In times when entire companies are geared towards this, driven by the desire to become agile, the focus is shifting to "customer orientation", "focus on delivery capability" and "time to market". From some rooftops, or at least from the boardroom below, the cry seems to be: "You should organize yourself according to the product!" But what exactly is this product?
Excuse me, have you seen the products?
It is interesting to note that at some of the companies we have accompanied, the question about the products is answered differently from Senior Vide President to Team Lead! If I ask six people, I get three answers - at least.
Many people talk about how the organization should be one way or another, but no one has seen this organization either. Not in the corridors, in the canteens and probably even less in front of the screens at home.
But because the success of a company depends largely on how and on what it focuses its activities, the question of the product is so fundamental. Entire companies are organized according to the product portfolio, their departments are aligned accordingly and product owners are responsible for their development. Agile working emphasizes the focus on the question "what is a product?"
There are surprisingly few explanations for this, most of them are based on the assumption that this is already known somehow. Yet the idea of product organization hasn't just been around since yesterday.[1]
However, with the aim of accompanying our customers from the initial idea to success, we inevitably encounter this question frequently - and that's a good thing!
Theoretically, the product is clear.
Interestingly, the academic literature contains many definitions from the field of marketing.[2] The product is therefore a bundle of functionalities that have added value for customers.[3]
Great, isn't it? It's that simple. Maybe we can squeeze in the idea of the customer journey. And the organization is complete. Or is it? On closer inspection, it becomes clear that this can't be everything. That's just the customer perspective! This definition does not yet explain how the product is created.
In search of an alternative definition, the Merriam-Webster dictionary gives a concise description: "[A product is] something that is made or grown to be sold or used"[4] After all, even a furtive glance indicates that a product is somehow created. The Oxford and Cambridge Dictionaries also give similar definitions in British English.[5] [6]
That's great, because it means that all functionalities can be neatly divided up and in the end there is a business unit for each product, which is aligned with the customer journey and: done. Or is it?
In practice, it turns out that looking at the customer is not everything!
The customer can be king, of course. Everything is still geared towards the customer. But in the search for the definition of a product, it becomes clear that the customer does not rule alone.
Because the sole definition of the product by the customer and the functionalities of interest to him only describes the product from the end. And therefore the view from this direction cannot be everything. The second perspective, that of the organization, therefore necessarily follows. The product is conceived and developed from the other direction.
Both perspectives, the functionalities and the development, belong together!
Only then can the question "what is a product?" be answered. When searching for products, a bit like a detective, it helps to first look at everything, then lean back, take a deep breath and then take out the stethoscope and carefully listen for these characteristics:
1. there is a vision for the product.
In the very beginning was the idea. No matter where this idea is born, whether in the shower or in the office kitchen, a product idea is the reason why products exist in the first place. It's not the customers, it's not the strategies and it's not even the innovation processes. Of course, these can foster the creative moment, but they can also stand in its way.
It is the idea that stimulates the imagination, that builds a bridge between the present and the future. It is the vision that inspires and mobilizes.
2. there is a business model for the product.
Having a product vision is laudable, but of no entrepreneurial value. We need answers to these questions:
2.1 Is the product feasible?
Do technologies, expertise, talent and partnerships exist or can they be developed?
2.2 Is the product practicable
Can it be produced technically, are there or can distribution channels be identified, are the costs acceptable (not-for-profit), and are these offset by higher revenues (for-profit)?
2.3 Is the product durable
Can the product be maintained in the long term, even after its development, and can the customer potentially be offered services after the purchase?
3. there is added value for the product.
A product must offer added value compared to the alternative of "no product". And this added value has to be created somehow. Very few products are created by one person alone, so this is where collaboration comes into play. Collaboration, in turn, should be organized to improve alignment, decision-making and coordination.
Without these three points, there is no product: if there is only a vision, the product is just an idea. If there is no business model, the product is just a vision. If there is no added value, the product is just a plan.
This provides a complete picture of the product definition
Of course, the product is also more than vision, business model and added value. And this brings us back to the beginning of the article: a product must always offer added value for the customer. The customer must be willing to give something for this added value.[7] The customer gives something in return if needs are met. And functionalities, in turn, are at best described in such a way that they capture needs.
Without these points, there is also no product: if there are only functionalities, the product only meets needs by chance. If only needs are known, this does not yet manifest the person "customer". If the customers are known but the usage is not, I cannot trace their connection to the product over time.
In the end - I'm sorry to reveal it at this point - there is no clear definition. I'm still wondering whether it can exist at all. I would be extremely grateful for any relevant information. Until then, this food for thought will help. Really!
Finally, one more price question
Should the focus be on the customer or not?
What do you think? Put your answer in a comment!
Everyone who answers the "prize question" will be entered into a prize draw to win the book "Innovation Games" by Luke Hohmann. This will give you a nice toolbox full of methods for product workshops.
[1] https://hbr.org/1968/11/organizational-choice-product-vs-function
[2] Kotler, P., Armstrong, G., Brown, L., and Adam, S. (2006) Marketing, 7th Ed. Pearson Education Australia/Prentice Hall.
[3] Christian Homburg, Harley Krohmer: Marketingmanagement Strategie - Instrumente - Umsetzung - Unternehmensführung. 3rd edition. Gabler Verlag, Wiesbaden 2009, ISBN 978-3-8349-1656-3, p. 536 Chapter 11.1 Conceptual foundations of product policy
[4] https://www.merriam-webster.com/dictionary/product
[5] https://www.oxfordlearnersdictionaries.com/definition/english/product
[6] https://dictionary.cambridge.org/dictionary/english/product
[7] This also applies in the not-for-profit sector, because it doesn't have to be money that people want to give.
customers can give time and attention, among other things: Using Twitter or LinkedIn doesn't cost money, just...notice for yourself, right?
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