Part II: Successful products are the result of learning products which previously failed in the marketplace


(B) Following is the part II of the case study that I wrote, and which illustrates how successful products are the result of learning products that previously failed in the marketplace. This case study is the story of Giles, a product manager at two Silicon Valley start-ups during the 2000 Internet and Telecom Bubble. The lessons here are not about the technology but how just be keeping his eyes opened and using his common sense, Giles was able to drive a successful product having learned before from a failed product.

Starting again from the white board

After Iris Networks, Giles joined Dahlia Networks, a Silicon Valley company that has provided for a long time legacy multiplexing and customer premise equipment (CPE) to AT&T and WorldCom. Dahlia Networks was generated around $20 million a year, but revenues have been steadily declining. Giles was hired to start the next generation of products for Dahlia Networks. After two months in the company, he proposed two business plans for two new product lines: a network edge appliance, and an edge transport system. In addition, he proposed a solution that could integrate into the same network both product lines through a shared control and management plane. Those two business plans were presented to the board of directors of Dahlia Networks and after multiple reviews, Giles was told by his CEO that the board did not want to pursue the business plan for the network edge appliance due to the high risk of competing directly with Cisco Systems. However, the CEO gave him the “green light” to start working on the edge transport system.

More with less

When Giles developed the business plan for the edge transport system, he tried to remember all the product mistakes that were made when he was working at Iris Networks. He knew that there was a strong market demand for a new generation of access equipment as the Internet was continuing to grow but the product features had to be right for the product to be successful. And, he strongly believed that in order to be a market success, a new edge transport system would have to meet the following requirements:

  • Do not provide the three network functions (transport, switching, routing) of Iris “God Box” but only one product function (transport) and implement it extremely well!
  • Optimize the product for the transport of Internet traffic over legacy SONET transport network
  • Do not develop one product but develop a product line that customers could use to build an access network solution
  • Focus on margin and cost; and offer much more capabilities into the product at a much lower price
  • After having worked on his business plan, Giles started to work on his product requirements so that his engineering organization could start working on the initial system architecture.

The challenges of developing the next generation of product

Giles had two initial and huge challenges in order to get a product out of the door at Dahlia Networks.

The first one was that he was a software product manager, and this was the first time that he was responsible for both the hardware and the software of a product. When he developed his business plan for the edge transport system, no one helped him to check if technically Dahlia Networks could integrate many network functions into the silicon of the product, at the cost that he wanted. But fortunately, his CEO decided to hire a talented system architecture, and three weeks after joining the company, he shared with him the good news: “they could develop the product that Giles had in mind at the right cost”.

His second challenge was the organization of Dahlia Networks itself that was not ready to develop and launch a new product. Dahlia Networks did not launch a new product for a very long time, and so Giles had to convince the organization that the future of the company was tied to this next generation of products. With his VP of Engineering, he decided to focus initially all their efforts on a prototype for the new product. This early prototype got some positive feedback from customers. When the engineers working on the existing product lines heard about positive customer feedback, they started to be more exciting about the opportunity of working on the next generation of product. And in a short period of time, most of the best engineers working on the existing product line moved quickly to work on the next generation of product. And after the best engineers moved to work on this new product, everyone followed.

A successful product leads to a successful outcome

After one year of engineering development, Giles’ product was launched at a big telecom exhibition SuperComm in Atlanta in June 2003 marketed as the Dahlia 7400. And, the press called it a micro MSPP. During the summer and the fall of 2003, existing Dahlia Networks customers started to test the Dahlia 7400 first in their labs, and second over a few pilot trials. Dahlia Networks sales and operations organizations started to receive the first purchase orders at the end of 2003.

And in April 2004, Dahlia Networks received an offer to be acquired by a larger supplier of telecom equipment AlcaLou Networks which was interested in the Dahlia 7400 to expand its product line. The Dahlia 7400 was the main reason for Dahlia Networks acquisition by AlcaLou.

As it is often the case, a successful product leads to a successful outcome.

Note: The picture above is “The Milliners” from Louise-Catherine Breslau and presently displayed at the “Degas, Impressionism, and the Paris Millinery Trade” exhibition at the Legion of Honor.

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Categories: Product Management