Managing Strategy and Vision UNDERSTANDING THE EXTERNAL BUSINESS ENVIRONMENT Curtis Webb PAYMENTS PRODUCT MANAGER, PLURALSIGHT AUTHOR www.pluralsight.com
t h s Review the role of the Product Manager Overview Complete an overview of strategy frameworks • PESTEL Analysis • Industry Dynamics Scorecard Practice strategy frameworks with a sample industry
s h s - General manager responsible for every aspect of the product. - Proactive team member interacting with business, technology, and customers to PRODUCT MANAGER deliver value. leads cross-functional teams - Mini-CEO to optimize the product’s position and financial returns consistent with business objectives.
Typical Time Spent by Product Managers Coachi Coaching, ng, team eam Res Resear earchi ching ng Pr Prici cing ng and and and and packagi packaging ng ma manageme ment, recruiting market and ma 2% 2% 5% 5% competi com petiti tion on Defini De ning ng pr produc oduct 4% 4% strategy strategy 18% 18 Revi Reviewi ewing ng met etrics cs 18% 8% 8% time spent defining Pl Planni anning ng and and Col Collabor aborat ating ng maintaining the ma product strategy with technical and wi pr product oduct roadm oadmap ap design des gn funct unctions ons 10% 10 15% 15 Engaging Engagi ng with h custom customer ers s and and par partner ners De Defini ning ng pr produc oduct 12% 12 require re irements ts Collabor Col aborat ating ng 14% 14 wi with other fu functio ctions 12 12% Source: McKinsey Product Management Index, 2018.
s h s Qualitative framework used to analyze and monitor macro-environmental factors: Political Defining Product Strategy Economical PESTEL Analysis Social Technological Environmental Legal
PESTEL Overview Economical Political Economic factors that impact how How and to what degree a government business is done and profitability intervenes in the economy Social Technological Socio-cultural shared beliefs and Tech landscape changes that impact how attitudes of the population products are marketed Legal Environmental Health and safety, equal opportunities, Scarcity of raw materials, pollution consumer rights and laws, etc. targets, and sustainability factors
s h s Quantitative framework used to track and score facts to identify if the industry has: Defining Product Strategy Potential show-stoppers Industry Dynamics Significant challenges Scorecard Data conducive to your product Conditions ideal for venture success
Industry Dynamics Scorecard Overview Facts and Data Score (1-10) Size and Growth Rate Favorable Trends Competitive Intensity Ke Key: 1 Show-stopper 3 Significant challenge Presence of Winners 5 Neutral 7 Positive Level of startup/M&A 10 Ideal Tech/Innovation Trends Customer Channels Low barriers to entry Total Score
t h s Practice strategy frameworks Demo Qualitative and quantitative discussion with business leaders Analyze an existing or a prospective industry Focus on one or two things
PESTEL Example: Payments Industry Political Economical Political changes and instability in Market volatility can increase or reduce markets may impact business consumer spending confidence Social Technological Global movement toward empowering Digital payment adoption enabling unbanked and underbanked growth Legal Environmental Data privacy, transfer and storage Reducing footprint with environmentally friendly rules and tech
Scorecard Example: Payments Industry Facts and Data Score (1-10) • Banks issuing credit/debit products Size and Growth Rate 8 • Increase in online spending • Favorable Trends Less cash being used 7 • Millennials starting to spend $ • Card brand flips are common Competitive Intensity Ke Key: 1-10 10 5 • Mature industry competing on price 1 Show-stopper • 3 Significant challenge Saturated market with winners Presence of Winners 3 • Start-ups compete with large legacies 5 Neutral 7 Positive Level of startup/M&A • Many start-ups serving few customers 5 10 Ideal • Networks buying start-ups • Tech/Innovation Trends Huge focus on future of payments 10 • Faster payments @ premium revenue • Merchants + corporates + cardholders 9 Customer Channels • Online/mobile apps/tablet • High tech build and compliance costs Low barriers to entry 2 • Bank grade security investments Total Score 49
t h s Product managers are mini-CEOs that spend most of their time defining product strategy. Summary Strategy framework assessments like PESTEL and the Industry Dynamics Scorecard can help analyze the external business environment. These tools can be used to provide a qualitative and quantitative resource to understand your existing industry or decide which industry to enter.
Up Next: Understanding the Internal Business Environment
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