The challenges organizations face today have never been greater. Products are failing, which in some cases results in organizations declaring bankruptcy. A study done by Clayton Christensen at Harvard University shows that 80% of new consumer products fail in their first year. This is an alarming rate. When products fail, organizations fail. Why is this happening? In the book, I co-authored with Joanna Tivig, Gen P - New generation of Product Owners Who Care About Customers, we identified three reasons why products are failing: technology disruptors, new business models, and diversity.
Technology disruptors are creating new opportunities for competitors to enter a market. Think about the online retailer Amazon entering the retail market and competing with the traditional, brick and mortar, department stores. Or, Uber competing against the taxi industry with a smartphone application. New technology has allowed organizations to be fearless competitors in environments that have implemented a predictable, unsurprising approach to running the business. Technologies are fundamentally changing the way of doing business, leading to the second challenge, new business models, that often impact the way organizations relate to their customers and make money. In the case of Uber, cutting out the need for dispatchers. The third challenge is diversity, which has two parts. The first part is again related to technology and the freedom of conducting the business anytime, anywhere in the world. Organizations can sell to customers in parts of the world they never thought possible. Alibaba, a Chinese multinational technology company owns and operates a diverse array of businesses in multiple sectors. Alibaba competes with companies like Amazon and eBay and makes record sales based on low margin products. The bad news is that competitors can sell to your customers from anywhere in the world, too. The second part of diversity is that the organization’s workforce is becoming increasingly more diverse. This leads to organizations being better able to support customers and produce more innovative products. At the same time, organizations have to be a lot more sensitive to the impact of diversity in the workplace.
How can organizations address these challenges? Organizations need new or enhanced products to deliver their strategy. This means organizations need to transform their way of doing business by employing new ways of working around product frameworks and use iterative approaches for product delivery. Studies done by The Project Management Institute Brightline organization (www.brightline.org) have shown that 70% of large scale transformations fail to meet their goals. Organizations that are unable to transform are not prepared to adapt to faster and changeable environments.
Organizations recognize that changes are inevitable and constant, which leads them to develop strategies to address the problems and challenges that continue to surface. However, organizations have trouble implementing and executing their strategy. In our book, Gen P, Joanna and I argue that one of the most important elements to be able to execute strategy is to be able to develop products through iterative approaches and create an organization that embraces product ownership as a way of thinking. Products deliver value to customers which in turn can deliver organizational benefits that will result in achieving the organization’s strategy.
Brightline’s research shows that in order to introduce new products and services, an organization has to transform. The transformation needs to reflect the organization’s capability to deliver products of value, capture customer feedback, and incorporate it back into the delivery process as fast as possible. The link between products and customers is more important than ever these days. Customers are selective, overwhelmed with products, information, and constrained by time. In order for an organization to retain and acquire customers, they need to adopt new ways of working, they have to transform. But organizations need to deliver products that deliver value to their customers. Brightline’s research does not mention the need for organizations to have great products that deliver value to customers every day. However, organizations need to have a more focused approach to product delivery methods and customer engagement mechanisms to be able to survive. The symbiotic relationship between products and owners enforces an organization to support consistent, longer-term life-cycles to deliver value to customers.
There are five ways product owners help organizations transform successfully through products.
First, products provide a focus for organizations. Transforming the organization is going to be a task around one major area of focus: products. Either it is business models, processes, technology or data, it all revolves around products. For example, if an organization wants to transform from the traditional retail in-store sales model to online, the organization needs to create a website that supports online sales. The website is the product that gives a focus to the transformation. To effectively transform, organizations need to be able to incrementally deliver products that will support the needs of their customers.
Second, products are the link to customers and a great source for customer feedback. Organizations know if their products are successful or not through product sales, reviews, scores and referrals. In Gen P, Joanna Tivig and I argue that the new generation of product owners needs to be able to obtain quality feedback from customers. Customer feedback is required to test whether products are delivering value to customers or not and if additional features are needed to increase customer value. Products must solve a customer problem, a need or a pain. Through feedback, organizations can determine if the product is solving the customer’s problem and what steps can be taken to reshape the experience for better customer satisfaction. Product owners must understand what competitors are doing and what the megatrends are in the environment, to anticipate what the customer needs will be in the future. Creating product roadmaps that continuously add features to products based on customer feedback and research will ensure products continue to add value to customers and provide benefits to organizations.
Third, when an organization transforms, an organization needs to be agile. An organization needs to have the agility to adapt to changes in the market and to customer demands. In Gen P, we propose using an iterative development approach to create and enhance products. Product owners need to start off by launching a minimum viable product (MVP), with the minimum number of features that deliver value to customers. Then organizations continuously need to add features to products that increase the value to their customers based on continuous feedback. This approach ensures that the maximum value through minimum features is delivered to customers at all times. The iterative approach allows organizations to adapt to the ever-changing marketplace to ensure that the needs of your customers are continuously being addressed while adjusting to new technologies and business models. Continuous improvement and delivery allow organizations to create sustainable products leading to a sustainable business.
Fourth, to transform, organizations need transformation champions, the product owners. Product owners drive and enable transformations in an organization through the products they are developing, enhancing, and supporting. As products need to be enhanced, organizations need to create rapid response teams in order to add in the new features to address the immediate needs of customers in a timely and proactive manner. Effective product management with product roadmaps and product value propositions will help organizations provide frameworks that ensure their people and resources are focused on the most critical products and features, allowing the organization to transform and to be successful.
Last but not least, organizations transform by providing something employees can get passionate about. In Gen P, we introduced the 5 P’s of product ownership: pride, power, promotion, protection, and passion. These 5 P’s are the same ones that are needed for volunteer champions. To create great products, organizations need to empower product owners and encourage them to take ownership of their product. This is the first step to ensure that products will be successful based on meeting customer needs and delivering benefits to the organization. When a product that is linked to the strategy of the organization is successful, employees see how they are contributing to its overall success, which will make them more passionate and motivated.
It is critical for organizations to transform and overcome the challenges of disruptive technology, new business models, and diversity. To transform effectively, organizations need to have a great strategy, great execution approaches, great products, and great people. Organizations need to ensure they develop the right products the right way and support those products in new and different ways. Transforming without great products will lead to yet another failed transform initiative. Great products that are not supported by organizations will also lead to failure. But, having an organization with a product mindset that builds and supports product delivery and ultimately successful strategy implementations will sustain and solidify its core operational model for many years to come.
Peter
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