424: Lean product management – with Dan Olsen

How to achieve product-market fit – for product managers This episode is sponsored by PDMA, the Product Development and Management Association. PDMA is a global community of professional members whose skills, expertise and experience power the most recognized and respected innovative companies in the world. PDMA is also the longest-running professional association for product managers, leaders, and innovators, having started in 1976. I have enjoyed being a member of PDMA for more than a decade, finding their resources and network very valuable. Learn more about them at PDMA.org. PDMA invited me to their conference, which was in Orlando, Florida, to interview some of their speakers. This speaker emceed the conference and presented on Lean Product Management: How to Achieve Product-Market Fit. Our guest will teach us a simple but effective process for creating successful products. Dan Olsen is a returning guest to the podcast. He is a well-known product management trainer, consultant, and speaker. He is also the author of the bestselling product management book, The Lean Product Playbook. Through his talks and interactive training workshops, Dan helps companies build great products and strong product teams. Summary of some concepts discussed for product managers [3:38] What are the steps of the Lean Product Process? The Product-Market Fit Pyramid is the key framework, and it has five layers that build on each other. Start at the bottom and work your way up: Market: 1. Target customer 2. Underserved needs Product: 3. Value proposition 4. Feature set 5. User experience (UX) Write down your hypotheses in each layer then test the product with customers to see where you’re at with product-market fit. Iterate those assumptions and hypotheses until you get to the level of product-market fit you want or decide to pivot. [8:38] How do we identify our target customer? It’s important to start in the problem space. Get really clear on who has the problem, because those details will change how you solve it. Segment the market by: * Demographics (or firmographics for B2B). Usually demographics show correlation, not causality, but they’re a good starting point. * Attitudes: What do customers believe? What’s important to them? For example, how much do different segments care about the environment? * Behaviors: What are customers doing? For example, power users vs. lightweight users. * Needs: What are the different needs of different segments? This is the closest to causality. Use all four ways of segmenting. To find out if your segments are clear enough, interview ten customers. If five of them love your prototype and five don’t, that’s a hint you haven’t segmented your market enough. What is the salient attribute you missed? Adding that attribute adds predictive power to your model. The Lean Product Process helps teams get aligned. If we’re not aligned on the customer, of course we’re going to have disagreements about features and prioritization. Create a simple persona to get everybody on the same page. [13:45] How do we discover underserved needs? Find out why the problem is important to your customer. How is it going to create value for them? Don’t go rushing into the solution space without being clear on who your customer is and what problem you’re going to solve for them. People don’t want a quarter-inch drill; they want a quarter-inch hole. A product manager’s main job is to define who our customer is and what their needs are. Map out a problem space definition. Brainstorm all the benefits you could address and organize them. Look for an unmet or underserved need. I use an importance vs.