Seeing the system dynamic: narrow vs. broad product definition - part 2

In part 1, we looked at the case of platform as product. Now, we are going to look at the case of product area as product. Those products all have customer views, but there is possibility to define a broad product, then the products become product areas in the broad product. Let's separate them further into two cases, one is defining product solution as product; the other is defining product family as products.

Product solution as Product

The product solution includes several products that interact to create customer value. Let's take a couple of examples. In telecom, RAN (Radio Access Network) is a solution, while BTS (Base Transceiver Station) and RNC (Radio Network Controller) are separate products - network elements inside the network solution. In e-commerce, the e-commerce platform provides the end-to-end solution for customer, while shopping, payment, logistics are separate products - elements inside the solution. Usually, the product solution evolves to an open ecosystem. We could redefine product solution as product, then those products in the same product solution become product areas.

1. Productization, synchronization and flexibility

Even though the relation among products in the product solution is different from the relation between application product and platform product in part 1, the below dynamic is similar.

The productization is a key drive for narrow product definition, which is illustrated by B1-loop. The support on productization includes marketing, sales, budget, etc. Once there is gap, we define them as separate products under the same product solution. This increases the product orientation, leading to better support on productization, thus closing the gap.

To deliver the value at the level of product solution, those parts still need to be in sync. The separation of products decreases the extent of synchronization, thus, extends the cycle time. The longer cycle time raises the time pressure, which acts as a force against the separation and narrow product definition. This is illustrated by B2-loop.

The separation also creates silo effect among narrow products, which reduces the overall flexibility. When there is more valuable work in one product, it is hard to move teams from other products to this product. When the whole product solution is still full of uncertainty and the size of the organization is still small, the expected flexibility is high. Thus, it creates a force against the separation and narrow product. This is illustrated by B3-loop.

Similar to turning a platform to a real product, the separation of products in the product solution is better to emerge than to plan upfront. The premature separation creates more problems than what it solves.

2. Local innovation and holistic innovation

There is another tradeoff between local innovation and holistic innovation. Local innovation means the innovation within each narrow product, while holistic innovation means the innovation at the level of product solution.

Narrow product definition helps close the gap on local innovation, which is illustrated by B4-loop. This acts as a drive for narrow product definition. However, the product separation creates the silo effect, which harms the collaboration, then reduces holistic innovation. When a gap is perceived, we define broad product to reduce silo effect and increase collaboration, holistic innovation goes up, which closes the gap. This is illustrated by B5-loop, which acts as a force against narrow product.

Organization may choose a different balancing loop to address the lack of holistic innovation. Instead of defining broad product, they create cross-product task forces to increase the collaboration, thus, promote holistic innovation. This is illustrated by B6-loop. In theory, this is a good idea. However, in practice, it is a challenge to implement the outcome from those task forces into those separate products. Defining broad product and having task forces could be complementary too.

Product family as Product

The product family includes several products targeted for the same market but different customer segments, e.g. some for high-end, the other for low-end. Usually they share a large portion of code base too. We could redefine product family as product, then those products in the same product family become product areas.

1. Attention, competition and confusion

We first look at the dynamic regarding business and customers. Attention on customers increases customer satisfaction, while confusion by customers decreases it. The competition means that  products in the same product family compete for business and customers.

One drive to define narrow product in product family is to serve their customers better. The narrower the product is, the more attention those customers get. This increases customer satisfaction and relieves customer pressure. This is illustrated by B7-loop.

When each product in the same product family goes on their own, the alignment drops. The competition among products increases, till the point of having alignment gap, which triggers to redefine a broad product. The broad product definition increases the alignment then closes the gap. This is illustrated by B8-loop, which acts as a force against narrow product definition.

What's interesting is when alignment is lower, the confusion by customers increases as they may use multiple products in the same product family and get different even conflicting marketing messages. The confusion decreases customer satisfaction. This unintended consequence is illustrated by R1-loop. B7-loop and R1-loop form the "fixes that backfire" archetype.

2. Duplication and common components

Let's look at the dynamic regarding development. The duplication has negative impact on development cost, while common components help lower the cost.

When each product in the same product family goes on their own, the transparency across them becomes lower, which makes fewer common components, leading to more duplication. The duplication increases the development cost, then raises the cost pressure. In response to it, one solution is to define product family as the broad product, thus, all previous products become product areas under one product. This increases the transparency, which enables more common components, leading to less duplication. This decreases the development cost, then relieves the cost pressure. This is illustrated by B9-loop, which acts as a force against narrow product definition.

There is another common solution in response to the duplication. We create organizations around potential common components, which drive their usage to make them become real common components, leading to less duplication. This decreases the development cost, then relieves the cost pressure. This is illustrated by B10-loop. As you probably have noticed, this is essentially the case of platform as product - the platform is a component, which has been described in part 1.

B9-loop and B10-loop are two different ways of creating common components, one is to enable it via transparency; the other is to define it. In my experience, it usually works better to emerge than define upfront.

Summary

Narrow vs. broad product definition is a big topic and the contextual difference is massive. These two articles (part 1 and part 2) are far from comprehensive. I summarize the major tradeoffs and pitfalls here.

• Productization is a key drive for narrow product definition. As the right narrow product emerges, we should avoid premature separation.
• Cycle time and flexibility are main forces against narrow product definition. This applies for both real product and platform/component.
• Common components and reusable platforms help reduce the development cost, but they are not necessarily defined as product associated with development organization.
• Narrow product definition may promote local innovation at the expense of holistic innovation.

P.S. While writing these two articles, I gained much insight and clarity from the discussion with Jurgen De Smet, thank you!