via Product Focus blog.
Transitioning from a project to product orientation isn’t without pain but it will lead to better long-term outcomes:
- Faster, more reliable deliveries of product
- Better alignment and efficiency across the business by selling what’s available and delivering what’s been sold
- Taking control of the product strategy rather than being led by the customers who shout first or loudest
- Better profits through fully embracing the ‘build once, sell many times’ philosophy
Are you working in a business where single customer deals are driving priorities in development?
We see this happening in start-ups where the next deal results in a ‘pivot’ that sets the business in a new direction (as does the next deal and the next…). But it also happens in mature businesses where the next deal is a big chunk of money…
Whilst we all want a ‘can do’ culture in which we are responsive and agile, going down the custom route provides short-term gain whilst storing up pain for the future.
Each custom deal, taken in isolation, might make sense. It means a new contract has been signed which brings in some money and makes people feel good, it keeps a customer happy and maybe even gives you a new reference for future deals.
But it’s too easy to ignore the downsides…
Development of ‘product’ needed for multiple customers (maybe existing customers) gets delayed…
A culture of ‘customer-first’ means Sales don’t have to learn what’s possible or best for the business but feel free to sell whatever their customer wants…
Deployment and support must deal with yet another variant which is time consuming, messy and expensive…
Profitability on these bespoke deals either doesn’t get measured or is measured incorrectly…
There are 5 key things to get right:
• The culture must change: The culture that allows Sales (or Senior Management) to sell whatever the customer requests needs to go. … There has to be a realization that saying Yes to something means saying No to something else.
• Measure behaviour: The shift from selling projects to selling products needs to be measured and rewarded .…It needs to be made harder for the front end of the business to persuade the business to create a custom project than it is for them to sell what’s already available. Review the real costs and profitability of those large complex deals … they may be high revenue, but what about margin and the impact on the wider business?
• Improve your sales training and support: Whoever is doing the selling needs to know the portfolio, to be able to position and sell the value of what’s available. … The product managers’ role is to instill enthusiasm in Sales to sell the product and then equip them to do so.
• Put product people in the driving seat: A common factor we see in project oriented businesses is that product managers are bypassed. We often see Sales people going directly to Development to get an estimate for effort and delivery timescales. … Product managers might or might not get told what’s happened but even if they are, it’s often too late to influence the decision.
• Get ahead with your market understanding: You should be doing proactive research to try and understand where the market is heading in advance of these customer requirements coming in. This allows you to create the governance where you can say ‘no’ to things that are only relevant to a few customers and focus on things that are valued by the wider market where the opportunity is much bigger.