Millennials shunning traditional employment

The baby boomers might not like it, and even Generation X are known to be less than thrilled with it; why are so many millennials shunning traditional employment and jobs, and going into business for themselves? With so many entrepreneurs and freelancers out there, surely there must be something the older generations just don’t see?

A Lack of Jobs or Qualifications

First and foremost, nobody should “blame” millennials for going into business for themselves. If that is what somebody wants to do, so be it. However, there are several factors which may have gently nudged or pushed them into making that decision.

There aren’t actually that many jobs out there in 2018 for the inexperienced or uneducated. Unless you fancy low-paid labor, you will probably have neither the experience nor the education to get one of the better-paid jobs. Even when an educated person with a university or college degree goes for a job, they are unlikely to be able to get it. Companies want experience which even educated youths don’t have. Since you need a job to get experience, and you need experience to get a job, there are precious few youths being employed by the bigger companies.

There are, however, other factors in why millennials don’t want to play ball and go into business for themselves.

Other Factors

Many in the millennial era are far more assertive than their forebears. They want more control over what they do and their time. They want flexibility in their schedule. They want to be able to swim at noon and take a weekend break with the kids if they so desire. Regular employment just doesn’t offer you the same opportunities as being self-employed.

Millennials will often try to fuse their work and personal lives into one. Many have a home office, and that acts as the hub where their business operates from. Others do not like restrictions interfering with their personal life from the workplace. This means that they may feel more unrestricted if they can work on their timetable, in their home. Passion projects also mean that millennials are more inclined to spend more time working, and with greater devotion and care, then they would if they were set up in an office and a company they don’t particularly care about.

We are living in a digital age, and the millennials were the first ones to truly have the fruits of the digital age open to them. The internet provides the generation with the tools to be self-employed. They don’t thousands of dollars’ worth of software, client lists, and delivery men. Most self-employed people can build up a client base from the internet, use free internet tools to establish their business and to network, and can get paid digitally, too.

Everything the modern businessmen need is at their fingertips in a digital environment. The new generation isn’t shunning work (as such), they are just using different tools which make it easier for them to do the kinds of jobs they wish to do, when and how they want to do it.

Managing by Influence

I used the following text as a base for my presentation at the recent ProductCamp in Chicago on June 19. The presentation is available here.

In the knowledge economy, many of us are responsible for one or several  products, services, projects or initiatives. We are held accountable to get things done, but we often do not have the resources or authority to overcome many of the obstacles thrown our way. No one reports to us. Resources get cut, coworkers have different agendas, and our management is not able to prioritize projects. While you try to resolve these issues, the competition is eating your lunch, and your customers take your product for granted. Nonetheless we must pursue our objective no matter what.

So how does one ensure that things get done under these circumstances? One way I found is to lead other by influence. Driving the though process will enlist your team to do what’s right. Give your team members a purpose and they will follow you. Usually people will support your efforts if you bring sense and logic to them.

How do you get there? I found, based on my readings and experience that just a few principles can make a difference. Pardon me if I am sometimes stating the obvious, but these principles deserve to be presented in detail.

First you need to have a vision of where your initiative is going. Having a well thought-out, step-by-step understanding of where things are and where they need to be and when is absolutely key to influence your team. The beautiful thing is that you don’t need to have that vision right off the bat. The simple fact for being the engine to drive the development of that vision will help you federate the energies towards a common goal.

Another aspect is to consider is the tapes which are running inside your team member’s head. Because of previous past experiences, positives or negatives, your team member hears voices or “tapes” that will affect your initiative, positively or negatively: “this will never work”, “we’ve tried this before” , “this is a fad, if I wait long enough, it will go away”. These are examples of tapes that are hard-wired in people’s mind. As a leader, it is very important that you are aware of these tapes.  Please read Robert Cialdini “Influence, Science and Practice” for more on this topic. Direct contact with team members, ability to listen with an open mind, understanding what will trigger behavioral changes, constant and consistent communication of why and how the team will succeed can go a long way to fight negative attitudes.

Once you have the vision and understand the emotional landscape of your team and your management, you must have the ability to convince.  Tons of books and articles have been written on this very topic but the document I like the best because of its impact is a 1995 article from HBR by Jay Conger, a professor at USC. In his article, he list what works and what doesn’t.  Let me start with what doesn’t because I am guilty of having practiced a lot of what he does not recommend:

1)      Make a case with an upfront hard sell. The “John Wayne” method gives your adversaries the ammunition they need to bring you down.

2)      Resisting compromise:  showing no flexibility to address other constituents’ concerns is a sure way to see your ideas die.

3)      Believing that the secret of persuasion lies in presenting great arguments. It matters, but it is not enough.

4)      Assuming that persuasion is a one shot effort.  Convincing a team is a process, not a one-time event.

Now let’s see what works according to Jay Conger’s research:

–          You must first establish credibility. Things will get a lot easier if you have the credibility to bring the team to a win. That is not an easy thing. Not too many individuals who have been in the same organization for a long time have a pristine track record. New employees , hired to provide leadership are given the benefit of the doubt  for a while, but need to be able to swim in the cold water after a few weeks. If you miss some credibility, you can substitute some of it by ensuring that you have visible management support. Fact and figures will also help you enlist the critical minds.

–          Frame for common ground. Even if your credibility is high, your position must still appeal strongly to the people you are trying to convince. What will be of interest to the individuals who are key to your success?

–          Provide evidence. Still according to Jay Conger, raw evidence won’t do. You need to mix your data with metaphors, examples or analogies to make your position come alive.

–          Connect emotionally. While we all agree that emotion plays an important part in influencing and convincing, it is how we calibrate the emotional component that matters. Too little of it and you do not connect. Too much of it and people will think you are weak. It is repeated contact with your team that will give you a sense of the right mixture. This may sound calculated or not spontaneous, but it not about faking your emotion. It is about channeling them in a way that is useful to your initiative.

The task is much harder for individuals working out of a remote office with no visual cues on a geographically distributed team’s body language. You don’t know if they are listening to you, and they don’t know if you hear them. Any one with hints on how to deal with this situation is welcomed to provide input.

In conclusion, Influence is not a given, but there are many tools and techniques one can use to increase it. It is a complex tool, but that’s why it is so interesting to be a product manager.

Product Managers Must Feel The Pain

Customer pain points are a good way to start an investigation about new products or even a major feature of your new release. Granted, and to paraphrase Henry Ford, customers familiar with horses won’t think to ask you about a car, but it is a starting point.

The sales force is an invaluable source of information on this topic. As part of their sales cycle they will typically manage to articulate the customer’s pain points to the rest of the organization and they will propose solutions to these pain points around the products you and your team manage. Product Managers should use this information whenever possible.

However, Product Managers should not totally depend on the sales organization to understand the customer’s pain points. Instead, they should consider it an important part of their job to go out there (heard that one before?) and spend some time in the field. Direct discussions with the sales force can help but cannot replace direct interaction with a customer.

There are a multitude of reasons for this, and as part of this blog, I will limit myself to the top five.

  1. The information Sales provides is not packaged correctly for what you need to accomplish. You need detailed, objective information to build your new product. Most of the reports you read in a CRM system contain only a few lines about the pain, its impact and how the customer copes today. Interviews with the sales force may not always help either. Why? Because the data around the business pain must be consistent to be really useful.  In order to draw rigorous conclusions, you need to have a process for interacting with the customer in a systematic fashion. A consistent set of questions will create a systemic approach to generating more data points and to avoiding having your perspective clouded by one anecdote. It will also help you segment the categories of business pain in a more logical fashion.
  2. How about the customers and prospects your sales force is NOT meeting?  These constituents are very important. They may not know your solution exists, or they may have discounted it for a reason that you’d love to know. You need to go out there to find out.  Network at conferences; seek introductions thorough alumni and other social networks. That’s part of the value you bring to the table.
  3. The customer pain may evolve as you ask questions and sales may not have the time to capture subtle changes occurring as the customer becomes more sophisticated through a lengthy sales cycle. As you and your competitors educate the customer, their definition of the problem becomes more sharp. You and your company must sense that evolution in order to gain and keep the status of a “column A” vendor. Granted it is the account manager’s responsibility to manage the prospect’s expectations, but she may not know as much about the competitors as you do.
  4. How many actors experience the impact of the pain? It must be incurred and recognized as an issue by many. If only one actor feels the pain, will they be able to make it a problem that can truly be felt by the rest of the organization and start a sales cycle? Or is it a real but vastly ignored issue that may take a few years to surface as a top issue? If the pain point is well-known and pervasive, it will be a lot easier to sell a product that addresses it as opposed to one where you need to educate a prospect about a problem they didn’t know they had.
  5. What are the substitutes? Because your position as a Product Manager allows for an expanded understanding of your industry, you may be able to consider any substitute that your sales force does not. What if that pain is easily solved by some other product in a cheaper way? Does it warrant a new product then? Probably not.

Too many times Product Managers use sales force information as a main source for understanding business pains. In some situations, Product Managers are cut off from their customers for budgetary or political reasons. Sometimes they are just too busy for a trip. Don’t fall into the trap of becoming an order-taker. It may be easy, but it won’t yield homerun products. Take the time to get to the bottom of the issues and accurately define the problems your product or solution will solve. This will increase your chances of success and will help you gain credibility in the process.

Service Management For Product Managers

In my consulting practice, I have been working a lot lately to define a service line for one of my clients.  It’s a strategic content generation service that we are packaging as a standardized, multi-customer offering. I find that it has a lot of the same high-level needs that a product might have – pricing, packaging, definition, release plan, feature/function, messaging, etc…  Seems similar – and it is, but only at the high level. Since a large portion of the knowledge economy is moving to service-oriented offerings as well as transitioning from traditional software to SaaS, I thought that more and more product managers might find themselves in a similar position.

So what are the key differences between managing a product and managing a service?

Features vs. Modules: Products have features – pieces of functionality that we spend our lives trying to tune to the users needs.  Similarly, Services are comprised of one to many modules, which are the value added actions performed to complete the services. Just as product managers have to decide what features go on the must-have list and the nice-to-have list, the same action needs to be taken for the modules of a service.  For example, if you are defining a dental service, teeth cleaning and cavity checks are must- have modules while teeth whitening goes into the nice to have category.

The Product Manager uses the same methods to research the modules as he or she does for the features: what does the customer base need and want, how will they be using the feature/module, what else is out there in the marketplace, etc… He or she should also use the same methods for pricing – the EVC of the feature or module.

That is where the similarities end.

Instead of building a feature, as you do in the product world, in the service world, you have define the module.  Defining the module is a very different process because unlike the feature, the module has to be executed each time the service is performed.  The module has to be designed in a way that is repeatable by the service provider in a cost effective way.  There are several considerations:

  • Repeatability – After you design the module, can it be easily repeatable by the service provider?  Service modules with significant levels of complexity may not always be successfully executed even thought they were defined very well.
  • Provider – Who is going to provide this module?  How expensive are they?  How skilled are they?  How motivated are they?  Defining a service module that will be provided by a highly skilled and motivated person will need to be less through than one provided by an unskilled person because the skilled and motivated person will take more ownership in the job that they are doing and require less specific directions.
  • Cost Structure – Complex modules generally have greater variability in the amount of time they take to perform even with people that have similar skill levels. Furthermore, the recipient of the module may take varying amounts of time to receive it. Using the dental exam again, people with a fear of dentists will take significantly longer to consume the teeth cleaning module. Furthermore, unlike a feature, a module that is sitting idle can be costing you money while a product sitting idle isn’t.
  • Audit Processes – Service modules may degrade over time as service providers become bored, lazy or otherwise disengaged.  On the other hand, modules may improve as service providers perform them. Your audit process needs to both ensure that the quality is up to par and quickly assimilate any “lessons learned” into the module definition. (This is similar to developing features with “iterations” except with services you are in an almost constant release cycle for element tuning.)

Sales and Promotion – Assuming that the customer is aware of the business problem and is properly qualified, you must arm your sales team with the knowledge and collateral to convince this customer of the following:

    • The defined service corresponds to the customer’s needs without significant modification. Services seem easily customizable from the customer’s perspective, but customization can drive your costs up dramatically.
    • At the end of the engagement, the defined deliverables will solve their problem.
    • Your people are skilled enough to execute it properly.
    • You are putting the proper structures in place so you won’t have to come back regularly to do the same service. unless your service is a regularly scheduled event.

Financing – Unlike a product that has to be built, a service, once defined, can be ready to perform with minimal start up costs.  It requires less capital investment overall and can be producing revenue within a few days.  Since the sunk costs are a significantly lower part of the budget, you can afford to take greater risks in rolling out a new service than you can with a new product.

However, since you can roll out a service easily, so can your competitor.  Business process patents do exist, but they are not as popular or binding as regular patents.

Product Support vs. Service Support:  Many people consider support a Service and it is, but not in the sense that I am defining Services here because you need Support for a Product or a Service.  (Think you don’t?  How many times have you asked the painter to come back and clean up something he hasn’t done right?) One significant difference that I have found though is that increasing the complexity of the service does not necessarily increase the support cost as it does with a product.  Sounds a bit counterintuitive, but the more complex the service, the higher the level of service provider (usually) which results in a deeper emotional connection between the service provider and the quality of the service.

Even outside the SaaS world, many Product Managers are now finding themselves defining and managing a service offering.  If you find yourself in this position, these concepts will help get you started without making the same mistakes I did, which should save you a lot of time, effort and frustration.

Unlock Your Product’s Value with Pricing

From my experience, value-based pricing is one of the most often used, yet least understood concepts in product management. While deceptively simple on the surface, most product managers have trouble turning it into something concrete. Sure it makes sense that a good product should provide value to the customer, but trying to get a handle on this is like trying to catch smoke with your bare hands. Luckily, this task is a bit easier for those of us in the B2B space since we don’t typically have to be overly concerned with the fuzzy intangibles so important in B2C like how our brand will help the consumer achieve their personal goals, laddering up to get closer to the consumer’s core values, and all that noise. But even still, understanding how your product can help a customer improve their business does not automatically translate into a price point.

Economic Value to the Customer (EVC), a concept I mentioned in a previous post, can be of great help in this situation – especially when you’re working on pricing a new product and you don’t have the luxury of existing sales data to calculate a demand curve (not that this is exactly easy either). Once you’ve completed the EVC framework for your product you’ll be able to use it to help diagnose why sales are slow, assist sales force personnel in negotiations and even determine which enhancements will result in the largest gains in customer willingness to pay.

The basic premise behind EVC is that consumers buy not just on price, but on the basis of the economic value that the price represents. This means that customers attempt to discern the Net Value of your product. For those that are mathematically inclined, you can think about it like this:

After customers gather information about all the options in the marketplace, they will (quite logically) select your product only if it proves to yield the highest Net Value relative to competing offerings. Reordering variables shows us that the price you charge for the product, therefore, must be less than or equal to the sum of the Differentiation Value (∆V) and the Reference Value (R). The Reference Value is the price of what customers view as best substitute and the Differentiation Value is the value to the customer (both positive and negative) of any differences between your offering and the reference product.

Said another way, a product’s total economic value is the price of the customer’s best alternative (the Reference Value) plus the economic value of whatever differentiates the offering from the alternative (the Differentiation Value).

Of the times that I’ve used EVC, one case illustrates the process extremely well. I was launching a bundle of web services that allow third-party service providers to automate receiving work assignments from their customers. Prior to this solution, the only alternative was a manual process, so in other words, the Reference Value was the cost associated with employing staff to manage the work conducted between the two companies. Through a number of conversations with managers at these firms I was able to uncover the fully loaded cost per employee as well as the ratio of employees relative to work volume on the average. These details unlocked the cost of the manual process and hence, the Reference Value.

The Differentiation Value consisted of a number of components. First, the new system would require an up-front investment in information technology to implement the web service interface. So relative to the manual approach, this was a negative – remember that your product will probably have pros and cons when compared to the competition. Benefits over the manual approach included reduced headcount, improved performance (increased throughput) and improved quality.

Once you have these details, calculating the Willingness To Pay (WTP) is fairly straight forward. Simply sum the dollar value of the cost savings generated from the labor reduction and the value of the productivity and quality gains. This exercise yields the maximum WTP. Note! This isn’t the price, but rather the amount at which the customer would be indifferent between the manual process and the web services. You’ll want to set the price below the maximum in order to share some of the value created with your customer and entice them to make the purchase. Economists know this as Consumer Surplus.

As you can see, the process of measuring your Differentiation and Reference Values isn’t exactly a plug-n-chug operation. Applying EVC necessitates effort and creativity, which requires you to think broadly about the sources of value for your product. Usually, in the B2B space economic value can be expressed as revenues gained or costs avoided by purchasing the product. This means you need to truly understand your customer’s business and how your product will impact it. Only then will you be able to determine if your pricing is doing a good job of getting a piece of the value your product is delivering to the customer.