Products - What are they?

?I have been in Product Management for over 21 years. There are many things about my profession that assault my brain each day – market, value, prioritization, roadmap, etc. However, the most profound thing hitting my brain perpetually without a proper solution is the question, what is a Product? And more importantly, why should it matter?

First, let’s start with why this matters? Businesses deliver value to customers with a set of activities, aka the value chain. How these activities are setup, staffed, organized and choreographed decides the uniqueness and differentiation of the value that is delivered. Tradeoff decisions are made in the pursuit of value delivery. Products and Services are two different ends of the spectrum in value delivery. A company that confuses these two ends up with staffing and organizational challenges. A business can shift between products and services as demonstrated by Lou Gerstner and documented in his awesome book, ‘Who Says Elephants Can't Dance? Inside IBM's Historic Turnaround’. However, such shifts in the DNA of an organization are hard and rarely succeed.

There are several definitions of a product I have seen used. In the days of yore, a product would be anything - that could be inventoried, had marginal cost/revenue (mr and mc for the microeconomic mind) and was the reason why factories existed. The result of industrial revolution, a shirt that costed $5,000 in the pre-industrial revolution era, was down to $20 (source: https://www.sleuthsayers.org/2013/06/the-3500-shirt-history-lesson-in.html). So products and productization of bespoke work have definitely helped humanity.

With software products, the definition continues to evolve. Two radical changes due to software products: (1) there was nothing more to be inventoried, unless you count magnetized bits and bytes on a hard drive on a computer sitting in a Microsoft or Amazon data center in Buffalo, NY. (2) there was no marginal cost any more, produce endless copies at no additional cost! What then are the defining factors of a Product? In my opinion, there are three factors – (1) Reuse: build once and use it for several users/customers. (2) Intellectual property / secret sauce: property protection has always been a legal matter, this becomes even more difficult when you have something that has no physical shape. (3) Deliver value with cost in mind: help get things done faster, better, and cheaper compared to existing solutions available in the market.

Software products themselves continue to undergo change. With much of Product’s value being delivered as a service, sales and service are becoming components of Product itself.

How does the definition of Product change as we get to the end of 2021? There was a time when we had software companies and traditional companies. Traditional companies consumed software from software companies. As 2021 comes to an end, it is becoming apparent that all companies are software companies. Software is an essential and integral part of the value that is delivered by all companies - be it a clean water delivery company like EcoWater or Healthcare company like UnitedHealth Group (discloure: UHG is my employer).

In this article, I do not go into my own field and how it is being disrupted and redefined as the definition of products undergo change. That would be for a future writeup. Would love your comments.