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PRODUCT MANAGEMENT
PRODUCT DEVELOPMENT AND MANAGEMENT - IS THERE A RIGHT WAY?
Banking is largely an undifferentiated industry. In almost all our Forums, attendees say, "We all sell the same products". Without debating whether this is true, I'd like to consider other successful companies that have sold a largely undifferentiated product successfully. Starbucks wasn't the first coffee shop, but it created a strong brand identity that was not based on coffee. Similarly, Disney might have inferior rides to its competitors, but it offers an experience that others can't claim ("The Happiest Place On Earth").
Notwithstanding possible differentiation on elements other than brand or customer experience, bringing product to market, even "me too" products, has been a challenge in our industry. All too often the product is introduced to employees almost simultaneously to being introduced to customers, and the "product kits" are all abuot features and functionality, peppered with administrative directives, and lacking benefit statements and sales tips.
A prime example of the need for product management has been Remote Deposit Capture, a product which has been introduced extremely successfully in some banks, selling north of 100 installations a month, and poorly in others of similar size and means, selling 5 a week and considering that an accomplishment. The difference could have been a CEO focus, but also might be explained by a stronger product development and management function.
Product management does NOT necessarily mean large staffs and long delays in bringing product to market. What it DOES mean is that, for every new product, someone's neck is on the line for its success. Here are some thoughts regarding structuring the Product development and Management function without too many resources and bureaucracy while focusing on the right issues: profitable, timely and relevant product introduction.
Define "A new product".
Too often it's unclear what counts as a new product: a breakthrough innovation only? A tweak to an existing product? Personally I believe any product that is uniquely targeted or marketed counts as a new product, but if you expect your product development function exclusively to create and innovate, enhancements to existing products don't count. Require a business case
A simple, two page business case (one narrative, one numbers) is the best way to evaluate whether a product enhancement or innovation makes sense. If the product sponsor can't articulate the value verbally and numerically in two pages there might be an issue with the initiative altogether. Spell out in advance your ROE or IRR expectations, and clearly identify your expectations from the business case content to ensure you'll get responsive business cases. Listen to the field
In many banks, the main initiators of product innovations come from staff functions and from headquarters. Open the lines to the field to hear their perspective on what's needed, what will work and what won't among your customer bases. They know best, yet we don't typically listen to them very well Look back
Once a business case is approved and acted upon, looking back to ensure that initial expectations as per the business case were met is essential. It serves many purposes, including building the product sponsor's credibility as an effective predictor of results; holding folks accountable for their promises; rewarding where appropriate; learning from mistakes etc. Don't get too analytical
Product management is typically staffed primarily by highly analytical folks. While their contribution is indeed invaluable, and discipline is at the core of the function, don't forget that ultimately this is a people business, so heart and intuition should play a role as well, especially in product introduction. Use of management or pricing committee
Many banks have pricing committees that meet weekly to discuss product pricing. These forums typically are comprised of executives from all walks of banking life, who can also function as the approval body for product management ideas. Leverage these committees to get insights from your executive teams regarding product ideas, their worth, and other relevant elements to the product management process. Get input from others
Other partners, including vendors, can help the product management function and help avoid pitfalls encountered by others. Utilize their input to improve your efficiency and get additional ideas. Outside eyes certainly help thinking out of the box. Test and learn
Too often we want to get things right immediately. Major R&D companies realize that the process requires minor adjustments time and time again, and we should accept that limitation. Testing ideas in limited markets and isolated branches is a valid way to refine value propositions, learn from market reactions and improve ultimate results.
Roll-out process
Ask your folks, especially in the retail bank, when did they find out about your latest product introduction. In all likelihood this took place within 48 hours of roll-out. We have been ineffective in planning product roll-outs such that the distribution sales forces do not have sufficient time to prepare for the product introduction. Paying attention to this part of the product development process and correcting issues where they exist is an important contributor to a successful launch. Product management
What happens to a product once it's launched is no one's job in many banks. Unfortunately, where no one is responsible, results are spotty. Having a person's success tied into the product performance will enhance the likelihood of success and ensure that at least one product champion is following the product performance and making the changes needed to optimize results. Where should it report?
Product management is placed in different spots in many organizations. I find that it is most effective when it is housed at the distribution sales force line of business, i.e. retail, commercial etc. The reason I prefer this line of reporting is that it limits the finger pointing that takes place when a launch is unsuccessful (the line says development failed, and development says the line didn't sell it well). There are pluses to centralizing product management by type of product (e.g. deposits, loans, payments) as well, but the lack of scale economics and critical mass has a significant downside.
I hope you find this outline helpful as you contemplate the success of your own product management function, whether it has been formalized or not. Given the competitive environment, I believe it is important to make product introduction and performance expectations more crisp, and establishing a clear process to introduction, performance and monitoring is the first step.
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