The Basics of Product Management: How to Think About Products

1. Introduction: [MUSIC] Hi. Welcome to Understanding Product Thinking. I'm Josh Anon. In today's class, we're going to look at what product thinking is and learn why it's such a basic and fundamental skills to entrepreneurs, product management, and anyone interested in product design and development. Included in this class is a handout with prompts for each step. Until product thinking is second nature, use this handout to guide you through how to think about improving a product or developing a new product. Before we begin, let me tell you a little bit about myself. I started my career with a degree in Computer Science, and then I went to Pixar actually building software to make movies. From there, I moved into production and actually helped make the movies. But on the side, I was working on my own products, including some of the first iOS apps. I left Pixar and went to a company called Lytro where I built futuristic light field cameras. I worked on a range of software and hardware at Lytro. I left Lytro and then started doing product consulting where I was doing business to business, and business to consumer products, mostly software in those cases. Then I ended up going back full-time taking a job at Magic Leap where I worked on hardware, software, and services for mixed reality. It was pretty cool. Currently, I'm Head of Product Management at a company called Embodied building socially assistive robots. Outside of my full-time job, I've spent a fair amount of time teaching people how to be product managers. In fact, I worked with a company called Product School which runs a boot camp to teach people specifically how to be product managers, and I develop their curriculum. I also ended up writing Product School's textbook called The Product book, which you can buy on Amazon. Now, I'm here to share with you some of what I've learned to help you build better products. I don't know about you, but I hate bad products. So anything I can do to help get better products out there, I want to do that. So let's talk about what you're going to learn in this class. In this class, you're going to learn how to identify opportunities to improve existing products, or to develop new ones. We call this skill Product Thinking. In fact, in this class, you're also going to learn a framework that you can use to apply to situations where you think there's an opportunity to improve a product or develop a new product. In this class, you're going to learn what product thinking is, why it's important, and a framework to apply it. So why does this skill matters so much? Understanding how to identify opportunities and figuring out how to take advantage of them is fundamental, whether you're a founder that's starting a company to address a new opportunity, you're a product manager that's starting a new product line to address a new opportunity, or you're a product manager that's taking an existing product and trying to figure out how to make it better. In fact, it's so important that every product manager interview involves some form of the question, "Pick a product and how do you make it better." Some ways that you might see this question come about include what's your favorite product, how would you improve it, pick a product and talk about how to make it better. Make the DMV better, giving a specific instance of what something you might want to make better. Design an alarm clock for the blind. Take a product that we know and it's actually pretty decent and figure out how to apply it to a new customer base. These are all product design questions. So why does it matter so much that you know how to answer these well? If you're an entrepreneur, identifying useful opportunities is your lifeblood and figuring out how to take advantage of them. If you're a product manager, coming up with the right new products or new features for the customer and enabling the customer to be successful, and thus ensuring your company's success, is the cornerstone of your job. Bad ideas that no one wants, like spiky socks, or not enough people want, like a free app to manage your dog's chauffeur, or that have too many trade-offs for a customer to adopt successfully, those bad ideas, they kill companies. Let's look at a framework to apply product thinking to make sure that you don't kill your company. Step one is understanding the product's objective. What need will the product fill? Step two is identifying the customer. Now, to be fair, sometimes in the interviews, or sometimes when you're approaching the product design question a little bit differently, you'll actually swap these steps, but we're going to approach it in this order. Step three, how do you define success? We need to keep success in mind because step four is, what are the pain points that are limiting the customer's ability to be successful, and then we're going to pick one to address. Step five is we're going to brainstorm all the different possible solutions to that pain point. How can we help the customer? Then as you might expect, we're going to prioritize and pick a solution. Finally, we're going to put it altogether and assess our solution. In this class, we're going to look at a case study throughout each steps that we have a solid example. Can we build a better toothbrush? Now, we all brush our teeth, hopefully at least twice a day, and toothbrushes have been around for awhile and they're pretty successful at the job. So you might even be wondering, "Is there an opportunity to build a better toothbrush?" Well, let's take a look and find out as we move through the class. Maybe we'll find something interesting. 2. Understand the Product: Step 1, what need does the product fill? First, we need to assess why the customer is actually interested in the product, or if you're building a new product, what are you aiming to help in their life? What objectives do you want to help the customer solve? What's the opportunity that you're looking at addressing? Keep in mind that customers don't buy products because they want to support your brand or give you their money. They buy your product because it solves a problem for them. We need to define that problem up front. One mistake people make at this point is they focus on features instead of higher level objectives. For example, instead of saying, I want a way to easily access my files online, they say I want to make sure that my files are stored locally on my desk but then synced online just like Dropbox. We want to focus on things like, I want a way to move between floors instead of I want an escalator, or I want this feature in an elevator. Later on, we're going to focus on the features. But for right now let's think about what the customer's trying to achieve. Next, especially when we're doing this for real and not answering a product design question during an interview, we really want to assess if this is a space worth plug-in. Is there a legitimate need for a customer to create a product to address this need or to improve an existing product to address this need. Is someone actually going to be willing to open up their wallet and pay money for whatever solution that we're offering? Oh, there are a lot of good ideas out there, but frankly a lot of times, people aren't willing to spend money on it. For example, I have an espresso machine at home. My Porto filter sometimes it drips water on the counter, when I move it to the sink. I'm not going to spend money on anything special to solve that problem. It's not a big enough pain point. I just take a paper towel and wipe it down. But at the same time, there are plenty of other products that I happily spend money on. For example, I bought an espresso machine so I could make espresso at home instead of going into a cafe and having to pay for that every day. Let's think about our case study that toothbrush for a second. Well, fundamentally, toothbrush is the only viable option to clean your teeth. That's the biggest need that it fulfills. The next thing is that the toothbrush and a clean teeth contribute to your dental health and a lot of studies are showing that that contributes to our overall health. Brushing our teeth twice a day, makes sure that we have good breath too. Having white teeth is attractive. Brushing our teeth helps with our physical appearance. Instead of if we don't brush your teeth rot and fall outer, horribly yellow and disgusting. All of this also contributes to a better quality of life. Fundamentally, brushing our teeth is about having clean teeth and having a good quality of life, and we want that because if we didn't do it, we'd have all those pain points. We'd have bad breath, we'd lose our teeth, that it wouldn't be good. So clean teeth is a pretty important need. 3. Identifying the Customer: The next step is identifying the customer that we're going to target building this product for. Different products need to be different for different audiences and before you find an opportunity, you need to consider who you're building the product for and what their special needs might be. For example, if your goal is to move between floors, is the customer physically able to walk up and downstairs? And I don't just mean a permanent limit to their accessibility like being in a wheelchair. I mean temporary limitations too. For example, are they carrying something that might make it really awkward or hard to walk upstairs? Or maybe it would make it really hard to go into an elevator and press a button to move between floors. What are their needs? As another example, imagine that you wanted to make a pen. Who's the person that's going to buy it? Is it a businessperson that might want a special differentiated pen? Is it a scuba diver that needs it to write underwater? Is it an astronaut that needs it to write in zero-gravity? Is it a person with repetitive stress injury that maybe doesn't want a fine minimalist pen. They want something big and chunky that's easy to grab. Think about who the customer is and what their needs are, and how it applies to the opportunity. Now, if there's not a clear customer or an existing market, determine who the possible customers might be by brainstorming a list. Then, assess which group is either the largest or has the most need. The larger the possible customer base, and the more people will be interested in your product. But you also need to take into account how big of the pain point the problem is. If 10 million people have the pain but don't care, then only 100 people might buy your product. For example, a tool that clip socks together in the laundry to prevent losing them. Yeah, probably not a big enough pain points to justify a product. But if you have 100,000 people that all have a pain point and really want to solve it, you'll end up with more people actually buying your product. They'll be highly engaged with that, and more likely you'll be more successful as a product manager, as an entrepreneur. Make sure as part of the step that you really focus on connecting the objective with the customers specific needs. A good first step in that is consider if customers are actually doing anything to fill this need right now. If they are, especially if it's a convoluted workflow that has a lot of different steps to it and is inconvenient, then this is probably a really good opportunity because it's an actual pain point that people are working on solving, even if it's an awkward solution. If customers aren't doing anything to solve this right now, think a little bit about if this really is a valid opportunity. In the real world, you might even want to talk to some potential customers and see if they actually feel this as a pain point that they'd be willing to spend money to solve. Remember, some products have different customers, the people that buy it then end users, the people that actually use it. For example, the swing set as a product that's marketed at parents, but that kids actually use. Some of the opportunity you identify might be focused on the customer. For example, a parent might want a safer swing set and some is going to be focused on the kid. For example, a kid might like a superhero theme, swing set would be fun. In an interview, you'll want to focus on the end user and the customer and talk about their different needs. But when you're actually building a product, you'll want to focus more heavily on the customer because they're the ones you need to convince to actually go buy the product. But you want to make sure that the end user likes the product and finds it appealing. Let's think about our toothbrush. How would adults be as a customer? Well, toothbrushes work pretty well for adults. People pretty reliably brush. We know that we want to avoid cavities. There are whole range of brushes. There is electric ones, there's manual, there's portable, there's ones that give you on planes or the free one in hotels. Adults are pretty covered. What about babies? Well, a lot of babies don't have teeth and that's sensitive in there. But what about kids like, especially maybe five to seven year olds? Those kids have their teeth, but they struggle a lot with brushing well, and parents struggle getting their kids to brush. Maybe there's an opportunity here and that's actually a pretty big audience. At least anecdotally, I don't know about you, but I've heard a lot of parents complain about getting their kids to brush. Let's roll with that. Let's see if there's an opportunity. Let's figure out if we can improve a toothbrush for kids. 4. Define Success: Now let's talk about what success looks like. Ultimately the goal of the business is revenue. We want to make sure the business is successful, but that's not very helpful here. Let's actually think about the customer and their goals. Now that we've identified who we're building for and what problem these customers want the product solve, let's focus on what our overall goal is to improve and define how we're going to measure it. What metric will we use to define success? This lets us assess why existing products or solutions might be falling short, and then put us on a path to think about how we can fix that. Let's look at our toothbrush for kids example. Clearly, neither a parent nor a kid cares about a company's revenue. But what they do care about, especially the parent, is successful tooth brushing. This is ultimately how we'll define success. The more successful kids are at brushing with our toothbrush, the better our product is. Now, we can also fill in the gap between why successful tooth brushing for a customer can lead to more revenue for a company. It's always good in the back of our minds when we're defining success to think about what is this going to result in for the company? Why is this worth doing for the company and not just for the customer? We want to make sure those two align so that we all win. During an interview, you might actually be smart to pick your success metric first before you pick a customer to focus on or the need to address. This makes it so that you can figure out where the most potential opportunity to improve that metric will be. Also sometimes during the interview, you want to focus more on business success and not customer success. For example, if someone asks you how you'd improve Facebook, you might need to clarify this a bit. What metric do you want to improve? Do you want to focus on adoption, how many people use it? Engagement, how often did they use it for? Ad conversion, how many people click on an ad and go buy something, and so on. Then you can work backwards to think about which customers provide the most opportunity to improve this metric. For example, if you want to get more users, you would focus on people not using the product rather than people that already are using it. 5. Define the Pain: Next up, we need to define the pain points. What are the factors that contribute to the customers goal that contribute to achieving that success metric and define what the active pain points are that limit their ability to achieve those goals? What are the barriers to customer success? This could be something explicit, such as if the customers are trying to share music with their family but DRM actively limits it. The product is explicitly designed not to do something. Or it could be an unmet need. Like a convenient and low cost transit such as an electric scooter. Then ask, why do existing problems fall short? Your opportunity comes from solving customer pain. Really spend time with this step and come up with a thorough list to help you start off building a product on the right foot. The more pain you effectively solve for people, the more successful your product will be. Work review. What a customer actually writes about your products if they write a review. If you're struggling for ideas, go to Amazon and read some of the negative reviews. See what people don't like about products. Let's think about tooth brushing again. There are actually a bunch of things that lead to successful tooth brushing. We want to make sure you brush all your teeth. They actually get clean. The person doing the brushing brushes long enough so that it's effective. We want to make sure they do it regularly and not just once every few weeks. Ideally, you do it without supervision or being nagged to do it. We also want to make sure that the product doesn't damage your teeth and leave them worse off than before they used it. It's a pretty long list of things. What are the pin points that the end user, the child has that might be stopping them from achieving these successfully? Well, for one, a lot of kids just don't know how to brush their teeth right. They might not know how much toothpaste to put on the toothbrush. They might not know how long to brush for. They might not like the tooth paste and spit it out right away. Or they might like it too much and not know, they need to spit it out when they're done and they can't swallow it. Fundamentally, a lot of kids just don't care about brushing their teeth. They don't know why they need to do it and frankly, brushing their teeth isn't that much fun. When we look at existing products, they mainly add characters to try and make it seem a little more fun and they come in sizes for kids and some even have little timers to help kids know how long to brush. But it doesn't really solve some of the obstacles to success that prevents successful brushing. The net result of that is parent pain. Because parents have to nag and supervise and they're not happy and really the full result is that we have unsuccessful teeth brushing kids right now. 6. Pick Your Pain: Even when something is simple as brushing your teeth, you can see a lot of different potential pain points, and hopefully when you finish the step, you have a pretty long list of pain points that you can look through and pick what to focus on, and in fact, that's the next step, picking the pain point we want to focus on. Sometimes it's unclear which to prioritize. Simple thing to think about is which pain point has the biggest impact or target metric? Which one is the biggest barrier to success? Another idea to think about is which pain point affects the most customers. That means the most people will care about it, which will be easiest to implement to solution for. Sometimes just getting something out quickly makes a difference to a lot of people and makes them happy, especially with existing products and another part of the step is make sure you pick a real pain point, and not just one that you wish were real because you could actually solve it. That's why being authentic is important. If the prioritization is unclear, business prioritization is a common way to prioritize your pain points. Assess how many customers you might find, think about what their need is, multiply the two together and you can get a number for priority. For customers, you need to be accurate. It's never going to be everyone. Even iPhone, which has pretty broad appeal, is too expensive for some people. Some people don't like apple, some people don't want a smart phone and so on. So an iPhone is not for everyone. There are a lot of different ways beyond the scope of this class to determine how many customers might actually be interested in your solution. But simple ways to do it or think about, there are about three hundred million people in the US. There are about seven billion people in the world. Half of those are men, half are women. Think about age distributions, think about income distributions. See if you can find some other statistic out there that you could apply to yours, like this many people use this product so there's some subset of it that has this issue. There are a bunch of ways to do it. Now, need is hard to quantify. Let me suggest assigning some exponential number, like a power of two to need because that way something where there's a high need will be disproportionately larger than something there's a small need for. That will help make sure that if you have a large audience with a low need , it's balanced well against a small audience with a high need. Getting back to our case study, let's ask, could we build a toothbrush for kids that parents love because it gets kids successfully brushing their teeth without supervision? Essentially, we want to address independence. Independence is a pain point you hear, and it's a barrier to successful teeth brushing. It's something worth solving. 7. Brainstorm Solutions: So the next step is to sit down and brainstorm all the possible solutions you can think of to this pain point. Get creative. Don't focus on things that exists now. Can you apply ideas from other industries are products to your specific case? For example, if you're thinking about how do you get more people looking at news articles or finding things they like? Could you apply algorithms and ideas from dating apps like Tinder to the news? Let's think about our toothbrush now. Let's brainstorm some ideas to figure out how to get kids successfully brushing their teeth independently. Well, what if the toothbrush spoke to you and actually gave the kid feedback while they were brushing. Let's take it a step further. Let's make the toothbrush a virtual pet like the old Tamagotchis that get upset if you don't brush your teeth twice a day long enough. Maybe we could actually connect it to a game on a phone and make it so it's more like a controller rather than actually brushing your teeth. Or rather than a phone, what if we had like a little model of a mouth and make it light up to do something fun as you brush your teeth and then there's a reward when you finish. Maybe we could actually have the toothbrush tell you a story. But it only tells you more as you brush your mouth successfully. So you figure out how do I make sure that story progresses by getting those molars in the back there. What if we just had a rewards chart? What if each time you brush your teeth successfully, you get a gold star? Rewards tend to be motivating for kids. So that could work. What if we just killed the toothbrush completely? What if we figured out a way to clean all your teeth simultaneously in under ten seconds and then made it fun to use. So let's just completely blow up the whole problem and say, the best toothbrush is actually not a toothbrush. This would address a lot of the pain points like not knowing how to do it because we could reassess the whole problem in completely simplified. That could work too. Now, you see with all of these ideas, I wasn't filtering. I'm just coming up with a whole bunch of different things, some of which are more practical than others, but we'll assess them in the next step. But I really want a wide range to pick from. This is how you find those creative opportunities that nobody else has thought of. Or in other words, this is how you innovate. 8. Prioritize and Pick a Solution: Now we have a bunch of cool options. How do we pick which one to do? The first step is to figure out a framework you want to use to assess your solutions. The common way to do this is to look at your business goal and figure out which solution ties in best with this. We talked about revenue with our toothbrush earlier. Let's keep focusing on that. Well, revenue will increase if we're getting more customers successfully brushing their teeth. We need a solution we could implement in a low-cost way that customers can afford, which will still give us a decent margin. We also need something that doesn't cause crazy money to develop and that we'd never be able to actually make that. Let's say that the end, our toothbrush can't cost more than 50 bucks to sell. This is a bit of an arbitrary number, but I'm essentially thinking toothbrushes right now are really cheap. Electric toothbrush tend to vary between 20 and really fancy ones for adults for a couple of $100. $50 seems like a reasonable upper limits to pay for a toothbrush for a kid for your average to higher income family. General rule of thumb is figure the thing itself needs to costs us about $10 to actually build and develop. I was being a bit hand wavy in that discussion, but really if you have a way to objectively prioritized solutions, come up with a number for them. It's really easy to rank them and the business goal can be a nice way to figure out an equation that lets you get a number. For example, with revenue, if we were to take the potential revenue minus the cost to develop and then divide it by the time to develop. We would have a pretty good idea of how effectively we could take each of these ideas to market. But right now, I'm not going to go through this list and generate a full set of numbers for each one. But we're going to generally assume that the more time something takes to develop, the worst of an idea it is, and anything that's going to customer extra money is probably going to be bad. So right away it can say that giving them an extra model of the mouth is going to cost money to develop and it's going to cost more because there's another physical thing that we're selling to them. Also, this idea of killing the toothbrush and completely blowing up a hole. How do you brush your teeth? That could be fun to address, but I'm not sure that I'd start with kids in that, I might focus on adults that are willing to pay more for that type of product. Now, we've reduced our list of bit, but we still have a lot of things on it. Let's start to think about what some of the trade-offs to these different ideas are, and if they're really big trade-offs, we can probably cross its solution off. Really play devil's advocate here and be hard on yourself. You want to be as honest as possible about what a customer is going to actually do, and if you can actually build this successfully. But the reason for that is the more you really think about the trade-offs and if a customer is willing to take it or if you're willing to make them as a company, the better off you're going to be later on once you've actually built the product. Now, let me give you an example of when not thinking about some of these trade-offs ended up hurting the company. I mentioned before I worked at Lytro. We built a camera that took light filled images. That meant you could refocus them after you took them. It was pretty cool. But the thing is there was a big trade-off in resolution. So a ten megapixel image you took with the camera might only be one megapixel in the final refocus of the mage. Furthermore, it took more work to get a good refocusable shot than just a normal photo. It didn't just work for every image out there. It turned out that for most customers, these trade-offs weren't actually worth it. Well, it was a lot of fun when you got to good refocusable shot. Most of the time our customers just weren't taking them successfully. They were unhappy with the camera. It just sat on their shells and they didn't tell their friends to buy one. In fact, after all this, Lytro pivoted away from building consumer cameras and started focusing on the pro market. We've been really authentic with ourselves up front and thought about these trade-offs and thought about is there a market here? We might have made some different decisions early on. Let's go back to our list. Well, do we want our toothbrush to have personality? That might be a little bit weird, so maybe let's cross it out. For this next one, making it into a virtual pet. There's costs to develop good character and to really make this compelling and interesting. This might not be the best idea either. Let's look at these next three. Thinking about a toothbrush, we can connect to a game on a phone. There's moderate cost to develop the game and a moderate cost to building the connections to the toothbrush, but it's not too bad. We could actually combine it with these other two things. We could make that game reveal a story and we can put a rewards chart into it. It seems like there's potential here. Now let's think about the trade-offs. This would require taking a phone or a tablet into the bathroom. But a lot of times kids do have their own phones or tablets now where parents are willing to give the kids theirs to play with for a bit. That might not actually be too bad. Let's roll with this more. Let's think about what we would actually need to build these solution successfully. Well, we need some way in the toothbrush to detect how its oriented and how we're moving it and making sure that we're brushing all the teeth. We also need a way to sync with an app that lets you send data back and forth. BTLE does that pretty readily. We also had a little sensor to make sure that we're not brushing the teeth too hard or too light to make sure that we're doing it right and effectively and not damaging the teeth. That's pretty feasible. Maybe we could even do a built-in toothpaste dispenser to make sure that the right amount of toothpaste always comes out. Right now, another way we could do that, it's actually just putting some instructions in the app to make sure the kid can clearly see each time how to do this right. All right. This all seems feasible. I think we can build this. 9. Summarize Your Solution: Finally, after all this and after all these tangents and all these list, let's put everything together and summarize where we landed. Our solution is a smart toothbrush that controls a tooth-brushing game on your phone. The toothbrush will have BTLE to connect, it'll have sensors to know how its oriented, where it's moving, and possibly even a force sensor to make sure we know that you're brushing each tooth with the right amount of force. Let's go back and connect this to some of our pain points. Well, let's see. A game can explain how to brush and provide live feedback that you're doing it right. A game should also make it fun and hopefully make a kid actually care about brushing because it's not that they're brushing, it's that they're playing a game. I think this would address these pain points. Now let's look at the things that the adult cares about. All those factors that feed into successful tooth-brushing. Well, if you think about it, we have a solution that addresses all the pieces that feed into successful teeth brushing. A game can make sure that you brush all the teeth. You have to do all the teeth to complete the level. We can make sure that the teeth are actually being clean because we know how the toothbrush is moving and we can get feedback for it. Maybe moving the brush is what let's you defeat the baddies in the game. We can put a timer into this to make sure that you're brushing long enough successfully. Now, I'm making an assumption that if we have a game, it'll be done regularly, but it's a pretty reasonable assumption given that kids do like playing games and video games and we're building a healthy video game. Hopefully that also means that this can be done without supervision. A kid will want to play the game without having an adult nag them. Or if an adult needs to tell them to brush their teeth, it's not nagging to brush their teeth, it's, "Why don't you go play that game?" Then finally, we should be able to make sure there's no damage to the teeth with that force sensor to make sure they're not pressing too hard. We could even go above and beyond and provide some feedback from the app to the parents so the parents actually know how their kids did brushing their teeth without actually sitting there hovering. That could be cool. Now, once you've gone through this exercise, if you're ever wondering if you did a good job, it can be helpful to actually go online and see what other products are out there. This is true when you're thinking about building something new and starting your company too. There's a reasonable chance that if you have a good idea, somebody else is taking or has taken a stab at it. I'd never actually thought about building a toothbrush for kids before going through this exercise and putting this class together. But I was curious. so I went online to see what was out there. It turns out that there are a couple of solutions out there that are very similar to where we landed. There's one called Grush that actually builds itself. Is a gaming toothbrush for kids and has an app to connect to it. You can see the app with the mouth. I'm hoping that if I actually built this, I might make that game look a little bit more fun, but okay, it's a good place to start. It turns out that Philips Sonicare also has a product like this too. This is a sign we did a good job with this exercise because other companies have taken the time to truly go through and develop this product. But if you were hoping to go start your own company to build a smart toothbrush for kids, sorry, I might've just dashed your hopes and dreams on that one. Don't worry, there are plenty of other good ideas out there. Maybe try that virtual pet one. Hopefully now you see why product thinking is a valuable skill to product managers and entrepreneurs, and you should now have a framework to guide you as you go through and apply this process. As a final thought, spend time practicing the skill with other students, friends, or even on your own. Look at everyday products and think about how to make them better. Or think about random types of customers and what you might do to customize specific products for them. Be critical of whatever conclusions you reach. Think about if you were actually writing the review for that product, what would you say in it? It's a good skill to learn to be hard on yourself to ensure that you're building something solid. Because customers are always going to be just as hard, if not harder. If you can think about what they might say ahead of time and address those pain points while you're building your product, your product is going to be more successful later on. 10. Conclusion: Thanks for watching. I hope you enjoyed the class. More importantly, I hope you learned how to think about products. If you're interested in getting in touch with me, or knowing more about me, you can see my website at www.joshanon.com, or you can find me on Twitter and other social networks @JoshAnon.