Ocado product managers want to do more than just sell you food

Ocado product managers want to do more than just sell you food
Image Credit: IanVisits

As product managers we all like to try new ideas out. However, sometimes the job that we’re being asked to do is so brand new that there really is nobody that we can compare ourselves to and no existing product development definition. The product managers at Ocado find themselves in this very situation: they are trying to make the company’s business of online grocery shopping a success. However, nobody has really been able to make this happen so far. It sure looks like it’s time for some creative thinking!

The Market For Online Groceries

For those of you who remember the madness that was the “dot com” era, you may remember a high profile company called “Webvan”. This well-funded startup had some famous people running the show and they were going to change the world by introducing all of us to buying groceries online and then having them delivered to our doorstep. It didn’t work out and they failed.

However, the idea didn’t die with them. It turns out that another company, Ocado, wants to give it another try over in the U.K. The good news for Ocado is that the online grocery market is predicted to double in size over the next five years. By that time it will represent a US$26.82B market and will account for 9% of the total UK grocery market. Clearly the three former Goldman Saches bankers who are running the company think that they can play a major role in that market.

The UK is a great place to start this type of business. The high population density has led all four of the major grocery store chains to launch their own version of an online ordering home delivery service. However, they are all experiencing the greatest problem that this service has: it’s really, really expensive to deliver groceries to individual homes. It’s a struggle for all of these firms to make this business profitable.

The Market For Grocery Technology

The challenges presented by this market have caused the product managers at Ocado to start to look for new ways to generate revenue for their firm. What they did was to look inside of the company and try to find anything that the company was doing that might be valuable to other firms. What they discovered is that the company is very good at taking and delivering orders for groceries.

The product managers have decided that they now want to package and sell one of Ocado’s core skills: it wants to license its proprietary technology and equipment to other firms in order to allow them to enter into the grocery home delivery market. They have already successfully licensed this product to the UK’s fourth largest grocer Wm. Morrison Supermakets PLC. If they can come up with a way to turn this into a viable business, then they will have discovered something else to add to their product manager resume.

Since Ocado is offering this service in the UK, they don’t really want everyone in the UK to use their own technology to compete with them. Instead, the product managers are now looking for overseas partners. Their goal is to share the technology that they’ve used to create a distribution center that occupies 1.2 million square feet – roughly the size of 20 American football fields. With the proper set of international partners, Ocado can expand into the business of becoming a software and technology firm.

What All Of This Means For You

Ocado is a firm that has started out as an online grocery firm. It turns out that the business that their product managers have been focused on dominating is a difficult one in which to make significant profits. Their product manager job description told them to be creative and so in order to keep growing the business, the product managers are now looking for ways to license the company’s technology to other firms.

Ocado has done a good job of creating a successful online grocery store in the UK. They currently own roughly 14% of this market. However, in order to keep growing they now want to license the software and technology that they have developed to other firms. They’ve already made a sale to another UK grocer and so now they are busy looking for international partners.

The product managers at Ocado are doing a good job of thinking outside of the box. They realized that they were not going to be able to grow the business as fast as they wanted to if they remained solely focused on the grocery business. Being willing to expand into a different market using what the firm does well shows some real initiative. We’ll have to keep a close watch on Ocado to see if they can successfully pull this off!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: Do you think that it was a wise move for Ocado the grocer to try to become a software and technology vendor?

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P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

So product manager, I’ve got an interesting ethical issue for you. Are you ready? If sales of your product were sagging and your boss came to you and told you that it was your job to boost sales, how far would you go to make this happen? Would you change your product development definition? Would you be willing to lie to your customers to get them to buy more of your product? What if it was just a little lie – maybe not even a lie, just a mistruth? What if your customers wanted to be lied to? Over at the Chipotle food chain, their product managers faced this very dilemma.

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Product managers would like their product to become a powerhouse like ESPN

Product managers would like their product to become a powerhouse like ESPN
Image Credit: Penn State

If you like sports, then you like ESPN. ESPN is the dominate force in the world of broadcasting sports. In fact, they are so much a part of sports today that it’s almost hard to remember a time when they didn’t exist. However, there was a time that sports fans had to hunt in order to watch their favorite game. Somehow this all changed and now we instinctively go to ESPN in order to find out what is going on in the world of sports. How did the ESPN product managers create a product development definition that allowed this to happen?

What Makes ESPN Work?

That ESPN is a success is no big secret. However, how the ESPN product managers turned it into such a success is not quite so clear. As product managers, this is the story that all of us would like to hear. As you may have guessed, there is no one thing that they did that made them successful, but rather a number of different things.

One of the most important secrets to ESPN’s success is the simple fact that it turns out that it’s a fun place to work. Every member of the product team truly enjoys being there. Let’s face it, sports are enjoyable. The people that ESPN hired played sports. What this meant was that they would then “play” the position that they were hired to fill. In one way, working at ESPN become a sort of the
ultimate adult playground.

ESPN believes that its strategic advantage comes from the fact that it has been able to create a team-like environment within its workplace. This has led to workers who bring a “never stop innovating” mentality to the table. What ESPN does is to hire skilled people, place them on a team, and then let them do what they do best.

The Secret To ESPN’s Success

One of ESPN’s most successful shows is called “Sports Center”. During this nightly program, a recap of the day’s events in sports is presented. This is not a new idea – it’s been around for a long time. On these types of shows, they often focus on a single sport, show the highlights from that sport and then move on to the next sport.

What ESPN did that was so revolutionary was to treat the show like it was a newspaper. What this meant was that whatever was the lead story in sports would lead the broadcast off just like a headline. This could then be followed by the next story that might be about a completely different sport. When highlights were being presented from a game, they wouldn’t be presented chronologically. Instead, they would be presented in order of their level of excitement. This kind of innovative
thinking is what you want to have on your product manager resume.

It’s important to note that not everything that the ESPN product managers tried to do was a success. Specifically, when they tried to open ESPN retail stores, no customers came. When they tried to create another sports channel, ESPN2, that was hipper than ESPN, that didn’t go over very well either. However, they’ve learned from their mistakes and they’ve bounced back from them quickly.

What All Of This Means For You

When you ask almost anyone about televised sports, one of the first things that will pop into their head will be “ESPN”. As product managers we’d all like for our products to have that kind of brand appeal. In fact, this is exactly what our product manager job description asks us to accomplish. However, we need to remember that things were not always this way. ESPN got to where they are today by the efforts of their product managers to promote the brand.

One of the most powerful things that ESPN has going for it occurs off-camera. They have created a unique team-based work environment. When staff join the company, they start to “play” their position. This has allowed a great deal of on-the-job innovation to occur. Another way that ESPN has risen to the top of the sports broadcasting world is via their popular Sports Center program. By copying the way that newspapers present information, they’ve created a unique and popular way to communicate the sports events of the day.

As product managers there are a number of different things that we can learn from how ESPN has become successful. We always need to remember that a product is not the result of one person’s efforts, but rather what a team has been able to accomplish. Using the innovation that our product team can bring to the table is what will allow us to create a product that can dominate our market and win the game – just like ESPN!

– Dr. Jim Anderson
Blue Elephant Consulting –
Your Source For Real World Product Management Skills™

Question For You: How do you think you could present product information to your customer like a newspaper would?

Click here to get automatic updates when
The Accidental Product Manager Blog is updated.

P.S.: Free subscriptions to The Accidental Product Manager Newsletter are now available. It’s your product – it’s your career. Subscribe now: Click Here!

What We’ll Be Talking About Next Time

As product managers we all like to try new ideas out. However, sometimes the job that we’re being asked to do is so brand new that there really is nobody that we can compare ourselves to and no existing product development definition. The product managers at Ocado find themselves in this very situation: they are trying to make the company’s business of online grocery shopping a success. However, nobody has really been able to make this happen so far. It sure looks like it’s time for some creative thinking!

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