A big part of my research agenda for this year is productization. Many app dev teams see productization as a way to innovate better, achieve more sustainable results at a lower cost, deal with some of the tough challenges downstream, and in general lead a happier and more productive life. The allure of productization varies across different types of organization, as do the approaches. Therefore, to do the product justice, we're going to look at five different settings in which app dev teams are striving to productize their work:
Companies that have customer-facing applications on their websites. The classic example is online banking, but there are plenty of others. Some of these applications are tools for existing customers, while others are mechanisms for interactive marketing.
IT departments. In this case, productization is a way to improve the long-term return on technology investments, by treating them as products and assigning them a product owner.
Services companies. Productization may reduce inefficiencies in developing and delivering offerings, as well as marketing and selling them.
Embedded software. The ubiquity of software as a component of a larger product (car, medical device, etc.) creates new challenges in defining what the product is, and where software development fits into it. That's one reason why PTC, a product lifecycle management (PLM) vendor, was interested in acquiring MKS. (Other than their shared interest in TLAs.)
Product strategists at Mars, Incorporated are experimenting with mass customized offerings quite a bit. In addition to their build-to-order customized M&Ms offering, their subsidiary Wrigley has just rolled out MyExtra gum, which prints personalized wrappers on Extra gum packs.
Product strategists at Wrigley declined Forrester’s recent request for a research interview, but judging from the myextragum website and their press release, the offering is a really interesting example of a creatively mass customized product strategy. Why? Product strategists at Wrigley have:
Redefined the product using customization. Myextragum isn’t just gum with a customized wrapper. Instead, it’s a greeting card (Mother’s day, birthday, other holiday) or a business card (to be given to patrons) plus gum. Wrigley is moving into a non-adjacent, previously orthogonal product market in one fell swoop. That’s aggressive and creative.
Justified the higher price point. At $4.99 – though the price reduces with bulk orders – the product is pretty expensive for a pack of gum. But, again, it’s not a pack of gum – it’s a greeting card or business card that also has gum inside. This pricing makes sense when you think of the price of Hallmark cards or custom business cards.
Mass customization has been the “next big thing” in product strategy for a very long time. Theorists have been talking about it as the future of products since at least 1970, when Alvin Toffler presaged the concept. Important books from 1992 and 2000 further promoted the idea that mass customization was the future of products.
Yet for years, mass customization has disappointed. Some failures were due to execution: Levi Strauss, which sold customized jeans from 1993-2003, never offered consumers choice over a key product feature – color. In other cases, changing market conditions undermined the business model: Dell, once the most prominent practitioner of mass customization, failed spectacularly, reporting that the model had become “too complex and costly.”
Overall, the “next big thing” has remained an elusive strategy in the real world, keeping product strategists away in droves.
Both Agile and Lean have an ethos that, at least on paper, acknowledges the noble failure. "Fail fast" is part of the Agile credo. Although it sounds as though it contradicts the "fail fast" approach, Lean's admonition to delay decisions for as long as possible is actually very complementary. The first draft of anything, from automotive design to software architecture to student papers, always contains elements that could be improved or that are just flat-out wrong. Practices that sit beneath the banner of Agile or Lean, such as set-based development, provide further ways to make mistakes and overcome them.
To a large extent, these practices deal with the easier varieties of failure. Prototyping a feature quickly, so that you can invite feedback when you actually have enough time to respond to it, is an extremely valuable technique for lowering the risk that you build something the wrong way. You need a different approach to identifying the features that you should not build, period.
That result wasn't a surprise. For years, we've been hearing about how difficult it is to define product management. Perhaps that has something to do with the difficulty of defining the thing that product managers manage. We think we know products when we see them, in much the same fashion as Justice Potter Stewart famously defined obscenity, but we're a bit challenged to put into words exactly what they are. We can easily define them in the negative, such as consulting offerings that aren't products or IT projects that aren't products. We've all heard that products have life cycles, which isn't nearly as Darwinian as one might expect. (Many ideas that don't deserve to become products, do. Many that deserve to die, don't.) But, if pressed, we're at a loss to define what products are.