There is a saying that planning is guessing. One place to spot it is the front cover of Rework, a book from the team at 37signals.com, a team to admire not only for their writings, but also for their doings (they are responsible for a couple of nice products, among which Basecamp, and for creating and open sourcing Ruby on Rails).
Planning is indeed guessing, no argue about that. But it is about educated guessing: making informed decisions that use judgment and a level of knowledge. Which make it more likely that the guess is correct.
In a world where it’s becoming more and more difficult to distinguish substance from clutter, it’s also difficult to distinguish planning from guessing. We see it quite often in the world of products and startups – I have an idea, but no plan as to how to monetise, how to build, how to sell – scenarios.
Working on a plan can shed light into such aspects and, if done early, can spare product developers and investors of a lot of time, energy and money spent. Remember that we are not saying that an idea has to be automatically dismissed if it doesn’t show a neat revenue model accompanied by a full-fledged business plan, but it has to show that there is a core value incorporated in the product, which can be monetised in some way, bring some proofs to support that and show a path to getting there.
In its early days, neither did Google have a working revenue model or a five years plan. It did however have a vision of the best search engine in the world, which would eventually bring money from advertising, and the technology insight to build it! The path was quite manifest.
So what are the benefits of planning? Just to name a few we’ve seen in our own experience:
- Challenge assumptions – when you sit and plan, it makes you question your assumptions and forces you to challenge them. This can in turn lead to saving efforts that you might have put in wrong directions.
- Stay focused on what drives value – a reason why many products and start-ups fail is that a lot of time is consumed with efforts that don’t converge to what is the quintessence of value. A plan enables you to gravitate around that.
- Stay focused on the targets – pivot when it makes sense, make changes, but don’t lose sight of your objectives.
- Manage expectations and achievements – especially if you’re in a product initiative that’s not bootstrapping, this may be very important to managing the relation with your sponsor or investor (have a common understanding of some clear expectations).
What major strategic plans are there in a product’s life cycle?
First – there is the business case (or the business plan or, later on, the product plan) – a key element in the life cycle of a product. It sets the foundation for a proper assessment of the business opportunity and of whether or not we should invest further in building the product.
It should be no more than 20–30 pages long (synthesis capacity is important for someone managing a product) to outline the essence of the product, which should be a clear definition of what it addresses, how is value created and where revenue comes from.
Essential elements in a business case refer to:
- The product concept (market problem, description of the solution, value proposition)
- Insights from market analysis (target segments, market size, market trends)
- Insight from customer research (feedback, commercial or technical considerations)
- Competitor products analysis
- High level product requirements
- Financials (revenue model and financial projections)
- Risk analysis
- Critical success factors (the SMART objectives for product launch)
Second – the product plan. If a business case gets pass go and the product is financed, built and launched, then the business case should turn into a product plan that constantly updates product information with data from the market, feedback from the users or customers etc. You may not have a detailed multi-yearly plan, but a map of product objectives for maintenance and growth and a one-year view of how cash comes in and goes out should be in place. Remember that your main focus – until you’re in a predictable working model – is to stay away from running out of cash.
Summing up, strict plans are obsolete in today’s environments, but to keep focused on what matters, to have everyone in the loop and to keep the “oxygen” from running out, the exercise of planning should be in the routine of any product-focused team.