What is A Product-Centric Organization?
What does it mean to become product-centric? And if you are becoming a product-centric organization, does that mean moving away from user-centricity? Absolutely not. Being product-centric means you are inherently both user and buyer-centric.
Great… so in practical terms, how should we think about it? To me, it translates to your products driving your business strategy and growth plan. Unfortunately, all too often businesses set goals disconnected from their products. As an example, achieve $100 million in revenue. Then as a next step, map this target down and assign a number to each of the products.
In a product-centric organization, you would start with the buyer and user segments and their current/future needs. Then look across your product portfolio to see what you can bring to market to meet those needs while fitting into the buyer/user journeys. By taking this approach, you will understand concrete revenue potential instead of setting an arbitrary target.
Once the product-based revenue potential is rolled up across the portfolio, an enterprise number emerges to share with leadership. Of course, that product-driven revenue potential will be negotiated with leadership. However, at least the negotiation will be fact-based.
In following this approach, you are taking an important and impactful step toward product-centricity. Your products now drive your market strategy and growth plan.
It is worth noting that there are many other steps you must take to move from existing methods for market and revenue planning to a product-centric approach. However, it would take an entire book and a rather long one at that to go through all of the steps and formulate a transition plan.
So, that aside and without trying to fit the subject for a long book into a short article, I will share a framework to help you anchor as you transition toward a product-centric organization. A framework to ensure your strategic plan and long-term growth plan are product-driven.
Here are the first steps you should consider to make the transition:
- Catalog buyer/users’ needs (often found in your backlog).
- Conduct market and buyer/user research to validate/uncover new needs.
- Have your product strategy team lead an exercise to prioritize those opportunities based on the value both from the buyer/user perspective and revenue potential.
- Align the prioritized list to your roadmap with engineering to identify delivery timing based on capacity and in-flight work that may be impacted.
- Translate the combined roadmap (existing + net new opportunities) to a quarter by quarter revenue-based delivery schedule.
- Roll up the opportunity roadmaps across the enterprise to understand revenue potential.
- Negotiate with leadership, set a target, and approve new additions to the roadmap (budget, timing).
There is no doubt this will be painful the first time. However, doing this every quarter on a go-forward basis will ensure there is a quarter by quarter view on revenue potential. Your strategic plan and growth plan will evolve on a quarter by quarter basis. This gives leadership the means to understand how revenue looks compared to plan and course correct with the product team as needed.
By using this framework, you can avoid arbitrary target setting and focus on the organization on products. In the case you do have a revenue target thrust upon you take the opportunity to conduct this exercise and determine if you will fall short, meet or exceed the desired target and get ahead of the ask the next quarter.
If we look at this using the hypothetical scenario of our donut shop amidst a digital transformation, you would consider all the ways your product mix can change and expand quarter over quarter to addressed identified needs (in this case needs = problems buyers/users have that they would pay to have solved). This could include new flavors chosen by your community, line extensions (e.g. donut flavored coffee sold online), physical changes to your store (e.g. kiosk driven ordering), digital experiences (order ahead, delivery), and new lines of business (e.g. creation and distribution of NFT donuts which could be rotated as the daily/weekly flavor and featuring the buyer’s name if desired). Of course, these product mix changes should be driven by buyer/user research and market analysis. An important point to call out is you must consider if you even have an opportunity to win in the market based on your competitors. Sometimes there are too many solutions in a market targeted at a need, making for a crowded space which would decrease the value assigned to the opportunity.
In this case value scoring seems fun! Let’s tase some donuts. Based on the opportunity value, narrow it to your top three — for fun, kiosk-based ordering, order ahead, and NFT donuts. You would then talk to both operations and engineering to determine feasibility and delivery timing. From there, you can forecast revenue to inform the long-term growth plan. In this case, NFT based donuts are your best opportunity to deliver to an urgent need, generate the most revenue with the lowest investment, and where you would have low market competition.
Wala. Leadership agrees with your forecast that NFT donuts can create $100 million in high margin revenue in 2 years satisfying the need to grow. A big win!
In conclusion, product-centric companies drive their market strategy and growth plans through their products instead of setting a revenue target and assigning it to existing products. Beyond the obvious legitimacy a product-centric approach brings to revenue goals, a product-centric approach also allows for innovation to thrive as a mechanism to drive revenue. Instead of retrofitting top-down revenue targets to existing products you are creating new products that will sustain your company in the future.
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