Chris Cox's presentation at F8 is essential viewing for anyone in product management

The purpose of this post is not to summarise the developments or hypothesise on the implications: there are plenty of pundits doing that already. In this post we explore the importance of product vision to successful product development, and use Facebook’s Timeline as an exemplar of best practice.

What is product vision?

Every digital product should have a purpose: this answers the question “why would someone use the product”. Whereas the product purpose is the reason someone would use the product today, the product vision determines why someone would use the product at some period in the future. (Typically in digital up to five years in the future: few people are brave enough to make predictions about how the digital world will look more than five years from now.) The product vision is a long-term aspiration which guides product development decisions in the short-term.

Product vision isn’t talked about much in digital product development. That’s mostly because developing a suitable vision is particularly hard in such a fast-moving environment. Indeed, commitment to a vision can be a hindrance, preventing companies from adjusting rapidly to markets because of commitment to an unsuitable roadmap and vision. Much of our work at Keplar involves helping clients to adopt an iterative approach to product development that emphasizes learning from consumers and, as far as possible, co-creating digital products with consumers, so that the products develop around the actual needs and behaviours of real users. This more “bottom up” approach can sit uncomfortably with the more “top down”, vision-led approach.

The two approaches are not incompatible, however. The vision needs to be high-level enough that it gives product managers space to make short-term design and development decisions around user behaviours, but still move the product (and the userbase) in the direction of the vision.  Also the vision need not be static: it can evolve as you learn more about your userbase. At its core should be an aspiration that is recognisable to users, just as it needs to be recognisable to everyone involved in developing the product on both the design and development sides.

Characteristics of a good product vision

1. It is an aspiration: the vision needs to be a stretch – if it describes a product that already exists today, then it won’t prove any help in driving the product to new heights
2. It is inspiring: if people are going to overcome the myriad challenges associated with delivering a stretch target, then they have to really believe in the vision. The world should be a better place when the vision is realised
3. It is about the consumer, not the product or the company developing the product: it is easy to state the purpose of a product in terms of commercial benefit (it is nearly always more profit.) However that’s not something that users are going to buy into, and it’s a terrible guide to making short-term product development decisions because it is often hard to link these to long-term commercial gain. It is much harder to build a digital product around a commercial vision than build a business model around a product vision. That is why the product vision needs to be about the consumer, and not the company developing the product

The case for Facebook introducing Timeline: a complete overhaul of the profile page

Timeline is a significant evolution of the Facebook profile page, a core part of the Facebook experience since its inception.

Before we look at timeline in any kind of detail, however, it’s worth stepping back and examining the case for Facebook to significantly overhaul its profile page. The business case for doing so is very, very weak:

1. Facebook is the world’s largest social network, with a userbase of over 800M users. It is still growing rapidly, and it is hard to imagine that changing the profile page will drive significant incremental growth beyond its current growth rate
2. Facebook is only just starting to exploit the monetization opportunities around its existing services. It has developed into one of the biggest forces in display advertising (because of the large number of impressions and high eCPMs generated by banners on its site). At the same time it is developing an enormous database of its users and their relationship to a whole range of products and services, through the Like button; the possibilities to monetise this data are significant. So, there are plenty of short-term commercial opportunities that Facebook could concentrate on exploiting: it is not clear that overhauling the profile page would help it do so any faster
3. Overhauling the profile page is fraught with risk. Because it is a core part of the Facebook experience, any changes to it which jar with users are likely to lead to a massive outcry across the 800M userbase. Any change is going to take time for users to get used to, and in the interim their engagement levels may well decline. Fear of upsetting existing users is one reason why eBay’s user interface looks almost the same today as it did 5 years ago

Given the lack of commercial necessity and high risk associated with overhauling the profile page, few companies in Facebook’s position would take this step. But Facebook is no ordinary company.

The vision for Timeline

The vision for Timeline can be summarised:

The vision for Timeline meets all of the criteria for a great product vision. It is a huge stretch: whilst the current Facebook profile is probably one of the nicest profile pages on the web today, it is far from the “best place to define who I am”. The level of ambition drives each of the subgoals for the vision: the Timeline should encompass a user’s entire life, whilst also looking beautiful, being easy to populate and giving users the control they require. The vision is inspiring and if executed well will prove enormously exciting to Facebook users.

The impact of that vision

The resulting product is pretty spectacular:

And the competitive landscape has been transformed. Google Plus, which so recently looked like it was making significant headway in catching up with Facebook, now looks antiquated by comparison. Product vision may be all about the consumer, but the commercial impact of getting it right cannot be underestimated.

There was no chance of a consensus emerging amongst participants, illustrating how divided people are on this complicated issue.  It did prompt me to draw a number of conclusions:

• The key question is not where along the private – public continuum most people are likely to situate themselves.  It is what value they place on different bits of their privacy, and how much value they need in exchange for giving that privacy up
• At the moment, Facebook faces a “perfect privacy storm”:
  1. Users who previously expected their data to be kept behind a walled garden are uncomfortable finding out that that might no longer be the case. (Versus Twitter, where users from the joined expecting everything they Tweeted to be public.)
  2. Users do not understand what data Facebook collects about them and how this is used to generate value. Their privacy concerns are therefore derived from both a lack of transparency and control.
  3. Facebook is not in a position to educate users on how data will be used, because frankly, they’re still working out how to drive value from that data.
  4. Users don’t see any value for themselves in sharing their data. There is therefore very little to persuade them to give up any privacy. (This would change if Facebook found a way to drive value from that data that benefited themselves, their advertisers and their users at the same time.)
• There are some parallels with the privacy debate around behavioural targeting. Once again, there is a perfect storm where
  1. Users don’t understand what is being done with their data,
  2. have no visibility on what happens to their data,
  3. have no control over what happens to their data and
  4. don’t see any benefit in sharing that data so have little incentize to give up any of their privacy.
• However there is one key difference between the Facebook privacy debate and the debate around privacy and behavioural targeting. Namely, that the information Facebook has, although deeply personal, is broadly accepted as data which the users have voluntarily submitted to Facebook. This makes Facebook somewhat different to the behavioural targeting companies, who in many cases have been collecting data on users that they may not even be aware exists, and have not in any direct sense created.
• At the end of the day, Facebook is a multi-sided platform that has to work out a value proposition that works for it, its users and its advertisers.  The privacy storm suggests that it is out of kilter with its users – and I wonder whether advertisers view this with excitement or trepidation…

Here at Keplar some of our recent advisory work has been for online community sites, helping them to improve their customer proposition while also growing their revenues. In the course of these projects we have started to develop a new technique for guiding the development of these sites which we call “value chain mapping” – a technique that works to improve the way community sites serve their community whilst simultaneously growing their revenue. This blog post aims to explain this technique – articulating the theory but also providing practical advice for owners of social networks. (None of the companies mentioned in this post are current or past clients of Keplar.)

Vertical social networks: a primer

For this post we focus on “vertical” social networks – these are simply community-oriented websites which focus on one content area, interest group or demographic. We use the word vertical to distinguish these community sites from general-purpose social networks such as Facebook and Bebo. For this post we use Mumsnet, the UK website “by parents for parents”, as our main example.

So, what does a vertical social network look like? Typically these sites provide their user community with a set of “soft tools” such as forums, profiles and articles, all designed to support the site’s users in socialising, sharing knowledge and fulfilling specific needs. On Mumsnet, those user needs would include childminding, keeping their child healthy, and finding a kindergarten.

On the monetisation side, vertical social networks generate most of their revenues through advertising – showing users targeted or general banner ads but also directing users towards relevant businesses for a fee (see for example the Mumsnet Mall). It’s a delicate balancing act for the site owners as communities respond badly to advertising which they deem excessive, irrelevant or dishonest.

So, what’s wrong with this model?

The current model is far too narrow

The fundamental weakness of this approach to a vertical social network is that it’s far too narrow. To continue with the Mumsnet example: parents are an important part of the parenting ecosystem, but they are only one part of it. There are many other people and organisations who have a direct or indirect role to play – from the children themselves through to care providers (e.g. childminders, paediatricians), merchants (e.g. toy shops, pharmacists), manufacturers (e.g. buggy makers) and educationalists.

In short, parenting is a huge, complex ecosystem of which parents are the most important part – but they are only one part. And a site which only gives a voice to one player in an ecosystem is an echo chamber – think of the House of Commons without the Opposition, or eBay without the sellers. These sites are facilitating peer-to-peer communication between their narrowly defined interest group, but they don’t truly fulfil that group’s needs, because they don’t allow them to build real relationships with the wider ecosystem.

Our approach for vertical social networks, then, is built around the idea that these sites need to expand to accommodate – and serve – as much of their respective ecosystems as possible. It is only by this expansion that the user needs of their core interest group (e.g. parents) can be properly met.

Mapping value chains

If this is the theory, then how does a site such as Mumsnet go about incorporating its wider ecosystem – isn’t this a Herculean task? Fortunately, each ecosystem breaks down into a set of smaller, discreet value chains. By a value chain we mean a set of people or organisations which pass value in one direction to fulfil a user need, for example the value chain for childminding looks something like this:

Our approach is to incorporate these individual value chains into a vertical social network to better serve these user needs. We do this by “mapping” these value chains into the network – in the case of childminding this would be a three step process:

1. Extend the network to allow agencies and childcarers to have individual profiles on the site
2. Provide discovery tools to allow parents to find and evaluate these childcarer profiles on the site
3. Provide market tools to allow parents to buy childcare from providers through the site

With this value chain mapped into the social network, parents are now able to discover and buy childcare without leaving the site. We are leveraging all the powerful attributes of social networks – discovery, reputation, communication – and applying them to solving a specific user need. Incorporating more of the ecosystem is then simply a case of “breaking off” more value chains, mapping them onto entities within the social network and providing the necessary tools to connect them to users.

If this is the approach, what is the impact on the site’s bottom line? The impact can be considerable, because whenever a service is fulfilling key user needs there are significant revenue-generating opportunities. To go back to childcare: in the UK alone this is a £4.1 billion market (source). If a social network can model a value chain like childcare then there are various ways of capturing a slice of that value – perhaps a small slice, but certainly much higher than any revenues from current advertisers from that value chain. Wahanda, the health and wellbeing network, is a great example of a site which has mapped its key value chains and is capturing value as a result.

Conclusion

In summary, then, value chain mapping is a way for vertical social networks to break out of their current narrow focuses and start comprehensively fulfilling their user’s specific needs. In doing so they can directly capture value from their respective ecosystems, in addition to the indirect revenues they currently make from advertising.

A social network can start small with this approach – we recommend that network owners reading this start with just one user need: take that user need, understand the value chain that fulfils it and make sure that the relevant organisations and people have a space within your network. And let us know how it goes! We’d love to get a discussion going around this post with a view to building on this approach and helping social networks to deliver more.

Interested in monetising your community site better? Send us an email to find out how Keplar can help.

Dear Spotify,

We know that you are one of the most exciting companies of the moment.  Everyone, from the Guardian, to Techcrunch and e-consultancy is singing your praises.  In spite of all the hype, we actually believe that Spotify remains under-hyped.

It’s about more than your business model

Mainstream media interest in Spotify has focussed on your business model.  The music industry has of course been badly hit by the growth of the internet, the rise in piracy and the shift in consumer spend to video games.  As a result, almost all of the coverage has narrowly focused on this question of whether you can make the music industry profitable, and whether you can be profitable yourself.  People have, shockingly, compared Spotify to We7, shocking because We7’s sole purpose is to deliver ad supported music to consumers for free, and the Spotify proposition offers a whole lot more.

It’s about a whole new way of consuming music

It is tempting, given Spotify’s iTunes-like interface, to think of it as just another music delivery mechanism, one that’s preferable to downloads because it is easier to protect against piracy.  But that misses the point.  Streaming music allows you to potentially offer your users two new types of listening experiences, without parallel in competitor services.  One of these has already been launched, and I hope that we don’t have to wait long for the second:

1.  Transform my mobile phone into the ultimate MP3 player

Spotify’s premium service for iPhone, Android and Symbian is incredible.  I have access to (almost) any song, at any time, immediately.  It doesn’t matter that my iPhone has only 8Gb.  I have instant access to an enormous music catalogue, unparalleled by even the biggest private collections.

2. Social consumption of music

Spotify has barely scratched the surface of the social features they could build around their product.  Sharing playlists is just the beginning.  I want to be able to discuss tracks with other music enthusiasts as I listen to them (and we listen to them together, in real-time), lookup forthcoming gigs, browse other people’s libraries for new music, send tracks to friends, even potentially talk to the artist while we’re both online.

How does Spotify seize these opportunities?

Given the potential, it’s a little disappointing how quickly you are progressing with your music revolution. Some recommendations:

1. Start properly marketing / advertising the services you already offer

Your mobile phone app is nothing short of incredible.  It has serious mainstream appeal.  You should be all over mainstream media telling people: “we can turn your phone into the ultimate MP3 player”  Don’t get stuck, as Skype did, trying to monetise your cost conscious, tech-savvy early adopters, but rather start advertising directly to the thousands of people who would kill to have a limitless library of music in their pockets.

2. Develop social features – quick!

A flippant thing remark, perhaps, but it needs saying.  Those social features aren’t “nice to haves” – they’re key in differentiating the Spotify proposition from everything that’s gone before it.  And that’s important because music piracy means by and large people are much less willing to pay for just the vanilla experience of listening to individual tracks.  However they may well, for example, be willing to browse and listen to their favourite artist’s music collection – be that Rev Run or Paul McCartney.  Especially if they can do so with their friends, compare notes, and rate it.  And imagine if they could do it with the artist him/herself?

There are several challenges to developing the social features quickly.  One option you might want to consider is opening up your platform.  Your core audio streaming system is brilliant – why not follow the path of Facebook or Twitter and nurture an imaginative developer community to build a wealth of different apps to take advantage of that core technology?

And if it all sounds like a bit much?  Hire Keplar LLP