Is Your Product Roadmap Just Burning Your Money?

The number 1 mistake I have seen companies of all sizes make is to let the customers, sales people, engineers and tactical product managers decide the product roadmap by adding one feature after another.

by Disaster Area (Creative Commons)

If you have product market fit and are doing more than a few million dollars in ARR (annual run rate), you don’t need new features to sell your product. If your product is good enough for a few customers with little marketing then it is reasonable to expect that there are many more customers for whom the product is good enough.

Your sales people will complain when they lose to a competitor because of feature X but will likely not be ready to commit to a bigger quota. This is a tell tale sign that this is not a true gap.

Given my experience with 10+ startups and at Salesforce.com, here is my key learning: most product roadmaps do very little to move the needle on growth.

Ask the Hard Question: What if we did no new features for a year?

The way to tease out what is truly strategic and important is to start by framing the problem differently. Think of it as zero based budgeting. – you don’t assume that you keep doing the old stuff, you question everything.

I usually ask the management team – CEO, VP of product, VP of sales – to individually assess the change in top line revenue 1, 2 and 3 years out if we stopped building all the new features except bug fixes and just plugging gaping big holes.

The answer is usually shocking – most startups (and big companies) spend most of the R&D budget building features that are unlikely to move the needle.

What would you build to increase revenue 24 months from now?

There is very little that a product can do to truly change the revenue trajectory for a post product-market fit company in the short term. But if you invest in the right areas, it should impact your longer term roadmap. For example, HubSpot adding CRM to its feature set is definitely going to impact its TAM (total addressable market) unlike adding lots of bells and whistles to email marketing. Workday needs to build all the HCM features out but real top line growth from R&D comes from building Financials or Supply Chain products.

Great companies and great product leaders are naturally good at this. They intuitively understand what the market wants and deliver it.

We all intuitively know this for companies that ship hardware. Everyone is asking for the next iPad, the next iPhone – not just a slightly better Macbook. Its important to finish what you started – and there is whole blog post on this – but its important to know that the two buckets are different.

You will never build an iPhone by incrementally improving your Macbook. 

Similarly, a software company that keeps adding features to its one product without thinking in terms of new editions, new product lines or new go to market – will end up with a bloated product not a richer set of products that can alter the future of the company.

I leave you with this thought – what features are you building today that will truly significantly change the your future? Are you building the next iPhoneor are you just adding the 10th button and the 7th app on a Blackberry?

(Cross-posted @ Anshu Blog)

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Partner, Storm Ventures. Previously VP of product management & strategy at salesforce.com across applications and platform. Previously founded and led Oracle SaaS Platform, and held engineering and product management roles in SOA and Identity Management. Anshu has a B. Tech. (Honors) and M.S. in Computer Science from Indian Institute of Technology at Kharagpur and University of North Carolina at Chapel Hill respectively. Read his blog here.

One response to “Is Your Product Roadmap Just Burning Your Money?”

  1. Nis

    “There is very little that a product can do to truly change the revenue trajectory for a post product-market fit company in the short term. But if you invest in the right areas, it should impact your longer term roadmap.”

    It’s all about how you think of your company’s capital. Are you the gambler hoping to double your money on a dream feature, or an architect building a sturdy structure that will produce revenue for years to come?