Product Management is about asking the right questions before making an investment.
A friend you trust has a proposition for you:
“I have a great idea but I need $50,000 to get started. Will you lend it to me?”
What will you do?
You have worked hard for the money that you have and it is safely tucked away in a savings account earning a bit of interest. You have been thinking about how best to invest it and now someone else wants to use it? What would convince you to hand over the $50 grand to your friend?
It is the same for business.
This is the same question that every business has to make when it is asked to fund a new project or idea. People often get frustrated with the process of preparing and writing a business case to justify expenditure on a particular activity, yet we wouldn’t hesitate to ask a few clarifying questions if we were providing the funding ourselves.
There are two different perspectives at play here.
- Funding – the person with the idea requires money to get their idea moving.
- Investment – the person with the money needs to decide if the idea is the best thing to spend it on, relative to any other alternatives.
When considered rationally these 2 concepts will live harmoniously together. Unfortunately the excitement of a new idea tends to overshadow rational thinking, and the desire to act quickly is sexier that clearly rationalising how an idea may actually benefit the investor.
For the Product Manager
In business the role of the product manager is to balance both of these perspectives to select the ideas that will deliver the best outcomes for the target market as well as directing expenditure of resources to the most attractive investment opportunities. These won’t always be compatible and it can be difficult to remain impartial to both funding and investment focuses.
At Brainmates we use the development of a business case as the process of:
a) Expressing the benefits of funding an idea in the first place.
b) Determining the likelihood that the idea will survive in the market place.
c) Estimating the investment potential of the idea for the business.
What will you do?
So if you ever think that you project doesn’t need a business case then just consider how you might respond to your entrepreneurial friend who wants to borrow $50,000.
- What questions will you ask your friend?
- What do you need to know?
- How much risk would you be willing to bear?
- How much money would you expect to get back and when?
- What else will go into your personal “business case”?
Share your thoughts in the comments below.