Over the last two of months, I’ve studied and written about companies and people whose creations we buy, use and ultimately love. Products and services that are bought in droves, used incessantly and promoted for free. With the new year, I want to branch out into posts about specific questions that emerge from these profiles.
This time around, it’s about the choice between doing more (or different) or doing the same (hopefully better). A lot of the writing on this topic seems to have a strong success bias i.e. whichever option worked in a particular instance, that’s the option proclaimed to be the best. I want to understand when exactly a product business should do more (features, options, tiers) and when exactly it should focus and improve what it already does.
Even if the final decision is a combination of better and more (purple pill, anyone?); it seems clear that a Product Manager needs to intimately understand their situation (their customers, market and business) before deciding. The three parameters below seem most important to me – would love to hear your comments about others…
Landscape and competition
Many product businesses have to build more features (tiers, options) just to be considered during the buying process. It’s a pretty simple choice (btw, simple doesn’t necessarily mean easy) if the feature represents a fundamental barrier to entry to a market i.e. it passes the ‘minimum viable product’ test. However, things get more complex when this need is driven by competitive pressures because it is possible to succeed while ignoring competitive pressures (think Kindle vs. iPad). Reacting to any and all competitive pressures might actually be a recipe for disaster. The annoying part is that sometimes these features, while being decision criteria, are not really used day-to-day. I can see how this would irk the rational mind but I guess a PM needs to be just as rational (or irrational) as their customers.
Growing revenue vs. growing profits
The product business needs to know whether it wants to make more money in total or make more profits. These two might seem remarkably similar but they are not, since we all know that ‘one has to spend money to make money’. Almost anyone can make more money while spending more money but this can only be sustained for a short amount of time (think failed diversification-driven acquisitions). Making more money while spending less requires great discipline in picking priorities and having a clear understanding of how much is good enough for the customer to buy. Hopefully, all business plans seek a clear path to higher long-term profitability.
More customers or more from each customer
The product business needs to decide between pursuing more customers or higher-paying customers. If you’re a new business the choice is pretty clear – more customers are better than none. Typically, higher-paying customers demand more (options, tiers, features) within each product category because they have the means and expertise to sift through the options to pick one that is just right for them. On the other hand, the pursuit for more customers can be served by many bare-bones products (in different categories) to chase the long tail or a focused ‘good enough’ product that meets the most important needs of a very large market.
Self awareness and situational awareness are critical in personal life and it sure seems like they are essential in the pursuit of product nirvana. Creating products and services with the buy, use, love magic seems to hinge on seeking to know and knowing to keep seeking.