Product Talk #10 “Turning Ideas into Business Cases” – Do We Need a Business Case?

This is the second of the posts about Product Talk 10, “Turning Ideas into Business cases”. For this section of the Talk, we started by discussing under what conditions a Business case is required.

For Publishing, it is a matter of the level of investment. Jen Armstrong pointed out that it’s sometimes cheaper to release the product than go through the idea validation process. However, a Business Case will be built if there is dependence on the Sales Team.

For Software, the same principle applies – it’s very cheap to get some basic user testing and initial customer feedback. At Atlassian, Nick Muldoon and his team will put ideas out in the wild, and only proceed to the Business Case product validation process if there is encouraging feedback.

It’s a different matter for Banking, where due to regulatory concerns, Business Cases are a necessary formal hurdle. For Kees Kwakernaak, the question is more about what value a Business Case brings in:

  • Facilitating Sales Team product buy-in;
  • Bringing structure to the Product and Product Development process; and
  • Forcing deliberation on whether the product is a good idea or not.

Adrienne Tan raised that the discussion indicated some reticence to building a formal business case. Kees pointed out that some of this is due to concerns about Product Managers being held to figures stated in a Business Case document. Jen added that there is a balancing act between building a strong business case versus getting the product out in a timely manner.

At Atlassian, Business Cases are used as part of the formal process for the Atlassian incubator program. Signing off on the Business Case is a step before a product is released to market. Each Business Case document must include:

  • Target Market information
  • Product Pricing
  • A list of official Atlassian Partners to work with

Janine Panizza pointed out that, from a Business and Production perspective, the Business Case will also be used as a prioritisation tool, allocating and prioritising the product from the existing resource pool, and acts a baseline to work from.

Melissa Osborne gave a different approach to the idea generation, validation and approval process. At Sema Group, they’ve separated the traditional Business Case into two separate documents:

  • A Business Proposal, which includes:
    • The Product Idea
    • Initial Estimated Revenue
    • Initial Estimated Margin
    • Target Market
    • Estimated market Propensity to Pay
    • Estimated Costs

The Business Proposal is taken to the business for approval, and represents a ‘best-case’ situation.

  • A Business Case, which includes
    • Market Definition
    • Market Requirements
    • Final Costs
    • Final Market Figures

The Business Case is then used to prove or to disprove the Business Proposal, and requires input from every team at the company.

Jen had previously worked with a similar document, called a Concept Memo. Concept Memos state what is known and what is unknown about an Idea. If the unknowns were identifiable and quantifiable, then the business would give the OK to proceed to the Business Case stage.