Double Down On Current Customers And Talent To Thrive And Grow
Unlike the shocks that resulted from the Covid-19 pandemic, this potential economic shift will not be a surprise. Regardless of whether a recession arrives, we know that resources are scarcer than they were during the last several years. This reality becomes clear when we observe the decline of stock market value and the increase in interest rates. Additionally, business growth without profit — for both public and private companies — is no longer as acceptable to investors as it once was. For the foreseeable future, companies will be expected to both grow and turn a profit. This emerging reality has major implications for B2B product leaders, as their buyers will be more conservative in their purchase behavior in the coming year. For B2C product managers, their customer base faces higher inflation and the specter of higher unemployment. Product management leaders should work with their peers in other functions to implement key elements of the following strategies:
- Stay the course and drive alignment on a realistic revenue, cost, and product plan. Whether the recession is mild or severe, 2023 will be a year of change and uncertainty. Leaders will feel vulnerable and are likely to consider business strategy changes as the year progresses. Product management must ensure communication is clear throughout the company and commit to the agreed-upon strategy until data signals the need for a shift. In addition, align with your peers in leadership to develop a realistic plan for the next year and look at what it will take for the business to support itself over the next two years without additional investment. Reduce investment where needed but be careful of being caught without sufficient resources when the economy improves. Act now to bring data and stakeholder voices together to develop and align on a near-term product release plan if modifications are required. The cross-functional leadership team be ready to execute on any updated product and revenue strategies that are informed by long-term company goals.
- Refine your team’s talent. Now is the time to build the strength of your product management team. Current unemployment levels (as of December 2022, the US unemployment rate was 3.5%, at pre-pandemic levels) and the demand for strong product management talent indicate that a reduction in these resources could result in gaps in capacity when the economic situation shifts back to growth. According to data collected by Glassdoor, product management has ranked in the top 10 of the “best jobs in the US” over the past five years, partially due to the continuously strong demand for product management talent. Additionally, the competencies and qualities that make for a strong product manager are unique and companies are often quick to snap up the best candidates. Recruiting new resources will be a challenge when market conditions stabilize and improve.
- Simplify the product portfolio by deeply understanding the value for customers. It’s more important than ever to have ongoing conversations with customers to determine if your offering is delivering the value they anticipated. This should go beyond in-person meetings, as technology now exists to have collaborative workshops with customers beyond phone calls. Additionally, track value delivery through product usage technology. Work with the customer success function to ensure elements of the product experience (e.g., implementation, onboarding) are achieving the expected results and guide the cross-functional product team to adjust practices as needed to increase the value delivered to the customer. Catalog the relevant lessons and take the time now to assess all the offerings in your portfolio using comprehensive criteria, data, and stakeholder input to make any required optimization decisions. The benefits of a simplified product portfolio go beyond speeding up the sales cycle. A leaner portfolio is often easier for product management, marketing, development support, and operational teams to master, and this improved internal competency yields benefits for customers. The same is true for services and support provided by ecosystem partners. The more products they need to understand, the harder it is for them to provide customers with a high level of support and expertise on each offering. Portfolio simplification is also shown to correlate with the achievement of KPIs. Forrester’s B2B Benchmark Metrics Data shows that 73% of high-performing companies — those that drive 75% or more of their offerings to meet revenue goals — are diligent with their product sunsetting efforts.
- Continue to identify new customer problems and iterate on their solutions. Innovative organizations focus on customer needs, improving customer outcomes, and delivering new value. To achieve success in these focus areas, organizations must conduct customer research. Forrester’s B2B Benchmark Metrics Data shows that 90% of highly successful product management organizations have a formal program in place to understand and prioritize customer needs. Understanding customer problems through research should be an ongoing process and must not stop during a downturn. In fact, a recession can expose new areas of customer value. For example, Philips Lighting has addressed a new need through the introduction of Interact Office, a new lighting solution to help its customers create inspiring workplaces that are more efficient and inviting and boost productivity. The discovery, design, and align stages of a product commercialization and lifecycle management process generally don’t include high-cost activities. Now is the time to conduct customer-collaborative development through iterative concept tests, minimum viable product experiments, and continuous discovery activities. When testing solutions, consider leveraging elements of the full product experience (e.g., complimentary partner offerings, API data, onboarding practices) to bring new value for your customers. By ramping up these initiatives, you will be positioned to differentiate your offerings through a downturn and beyond.
- Go forward with product management technology spend. According to Forrester’s Budget Pulse Survey, 2022, 76% of B2B product management decision-makers are planning to increase spend on dedicated product management technology in 2023. This planning spend includes investment in technology used for product usage analytics, product planning, prioritization and roadmapping, and concept testing. Additionally, Forrester’s Software 2 Survey, 2022, showed that 74% or more of software decision-makers have adopted, are expanding their use of, or are planning to implement these product management technologies. Technology that helps product managers understand how products are being used and if they are delivering value provides the necessary data for making product modifications in response to evolving customer needs. Additionally, such data is useful in creating an ROI analysis to support sales in a more challenging selling environment. Product planning and prioritization and roadmapping technology will allow product managers to better synthesize changing customer needs, share the data across functions and keep the organization aligned and focused on strategy.