Last night, at 1:34 AM, I was awoken by a chirping smoke alarm, indicating that it needed to have a new battery installed.
After finding the ladder and the new battery, quickly making the change and jumping back into bed, I started thinking about how that experience paralleled my work history.
In the early 80’s, as a young product manager I received a call from a production supervisor telling me that my biggest selling, most differentiated, oldest, product line was suffering from a 10% manufacturing yield and that I should get ready for significant, sustained back orders. I wasn’t paying attention to my all-star product; I had moved on to more creative work. This is when I instituted the, “Annual Product Performance Review” (APPR).
Discipline vs. Creativity
If I had only replaced all the smoke alarm batteries when I was supposed to, I would not have been shaken from a good night sleep. Discipline often escapes the truly creative person. As a product manager you need both discipline and creativity. One way to manage these sometimes opposing attributes is to schedule the maintenance activities surrounding a downtime in your otherwise busy calendar. Never schedule them during sales meeting prep time, never during trade show season, etc.
Annual Product Performance Reviews, the minimum
I call this maintenance activity an APPR. As a product manager we have to care for our product lines, particularly when they have been on the market for a while and the excitement of the launch has worn off. Spending one day a year, on each of your product lines is a minimal amount of your time invested that could prevent you from being shaken from a good night sleep by an overlooked issue. What kind of an issue? Quality shifts, pricing slip, share slip, new competitive entry, shifting sales force focus, slipping gross margins, resurgence, increasing complaint levels all these potential issues are leading indicators of critical times for your product line.
The APPR can be done anytime of year. At its core, is a year-over-year comparison of key metrics. The more years you have data for, the more likely you are to see a trend. It is good to partner with finance or IT the first time you conduct this type of analysis to make sure your data sources are complete and comparable. For some product lines a monthly review may be more appropriate.
Each APPR took a day and included a review of the following metrics:
- Units, total
- Unit, mix
- Average selling price (ASP)
- ASP by mix
- Complaint rate by type or category
- Manufacturing yields
- Gross margins (GM)
- Revenue distribution my geography
- Revenue distribution by sales territory
- Number of active accounts
- Number of accounts that went inactive over the past 12 months
These metrics are all loaded into a simple excel file, which automatically did the year-over-year trend comparison and some simple charting. The output was the APPR dashboard. Often this dashboard pointed towards areas that needed my attention and a bit of investigative work.
Today, I have created custom dashboards in salesforce.com that provides real time comparisons for new product launches, after one-year the dashboard changes to a periodic based trend analysis that has taken the place of the APPR dashboard. The important thing is to monitor the product lines you are responsible for and take nothing for granted. This is a good application of the, “productive paranoia” concept that Jim Collins discusses in his book, Great by Choice.
A Happy Ending
So what happened with the product that had the yield issue? After managing a yield of 10% and all the logistical and customer service issues that resulted, for over a year, a new manufacturing process was validated and up and running. The product was re-launched and regained 96% of it former share dominance. The product was just that good. The customers allowed us a second bite of the apple.
Since instituting the APPR, have I been shaken from a goodnight sleep by unanticipated product issues? Of course, the key being unanticipated – unpredictable or random issues.
“Experience is what you get, right after you need it most.”
Make it a great day,
Tim Walker is the Principal consultant for The Experia Group. A small consulting firm that specializes in providing experience and expertise during critical device commercialization phases to increase the probability of success. www.theexperiagroup.com.