initial analysis and keep on top of performance. You need to keep an eye on the market as a whole. Previously unappetising segments may represent a huge opportunity. Some of your former ideal customers might have started to drop away. The most important thing is to be intentional, and not sleepwalk into anything.
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Wrapping up, and a couple of book recommendations
Here are a couple of books I read recently that I recommend you read too!
User Story Mapping - by Jeff Patton. I’ve read this before but I had another go to make sure I didn’t miss anything. It’s a great book to provoke the right kinds of conversations about what to build, who to build it for, and how to build it.
Forget the Funnel - Georgiana Laudi & Claire Suellentrop. A new book about moving away from traditional marketing funnel metrics (because customers don’t care where they are in your funnel) and moving towards Customer-Led Growth. Very Jobs-to-be-Done, and resonated a lot with me.
Writing this newsletter is fun, and I love to give stuff away for free. But, if you want to buy me a coffee, you can always buy me a coffee. In any case, if you enjoyed this issue, please share it with your friends!