Is your product funnel a cylinder??

Is your product funnel a cylinder?

There is always talk about the product funnel, the queue, etc along with killing products along the way a best practice in new product development. Unfortunately, this is often not the case and once products enter the development, the only way work truly stops is if they are eventually launched. This effectively makes your product funnel a cylinder.

Part of what is going on with an actual funnel is the liquid at the top is moving down slowly, however at the bottom of the funnel, the liquid is moving quite quickly. A good product funnel should be able to leverage the people from the killed projects and apply them to the better ones which should help accelerate the completion. This rarely happens in practice unfortunately, but there are ways to fix it.

To start with fixing it, we have to understand why projects aren’t killed. Projects aren’t killed for a lot of reasons, but most of them are emotional. Someone put in a lot of time and effort to come up with the concept and present it. They don’t want to see their work stopped. People also don’t understand the concept of sunk costs. Comments of “we’ve spent X amount already” motivate decisions to keep going. The reality though is the money is already gone and just need to look at spend going forward and what kind of margin dollars this will generate.

Sponsors of projects will also have their pet projects. Projects with somewhat weak business cases or a “build it and they will come” justification. Getting these projects killed are often the most challenging. Having good metrics and measures isn’t usually enough to kill these as the response from the sponsor is the metrics aren’t right. When the scoreboard is called in question, makes the arguments more difficult.

The best way to address killing a pet project that seems questionable is to actually go out and talk to the “they” in the “build it and they will come”. Go out to the potential customers and find out if they’re truly interested. Or if they’re truly interested in the product you’re developing. You should be talking to customers anyway, but usually the sponsor conversion takes the form of “customer X is interested, talk to some others to find out if they’re interested too” implying you don’t need to talk to customer X. You’ll need to talk to customer X (or X’s) to put together a true business case for the product. Might find out it is actually good or might confirm your suspicions and find out it is truly a pet project. If it is good, might need to kill something else to accelerate development or if it is bad, kill it with the business case giving you the ammo needed to have the right conversation with the sponsor. The more important aspect is to find out and find out quickly before you spend any more time.

Another reason the product funnel is a cylinder is there is also a misunderstanding of what is success in new product development. This sounds odd or unlikely, but true success for a new product is profitable sales and margin dollars. Since this measure is outside of the control of the engineering and product development groups, it often isn’t what is used. What is used instead is some measure of completing the work, hitting milestones, getting patents, etc, but it definitely isn’t company or new product profitability.

Since profitability isn’t the goal, it doesn’t really matter if the funnel is a cylinder. What happens is the work is the measure, not the completion. And having lots of work to do feels good. The measure needs to become revenue and margin. Being very busy with work is often stated, but that just means you’re spending money and says nothing of profitability.

Moving resources from killed project A to preferred project B to get it done faster just messes everything up from a product development’s group perspective. What people are working on is going to change and change requires conversations with people. You’ll also need to explain that what you’ve been working on “doesn’t matter anymore” and need to work on a product that does matter. That isn’t the full truth, but how a lot of people will interpret this new assignment. Changing this mindset is critical to moving your product cylinder back to a funnel.

The killed projects in some cases don’t need to be truly killed either. They might just need to go on hold while the preferred project is executed and executed faster. The business case will tell the true story of whether something should be killed or put on hold. If your product funnel has turned into a cylinder, you likely don’t have good business cases driving your product development efforts currently. There likely isn’t the discipline either to say no to bad or stalled out projects. These practices will need to be installed or re-installed to say for sure if a project should be truly killed or just be put back on hold.

So, turning your product cylinder back into a funnel isn’t truly about anything engineering or business related. It’s first about harnessing emotions. People need to be told what they’re working on doesn’t make sense anymore, that we’ve got too many projects and need to accelerate the best ones or that the pet project just won’t be going forward. These are all tough conversations, but needed to keep new product development efforts profitable. If your efforts are being diluted by having a product cylinder and you don’t ship as much as you could, you need to start having the tough conversations. This is truly the job of a manager involved with innovation. In my experience, most of these conversations go better than you think and people will eventually see the vision of doubling down on the winners.