9. Communicating Product Value in Financial Terms and Why Product People Need to Speak Finance with Greg Kegeles

The Estee Show - Product Management & Business Insights

Speaking finance is an essential skill for product managers who want to be successful. By learning to speak finance, product managers can communicate more effectively with stakeholders, get buy-in for their projects, and make better decisions for their products.

In this episode, Greg Kegeles, Operating Partner of Digital Transformation at New Light Partners, emphasizes the crucial role of product managers and technology leaders in fluently communicating in financial language. He underscores that finance serves as the ubiquitous language of business, enabling product managers to effectively engage with executive leadership and stakeholders. Greg advocates for utilizing financial metrics to assess various options, highlighting the imperative for aligning company objectives with technology and product decisions. He also stresses the importance of considering the total cost of ownership, encompassing post-launch maintenance and enhancements, when planning software development initiatives.

Greg Kegeles delves into the common challenges encountered by companies in project management and resource allocation. He sheds light on the prevalent issue of overburdening talented individuals with multiple responsibilities, often resulting in project delays and postponements. Another critical aspect he addresses is maintenance costs. Greg emphasizes the importance of considering the distribution of costs over time, a widely adopted approach in budgeting for ongoing expenses. Greg also explores financial concepts such as taxes, return on investment (ROI), and the quantification of returns. He draws an analogy between investing and software development, highlighting the potential for high returns but also acknowledging the inherent risks involved. Additionally, Greg challenges traditional roadmap approaches based on rigid timelines, suggesting alternative strategies for effective roadmap organization. He stresses the significance of having well-developed investment ideas and continuously evaluating ROI potential. He advocates for maintaining a surplus of ideas relative to available investments and viewing roadmaps as a funnel rather than an assembly line approach.

Greg emphasizes the concept of time-to-value, advocating for incremental product launches to minimize risk and maximize returns. He asserts that it's more prudent and efficient to divide projects into smaller, deliverable phases, allowing for user feedback and continuous value assessment. Additionally, effective communication can safeguard against team member attrition or resource allocation issues stemming from a lack of understanding or appreciation for the value delivered by product or technology teams.

Delve into the world of low-risk investments with higher return potential and gain a comprehensive understanding of finance as the universal language of business.

Highlights:

• Product managers need to be able to speak finance in order to communicate effectively with executive leadership and stakeholders.

• Finance is a language that business speaks, so adopting this language will make it easier for product leaders to get buy-in for their projects.

• Adopting a financial framework will also give product leaders a new way of thinking about the decisions they make.

• Four main ideas for speaking finance as a product person:

• Understand the financial implications of your product decisions

• Be able to communicate the value of your product in financial terms

• Be able to speak the language of the business

• Be able to negotiate effectively

• Examples:

• A product manager who wants to invest in retention needs to be able to explain to the CEO how much money that investment will save the company.

• A product manager who wants to develop a new feature needs to be able to explain to the board how much money that feature will generate for the company.

About the Guest

Greg is the Operating Partner of Digital Transformation at Newlight Partners, a private equity firm where he helps businesses accelerate their value. He is responsible for supporting portfolio companies in their data & technology needs.

Prior to Private Equity, Greg spent 15 years in different leadership roles in product and tech on internal tooling.

Throughout his experience both as a product leader, and in growing other companies and seeing product leaders succeed and fail, Greg has identified a skill many product managers lack but should be leveraging to get buy-in from leadership and finance. And that is being literate and making cases using financial terms of ROI (return on investment), NPV (net present value) so that product leaders can get budget and headcount for initiatives approved and so that they could work with the CFO/finance leaders.

Resources mentioned in the episode:

Book about ‘Time to value’ Software by Numbers: Low-Risk, High-Return Development by Mark Denne

Sample Return on Investment Calculator (developed by Greg Kegeles) Project ROI Calculator (1).xlsx

Connect with our Guest

• LinkedIn | Gregory Kegeles

• Website | www.newlightpartners.com

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About Estee Estee Goldschmidt is a customer-obsessed, delivery-oriented, and data-driven product leader. With extensive experience in strategy, product, marketing in the healthcare and CPG industries, startups and corporate, she joins teams to solve complex revenue problems related to client conversion and retention.

Her motto for proof of concept is: test, reiterate, scale. Estee’s background is in a diverse set of fields ranging from founding startups to leading teams in multinational corporations.

• Website | www.esteegoldschmidt.com

• LinkedIn | www.linkedin.com/in/esteegoldschmidt/