Phase 2 of product management
Post identifying a problem statement, we set on course for identifying a solution to the problem, solution to the need that was identified. This phase can be quite dynamic – it can be individual led or it can be a team effort. Someone out of the blue can identify a solution and sometime a group of people can identify a solution as a collective and disciplined effort. Either ways an idea in itself cannot achieve much unless there is conviction to it but more importantly there are people ready to back (fund) the idea.
This is when we start putting together an initial view of how the idea would work. What starts with an idea slowly starts taking taking form through rough sketches, white board drawings and in some case even literal articulations. Over next few iterations – idea takes a definite shape and is ready to be presented to sponsors. Every idea every generated which has seen the light of the day would have been backed by a sponsor. In some cases the sponsor can be the owner of the idea itself whereas in other cases it can be deep pocket investors. For an established organisations, there are dedicated processes through which ideas are approved and funded. We will try covering the process of fund raising in a separate post. It’s quite an interesting area and definitely merits a dedicated post.
What we though need to understand is how the idea and its merits are communicated to the sponsors and other stakeholders. The proposer or owner consolidates all the relevant details about the idea and develops a business case supporting the initiative. An idea business case would contain:
- Objective
- Problem statement
- Potential solution i.e the idea
- Detailed flow including business and technical
- Benefits of the idea
- Cost Benefit analysis
It will be wishful thinking to expect sponsors to start funding the moment we present a business case. Putting together a business case is just a medium to facilitate discussion. Like any careful investor or sponsor decision, what follows are multiple rounds of discussion covering every element of the business case. The process can run into days , weeks or sometimes even months before the investor would say yes. After all it’s money. Here it is important to understand the concept of opportunity cost. Opportunity cost refers to the cost of giving up an alternative in favour of another. For instance if we have $100 and you can only either invest in an ‘Apple’ share or a ‘Google’ share. So the opportunity cost of investing in ‘Apple’ is foregone benefit of dividend and capital appreciation from ‘Google’. The reason opportunity cost is important is that investors would have more than one alternative to commit their money. So before they can make the decision they need to be doubly sure that it’s worth the opportunity cost not only of the money but also the effort and time spent. In an organisational set up the alternatives is between various projects that it can spend money. The budget is defined but at any time number of projects which requires investments will be more than the available budget.
If and when the business case is approved, investor will generally take a staggered approach to first convince the idea would actually work before putting additional money. The usual request is for a proof of concept or a prototype to be developed to validate the idea. This is essentially where we move to the next phase of the product management.
ProductSME 