Why your business could do better with Product Thinking

What is Product Thinking?

You’ve probably heard of Design Thinking. You may be well versed in its principles, or perhaps you might not understand it all in in detail, but you’ll probably know that Design Thinking is a very effective philosophy for problem solving that’s centred around people.  Although Design Thinking was initially used to design physical objects, today it’s being applied to the design of complex, intangible customer solutions.

While Design Thinking is an effective methodology for addressing individual customer challenges it doesn’t fully address the broader commercial, technical and operational challenges of delivering them. Businesses are presented with a wide set of challenges that come before and after the application of Design thinking, such as:

• Deciding what customer challenges we want to solve, for whom;
• How we can solve them for multiple customers;
  • How we should organise ourselves to deliver and support those solutions;
  • What technologies we need to apply;
• How we position and sell what we do;
• How we can do all of this in a way that’s profitable.

This is where Product Thinking comes in. Product Thinking is a philosophy that provides a wider perspective beyond solution design. It considers the strategic, operational and commercial aspects of delivering those solutions to customers.

How can Product Thinking help me?

Product Thinking can help you to realise your business strategy through better structuring of your product or service portfolio, designing for modularity and repeatability, pricing to best reflect the value you deliver to clients, and how you can best communicate the benefits and unique selling points of what you offer to clearly defined target markets. It can also help you to set clear customer expectations which leads to greater customer satisfaction.

Product Thinking isn’t about changing what you do as a business. It’s about finding ways to do it better. Whether that be improving efficiency, agility, flexibility or profitability. It also aims to make your business more adaptable, so you aren’t blindsided by market changes and new innovations. Product Thinking aims to strike a balance between often competing business imperatives. It aims to understand markets and address them in a way that delivers value to both you and your customers.

It’s important to stress the word ‘market’ since this is an important part of Product Thinking and where it can drive advantage. Product thinking aims to satisfy the common needs of groups of customers, and in doing so creates the opportunity to build repeatable and scalable business processes.

It’s very important to stress that Product Thinking is not necessarily about mass production - even though it can be applied with that as an objective if needed. The aim of Product Thinking is not to turn out an endless supply of identical customer solutions. Rather, it builds the discipline to standardise the repeatable elements, while allowing you to focus on the more bespoke elements your offer to meet client needs.  The mix of standardised and bespoke may change for each client, but the aim is to standardise as much as is practical.

Product Thinking doesn’t just apply to the production of physical products either. Today services account for a significant part of the revenue of even the most product-oriented businesses.

Despite this, it’s often the case that some services businesses, especially those in the creative industries are hesitant to use ‘product’ approaches because they feel it might constrain their ability to produce something unique for each client. In reality however, the businesses that often gain the most from Product thinking are services and creative businesses that deliver highly customised or bespoke solutions to clients. Often, in only focusing client by client, these businesses haven’t developed approaches that are intended from the outset to reuse elements of what has been done before. Every client solution is built from the ground up each time, which involves duplication of effort and low repeatability. Addressing this is where Product Thinking can really pay off.

The intention of productising shouldn’t be to remove creativity, nor to remove the ability to deliver tailored solutions to each customer.  Its goal is to make that creativity and adaptability repeatable and scalable. Taking Lego as an analogy, it would be difficult to argue that the world’s most successful toy company stifles creativity. It allows children to be at their most creative whilst also being the epitome of product centric thinking. Every Lego project, whether it be built according to the instructions in the box, or out of the imagination of children, is constructed from a set of standard building blocks.

Product thinking is not an all-or-nothing approach. This is not how we advise organisations to adopt it. We suggest you use it as a tool that is applied to certain parts of your product or services offer, in the right circumstances to create value for both you and your clients. Even for the more unusual or bespoke client solutions, some parts may be made up of more ‘productised’ elements, while other are more hand crafted, depending on the client’s perspective and your operational ability to deliver them.

What are the benefits of Product Thinking?

There’s a long list of benefits from taking a Product Thinking approach, too long to fully cover in this article. The sort of benefits you gain will very much depend on the type of business you are, the customers you serve, and the objectives you hope to achieve. Some key outcomes you could expect from applying Product Thinking Include:

Increasing customer satisfaction – Customer dissatisfaction can often stem from a gap between what customers thought they were buying and what you believe you are providing. By establishing clear expectations with customers and delivering to them in a consistent manner, Product Thinking can reduce the risk of dissatisfaction.

Improving innovation – By constructing your offers from productised elements it allows you to evolve your offering piece by piece. You can innovate without having to eat the whole elephant.  This has real advantages when it comes to introducing new innovations such as automation, AI and machine learning, by enabling you to do it in a controlled way the doesn’t erode value.

Maximising efficiency and profitability – maximise the re-use and repeatability of your work by setting out with standardisation in mind. By standardising elements of your offer you’ll be able to deliver them at a lower cost, without losing value. It gives you greater flexibility to move people and resources between client teams where you’ll maximise the value they deliver. You’ll also have a means of differentiating pricing by charging more for high value activities, and less for lower value activities.

Accelerating speed to market – increase the speed at which you can respond to customer requests, provide pricing, and shorten delivery time by having a pre-defined catalogue of products and services, along with a consistent methodology for discounting or adjusting scope.

Improving sales and conversion – Product thinking helps you to more clearly communicate your offers, their unique selling points, value propositions and pricing. It also encourages you to be more focused about the markets you sell to. By being clear about the value each element of your solution is delivering, Product Thinking can also make it easier to resist pressure for discounting, or to add and remove value to hit the right price point.

There are strong arguments for taking a Product Thinking approach. Most industries, whether they are in creative, services or manufacturing can benefit, whether they are growing, or battling against headwinds. As our industries become more technology and process driven, the need to have a structured approach to how we plan and organise our product and service offers will take on ever greater importance.