Understanding product development economics - why it matters?
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Henri Hämäläinen's presentation from the Tulevaisuuden Tuotekehitys (Future of Product Development) -seminar 27.10.2016.
www.tulevaisuudentuotekehitys.com
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Understanding product development economics - why it matters?
2. Leading Expert in
Product Development
Optimization
Since 2006 we have helped over 300 companies on improving their software based
product development through processes, tools and organizational models. We are
located in Finland and work globally based on the customers needs.
3. Introduction - Henri Hämäläinen
• Principal Consultant, CEO of
Contribyte
• Helped tens of companies on building
more productive Product
Development
• Inventor of Tulevaisuuden
Tuotekehitys™ -series
My Public References
9. Profitability of Product
ProfitCost
Operative efficiency determines
when the curve turns
Slope of the curve comes from
Business capabilities
Subjective and Objective
Quality tells the product
longer term success
10. Business Agility needs to have
Operative
Efficiency
Subjective
& Objective
Quality
Business
Capabilities
Operative Efficiency
• Agile working methods
• Building Quality In
• Smaller Patch Size
• Continuous Deployment
• Lean SW & Lean Manufacturing
Business Capabilities
• Understanding Market
& Customer Problems
and Needs
• Marketing Innovation
and Efficiency
• Suitable Sales Models
• Service Design methods
• Lean Startup
Quality
• Usability and Customer
Experience
• Good working methods
• Craftsmanship attitude
• Customer Focus
12. Many companies solely focus on
operative efficiency!
..or zero defects as quality focus!
13. Business nowadays can come from so many
other factors: new business models,
surprising customer value, customer
experience or many other
14. no sales, easy to start for teams with small investment
• Atlassian does not have a traditional sales team. All prices,
information about products, documentation, support
requests, and training materials on its website
• They don’t offer discounts
• Licensing starting at $10 for 10 licenses
15. Why PayPal succeeded and all
the others failed?
• Was it the email money approach?
• Was is it 3rd party API’s and tools
• Was it the idea?
• Was it the simplicity?
• Was it eBay?
• Was it because the understood the internet
technology rather than payment business
The percentage represents the number of websites using given technology
divided by the total number of websites using any of the technologies
- Datanyze 10/2016
There are as many explanations as there are articles. Product development economics are not easy.
16. BTW..
Have you ever heard of a successful software
company tell, that the reason for their success is
that they are so good at coding quickly.
19. Normal Distribution Power Law
Small wins available for everyone Winner takes it all
History and statistic based Try and learn
Well defined business cases Value vision
Predictable Hard to predict
21. With software one product or product
feature can create 1000x more value than
something else.
Product development economics
optimization is all about probability and
risk handling
32. The only way to get these right, is to
work together. Business, development,
quality, sales and marketing create value
together. Organize your future around
that.
33. Product Owners and Product Managers
play huge role in product businesses of
companies..
And most of them suck at
understanding the economics
34. Create great balance
between these.
Challenge your
people to
understand these!
Operative
Efficiency
Subjective
& Objective
Quality
Business
Capabilities
35. And then you can create
products that are successful
for their full lifecycle!
ProfitCost
Operative efficiency determines
when the curve turns
Slope of the curve comes rom
Business capabilities
Subjective and Objective
Quality tells the product
longer term success
36. Thank you!
Henri Hämäläinen
CEO, Principal Consultant, Contribyte
www.contribyte.com
+358 50 487 3291
henri.hamalainen@contribyte.fi
fi.linkedin.com/in/henkkahamalainen
With no background in financial services but with a deep understanding of the nature of the Internet, founders CEO Peter Thiel and CTO Max Levchin have built PayPal into an eCommerce payments engine that handles $10 million per day in online payments. Despite an increasingly sluggish Internet economy, analysts still project that $3.5 billion in online payments will flow through the PayPal network in 2001.