No one, deliberately starts out to build a mediocre product or solution. Still, only few products are built exceptionally well and loved. I wrote in details about why products fail and what framework we can apply for it.
When helping few entrepreneurs find product market fit, I start by asking a question:- “What makes a real great product for the insight you got?” Better or great product definitions are different for different stakeholders and differ at different stages of the lifecycle.
One of several ways of thinking a better product from two different angle-
a) User Value: A product that provides the highest value, in appropriate proportion of effort, time and money invested.
b) Business value: A product that ethically maximizes the value extraction for it’s shareholders from the value it creates.
My quick quick 2 x 2 framework for the product categories:-
Above is the general idea on how I perceive products in the context of users and value they provide. Products move from one quadrant to other through their lifecycle. Teams should strive to move and sustain the offering where the product is most valuable and viable.
Following are my observations and thoughts for each of these buckets :
Winning products –
1. A product that is adding highest value to users and returning the best returns to business is a desirable product.
2. Winning products have inherent network effects or a backed by a breakthrough technology that builds sustainable competitive advantage over time.
3. Great products behave almost like monopolies, enable new user behavior and / or displaces an older product.
4. Great products push the boundaries of user satisfaction to new highs.
5. Successful platforms are typically winners since they create more value to their adapters that for their own. AWS and Stripe is the best example of this.
User segment specific niche products –
1. Niche products provide high user value (as they address very narrow and deep segments). However, business outcome depends on addressable market size.
2. Niche products are either disruptive (new technology and new cost structure) or solve unique problems to the highest level of satisfaction for small number of users.
3. Niche products are typically technology or industry specific than generic consumer products.
3. Interesting observation about successful niche products; over time, acquisition costs tends to zero (could be because of growth ceiling) and they enjoy negative churn.
Products in regulated industry or non-consumption segment–
1. In regulated industry, buyer and users are usually different personas. This phenomenon typically creates an artificial void between users and the builders, This gap delays iteration velocity, which leads to mediocre products.
2. In regulated industry, barrier to entry is high. This leads to small product selection for users, which creates the possibility for businesses to extract more value with not so high value product.
3. More competition leads to better customer value. Patented manufacturing process, expertise in technology than in productization of that technology leads to relatively low user value products.
End of life (Zombie) products
1. This category contains platforms or products that were once breakthrough but no longer are the “go-to” options
2. Legacy products that “still” serves some user value (mainframes) but doesn’t necessarily attract new investments are low user and business value.
3. Platform products that no longer are the “only” option (in that category) OR no longer used as direct underlaying platform for abstraction.
In summary, to build a better product, understanding product lifecycle from user value and business viability perspective is equally important as understanding product market lifecycles.