If you want to be a bad product manager, rush an undifferentiated product to market in order to grab market share. Sure, a competitor may have beat you to the market, but now that they are out there creating demand for an innovative offering, you don’t have time to waste. Your version may not be terribly unique and it may be a bit less than what the competition offers. Still, there may be customers who don’t like what the competitor has so you’ll get their business, or you can skim on advertising and sell yours a bit cheaper to create more demand. Either way, it should be pretty easy to get a successful product out of it, right?
If you want to be a good product manager, look to differentiate your product and avoid being a “me too.” Speed to market is certainly important, though it is almost always better to be later to the market with a better product than slightly quicker with something that does not stand out. Being first is good, though no guarantee. (Amazon.com was not the first online bookseller; the iPod was not the first portable MP3 player; Google was not the first search engine; Dyson was not the first vacuum; the list can go on and on…)
In Product Leadership: Creating and Launching Superior New Products
One of the top success factors we uncovered is delivering a differentiated product with unique customer benefits and superior value for the user. … Our NewProd projects studies show that such superior products have five times the success rate, over four times the market share, and four times the profitability as products lacking this ingredient.
“Truly Superior, Differentiated Products” had an average 98% success rate and 53.5% market share, while “Me-Too” Products averaged an 18.4% success rate and 11.6% market share. Though the desire for quick revenue and immediate return within organizations is often strong, though there is good cause for launching the “right” product. In the end, the extra effort put into figuring out how to differentiate a product will be well worth the effort.
Cooper offers these “seven ingredients of a unique, superior product with real value for the customer”:
- Meets customers’ needs better than competitive products.
- Is a better-quality product than competitors’ (however the customer defines quality).
- Has unique benefits and features for the customer.
- Solves customers’ problems with competitive products.
- Reduces the customer’s total in-use costs (better value-in-use).
- Has highly visible benefits for users.
- Is innovative or novel — the first of its kind on the market.
More importantly, he adds: “Note that product superiority is defined in the eyes of the customer!” While you may believe your product to be superior on one or more of these dimensions, it is ultimately up to the market to decide whether this is the case. Too often the view of product superiority and differentiation is different from those within the company versus those in the market.
It may be tempting to launch a follower product to ride the waves of a leader, without showing distinct differences in a product offering, product managers will be facing uphill battles. Look for ways to differentiate, to provide additional value, and to create a product that everyone else will try to copy.
Agree Jeff,
If a competitor has launched a successful product, there is no shame in incorporating it.
But before you hit the crtl+c button, you have to make sure that you understand why users are liking it. Users never like a product or a feature, they like the solution it is providing to them.
So it is important to understand the benefit it is providing to the user and then look the points below (in the order of priority)
– What else user wants out of it and how can you make your offerings superior
– Is there a better/easier way for achieving the same benefits
– Is there a cheaper way for achieving the same benefits
It’s better, not to have a product than to launch something inferior and raise a question about your innovative skills in the market.
Does your customer have to like it? Does your user have to use it? Just because you put it in your product, doesn’t mean that it should rise to the level of being liked, and it doesn’t mean that it should be used by everyone.
If it is being liked, it is drawing attention to itself. With non-geeks, this is not a good thing. They don’t want to know your appliction. They want to get stuff done with a minimum of effort. They want to build what they are building. You are just the screwdriver. Once the screw is in the wall, the screwdriver is put away. The user doesn’t spend their day thinking, oh I really liked that screwdriver. And, if the user is a hammer guy, then a screwdriver won’t do, so why do we expect them to use the screwdriver?
A feature will be used by some population of users. All of your users might have an opinion, but if you tune it to all of the opinion leaders, then the using population really loses out.
Fitness for use is not average use.
More on topic, your competitors definately serve a different population than you do. Their population self identified when they purchased your competitor’s product. Since that population is different, copying some functionality means redefining your own customers. Your competitor is defining and refining their customer base, not just their functionality.
I can imagine a situation where I throw some functionality out there that kills the vendors that incorporate it into their product. I can do that if my market is less pragmatic than theirs.
Excellent post, Jeff.
I especially liked the following quote:
—
“Note that product superiority is defined in the eyes of the customer!â€
—
I think this is most important. Too often, we (those at high-tech companies) stumble on this. We build something we’re convinced is superior, only to realize the customers don’t think so. At that point, we should move on to doing something the customers do consider superior, rather than insisting on “educating” the customers on why what we built is indeed superior.
Better yet, we should only build those things that customers consider superior! 🙂
– Raj
Accompa – Affordable Requirements Management Software for Product Management Teams
Good points David.
Good points David.
But I believe that the time difference between a feature used as a differentiation becoming a hygiene is very short these days.
The point you make when you said “your competitors definately serve a different population………… redefining your own customersâ€, may be true when users can use only one of the products . But in case of web application, where the same user can be using multiple products, this may not hold true. Because it that was the case, IE would have never come up with tabbed browsing or Orkut with apps.
Jeff, Based on my experience you’re spot on. Your assertion “it is almost always better to be later to the market with a better product than slightly quicker with something that does not stand out” is true. Every time I have been pushed to get the product out the door too soon it has always met with some degree of failure. I have found through these experiences that customers will wait for the right product most of the time. If they “jump ship” they will usually come back.
As product managers we obviously have to strike a balance between time to market and product features/quality. With leadership and intuition we can have a positive influence in both areas. -Michael
So if I’m on salesforce.com, I’m going to move all my data to another site to see if a neat new function is particularly useful for me? Nope. And, that would be true if the SaaS vendor removed all impediments for me to move my data to another site. There would still be steps involved.
Geeks see features and might do that. But, a person ,who isn’t a computer person, has real work to do and is focused on that. They are not focused on playing with a new feature.
Forget trying to cross sell based on features. Features are addressed to your users and your users alone. If your users could explore other platforms, then what is the point of being in the market in the first place. If you have to eat, you better hope that some market barrier exists.
SaaS is an end of life position for functionality. It’s unfortunate that it has come to be seen as a beginning. It is viable, because costs have been cut to the bone. And, ideally, it wouldn’t have market barriers, but use is accumulation. That and learning becomes a market barrier even if the data moves freely from one application to another without impediment. Data movement barrers are bad business in the SaaS world.
A lot of programmers like open software, but dislike money. They work on open software, but only after some day job somewhere pays them. SaaS has to pay, and it won’t pay much, and products without some kind of exit barrier won’t pay much either.
Great comments! Good products that meet the customer’s need, that get to the market at the right time is, of course, the holy grail. The challenge is in determining exactly who the customer is. Erroneous segmentation models often don’t often get to the right ‘need’ of the right customer. B2B markets have complex customer target types (users, decision-makers, etc.). B2C models often don’t account for the customer’s willingness to buy. The main point? Meeting a presumed need is different than meeting real underlying need….the one’s that customer’s cannot find the words to explain, no matter how much you ask.
Interesting read and great comments.
Reminded me of the book from http://www.37signals.com (sorry can’t remember the name, black cover white font) – where they emphasized the contra value of getting something out and refining it as you go..
Interesting take on things. My gut says that you are correct; however, there are a lot of very successful “me too” companies out there.
In stock car racing this is called “slip streaming” – you let someone else lead and punch a hole in a new environment and then you follow closely behind.
In the end I think that this is really a company call: what’s you reason for being in business? If you are a short term buy-out seeking firm that just needs lots of revenue now and low costs, then YES a me-too product is the way to go.
If you are in the game for the long haul, then Jeff is spot on.
– Dr. Jim Anderson
The Accidental PM Blog
“Learn How Product Managers Can Be Successful And Get The Respect That They Deserve”
Interesting take on things and I agree with both Jeff and Dr. Anderson.
I think it is also imprtant to understand what makes the product offering differentiated or undifferentiated. I don’t think it is just the speed to market and the product being unique in terms of features that differentiates the product. In my view, it should be a combination of well defined 4P’s – Product, Price, Place and Promotion (and 7P’s in case of services) that should be used to deliver the value to the customer, better than the competitors offering.
These parameters will inturn depend on the Market and Product strategy of the companies
In a category with a real market leader, late entrants get very little. You have to be in first five. Soon enough the category consolidates through M&As. The 4Ps work in the late/consumer/commoditized markets, because the all you have is brand and little else. Yes, Coke-Cola Company lives happily and spends to fight it out.
Go for it, but I’ll go and create a new category once I get near the late market.
Mom & Pop shops do just fine. As do lifestyle companies. Of course, you have to be the founders. If you want to build a product management career, do what you have to, but winning big is the fast track.
If you compete on price, you just hasten the day when the category dries up and blows away, so you are down to 3P’s. If you get sold in a box or a download, then that’s one place, the early market place. If you get sold as a SaaS offering, that’s the other place. If you get sold in the big box, beware of rebate fraud. If you sell global, use a distributor, so now we’re down to 2P’s. If you compete on promo, you might as well be a complementor. You can actually succeed better as a complement than as a prime vendor with your promo spend. Down to 1P. And, being product managers, we are forced to compete on product period.
I’ll compete on other things as well as product, but the typical marketing approach is expensive and doesn’t pay as much as category creation and market leadership.
thanks,differentiated product is very important for different customers.
This post is really cool and give an insight of the do s and don’t s for a Product Manager.
I would like to suggest one more point to it. Product Manager himself should be convinced with the idea and value that his product going to bring into the market for the users.
If your Product is not solving problem better than other competitive products, you should never launch it in the market.
Make your product up to the mark and that too not very late and do promote it as much as you can. Your customer service should very good at the same time….
Hope I have not added any redundancy to the thread……
Best of Luck
How about in this situation:
If a software startup could launch a version one, based on OEM’ed software that’s OK, within 1 month of incorporation, whilst it spends the first 6 months refining its own IP version that is better than the competition? Should it?
Charles,
You are talking about the technology layer. That says nothing about the product itself.
If the product productizes the technology, then sure, I can very easily see building it on OEM technology. Eventually, I’d replace the technology platform minimally using an adaptor pattern to move across multiple OEMs.
An advantage of building on the OEM’s platform, is that the OEM is a marketing channel. Most third-party vendors sponsor marketing support programs where you can reach their install base. And, these OEMs evangelize and keep their third-party complementing developers up to date.
That said, I wouldn’t be a complementor. That business is too expensive and not leveraged enough.
If your technology is the product, then you are in a different situation, and no, I’d develop my own IP, but I would also ask if entering after market leadership has been determined is worth the investment.
Jeff:
When I first read your blog a few months ago, your argument appeared correct in principle and intuitively I agreed with them. Until recently. I just read the book “Dealing with Darwin†by Geoffrey A Moore, where a counter argument has been put forward. It now seems to make more sense to me, particularly in the B2B space with an installed base (although the book does not explicitly specifies that). What it essentially argues is that if a particular killer feature is introduced by a competitor in the market first, it can be effectively neutralized by introducing “good enough†version of the same feature by the second mover. This book argues that there is no point in investing an overwhelming amount of resources to introduce a better version of the feature later, because the return may not justify the investment required to do so. I understand, though, that there could be some exceptions to this approach. It looks like that the answer to this problem is not as clear-cut as it appeared, at least to me, initially.
Moore’s books focus on B2B with an install base. SaaS has its place in Moore’s late market. SaaS is a cost reduction strategy for the vendor. That everyone is skipping the install base and going direct to SaaS is one accelerator of the feature-focused competition by fast followers. It is an ok place to bring in cheap revenues, but it is also a signal that the vendor needs a new disruptive technology basis where fast followers will not go.
The fast follower eats your premium. A point of difference eventually becomes a point of contention. The features that get copied occur at the interface, or on the skin. You can still compete at the model, metamodel, and sidebands. The fast follower may not see that stuff, and even if they see it, they still may not be able to copy it. Use IP protections for things behind the skin.
In “Hype Cycle,” the authors make a distinction between adoption and adaptation. Typical segmentation and requirements elicitation processes give rise to adaptation, as a means of mitigating a lack of fitness between the user and the application, particularly in the sense of meaning. IT is essentially information, rather than meaning. If you play for meaning, y0ur competitor will play for information simply because their market is not yours, so fitness would be at variance. Compete on meaning.
A couple of additional thoughts:
1. The role of defensibility of differentiation can still be important. The more barriers to entry, including IP, the harder it is for follow-on competitors.
2. We should remember the concept of the “whole product” which includes not only the physical product but its marketing, distribution, and ecosystem, etc. When a good whole product is first to market, it is hard to beat.
Market leadership is a real and long term advantage. Market leadership does not go necessarily to the first mover. In fact, the first move is a decade back for most market leaders.
Claims of market leadership are usually spurious, so those claims provide no advantage. Everyone in a market knows who the market leader is without the market leader saying anything at all.
Question:
Is a differentiator necessary on a new product in a pure commodity market in which:
-price is the driver.
-getting this differentiator on the product costs a lot (research & development).
-and in which customers are not ready to pay for this differentiator?
Thanks.
@Julien — Your question assumes that (a) there is one single differentiator, and (b) that differentiator is known up front. In the situation you described, the answer might be to
Alain Breillatt describes how to differentiate in an overcrowded market by using pencils as an example in this Ask A Good Product Manager post from 2008.