About Product Theory

So, product management is about managing “products,” which means it’s worth diving in a bit to talk about what products are. This post takes a more, well, theoretical approach to talking about them, so for some of you, this may help your understanding. And others may find it a yawn.

Anyway, this discussion depends on some context.

Of Factories and Artisans

The first context is the physical factory line that manufactures goods. Here the widgets from the factory line are the “products” of its activities, whether fabrication, assembly, etc. The typical MBA lessons about “widgets” are here.

Photo by Museums Victoria on Unsplash.

In the dictionary-definition sense, products are merely the outputs of any “production” process. This could be the factory, and by extension, could be the solo artisan, the part from the CNC machine, or the music from a producer. The products here are really the “fruits of ones labor.”

Taking Care of Business

But in tech companies, the relevant context to frame our thinking is a business model. For this, I like calling upon on the excellent book, Business Model Generation, which in its business model canvas defines a business model as a system of value delivery composed of 9 coordinated things: key activities, key partnerships, key resources, value propositions, customer channels, customer relationships, customer segments, revenues, and cost structures. That middle section, “value propositions,” is where products lie.

Businesses exist to fulfill these value propositions with customer segments. They are systems of exchange that generate revenues (or other forms of social value, if relevant), and one way to fulfill such value propositions is through offering products.

Product or Service?

Products often contrast to services, another key way to fulfill value propositions, but they behave a bit differently. There’s also a spectrum in between.

Services offer the specialized skills of people in chunks of their time. It’s a direct labor proposition instead of a fruits-of-labor one. Services carry a sense of fit-to-purpose customization, prioritizing a single customers’ needs more precisely, and for that reason, we often refer to a service’s customers as “clients.”) Offering services becomes engaging dynamic resource and scope management problems, and the more you can systematize, often the better off you are. That is, the closer to viability your product might be.

With a product, there’s a tradeoff made with its user and its purchaser.

It requires the user to learn how to use the product. They use the product to unlock the value proposition the product offers. This means they’re not doing things the way they would necessarily want to. Sometimes you get a cool synergy, that “Oh this is exactly what I was looking for!” reaction.

Products (and services) are systematic.

Services often use time as a unit directly paid for by the customer.

Products have time, but in product development. They aspire to deliver a quick purchase experience.

Spectrum of Product to Service

And it turns out, the product or service question isn’t so binary.

Custom-effort expertise-driven services. Structured, but exchanging human effort and expertise. Interior designer. Hiring a movie crew.

Example: Movies as products.

Corollary: Movie theater. Product or service? Service-product? Experiential product. Example of classic “service design,” but very regimented instead of customized to the person. We don’t ask the movie theater owner to create a custom experience for our family or group of friends; we just pay for the ticket and follow the rules.

Products Coupled With Services

Product is so complex (or obtuse) that you can’t get value from it without our (ongoing) help.

Notes ↓

Features are salable manifestations of capabilities that in aggregate fulfill a value proposition.

How does value flow and where is value automated away? Who provides that value and what is the value exchange?

Products are interesting because they are typically singular manifestations of patterns of a group of people willing enough to engage in that value exchange. Instead of everyone thinking their needs are unique, they adapt their activities to the product’s affordances to make problems go away.

Some value that has to be continuously renewed must be exchanged in ongoing fashion through services.

Customizability is an important area to consider.

Customizability versus ongoing service need…

Does someone get more value out of using the product than automating away a task or series of tasks? Or jobs?

For the individual, it’s a matter of what is the behavior tradeoff of using a product instead of using some other means, say the “personal means” (or some other phrase). The personal or baseline means has advantages in that the user has total control and understanding of that means, more or less.

For the product, it’s a matter of understanding the collective threshold for that tradeoff. How many people are willing to use a product that requires them to make a small behavioral exchange or tradeoff, versus a medium sized one, versus changing what they’re doing entirely?

Then thinking about solving problems versus creating opportunities for entirely new products (blue ocean?).

Does the product need to change to satisfy more customers? What secondary tradeoffs exist in that situation?