Impact Pricing Podcast

EP59: Features Don’t Matter: Why Value-Driven Product Plans Work with Steve Johnson

Steve Johnson is the CEO and founder of Under10 Consulting. His focus is on implementing ‘just enough’ process using proven methods. 

Since 1979 he has worked in computer hardware, software, and services. Over the years he has moved up from product manager to CMO and has worked with tens of thousands of product managers and product leaders at thousands of companies. 

In this episode, Steve Johnson shares how to implement world-class product management.

Why you have to check out today’s podcast: 

  • Learn about product management’s role in pricing strategy
  • Learn the importance of having a strategic customer and market-driven business case that will define the direction of your product and what you want to achieve
  • Understand Customer Perceived Value, what appeals to the consumer and why you need to put a dollar value to your product feature/solution

“Look at the cost savings or the impact on customers and take 10% or more. If you’ve got a good brand name, you can charge 15%. If you don’t, you can charge 10%.  At the end of the day, if you’re solving a problem that people don’t have, 10% of nothing is still nothing.”

– Steve Johnson 

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Topics Covered:

01:42 – What his product management role look like thirty years ago

03:52 – What are the roles of product managers and product marketing managers

08:48 – Why the need for clarity on buyer persona, market size, and positioning

11:58 – Are product managers thinking about the value or are they just thinking about problems

15:59 – Why write a business case and why the need for due diligence on an idea 

17:49 – How to value a feature or solution

21:53 – Stressing about the importance of product strategy, product planning, and product growth

25:03 – The best pricing advice he has

Key Takeaways:

Quoting Luke Hohmann: “A product owner, now a product manager owns pricing, a product owner doesn’t.” – Steve Johnson

“Right now, I’m kind of enamored with three brand new titles that I made up, product strategy, product planning, product growth because other people have got all this baggage with product manager or product owner and or product marketing manager. But I like those three titles because it aligns directly with what I’m wanting them to do, which is come up with a strategy for future products or come up with a plan for what we’re going to do next or look for ways to grow the products we have now.” – Steve Johnson

“All of my work is really around pretty simple metaphors like, all right, now that you have those three roles or one role, let’s write down everything you expect those people to do and I’ll show you how to decide whether those things are product things, development things or sales things.” – Steve Johnson

People / Resources Mentioned:

Connect With Steve Johnson:

Connect with Mark Stiving:   

Full Interview Transcript 

(Note: This transcript was created using Temi, an AI transcription service.  Please forgive any transcription or grammatical errors. We probably sounded better in real life.) 

Steve Johnson: Look at the cost savings or the impact on customers and take 10% or more. You know, if you’ve got a good brand name, you can charge 15 if you don’t, you can charge 10 but you certainly need to be at the end of the day. If you’re solving a problem that people don’t have 10% enough and is still nothing.

Mark Stiving: Welcome to Impact Pricing, the podcast where we discuss pricing, value, and the problematic relationship between them. I’m Mark Stiving, today our guest is Steve Johnson. Here are three things you want to know about Steve before we start. He is the first hired instructor at Pragmatic Marketing, the company I recently left and it’s an amazing company. He is the CEO and co-founder of Under10 Consulting, which I’m sure we’ll hear a little bit more about and he is possibly the most brilliant thought leader and product management today. Welcome, Steve!

Steve Johnson: Thank you. That’s a little over the top.

Mark Stiving: I said possibly. Okay.

Steve Johnson: So, I’ll tell my kids.

Mark Stiving: Yeah, exactly.

Steve Johnson: One of the top minds in product management and they go, what’s product management?

Mark Stiving: Well, speaking of which, I was scrolling through your LinkedIn profile and your first product management title was 30 years ago.

Steve Johnson: I haven’t aged a moment.

Mark Stiving: I know you still look that young. And so what was that like 30 years ago?

Steve Johnson: Well, you know, that’s an interesting way to get into this topic. 30 years ago, product management was a business role. You know, the folks who were doing product management were business people and making business decisions. But career-wise, I mean, coming up was kind of interesting. My first job out of college, I was a programmer in Fort Worth, Texas. And my boss did this super kind thing. He recommended me to a friend who was hiring sales engineers at a different company. And so I got this job as a sales engineer and I did great. I really loved that work.

And then I moved into sales from there and was suddenly outselling everybody on this one product that I had used as a user. And my boss said, you know, I don’t know what you’re doing, but could you teach everybody else what you’re doing? And so I put together a sales playbook and ran that across in our office and then across all the offices and came to the attention of the VP of marketing who said, you know, ‘Hey, what you’re doing is actually called product management.’ And actually, you know, today what we would call it, this product marketing. But anyway, he recruited me into that role as the product manager, whatever that is.

Mark Stiving: Yes. Well that’s the real question, right? Whatever that is. And eventually, I want to get, I know where I want our conversation to lead to, but let’s start off with the roles of product managers and product marketing managers In today’s world. My view was always product managers, their most important job is to figure out what the next version of the product is going to look like. If I could say that’s what the single most important thing a product manager does. First off. Is that right? Wrong?

Steve Johnson: No, I agree with that. I agree with that. I’ll take it a little bit further in a moment but finish your thought.

Mark Stiving: Well, so as I watch subscriptions, I see more and more of that decision moving to product marketing. And that’s what I find interesting about this whole process. And I wanted to debate it for just a few minutes.

Steve Johnson: Well, let’s go back to kind of where I started. You know, when I started again, it was pretty much a business role and it was almost always in marketing, but it wasn’t doing marketing communications. And then while I was a product manager, it started becoming, the product manager role started becoming more and more technical, more into the details of what’s coming out in the next release. And then when I was teaching at Pragmatic Marketing, I remember I had this wonderful experience where one of the people in my class was a former president.

I was the president of a company I had worked for. And I said, so, you know, I was making your point. You know, that the product managers are really about what should we build next? And product marketing is about taking the products we have now and increasing their success in the marketplace. And that’s how I think of it today, that product management is about what problems are we going to solve using, you know, a development resource that will get features. Whereas product marketing is looking at, okay, we’ve got this product, what problems do we have, what friction exists and how can we remove that?

And so these are different kinds of problems. These are go-to-market problems. So I think of product management is next and I think of product marketing is the product we have now. And then I typically see like the VP of product management or a portfolio manager looking at what products and options we should have in the future beyond the current products that, so I think of it in the three horizons, you know, now next and future, if that makes sense.

Mark Stiving: Yup. Absolutely. And so, to differentiate next from future for a second, you would think of next more as how do I tweak my current product? What are the new capabilities I would put on my current product, where the future is, what are the new products that we don’t do today?

Steve Johnson: That’s how I think of it. So, and then, you know, agile happened and it was interesting when I started Under10 Consulting back in 2012 and I should do a quick aside there. After 15 years, The Pragmatic, I continued seeing people who needed help operationalizing what they’d learned, you know, great class, you know, love the stories, love the jokes and I’m really having a hard time figuring out how to apply the concepts from class to my products in my organization.

So I started to entertain consulting and the idea of Under10 was don’t try to do all 37 boxes. Identify the 10 or fewer that are most important. So that was the origin of the community. But anyway, when I started Undert10 Consulting, the first thing I did was I called and interviewed over a hundred VPs of product and CPS, in particular, wanting to look at, you know, how is product management changing and how has agile impacted product management and pretty much everybody I talked to said that product managers have become primarily technicians as a result of agile, which is not what Scrum asked for.

I mean in the scrum book the product owner is, well if you read the book, it feels to me like the product owner is truly another name for product managers. You and I understand it, but in practice, it seems that the product managers have become designers, they’re doing prototypes, they’re assigning tasks. In some cases, they’re doing development. And to the point, I think you may four or five minutes ago and product marketing has said, well somebody kind of do this stuff and they have stepped into the void that has been left. So the companies that I talked to that said, I love agile, agile is doing everything great for us.

They split the role into product manager and product owner that there is a product owner dedicated to one or two or three teams and they focus on what’s in the next release or what’s in the next sprint. But a businessperson is the product manager and the companies that said agile has been a mess for us are the ones that said, well we just renamed all of our product managers, product owners and they got so subsumed into the development side of the house.

They haven’t left the building in three years. Right. And one of the things that agile even mandates is they want the product owner, I should’ve said Scrum, but what they mandate is they want the product owner to be a customer representative and yet don’t ever leave the building because you know we need you to answer our questions or read aloud too. It’s from JIRA.

Mark Stiving: And so the problem or the problem gets solved by product marketing taking on this role of saying, ‘Oh, here’s what we’re going to go build next.’.

Steve Johnson: Exactly. Exactly. It’s more like, I can’t actually do my go-to-market job if I don’t have clarity on the buyer personas and the markets that we’re trying to serve and the size of the markets and the positioning and a whole bunch of stuff that you would expect a product manager to have done, but you would not expect a developer lead to have that.

Mark Stiving: Right. And while the product marketers out learning all about the different personas and the different uses and the value that we’re going to add to the marketplace, they’re finding all these problems that we’re not solving.

Steve Johnson: Exactly.

Mark Stiving: And theoretically bringing them back into the company. So it does get left to product marketing’s role.

Steve Johnson: Indeed. And I was at a conference recently sitting at a table, it was a product marketing conference and I was sitting at a table with a couple of product marketing people and a couple of product managers. And at some point, the product manager leaned over to me and they said, they keep saying product marketing, but they’re describing what I thought my job is. And the issue was, this guy’s been doing it for a while, so he’s the product manager.

You and I were talking about, you know, the one who researches the market and understands the problems and identifies not just features but new products and options to offer. And another quick anecdote, my friend Luke Hohmann, who is the founder of Innovation Games used to put it pretty simply, he’d say a product owner, now a product manager owns pricing, a product owner doesn’t. I’m not sure you would agree with that statement, but certainly, we would agree that product owners rarely own pricing.

Mark Stiving: Yeah. I would say that that’s way closer to true than not true. It’s very far over. So there’s a lady who helps me with some of my content, a subject matter expert I often go to, Natalie Louie and she was a product marketing for Oracle and Hired and now she’s at Zuora. I mean, she’s a super brilliant product marketing person. And when I think of the role she does, she does a lot of product management stuff. Right. And it is just fascinating to me that that role is so important that it’s gotten moved over. Okay. So actually I appreciate that conversation cause it kind of clarifies some things in my mind, but I don’t really care. Here’s what I really care about is somebody is saying, here’s what we have to go build next.

For the sake of argument, let’s call it product managers, but it doesn’t matter who it is. For instance, we think in terms of product managers, we’ll let them have that role now. Okay, so now someone’s got to figure out what the next thing is. We build and I’m a pricing guy. When I think about what we taught at Pragmatic, it was what problems are we going to go solve? When I take that same thought process or concept and I turn it into a pricing world, I think about what’s the value of the next feature or capability or now are product managers thinking this way. Are they thinking about value? Are they thinking just about problems? Help me out, help me understand the mind of the product managers.

Steve Johnson: I think that that’s, you know, you’re touching on the big issue. You know, if product managers, yeah. If product managers are primarily spending their time with development, then they don’t know where the value is. If product managers were saying we’re building this feature cause I talked to a sales guy or our competitor just came out with this feature and they’re just doing the copycat. Well, they don’t know where the value is either.

And to me, this is all quite sad. I mean I’m not saying, ‘Oh yay, look what’s happened.’ Right. It feels to me as, well, I’m sorry, I’m pretty active on Quora and I’m pretty active on Reddit and I’m astounded at some of the things that I see in terms of questions like one person posted recently, ‘When will UX and PM be merged?’ and went on to say, you know, my job in product management is to build prototypes and to articulate acceptance criteria and assign, not assigned, but I make sure the right developers are getting the right tasks, you know, delineating between front end versus back end. And I’m like, I know what you’re doing is important, but it’s not product management.

You’re being a development league. And I think it, you know, I don’t know if it started with agile or if it started with the importance of UX and what I saw, Oh I don’t know, 20 years ago was product managers moving into the UX space because developers wouldn’t, and my line then and now was the reason product managers do UX design is because they suck at it less than developers do. To your point, if you haven’t spent time with customers or even you know, non-customers, people who ought to be shopping for your product and are not, how in the world are you making pricing decisions or even market sizing decisions. I talked to a guy, is not a statistically relevant survey.

Mark Stiving: Our competitor did this. Oh, good!

Mark Stiving: Nice. Yeah. 

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Mark Stiving: So I want to go back to, and I don’t care if it’s product management or product marketing, somebody theoretically is hearing things from the marketplace, but who’s saying, how valuable is this? And I guess I could drop this back to, are we actually writing business cases that have anything like reality in them?

Steve Johnson: Or you know, are we even writing business cases? I was working with one company and the product manager was hired because the president had this great idea and she got well into the development side of that and started doing, you know, market validation because she had learned that that was something that product managers were supposed to do, which is true. And she was showing the idea to a couple of potential customers and they were just bored senseless. They couldn’t care less.

And it kept happening and kept happening and she got more and more concerned. And finally, she went back to the president and said, where did this idea come from? And he said, Oh, it was just kind of an idea that I had one day.

So she realized that there was no due diligence done on the idea at all. And she needed to go all the way back to the beginning. You know, what persona do we have and what problem do we solve? And is that problem urgent to the buyer and important to the user? And what she found was they were building a solution to a problem people didn’t have.

Mark Stiving: Yup. So I had the exact opposite thing happened to me, which I want to give huge kudos. I was in teaching a client and one of the ladies said to me, I got hired to do this new project the CEO wanted. She said, ‘Here’s a $5 million budget. Go do this.’ And she said, ‘I don’t want the $5 million. I want to go validate the problem first.’ Nice job.

Steve Johnson: Good for her.

Mark Stiving: Yeah. Yeah. Nice job. So how do you, and do you teach people how to value a feature? And I keep using the word value because it’s an important word in my world. And maybe, maybe you don’t use that word or it’s not important to you, but how do you teach people how to value the next feature they’re going to build?

Steve Johnson: Well, I think you explained this really well in the price class where you look at different combinations of things and use conjoint analysis. But I feel that’s, I mean there’s a nice way. I feel that that’s almost beyond what most companies can do.

Mark Stiving: Absolutely.

Steve Johnson: And one of the ideas that I have underneath my product, underneath my consulting business is let’s do some easy things quickly and some easy things are your designer builds a user interface and you go show it to three people or set up a zoom session and walk them through, you know, a PowerPoint demo. That’s something people can do. And for that matter, let me go differently.

I taught a class in California and there was a guy in the front row who had his arms crossed for like two days. And finally, at the end he said, you know, I can’t do any of that. And I went, what do you mean you can’t do any of this? And he’s like, I’ve got to have permission from my boss before I can leave. And I said, but wait, I’ve been giving you techniques that you can use without permission. I mean, nobody prevents you from hopping on the phone with a customer who recently called customer support and say, dude, I’ve got this thing I want to show you. Or I used to be friends with the CIO of JPMorgan Chase. And I would secretly call him without my salespeople know and say, you know, ‘Hey, I’m really struggling with this security issue. I don’t understand the use scenario.’ And he’s like, ‘Oh yeah, that’s really common. What do you want to do?’ Is this, this, this, this, this.

And I knew he wouldn’t rat me out. He would never say, Oh yeah, I had a fine talk the other day with your product manager who made all these promises on your behalf. I’ve always, so I think there are a number of techniques which I do teach and when I talk about, you know, customer and market discovery, it’s, you know, build a landing page and get some signups, build a prototype and show it io some people. Do a survey if those are any good anymore. And I’m more and more feeling that the sales operations and marketing have so ruined surveys by asking me how every flight was and how every bite of my meal was that we all have survey fatigue, so we need to look for some other techniques to do the validation. But what I’m really, 10 is a long ramble to get there. I’m sorry, I don’t see people trying to get down to the feature level as much as just saying, here’s a bunch of stuff we’re working on. Explain to me how you would use it. But there’s an implication of, you know, how valuable is this for us to build? And when you hear four or five or six people say, that doesn’t interest me at all, then I don’t need to really score that. To me, you know what? For me, I’m mostly looking for zero or one, you know, yay or nay, not so much. This combination of things would be worth 792 and this combination of things would be worse 648.

Mark Stiving: Yeah. I tend not to worry so much about what’s the dollar value I would put on it and I worry much more about is there value or what would the value of the solution be? You know, I love my time at pragmatic because I learned so much while I was teaching. It was incredible, but one of the things that I did, I internalize this concept of the problem, right?

The problem is really important, but the problem is just the first step because you’ve got a problem. Then you’ve got the solution, which is your feature. Then you got the result the clients expecting to get when they solve this problem. Then you’ve got, especially in the B2B world, what’s the dollar value of that result? And so to me, that’s what I care a lot about is can I get to that dollar value of the result from my clients? That’s tough to do in B2C and selling fashion or something but B2B is certainly reasonable.

Steve Johnson: And feasible. I agree. And I was posting on Quora recently, somebody asked a question of you know, how much you charge and the scenario they gave was something like clients can eliminate two hundred thousand dollars positions by implementing whatever it is this person was talking about. And I instantly went to, well what is 15% of that? That’s probably your idea, right? 15% of the net gain.

Mark Stiving: You might’ve learned that from the price class.

Steve Johnson: Yeah, that sounds good.

Mark Stiving: I usually use 10% as the starting point and then if you have a really good brand you can have 15%.

Steve Johnson: I agree with that statement as well. But yeah, I mean, you know, here’s to me, so I mean here she’s got a clear understanding of the benefit in tangible ways as opposed to people will feel better. Right? I mean it’s like you can eliminate these positions or you can increase revenues or you can reduce costs and you can participate in that. And yet it seems to me many in a product planning or a product owner role are, well, you know, here’s another story that I put in my book.

I was sitting, I was in the San Francisco airport, so you’ve got to figure out everybody there isn’t a Silicon Valley person. And I was watching this guy and he was literally using cards, which I strongly advocate. I didn’t think anybody ever did, but he had a bunch of cards and he was flipping through them and I leaned over and I said, are you prioritizing your backlog? And he said, Oh gosh, how did you know? I’m like, who here is not a software guy in this area? Right? And I said, how are you prioritizing? And he’s like, well, I just feel like this one’s more important than that one. I mean, he had no, this aligns better with strategy. This will translate revenue. This is more cost savings for our customers.

It didn’t really have a prioritization scheme. And that’s certainly what I’ve been trying to do in the work I do here at Under10 is help people get clarity on roles and as you said, I don’t care what you call it. Right now, I’m kind of enamored with three brand new titles that I made up, product strategy, product planning, product growth because other people have got all this baggage with product manager or product owner and or product marketing manager. But I like those three titles because it aligns directly with what I’m wanting them to do, which is come up with a strategy for future products or come up with a plan for what we’re going to do next or look for ways to grow the products we have now.

And all of my work is really around pretty simple metaphors like all right, now that you have those three roles or one role, let’s write down everything you expect those people to do and I’ll show you how to decide whether those things are product things, development things or sales things.

Mark Stiving: And then we’ll get it divvied up. Oh yeah, Steve, I am going to have to run. This is so good though. One last question for you. What’s one piece of pricing advice that you would give our listeners that you think could have a big impact on their business?

Steve Johnson: Well you should have told me you were going to ask me that at the beginning cause I put away in the mill. I mean it was, yeah, my pricing advice is, you know, look at the cost savings or the impact on customers and take 10% or more. And as you said in our discussion earlier, you know, if you’ve got a good brand name you can charge 15 if you don’t, you can charge 10 but you certainly need to be at the end of the day, if you’re solving a problem that people don’t have 10% enough and it’s still nothing.

Mark Stiving: Yup, that’s exactly right. That’s exactly right. All right Steve, thank you so much for your time today. If anybody wants to contact you, how can they do that?

Steve Johnson: Lots of good information on my website including ways to get in touch with me.

Mark Stiving: And we’ll have that in the show notes as well. But that’s under one zero consulting.

Steve Johnson: Correct. Yes. and I’m also on Twitter and all sorts of other places as SJohnson seven one seven which is my birthday.

Mark Stiving: Yeah. And if you listen to anything product management, you can’t get away from him.

Steve Johnson: I love talking about product and product management.

Mark Stiving: And you do it so well, too. So that’s great. Episode 59 all done. My favorite part, let’s see, I enjoyed talking about the way product management is becoming product marketing or vice versa, however, you want to look in that. So what was your favorite part?

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Tags: Accelerate Your Subscription Business, ask a pricing expert, pricing metrics, pricing strategy

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