Over the years in the job, I too picked up the language and started “accepting” those rules about the domain that nobody questioned. But we’ve seen time and time again that a new player will challenge old notions about a domain and transform it forever. Isn’t that what product managers are supposed to be doing? Shouldn’t we be trying to revolutionize our markets and make it better for the end users and bring in profits. How is it that a new comer is able to do this – repeatedly, in different domains? This led me to wonder what domain expertise really brings to the table.

Value-adds of domain experts

Domain experts definitely have an edge over new comers because of the following:

• They are aware of pit-falls that the new comers should experience. It is very rare that new comers get lucky and avoid pit-falls.
• They can quickly get a “sense” of where something is heading. This is because they can pick up on cues much quicker than new comers. Most of the time they’ll be right.
• With today’s expectation of quick decision making with limited information, it is the domain experts who can stand up and make those quick decisions with confidence.
• They can assess new information quickly. The human brain has the ability to keep getting better at remembering and recalling as more information is added. This is opposite to what databases can do. As more information is added to a database, its performance keeps deteriorating.

Where domain experts can go wrong

Sometimes all this expertise can blind-sight a domain expert to ignore signs of change or to jump too quickly to a conclusion.

• Domain experts tend to assume they are right and will not investigate all areas completely. They would be right most of the time, but its the one odd mistake that can give the competitor the needed edge.
• They tend to fall into self-fulfilling cycles, where they support data that seems to make the domain experts look better and this makes them again think they are experts and so on. Till of course someone comes along and dislodges them.
• Looking at a narrow field, they are not able to bring innovations from other fields into this field. That’s why we see so much opportunity in traditional businesses that have not adopted new technology. Use the same technology in different domains.
• Sometimes domain experts dont like change and will resist transforming their work and habits. This is one of the weak areas, in my opinion, that is most prone to attack from new comers, since new comers are coming in from a different mindset, they will gladly explore all options and choose the best.

Market realities

Over the years, I have come to believe that there are some market realities which need to be understood, acknowledged and incorporated into business and strategy planning. Whether you like it or not, the domain (or market) has some underlying power laws and if you learn and understand those, you can create and execute better strategies. So below I’ll list out points where I feel domain expertise comes in:

• No one knows how the market will play out. Not even the domain experts. Sure, they may make a better guess, but listening to domain experts on predictions is definitely not the way to go, in my opinion. Always trust only data, and understand that conclusions from old data could have changed. We live today, and we need to understand what’s happening now in the market.
• Every domain is different from another, but has some unique characteristics. Domain experts can sense those or they already know those. Try to respect that knowledge. If a domain expert feels odd about a situation, there’s good reason for it. You might get away with ignoring a warning once or twice, but domain experts definitely are reading real cues in the market. Its another thing to extrapolate predictions based on these cues, but definitely pay attention to their assessment of strategy.
• While innovations may be quick in any domain, the momentum is slow. Big changes happen over time and with a lot of push. Consumers will adopt and adapt slowly. The market will cautiously react. Innovations coming too quickly will just flash out of the market. So domain experts will get a good sense of the change to come, if they are willing to see it openly and are given the freedom to do so.
• Patterns are everywhere. Some patterns occur within a domain very repeatedly and some across domains. Experts have learned to identify these patterns. Given access to data, they can find these patterns.

What works best

So in the end, what works? Where should domain experts come in and when should they allow change to step in.

• Domain experts should be valued for their insights about the domain and their understanding of the power laws of the domain.
• An interplay between domain experts and innovators from other domains should be encouraged where the domain experts give their assessment and thought processes.
• Do not expect domain experts to validate a strategy by ensuring one outcome or another. Then you get into a blame game when the outcome isn’t what was expected.
• Domain experts should allow new comers to express their ideas fully and then assess them and try to enrich those ideas with their own understanding and maturity. Of course I’m not suggesting that domain experts can’t innovate, but that how domain experts should handle ideas coming in from people from other domains.
• Domain experts must spend some time getting exposed to other domains. Not allied domains, or hobby domains. I’m talking about getting exposed to different domains that may not have any relation to the domain expert or the company or the business. Interplay of thoughts and ideas helps innovation. Domain experts can very quickly generate valuable ideas if they start exploring new avenues.

When you’re new to the domain you have to explore your ideas, get them vetted by a domain expert but dont stop dreaming and trying. If you can try and learn quickly you can transform the domain. Don’t settle with what the domain expert says if you feel he is wrong. It’s better to try and learn something than to assume that the domain expert was right and discard your ideas. But when you try and it turns out the domain expert was right (which I think will happen a lot if you ignore his opinion), be prepared to take the hit and move to the next idea. Good learning comes by working on things directly, not trying to follow a set of rules or guidelines set by someone else. So there is a balance between where you need to consult the expert and where you need to experiment and that balance will depend on how much you are willing to risk on the experiment. If you can keep that in a practical limit, then you will be able to explore domains quickly and ensure that you can maintain a strong hold on the domains you are holding.

1. We don’t have much time to iterate
2. We don’t have large budgets to spend
3. We still need to find that “market” and get there before our competitors

In such an environment, it looks like the odds are stacked up against the poor product manager. But, there are some positives we can bank on since we’re focusing specifically on new products and web based products.

1. You dont have to launch with a “final” product. You can launch with a BETA and iterate. So think of doing things like consumer’s price sensitivity, willingness to pay price, alliances, and so on after the initial launch.
2. Knowing the direction is more important than knowing the destination at this point. Now I know a lot of people will argue that as a product manager you need to have a clear vision of the goal. I am not going against that. All I’m saying is, focus on the direction and validate, validate, validate that versus trying to determine specifics of the destination you want to reach. You must have a goal, but I would spend 70% of my budget validating the direction than trying to focus on revenue generation at this point.
3. If it is a new product, consumers will not likely be able to tell you much. So don’t waste money on product surveys.

So at this point the primary goal of the product manager is to establish that a market exists and hopefully size it.

Time for market research

If you’re contemplating on primary market research, then you should have already done a fair bit of secondary market research. So we’ll move on assuming you have a defined market research problem you want to tackle. Lets take an example. Company A is in the online advertising business and wondering if it should introduce a new product aimed at individuals and small businesses for the local search market. The reason company A is doing this is, revenues are dominated by few customers who are gaining in bargaining power and of course competition is growing. So company A wants to (a) leverage the long tail of internet advertising and (b) get into a network effect business where it can dominate.

This is a great strategy for company A, provided there is a market for local advertising. Note: I’m talking about the Indian market here. I know a lot of folks will say Google is trying the same thing in US so obviously they’ve done their home work and there is a market for it.

Define the market research problem in detail

Professional market research agencies are experienced in iteratively working with product managers to define a concrete market research problem. But, they’re expensive, so we will need to define our market research problem in more detail ourselves. The market research problem for this example would be something like this:

Is there a market:

• What need / gap are we addressing?
• How is that need / gap currently addressed?
• What features do consumers want most?
• What are the alternatives?
• What are product consumption habits for alternatives?
• How do consumers evaluate alternatives?
• How would consumers evaluate proposed features?
• How much do alternatives cost (in time and money)?

Is the market viable:

• Are our features as good / better than alternatives?
• What is the switching cost?

What i’m suggesting is that do not try to go overboard with numbers. Try to get a sense of where the market is and validate that you’re moving towards that market.

Hiring a team

Now the trick here is to hire students, interns, a small company, etc that will not require a big budget. But armed with a specific research problem definition and trying to gauge direction, they will more easily be able to gather the required data. I had originally intending this post to be longer, but I’ll cut it short here. Will try to revisit this topic at a later time.

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Well, we gotta do these things to get noticed.

Products

• GoToMyPC – for remotely accessing your own PC.
• GoToMeeting, GoToWebinar, GoToTraining – for conducting web conferencing, inviting audiences and presenting collaboratively.
• GoToAssist – remote support solution where a support staff can remotely take control of the user’s PC and fix any problems. A unique feature here is that the support staff can log in at night without the user required to be present.
• GoView – this is a new addition to their product line and focuses on recording and sharing screencasts.
• HiDef Conferencing – hi definition conferencing

Traffic details

• Of all the products in their suite, GoToMeeting has by far been the largest in terms of users, pageviews and reach. My view is this is because the invitees who have to attend the meeting are directed to this site to login. Still, it presents a good cross-selling opportunity.
• Also I noticed that the traffic was very spiky. I have listened to podcasts from Audible and they are sponsored by Citrix Online. So it looks like advertising is bringing in a lot of traffic.
• Two noticeable growths in traffic are (1) Growth in Jan 2010 – could be because they launched a combined suite of applications along with HiDef conferencing and (2) Large growth in Mar 2010 – undoubtedly due to their launch of an iPad app.
• Pageviews / user was very consistent – possibly because it is largely dominated by invitees to meetings.
• Only 6% of traffic is from search but if you look at the search patterns from Google there are clearly a lot of search opportunities.

Search trend from Google

• Also see the growth rate of the term “webinar” in the last 2 years.

Webinar growth

• Also, the traffic for “remote desktop” is larger than both of these and there is significant searches for this term in India. Maybe the offshoring or outsourcing companies are looking for a solution.

Product review

The product is rated well on Ease of use, No installation required, pricing package (unlimited for a fee) is good, Cost is acceptable, Meeting buttons are incorporated into Outlook, etc and the meeting is recorded for viewing later. These features make this a good product that satisfies user needs.

On the negative rating, the computer needs to be kept on even when the user is not present at the computer. The files are not synced and hosted online so that market is slowly eating into this market since they have started providing collaboration and sharing capabilities which are pretty good.

Market outlook

Finally I would like to end with the opportunities and threats for Citrix Online and the market forecast for this industry.

Market forecast:

This is from Wainhouse market research.

Opportunities and threats:

• Tablet PCs and smart phones: With the expected growth of tablet PCs, there is going to be a big opportunity for webinars and remote meetings. Citrix Online has already started to capitalize on this with the launch of their Apple iPad app, which has shown a good growth. Smartphones too will allow people to attend remote meetings and take their work where they go and tools like this will benefit from that demand.
• Integration with TV: With players like Boxee, Apple TV and Google TV trying to bring the web to the TV, it provides an ideal platform for Citrix Online to extend their services to the TV. So you would be able to watch the training or the presentation on your 40″ plasma HDTV with surround sound. Wonder if that would make me want to remotely tune in over being physically present in the meeting
• Tap into India: The web search traffic for “remote desktop” in India is huge. This shows there is a real demand for services offered by Citrix Online. Also, the outsourcing and offshoring trend is likely to continue as cost advantages are realized in countries like India. Citrix Online can find a big market here.
• Cisco Webex: I have personally used Cisco Webex. I think it is good, but wouldn’t consider it easy since you must install their application.  But, they claim to have a 64% market share already. I think that is because they can piggy back on their own huge presence in the network space. They are likely going to continue to be a big competitor in this space.
• Cloud computing: With the big push to cloud computing, especially from Microsoft, we are going to see hosted applications and native applications (and maybe even the OS) support online collaboration and sharing. This is going to replace the need to purchase a remote conferencing software because (a) most of the business applications used will already be in the cloud and (b) collaborating and conferencing will be provided by the apps themselves. This could be a big threat for Citrix Online.

Well let me know what you think of my post. Do you agree with my views or disagree with them. Let me know. Also, please let me know if my style of writing is good or bad or simply confusing. Feel free to comment.

But, having said that, Apple today has over 150 million credit cards accounts with them. That’s more than many banks. With this kind of scale, Apple could usher in a new era of payment via mobile. One that is over the air, can be done just with the mobile and is open. Could this bring in a new micro-payment solution that just uses mobile. Hope people are looking at this idea.

David A. Aaker outlined the following dimensions of a market analysis:

• Market size (current and future)
• Market growth rate
• Market profitability
• Industry cost structure
• Distribution channels
• Market trends
• Key success factors

In this post I just want to focus on how to determine market size. I believe this is the fundamental question investors are looking for an answer to. If the market isn’t big enough there just is no point in pursuing an idea.

Market Sizing

So the question we’re tackling today is: How to determine the size of the market you want to capture?

Now if you’re in a large company with a large of market research budget, your answer to this would be to conduct a study that is tailored to size the market you’re looking at. This is what we call primary market research and its very expensive. But, the advantages are that you get a clear sense of the market you’re targeting and you can validate finer assumptions you have made in the strategy.

For firms with smaller budgets and independent investors, entrepreneurs, etc, they need to resort to secondary market research. Secondary market research is data that is collected for something other than the purpose at hand, but can be used as a surrogate to determine the market size. Government agencies collect data at a national level on various parameters that marketeers use extensively for secondary market research.

I recently did a market sizing exercise using US census data. I want to share my experience with you.

How to determine which secondary data to look at

I’ll just list the broad categories here, because its not where you find data but how you use it thats important. And well, Google will show you where to find the data.

• Business sources: Guides, Directories, Indexes and statistical data. You will need to pay for this data but depending on the number of competitors and the value of that information, the price will vary.
• Government sources: The government produces a lot of secondary data and releases them as census data and other publications. It is worth while to see these first.
• Purchase data from syndicated panel data, surveys and so on.

The trade-off

Secondary data is by its nature going to be less accurate. This is because it was intended for a larger use and a general purpose. So trading off accuracy for cost, time and ease of collection is what you have to evaluate.

• If you’re trying to size a market for a new product / idea, my suggestion is to go with secondary data. Primary data works when the people you interview understand the product (or need).
• If the product you are trying to introduce is not a high investment product, I feel you must go to market as quickly as possible. So do a preliminary market sizing using secondary data to determine that a market exists for your product and then release the product. Typically web based products are ideal candidates for this kind of experimentation. Once the early version of the product is released, you can iterate with feedback from real users.
• Understand that secondary data comes at a very broad level. For example, you will not get a figure for number of golf cart manufacturers in 2007. You can however get number of “Transportation Equipment and Supplies (except Motor Vehicle) Merchant Wholesalers”. That includes golf carts and many other types of non-motor transportation vehicles. So you need to know how to work with data you get (we’ll talk about this in a bit).
• Not all parameters are collected in secondary data, so again we need to work with what was collected.

So keeping tradeoffs in mind, we venture into the next topic of how to evaluate the data.

How to evaluate the secondary data

• Methodology: Different collection agencies use different methodologies. So check how the data was collected from end users, how was it organized, and then reported.
• Error (or accuracy): Error rates are published with secondary data, so its worth looking at.
• Time lag: Some studies like census data happen once in 5 years and they take a year or two to publish the data. So if your business idea requires recent data then you either need to project the available data with recent growth rates or need to look at primary data.
• Objective: It is important to know what the objective of the data was. That way we can interpret the meaning of the data collected and then determine if it applies to the current use. For example, data collected for tax paying employers of golf clubs may give an indication on number of employees employed by those establishments. But there are many independent (non-employers) who also work in the golf industry. So our analysis should account for that, which is not apparent unless you read the objective and methodology.
• Nature: The nature of the data means what definitions and terms were used when collecting and reporting data.
• Dependability: Secondary data is published by government departments and many other private sources. So it is necessary to evaluate the dependability of the data collectors before deciding to use it.

So how to determine the size of the market with this data

Now once you have shortlisted and identified your source of secondary market research, you need to apply the data to estimate your market size. Obviously the technique used depends on each situation, but here are some broad thoughts:

• If you dont get the exact data you want then choose surrogate data that best represents the industry you’re looking at. For example, the medical equipment business resembles the drugs manufacturing business.
• For data with large time periods, like census data (once every 5 years), it is better to use the growth rate for the most recent duration, than to average growth rate for previous durations. This is because the environment has changed a lot in 10 years.
• Also we need to investigate if any anomalies occurred in the industry at that period when the data was collected. If so, then either discount for it or use an alternate source of data.
• If you need to find the size for a niche market (say golf training market) and you only have data for the whole sport industry, then it is ok to use an accepted ratio to scale the number down. We can look at other data to find the ratio of golf in all sports and then use that same number to scale down the market size. This will give you a slightly less accurate number but its a good estimate to start with.

So lets say that after selecting data and using reasonable assumptions you have arrived at a number that you think represents your market. What next.

The idea of using secondary market research is to win over cost, time and ease of collection. So we have something to start with. Now you need to explicitly list out all assumptions made, your level of confidence and plan a test to verify those assumptions. In investor pitch scenarios, the investor will likely want to fund a small market research to verify your numbers before putting in the full money. With a clear statement of assumptions, you have a very objective way to measure this. The other way to measure these assumptions is to do it when your product has come to an alpha or beta stage with as many initial consumers as you can. The earlier you verify these assumptions, the better it is. You can make strategy changes if you see the numbers are a bit off. Well, do let me know your thoughts on this.

So, how do you know that you’re doing the right thing? The secret is: you don’t have to know its right before you build it. As execution cycles become shorter, customers get more engaged and reporting gets more advanced, we are moving to a stage where we experiment with ideas with real customers. This was never heard of 10 years ago. Now this doesn’t mean that as product managers we throw all our ideas at engineering and have them Beta (or Alpha) test the ideas with portions of real end users. I suggest the following method:

• Examine the vision of the organization (why do we exist)
• List down the values important to this business unit
• Crystallize the vision for the product (what do we want to be)
• Now, we are armed with enough information to draw out a strategy

This is a good start to put a strategy in place. The next step is to look outward. We need to know what the market is doing. It helps to look at the market from three different views:

• Players: What tactics are current players (basically your competitors) employing and what are their areas of focus for growth
• Customers: What are your customers saying? Are there feature requests, complaints, new ideas from your customers (or potential customers)?
• Analysts: Are industry watchers and analysts predicting the next big thing in your industry? Are they betting on any strategy or area of growth? If so, its good to take notice.

This will give you a sense of where the market is looking for growth and differentiation and what are your own ideas to meet your company’s vision. Putting them together, you have a fair answer to the question “Am I doing the right thing?”. Now having said that, its likely that there will be a lot of if’s and but’s and a lot of uncertainty and assumptions along the way. So always always always, prepare to view your strategy in terms of hypothesis that is measurable. When you’re saying “Are we doing the right thing?”, answer it in terms of hypothesis that you believe will pan out as you hit the market with your ideas. Then keep testing them.

A final note. With these metrics defined, keep watching the numbers. If they’re not moving towards your goal and your strategy isn’t getting you the results as expected, then its time to go through this process all over again and redefine what the strategy should be. When you define your strategy in terms of measurable hypothesis, then your numbers will paint a clear and accurate picture of the results. Maybe you didn’t consider some factors or maybe some assumptions were wrong. Either way, you’ll know whether the strategy is moving towards fulfilling the goal or not.

So, in summary, a great strategy is one which aligns with your company’s vision, the market realities and is measurable. The next step is just on executing it and seeing the results.

Strategy and tactic.

Let’s define what I mean by strategic and tactical levels of operation. A strategy is a game plan which defines the overall goal of the product and various strategies to achieve that objective. A tactic on the other hand is the action that enables the achievement of those goals. It is very important for a product manager to know what is the goal, the strategies to meet those goals and the tactics employed to achieve those strategic objectives.

This is especially important for a web-based product. You are constantly revisiting strategy and looking outward to understand the changing market and landscape. Let’s face it. You can’t win with positioning that has already been tried by the market leaders. Or worse, tried and changed by market leaders. So how does one keep track of goals, strategies and tactics.

The best tool for the job that I have encountered is the Balanced Score Card (later expanded to Strategy maps). It gives a clear understanding of what the goals are, what strategies are employed to achieve that goal and finally how to measure the success of tactics. Three important points for succeeding in your strategy through successful implementation of tactics:

1. Have a clear goal (or goals)
2. Specify your strategies on how you will meet your goals
3. Define tactics for each strategy that is measurable.

Most product managers have a pretty clear idea what the goal is and also a pretty idea of what strategies they need to employ to get there. But the disconnect comes because they don’t understand the importance of putting one foot into tactics to clearly define the success measure for each tactic and then ensure it meets that measure. Just like how bricks are the building blocks for any building, good tactics too are building blocks to a successful strategy that meets a goal.

Now by successful strategy I don’t mean to say that your strategies will work. The execution of that strategy will be successful. So if you can break up the achievement of a goal into two questions,

1. Are we doing the right thing? and,
2. Are we doing the thing right?

BSC gives you a great framework on ensuring that the second question is objectively answered. The first question is something we will visit later, but suffice it to say, that the right thing is constantly changing and as product managers we need to keep watching the environment to stay in the game.

Here’s where you can find some good material on BSC.

In my next post I’ll talk about how to answer the question “Are we doing the right thing?” and how can we as product managers track and stay on top of the market. In my view, we all need to ensure that we get the execution of tactics right first before you think up great strategies and products.

If you want to read a great book on how the economics of the world came to be, do read Wealth of Nations by Adam Smith.

So this blog is an expression of my thoughts and ideas on how to bring great ideas to life in a way that is economically sustainable. Technology is innovating at a great pace and as inventors we need to understand that unless this innovation produces real, tangible profits, it is not sustainable. So this blog explores that delicate balance between innovating for end users and making money. It is not an operational guide, but more of an adventure to seek the breadth and depth of possibility within us and amongst us.

Another myth about inventors is that, inventors know how to create useful stuff but stuff that’s not practical. This blog aims to break that thinking to explore how inventors can create sustainable, real value propositions that delight consumers and open new avenues of possibility. Lets invent!