Most B2B organizations use a Market Requirements Document (MRD) for driving new solutions to market. How much of the content in those MRDs should be pure market requirements versus product requirements? A good rule of thumb — 100% market and 0% product.
If MRD’s are supposed to reflect the needs of the market, they should be all about the market. Consider these contrasting examples.
Example 1: Customers need a single data repository so they can better analyze critical business metrics and make better business decisions.
What’s wrong with this sample market requirement? It’s completely missing the WHO, WHAT and WHY elements. We don’t know who the target customers are, why they need to make better business decisions, and the strategic impact of those decisions at the executive level. It’s more indicative of how a product solution needs to support an unclear business need.
Example 2: Regulations now require health plans to cover anyone, regardless of pre-existing conditions. In an effort to offset the cost of rising claims for their unhealthiest members, they want to analyze the claims activity of all members so they can identify telltale signs of critical health issues earlier and make proactive wellness recommendations to help members avoid serious and costly health issues later.
Members benefit by staying healthier and health plans benefit by avoiding more costly claims, and improving bottom-line profitability.
The WHO, WHAT and WHY elements are very clear in Example 2 and establish a great set of parameters for the eventual product solutions.
The ripple effect of MRDs that are too product centric is threefold.
- Solutions Looking for Problems – Multiply example 1 by two or twenty product managers and you have a proposed product solution looking for a well-defined business problem. The solution itself will have value but everyone will struggle to explain why.
- Constantly Changing Priorities – Multiply example 1 by two or twenty product managers and you’re unable to answer the “Why are we building it?” question. The result is portfolio strategy made up of a bunch of proposed product solutions instead of market solutions. Worse yet, it manifests itself into competing and changing priorities that are done subjectively. Further downstream, your marketing and sales messages pack no punch because they’re too product specific and don’t communicate the compelling reason WHY a solution is valuable.
- Poor Transfer of Knowledge – MRD’s as written in example 1 are generally too dense with product requirements and therefore serve poorly as a vehicle to transfer market expertise from product management/marketing to sales, engineering, executives, etc.
A Market Requirements Document That’s All “Market”
Think of your MRD as the headliner to the product requirements. It’s a communication vehicle that helps people inside and outside your organization understand the strategic, operational and tactical market value of a proposed solution without the details of HOW the products will work to solve the problem. Save the “how” components for your product requirements document. Together, the MRD and PRD provide a direct line of sight between the market needs and the product solutions.
Instead of creating dense, product-centric MRD’s that blend fragments of market information and product requirements, separate the two. You’ll end up with better vehicles for driving more impactful product solutions as well as transferring knowledge to the front lines of the organization for greater self-sufficiency in sales, marketing, services and support.
Create market specific MRD’s that provide your entire organization with a single view of each market segment, their strategic spending priorities, the operational areas most impacted, and the specific work processes affected as a result.
With this level of market and customer insights, all product managers can work as a team to produce an aggregate product plan with priorities determined collectively across all products based on impact to the customer organization from the top down. All subsequent product requirements and functional specifications (product specific) tie back to much clearer objectives using this approach and result in solutions that have far greater impact on the business outcomes of your target customers.
For example, a spike in oil prices a few years ago prompted a series of fuel conservation and new revenue initiatives for airlines that then dictated priorities in engineering, marketing, customer service, and many other operational departments. Those spending priorities impacted various activities and work processes in each department.
Product and service companies that target airlines saw tremendous revenue opportunities at a time when revenue is down because they fully understand the strategic impact oil prices have on operational issues and offer solutions that support fuel conservation initiatives, revenue growth initiatives or both.
The most obvious benefits that come from separating market and product requirements are as follows:
- A greater level of market insight better aligns your company as a whole to the industries/market segments that are most conducive to growth.
- Product management and product marketing are regarded more as market and business experts and subsequently have more influence on the strategic direction of the company.
- Higher impact solutions differentiate you from the competition and warrant higher price points (or smaller discounts) and drive greater revenue growth.
- Product teams have to be more collaborative to create integrated solutions that make better use of resources instead of competing with one another for tactical product enhancements.
- The knowledge transfer process becomes more efficient because pure market requirements can more easily be repurposed into sales, marketing and customer artifacts and provide a solid foundation to keep design and product development on the straight and narrow.
The bottom line: a market centric approach to MRD’s ensures one view of the market, one strategy and one set of priorities across the portfolio. It’s the easiest way to reduce excess churn when determining strategic and tactical priorities, product or otherwise. It’s also highly conducive to solving bigger problems for your target customers – the easiest way to grow your own revenue and market share.
If your MRD’s aren’t producing much more than low-value incremental enhancements, contact Proficientz to discuss how our B2B Product Management Framework and Hands-On Training Programs can help your team create high impact solutions that grow revenue while improving the proficiency of sales, marketing, service and support.
No one makes it easier than Proficientz.