Why is Any Product Effort Made, and by Whom?
Why companies put effort into the creation and development of digital products? Which capabilities are needed in order to make the effort successful? Which professionals do possess these capabilities? Who is a leader of the effort? Let’s figure this out.
Drivers of Any Product Effort
Every successful product effort is driven by a business objective. In turn, a business objective is set because a company sees an opportunity to solve an existing problem for a specific group of people. As soon as a product solves a problem and improves life of a customer or user in a way that a certain business objective is achieved, the product effort is worthwhile.
Thus, any product effort is aimed at fulfilment of a business objective by making customers and users happy.
Business Objective
As I wrote in my previous post, the idea of any product is to satisfy the desire or need of a customer. This satisfaction brings value. However, not only customers should take advantage of a solution to their problem. A company should benefit from selling product features, getting revenue, and returning investment. That’s why some companies constantly seek opportunities to build a new product and create a market for it. Those who did it try to make an existing product better to reach a larger market position. That is done by a definition of a business objective to enable a product team to work towards the right product for both the company and customers. What exactly is a business objective?
A business objective is a result that a company aims to achieve.
Business objectives are derived from business vision and strategy for building a successful company. Business strategy is a master plan that contains steps to create value and reach business objectives. A business objective shows what a company needs to accomplish to result in success. It is worth to note that it is impossible to achieve success as long as it is not measured. Therefore, companies know whether they are succeeded by a definition of key results.
For example, a company has started losing revenue because of an increased customer churn rate. The company decides to take action to retain customers. It sets a business objective “Reduce the customer churn rate”. However, the business objective says nothing about reduction itself. Would 10% reduction be considered as success or waste of time? That’s why the company sets the key result “In Q1, the customer churn rate is reduced by 5%”. At this point, the company defines success by the achievable and measurable business objective.
You might think business objectives are set only by large companies. And startup companies don’t need to invest time and resources in this activity. In fact, every company should set business objectives, even startups in order to be successful. However, business objectives often depend upon where a product, which is created by a company, is in a product life cycle.
There are five stages in the product life cycle — development, introduction, growth, maturity, and decline.
It is crucial to know in which stage a product is to set the right business objectives. As an example, business objectives of a startup company can be “Build a customer base”, “Generate sales”, “Achieve product-market fit”. When a company wants to grow and scale a product, the business objective can be “Increase a market share”. After a product matures, a company may wish “Maximize profitability” or “Ratain existing customers”. As product sales begin to decline, a company can “Attract new customers” or “Reduce prices”.
Product Objective
Most business objectives cannot be achieved without any product effort. Although other teams contribute to a business objective such as sales, marketing, and customer support, the success of most companies depend crucially on product success. While a business objective is aimed at company success, product objective is aimed at customer and user success. A product objective articulates a problem to be solved for customers and users. For example, the business objective “Reduce the customer churn rate” can be achieved by changing the behaviour of users while they use a product. Quantitative and qualitative research can help to define the right product objective and key result to solve the business problem.
A company needs to have the necessary capabilities to set and achieve product objectives and key results at the product team level. Nowadays these capabilities are provided by dedicated product teams.
Dedicated Product Team
According to Marty Cagan, a Silicon Valley-based product executive, a dedicated product team is “a group of people who bring together different specialized skills and responsibilities and feel real ownership for a product or at least a substantial piece of a larger product.”
A dedicated product team should be self-organized and cross-functional. It knows how best to accomplish its work. The team can find the best possible solution to a customer problem and implement it in reality. It accomplishes a business objective by contributing to a product objective. It has all competencies to do these activities. I consider these competencies as capabilities that should possess every dedicated product team.
Core Capabilities of a Dedicated Product Team
There are five core capabilities of a dedicated product team:
- Product Management
- Customer and User Research
- Product Design
- Engineering
- Data Analytics
Availability of most of them is crucial during all stages of product life cycle.
Product Management
Product management craft is all about building a shared understanding with your team and stakeholders about ‘what’ you building, for ‘whom’, and most importantly ‘why’. In other words, this capability is necessary to decide on which features to build and for which customers and users with a clear understanding of why it needs to be done. The main objective of product management is to make sure that real value is created and delivered to customers and a company.
This capability is provided by a product manager or product owner, who is a leader of any product effort.
Customer and User Research
Customer research is conducted to identify ‘who’ uses or will use a product as well as the motivation behind it. Customer research should shed more light on current and potential target customers, their needs, and behaviours. This type of research is extremely important during introduction and growth phases of the product life cycle since better knowledge about customers gives a better chance to reach the market and scale a product.
An equally important is user research. It is about understanding of problems to be solved and how well existing solutions solve user problems. It includes understanding of user perception, solving usability problems, and improving user satisfaction. User research helps to make a product design better in terms of usability by giving insight into what is relevant to users.
This capability is provided by either product manager or UX researcher.
Product Design
Product Design is all about making products easy and pleasurable to use. The main objective of product design is not only to create a beautiful user interface. The task is to enable a product to be user friendly. In other words, product design maximizes usability of a product by building prototypes and validating solutions with potential users.
A product designer possesses this capability.
Engineering
While the task of product management is to build the right product, engineering is needed to decide on how to build a product right. Engineering is all about technical design and implementation of a solution in a way to meet a certain business and customer need.
This capability is provided by a software architect, software engineer or developer, test engineer or quality assurance specialist.
Data Analytics
The objective of data analytics is to take the maximum advantage of collecting and analyzing useful data for making better product decisions. It is important to know which features customers and users like or dislike. Data analytics shows what contributes to customers engagement and return and what can be a reason for customer churn. It is worth noting that data analytics doesn’t help to figure out why something bad happens. It gives only quantitative knowledge. Qualitative learning is done through user research.
A product manager should possess this capability as well as a data analyst, data scientist and product analyst.
Final Thoughts
Every product effort is needed to meet business and customers needs. The success of companies depends on achievable and measurable business objectives.
A dedicated product team contributes to a business objective by making a lovely product. Every dedicated product team should possess core capabilities to set and achieve product objectives.
