What is a Product? Value from a Throughput Accounting Perspective

In the digital world, a product isn’t just something to market or sell—it’s an entity that creates specific value for users and the business. From the user's perspective, products solve problems or provide benefits, such as Spotify helping users discover music or Slack enabling team collaboration. For businesses, products either generate revenue, promote services, or boost productivity, like Adobe Creative Cloud for professionals or internal IT systems that enhance efficiency.

Determining Specific Value: A Throughput Accounting Approach

Throughput accounting focuses on maximizing the flow of value through the system. To ensure a product aligns with both user needs and business goals, organizations can ask these three key questions:

1. Will it increase throughput? – Does the product architecture enable faster, more efficient delivery of value to users?
2. Will it reduce investment (inventory)? – Can the system minimize waste or unused capacity, such as redundant features or unused infrastructure?
3. Will it reduce operating expenses? – Does the product help reduce costs, such as maintenance, operational overhead, or development complexity?

Evaluating product design decisions through this lens ensures that the product creates real business value while also addressing user needs.

Product vs. Project

A project delivers a specific product release—such as a new version of Microsoft Teams—and ends when that release is complete. A product, however, evolves over time, creating value continuously. From a throughput accounting perspective, product success is measured by how effectively it sustains and increases value over time. The architecture must be designed to adapt and grow with the product as it scales.

Features and Architecture Building Blocks

Not all assets are products. Features—like the messaging function in Slack—don’t deliver value on their own. They work in combination to create the full product experience. Similarly, architecture building blocks (such as microservices, APIs, or databases) are critical for supporting the product but don’t directly deliver business value. These components are part of the system's foundation, ensuring scalability and flexibility, but they only generate value when integrated into the product as a whole.

From a throughput accounting perspective, a product’s value comes from its ability to maximize the flow of value to both users and the business. Organizations should focus on throughput, reducing unnecessary investment, and lowering operational costs when evaluating product decisions. Features and architecture building blocks play a key role in supporting the product, but they aren’t standalone products themselves. A well-designed product architecture enables long-term flexibility and value delivery, ultimately leading to greater throughput and business success.

Resources

1 - https://www.romanpichler.com/blog/what-is-a-digital-product/

2 - "The Goal" by Eliyahu M. Goldratt

3 - "The Software Architect Elevator" by Gregor Hohpe