Software companies of all sizes are relying on acquisitions to fuel growth as opposed to relying on organic growth. Consequently, product managers and product team leaders are being tasked with the role of product portfolio integrator. These teams must be mindful—even vigilant—about their existing product portfolio gaps since acquired products or companies rarely fit perfectly into the existing portfolio.
As these companies continue to rely on acquisitions to address increased growth demand and product gaps, product managers and team leaders must move the portfolio management and integration activities from an afterthought to on-going product management hygiene.
These days when I talk to product managers and product team leaders about their product strategy, a growing number of them understand that the principle engine for their sustained product growth and the most expedient way they will close gaps in the portfolio comes through an acquisition.
Just last week, I asked a CEO of a small technology firm about the vision of his recent acquisition—in other words, what he intended to accomplish. The answers were compelling but not complete:
1. Working product
2. Modern stack
3. Documented APIs web services, etc.
4. Users already benefiting
5. Customers already paying
What was missing was how the new technology added to the current offering. The “better together” story was missing.
If you buy a company and its products, pay a premium valuation and place it into the organization, you need to have a view of how it’s going to play out and what is going to improve for both your organization and customers before you close the deal. Too often this exercise is limited to detailed financial modeling versus detailed product portfolio planning. As with most things in technology, the profits (and the devil) are in the details.
As a product manager or product team leader, you need to think about life after the mash-up. You need to know your better together story of the newly formed portfolio...before the acquisition is complete.
Admittedly, you may not be in the room when the executive team selects the targets or makes the final decision, but your work and the evidence of your product planning should be.
Why You Should Write a New (Epic) Story?
Some product teams may question the value of starting with a new story. Here is a practice I picked-up from a former Microsoft product manager; kick-off the project by writing the press release for the launch or go-to-market announcement. Product management, engineering and marketing all sign-off on the final document. This then serves as the positioning document, describing the value proposition, customer benefits and the competitive advantage.
Most companies don’t do this because they’re focused on the due diligence of the target, modeling the combined P&L or closing the deal. Many times, product teams are not participating in this part of the process because they’re putting out the latest fire. However, writing your better together story will pinpoint risk that can’t be found by examining a spread sheet of the deal. Discovering these elements earlier can make the difference between your investment becoming accretive.
Your better together story not only lays out the enhanced value proposition to your customers and the market, but it also pinpoints the product vision and a high-level roadmap for the portfolio. As a colleague says, this is where product managers get to have more fun. It’s also one of the most strategic parts of the job—you get to ignore the tactical elements (if only for a little while) and dig into the problem-solving aspects.
Remember the CEO from earlier?
I asked who was minding his organization’s portfolio. He answered that it was himself. After some back and forth, we both agreed that dedicated resources were needed. They would own the new story, the strategy and the execution of the product portfolio plan.
When product managers and product team leaders embrace the inevitability that important components of your company’s product portfolio are going to be acquired and plan for it, the executive team is more informed, make better decisions and the task of integration, while not easy, have lower risks.
Drafting Your Story
To easily achieve your better together story, incorporate frequent and light-touching make versus buy positioning exercises. Classic portfolio management techniques for most product teams are over-kill, but a few simple tools can help.
Most of you are familiar with the BCG matrix, bubble charts and the GE-McKinsey Strategy Matrix. All of these tools have their limitations, but for high-level planning they’re great for starting the process. Your long-term roadmap has the most value for identifying potential targets as much as it serves as a vision for what engineering will be asked to build next.
Once you’ve established acquiring is the right step, start a planning cycle for existing products. Which products in the current portfolio are redundant or rendered obsolete?
Be honest about the gaps in the products you’ve built and you’ll acquire a product that not only fills those gaps, but improves the competitiveness of the entire portfolio. Then place value on them.
The priority features for these products could be limited to performance improvements, sustaining or migration depending on the degree of overlap and where the product is in its lifecycle.
Ultimately, if you force the conversation of “what if we bought company or product x, y, and z” and ask it before the acquisition is on the table, you have time to plan and assess how you will integrate it into the current product portfolio before you are given the task with an unrealistic timeline.
So, what’s your better together story? Do you think you need to have one? Leave a comment and let us know.