Why Connecting a Data Product to $$$ Should Come First, Not Last
First, it has been a while since I wrote. The reason for that is I don’t like to write unless I have ideas or something I feel is worth sharing. Over the last few months my day job has taken most of my focus, but I’m excited to come back to it.
Second, during that time I’ve met with a lot of people who have been frustrated. Frustrated because their company “just doesn’t get” how important the data product they’ve built is. This can range from “they only give me enough resources to keep the lights on” to “they are investing in all of these other ideas but don’t see the value in using this data”.
I know what you mean. A lot of people reading this newsletter have lived that experience. In a time where companies are cutting costs, people and creating “focus”, new investment is hard to come by and existing investment is scrutinized in a way that we haven’t seen in a number of years. It can feel deflating when your great idea which was once a favorite barely garners attention, or your idea which you spent tons of time on is barely acknowledged.
The question is, why, and what can you do? To the title of the newsletter for today, you need to focus on how the data product you are creating connects to the company making money. I know that sounds silly. “well, duh”. What I’ve learned (mostly by failure) is that no one really cares if your product is data focused. Data product investment has to sit alongside product investment and if other product ideas clearly offer a better financial impact, they are likely to get prioritized. Here are some things to map out that might help your process:
Understand how your company makes money. I used to take for granted that I knew how my company made money. I think in technical spaces we can fall in love with the problem rather than think about its monetization. But right now, monetization wins every time. If you are going to answer how your product helps the company make money, map out all the ways your company makes money. Is it a subscription consumer product? A B2B license? An on demand consumption model? Knowing this is a precursor to the next step, don’t skip over it too quickly.
Map out the levers in your company that explain if the company will make more (or less) money from a user, business, or over a given period of time. Put another way, what explains growth? This could be focused top line revenue, or potentially improved unit economics. Making more money could take either form, but you should understand how certain user behaviors, often captured in metrics, connect to explaining how the company improves its financial position. Side note: given where companies are at, the “growth at all costs” mantra is going to fall flat. Don’t assume it will help you. “Show me the money” is very real.
Identify the levers that you found in the item above that your data product has the potential to affect. This could either be evidence based on initial versions of the product, other similar products that have been developed, or a hypothetical amount of change you expect to see. Whatever it is, don’t shy away from the details. The more you can explain exactly how your product affects users in a way that affects revenue or unit economics, the closer you will be to getting the investment that you want.
Make your ask ROI positive or neutral and be conservative about it. This goes to the question “exactly how much money do you expect this to create for the company?” Just because it does something doesn’t mean you can ask for unlimited investment. Be sure you know what you are asking for, how many people it requires, what the ongoing development and maintenance costs are, and be specific. Right now, generalities when it comes to cost are not going to be welcomed.
Revisit these steps repeatedly!
I know it is a frustrating time to be working on data products. But the more you connect to improving the company bottom or top line, the better off investment in you and your product will be.
Would it also make sense to add a step that makes you think about the way data professionals become the ‘UI’ for any given valuable data product? Not being one myself, I’ve been handed products by professionals who say, “this is awesome” and take off with follow on comments like, “I sent the [fill in the blank] report to you, it’s in there, you’ll figure it out, etc.” I’ve also been handed reports where the person drags me through it and educates me a bit on how to use it and why it’s an important product. In the latter case, not only did I become dangerous enough to use a product, but I also became more of an advocate for the use of data itself. I would recommend the latter (becoming the ‘UI’ for your company’s data products) over the e-mail diplomacy approach.