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Needs Analysis Part 1: Rating Products by Needs

Friday, November 21st, 2008 | Uncategorized, product vision, vision book | 1 Comment

In the last installment I used the example of the the Toyota Prius to demonstrate how the heart of a product can be expressed in terms of the problems it solves for customers, rather than by its features, design technologies. Put another way, we can see beyond the surface by focusing on a product’s needs profile — which set of needs it addresses, and to what degree.

Now I’d like to take it a step forward and show how to rate and visualize those needs. This will help to formalize our needs analysis, laying down another stepping stone in our quest for a systematic way to approach product vision.

Grading how well each need is addressed

Whether a need is addressed is not a black and white thing. A product might do well on some needs, poorly on others, and in-between on others. We can grade each need numerically. I prefer to use a limited scale of 0 to 3, which makes assigning a value easy and avoids splitting hairs:

0 - The product does not attempt to address the need.
1 - The product addresses the need at a basic level.
2 - The product does a decent job of addressing the need, but there is still room for improvement.
3 - The product fully satisfies the customer need, or the product is significantly ahead of the competition in doing so.

Needs Profile of the Prius

When discussing the Prius I spoke loosely of several customer needs: the needs for comfort, safety, fuel economy, and so on. Let’s now enumerate and rate each one relative to other mid-size sedans and efficient vehicles that would serve as comparison points for a customer considering a Prius.

Need for comfort - The Prius is surprisingly comfortable, but it’s not a luxury car. So let’s give it a 2 for comfort and reserve the 3 for the more cushy rides.
Need for performance - The Prius has plenty of power to climb hills and pass, but it’s not a performance automobile. We’ll give it a 2 out of 3.
Need for safety - It’s got a full compliment of safety features so we’ll give a 3.
Need for long range - The Prius’s range is excellent for a sedan, so it gets a 3.
Need for low fuel cost - Compared with regular sedans, the Prius has excellent fuel economy, so we’ll give it a 3.
Need for eco-friendliness - It’s rated as a Super Ultra Low Emissions Vehicle (SULEV), so it gets 3 on need for eco-friendliness.
Need for distinctive styling -The Prius stands out among sedans, but it’s not showy. We’ll give it a 2. (And we’ll say more about aesthetics later.)
Need for passenger capacity - The Prius comfortably sits five people. We’ll give it a full 3 for passenger capacity. (If we included minivans in the comparison set we’d have to give the Prius only a 2.)
Need for cargo capacity - the Prius has a large trunk and fold down back seats. Quite good for a sedan, so we’ll give it 3 for cargo capacity.
Need for ease of learning and use - Part of the Prius’s appeal is that it operates like any regular car. Unlike some alternative fuel vehicles, it requires no special training or change of habits. We’ll give it 3 for learnability and usability.
Need for refueling convenience - With an electric car, you better make sure you’re near an outlet at the end of the day. The Prius, on the other hand, is gassed up like any other car at any gas station. We’ll give it a 3 for refueling convenience.
Need for low initial costs - The sophisticated new engine on the Prius adds a couple of thousand dollars to the sticker price. We’ll give it a 1 for low initial cost.
Need for low maintenance cost - More sophisticated cars require special training on the part of car shops, and are therefore more expensive to repair. We’ll assign the Prius a 1.

We can now visualize these values in a table:

This is the needs profile of the Toyota Prius. The set of dimensions along the top is called the needs space and it will serve as the basis for comparison between products.

Notice that needs are always expressed in the positive. Bigger and darker numbers are always better. Standardizing on this scale makes it easy to read the table and make comparisons.

What’s going on here?

Thinking of a product in terms of its needs profile forces us to think at a higher conceptual level. for the Prius, we see beyond the details of its hybrid engine technology, funky styling and other features to the relevance those features have to the customer at the end of the day. The needs viewpoint is intrinsically customer-centric. When thinking needs, we can’t help but think of our product from the viewpoint of the people whom we want to have buy it.

The needs profile is a much more manageable way of understanding a product. Thousands of minute variables are synthesized down into a reasonable set of dimensions that we can wrap our head around.

Using needs for our dimensions is not arbitrary. We don’t just make up the needs. Needs ultimately come from customers in particular situations (see SSNiF Analysis). The features of the Prius or any other product can be traced to specific needs that fall out of specific situations that are experienced by a specific set of customers (or stakeholders). Even a feature as minute as a wide cupholder is traceable to a situation (buying Big Gulp at the drive-thru) and a resulting need (to put it down somewhere stable while traveling in a moving vehicle). Because needs are always traceable to SSNiFs they are less arbitrary and more reliability.

We now have a the beginnings of a new conceptual model for dealing with product vision. I call this approach to looking at products (and soon, customers), Formal Needs Analysis. Things get more interesting when we use the same basis of needs to compare products, so let’s do that next.

Choosing the right problem to solve

Thursday, November 13th, 2008 | product vision, vision book | 3 Comments

Product vision can seem impenetrable. How did the breakthrough products in the Hall of Fame manage to achieve something so much more advanced than the competition? It is mysterious when we look at products at a surface level. But things start to make sense when we shift our focus from the how we solve problems, to the choice of which problems to solve.

Normally when we look at any product, we see the tangible and concrete: the features, design, and technologies. This is natural. But it’s important to recognize that these things exist for a purpose, which is to solve a problem for someone. When we scratch past the surface, we see that it’s this selection of the problem, not how it’s solved, that determines so much of a product’s fate.

When we look at the breakthrough products, we see that they didn’t merely do a better job of addressing the same customer needs. They chose a a different set of needs. And when we look at the spectacular failures, we find that the problems that they chose to solve were not especially important to customers. Envisioning great products is about choosing the right set of problems to solve.

Deconstructing the problem

We can always take a product and look beyond its surface to figure out what problems it is endeavoring to solve. A corkscrew solves the problem of removing a cork from a bottle. A hammer and nails solves the problem of fastening large things together.

Toyota Prius

For a more sophisticated product, we can trace each individual feature to specific problems. Let’s take one of the Product Vision Hall of Fame, the Toyota Prius.

Looking at the distinguishing features of the Prius, we see a funky looking car that operates and performs like any other sedan, except that it has a a hybrid gas-electric engine. Each of these key features exists to address some customer need:

The hybrid engine saves fuel, which addresses the problem of high gas costs. Phrased in terms of needs, we can say that it addresses the customer’s need for fuel economy.
The hybrid engine helps to qualify the Prius as a Super-Ultra Low Emissions Vehicle. This help address the problem of greenhouse gas emissions and global warming. It helps address the customer need to minimize the impact on the environment, or, for brevity, the need for eco-friendliness.
The fact that the Prius drives like any other car solves the customer’s needs for comfort, safety, performance and range. The driving experience is not compromised for the sake of economy, unlike earlier efficient vehicles.
The Prius is operated like any other vehicle: gas it up, step on the pedal, and go. It does not require the driver to learn any new skills or change any habits, Electric cars have a limited range and require that the driver plan out where the next charge will come from. The Prius solves the customer need for ease of learning and, shall we say, the need for refueling convenience.
2010 Honda Insight

What need is served by the Prius’s unusual styling? To achieve it’s high mileage rating, Toyota was impelled by the laws of aerodynamics to deviate from the current fashion in automobile styling. The weird body shape helped address the need for fuel economy. But it also advanced Toyota’s need to have a distinctive automobile that stood out and declared to the world a new era in cars had arrived. Now, several years after the Prius’s North American introduction, the body shape is iconic and is even being copied by Honda with the 2010 Insight.
The funky body styling turns out to address a second customer need as well. According to the New York Times:

..more than half of the Prius buyers surveyed [..] said the main reason they purchased their car was that “it makes a statement about me. [..] “I really want people to know that I care about the environment,” said Joy Feasley of Philadelphia, owner of a green 2006 Prius. “I like that people stop and ask me how I like my car.”

So it turns out that many customers had a couple of ulterior motives for buying a Prius: to make a personal statement, and to influence others into thinking about the environment and making progressive choices, too. The unusual body styling helped address these needs.

Making Trade-offs

Nothing comes for free in product design. There are always trade-offs to be made. And so it goes with product vision. In the case of the Prius, the more complex engine and batteries come with a higher initial price, and possibly greater maintenance costs.

This set of trade-offs, with some needs addressed well and others addressed less well or not at all is what I call the product’s needs profile. It is the blueprint of the product’s vision.

The Prius has a fundamentally different product vision, because its needs profile is unique. None of the predecessors make the same set of trade-offs. Regular sedans are comfortable and safe, but do not address the need for fuel economy as well. Small cars address the need for fuel-efficiency but not the needs for space and comfort. Early electric vehicles like the Ford EV1 were extremely efficient, but sacrificed internal passenger and cargo capacity, performance, range and refueling convenience. Each comparison point makes a different balance of trade-offs and has a different needs profile.

This will be a central theme in our study of product vision. Sculpting the needs profile of future products will be a key tool in our arsenal for defining breakthrough products.

Try this at home

You can try this exercise of deconstructing products by needs yourself. Pick up any simple product around you like a mechanical pencil or your coffee mug. First ask yourself, what features or design elements or technologies make it unique among its peers? Then ask, what problem does each feature solve that the others do not? Then try and express the problem in terms of a customer need as I did for the Prius.

When you start to get good at this, you will develop an x-ray vision that lets you see past a product’s superficial skin to its essence and the reason that it exists. This is a core perspective for doing product vision work.

To summarize, envisioning great products is not about solving problems better, but choosing the right problems to solve. Choose the wrong problems and your product will be doomed before the project begins. Choose the right set of problems and you have the blueprint for a breakthrough product

Product Vision Hall of Fame

Friday, October 31st, 2008 | vision book | No Comments

When discussing product vision, it’s useful to have examples of breakthrough products in mind. We can use them to test our theories and to search for patterns.

For induction into the Product Vision Hall of Fame, we are looking for products that achieve the goals of outstanding product visions. They should be breakthrough products that were far ahead of the competition, and enormous commercial successes (relative to their industry, at least) that were able to hold their lead for a long time. The successes had to be concerted, not accidental. Their creators had to have foreseen the potential of the idea for it to count as true product vision.

Here are some of the most famous of these breakthrough products:

3Com Post-it Notes (1977) - Technologies in search of a problem seldom find one. Yet 3Com managed find a good outlet for its adhesive that failed to adhere. The sticky note was born, solving a plethora of needs that people didn’t know they had.

IBM PC (1981) and Wintel computing - IBM, Microsoft, Intel and others delivered utilitarian computing at reasonable cost, with support for business, multiple suppliers and lots of software. (Take that, Apple Macintosh circa 1984!) This example demonstrates, to the chagrin of designers everywhere, how great vision can withstand flawed design. If it satisfies important needs better, it’s more relevant.

OXO Good Grips (1990) - Common kitchen utensils like the potato peeler were all about the same: cheap, flimsy, and clunky. Nobody thought they should or could be anything more than that. OXO set out to create gadgets that were higher quality, more ergonomic and more aesthetically pleasing, and they had a hit. Competitors tried to copy their successful formula, but compromised, missing the essence of OXO’s success. Great product visions are surprisingly hard to copy.

Amazon (1994) - Get it for less, without the hassle of leaving home. Amazon’s consistently consumer-friendly attitude keeps buyers coming back. Amazon pioneered impartial community reviews that are as likely to pan products (even their precious Kindle which only has 4 out of 5 stars) as to praise them, making the site a relatively trustworthy source of advice and a good first choice for shopping.

Amazon “Used & new” listings - Unlike the original manufacturers, Amazon doesn’t really care whether customers buy a product new or used — they get their cut either way with “Used & new” listings that appear at the top of every product page. When someone buys something new, Amazon collects the money, passes along the order, and keeps its share. No inventory to hold, no human intervention. It’s another customer-friendly feature that brilliantly leverages the traffic that Amazon has already established.

eBay (1995) - There is a constant, global garage sale going on, and eBay gets a cut of each trinket sold. Sellers get access to a huge market and get a fair price thanks to the auction mechanism. Buyers save money by getting stuff used or even new, from small-time sellers willing to accept smaller margins. There is a wide moat around eBay protecting it from competitors, because it behooves both buyer and seller to go to the largest marketplace. New entrants have not been able to get a foothold — even those as powerful as Yahoo and Amazon. (eBay’s increasingly greedy fee structure may someday kill the goose.)

PalmPilot (1996) - There had been many attempts at mobile, pen-based computing. Palm Computing was the first to get it right. The PalmPilot was was focused, easy to use, PC-compatible, and inexpensive. It marked the beginning of the end of paper-based day planners. When Palm made the thin Palm V out of elegant brushed metal, they got women and image-conscious executives too. They owned the market until desktop PIMs and mobile phones became established and elbowed them out of the way.

Google Search (1999) - Early search engine companies were searching for a way to monetize their service, and they took actions that were at odds with the needs of their users. They tainted search results with paid placement, sullied the pages with distracting ads, or emphasized the size of the index rather than the quality of the results. This left an opening for competitors, which Google filled.

Google emphasized the usefulness and usability of the search over all else: can people actually find what they are looking for? Google’s vision for solving user needs first gave them the discipline to return search results with quality, speed, and integrity. Users flocked to Google and haven’t left yet. And Google found a way to monetize search without killing the user experience, by placing subtle, relevant ads in the perimeter of the search results, for which they accept payment only when the user actually clicks the ad. (In the early days, Yahoo actually paid Google to be their search engine, not realizing the riches to be gleaned by serving ads along with search results. Oops!)

RIM Blackberry (1999) - Up-to-the-minute email in your pocket that works and syncs seamlessly with your office email system. The evolution from the pager was a revolution and competitors continue to struggle to match their recipe.

Google AdWords (2000) & AdSense (2003) - Here is a stroke of product vision brilliance. AdWords and AdSense are two interlocking products solving the complementary needs of three factions: website owners, advertisers and web surfers. With AdSense, website owners can apportion part of the page for ads that are match the page’s content. Web surfers see unobtrusive ads on those pages that are actually pertinent. This massively increases the effectiveness of the ad for advertisers.

At the other end of the deal, advertisers buy key phrases in an auction. Surfers who Google for those key phrases see links to those pages alongside search results, and sites containing those key phrases serve up the ads. The elements of the system interlock for advertiser, website owner, and web surfer.

What’s more, Google made the process simple for the largest or smallest website owners and advertisers. You can buy $50,000 or $5 of ads in minutes.

(Google did not originate these technologies, but they appear to have pieced them together. The AdWords technology was first patented by Goto.com/Overture, which Yahoo bought and later licensed to Google. (Oops again!) Google acquired AdSense technology in 2003)

Netflix (2000) - Movie rental was a big, well-established business. Indefinite rental periods and having multiple movies to choose from at any moment was a substantial upgrade from having to go to the store. Netflix was clear on the problem to solve and it informed both its strategy and the tactics of its web experience.

Apple’s iPod (2001) - Apple made a great player, but they understood that it was more than just about the player. It was the whole user experience, which included managing the music and getting it onto the device. Competitors tried year after year tog usurp the iPod, but they too missed the essence of the iPod/iTunes vision until iPod was entrenched and it was too late. [Read more at : When Product Vision Goes Right]

Apple Mac OS X (2001) - Apple’s relevance in the late 90’s was coming to an end, but with the return of Steve Jobs they were able to literally reinvent the desktop operating system, and the company. The stability, simplicity and elegance of Mac OS X were the antithesis of the Windows experience. That, and the good fortune of being ignored by virus writers, made OS X an increasingly attractive platform. Moving to Intel architecture allowed for a migration path for the PC-bound who still had a couple of apps that would only run under Windows. Apple consistently focused on what the end-user needed, even if it meant breaking backwards-compatibility and making life harder for its software developers. The solid, beautifully designed laptops followed through on this quality user experience. Apple has been steadily gaining market share, thanks to years of consistent, significant improvement (abetted by the regression of Microsoft).

Toyota Prius (2001) - Back in 1994, Toyota realized that plentiful, cheap oil was not going to last forever, and they began the long R&D path to develop more efficient vehicles. When the oil crisis hit they were ready and could not manufacture the Prius fast enough to keep up with demand. Hapless American competitors that were busy fighting fuel economy regulations and milking the last drops of the SUV cash cow were left to ignominiously license Toyota’s Hybrid Synergy Drive.

Apple iTunes music store (2003) - Apple has proven that it is possible to profitably counteract rampant piracy. The trick was to make purchases effortless, integrated and reasonably priced. Within moments of picking a song to buy, it’s downloaded and rightfully yours, for a buck. Multiply that scenario by five billion and you’ve got a hit.

Nintendo Wii (2006) - While Microsoft’s Xbox 360 and the Nintendo PS3 battled for the attention of hard-core male gamers with expensive, powerful systems, Nintendo built a charming, intuitive, accessible console and games for everyone else. [Read more at : When Product Vision Goes Right]

Skype (2003) - As with any great product vision, there is a powerful SSNiF behind Skype: expats in any country need to get in touch with their loved ones elsewhere, and long-distance is (or was) really expensive. Give away computer-to-computer VoIP, and charge a little bit to connect people to real land-lines. Skype has over 250 million user accounts and in 2005 they sold their company to eBay for $2.6 billion. (Way too much IMHO, but that is a different story.)

Apple iPhone (2007) - For a product to be so sophisticated, so ahead of an entrenched field of competitors and so polished in its 1.0 incarnation is simply unprecedented. The barriers to entering the mobile phone market were enormous, but Apple did whatever it took to give the customer a substantially improved mobile communicator, including renegotiating the balance of power between the phone manufacturer and the phone company. It took Apple years of concealed and throwaway work to create the iPhone, but now Apple is miles ahead of the competition. They can now flesh out the product line and lower prices to starve out competitors. I believe history will grant Apple’s iPhone special legendary status in the Product Vision Hall of Fame.

And many more

This Product Vision Hall of Fame is not complete. Other legends of product vision include: the phonograph (1877), the long-burning incandescent light bulb (1880) and complimentary distribution of electricity (1880), Ford Model T (1908), the atomic bomb (1945), Disneyland (1955), IKEA furniture stores (1955), Kodak Instamatic camera (1963), FedEx (1971), the Sony Walkman (1979), the Netscape Navigator web browser (1994), TiVo digital video recorder (1999), Wikipedia (2001), Zip drive (1994) and many others.

[My thanks to the respondents to the Product Vision Survey, who nominated several of these examples. The survey is still open, so please fill it out!]

Readers, what examples of breakthrough product vision would you nominate to the Hall of Fame? Please add your comments below.

Tags: book, examples, product vision

The First Rule of Product Vision

Friday, October 24th, 2008 | vision book | 3 Comments

There is one rule about product vision that stands above the rest. Please memorize it, recite it often, and tattoo it onto your wrist:

The product must satisfy important, unmet customer needs, and profitably.

You can ask this whenever you need a reality check on your product. Let’s break this down.

The product must satisfy needs. Product vision is about needs. Not features. Or what technologies are used. Or even how it is designed. All of these things exist to serve customer needs and are only important to the extent that they do so. Are your new features truly solving needs?

The needs must be important. The needs must be important enough for customers to care about, and be willing to reward us for. Otherwise customers will not give the product the time of day. Are the needs your new features address really important?

The needs must be unmet. Somehow, people are surviving without your product this very minute. They are using a competitor’s product, or working around the problem, or quietly suffering. There must be a big enough gap between their level of need and the level already fulfilled by whatever they are using, or not using today.

This gap (the pink area in the diagram) defines the maximum potential opportunity.

Your product needs to fill as much of this gap as possible. If the improvement is too small, it won’t be important enough for users to bother wtih. The bigger the delta, the bigger the advantage. Is there a big enough gap remaining, and does your product make a big enough dent in it?

The needs must be met profitably. The product must meet the needs of both its customers and the company who sponsors it. The vision needs both a strong product concept and a strong business model to survive. A product that cannot sustain itself dies off, no matter how great it is, and becomes of no use to anyone.

So please memorize this mantra, the first rule of product vision:

The product must satisfy important, unmet customer needs, and profitably.

It’s the basis for distinguishing good product visions from bad ones, and it’s an important clue for developing a systematic approach to product vision.

Tags: needs, product vision

The Goals of Product Vision

Thursday, October 23rd, 2008 | vision book | 2 Comments

By looking at bad, good, and outstanding visions, we have an idea of what we are shooting for with product vision. Here is a summary.

Goals of a “pretty good” product vision

A pretty good product vision strives guide the execution of a solid, of not breakthrough, product. It should:

avoid the common product vision pitfalls: stagnation, incrementalism, bloat, and copycat visions that lead to feature wars and commoditization
describe a product that meets important unmet customer needs, profitably, and which is therefore well-justified
provide clear, complete direction for the product. The vision serves as the constitution for the product — a concise summary that guides all other decisions about features and designs.
provide a standard for what is in and out of scope from the current version of the product
make development more efficient by avoiding wasted work caused by unnecessary features and shifting requirements
reduce the risk of failure by shipping a relevant, well-justified product sooner, by taking advantage of the market window, and by doing so at a lower cost

Goals of an outstanding product vision

An outstanding product vision strives to define a breakthrough product. Its goals are to:

define a product that satisfies important, unmet needs far better than the competition
define a product customers love, which they will promote through word-of-mouth and positive reviews
define a product that enhances the company’s brand reputation and hence facilitates future sales
define a product that is highly profitable because of: lower development cost, increased sales, higher margin and longer lifespan before obsolescence
provides the perspective to instantly understand the significance of new competitors
define a long-term plan that resists competitors, preserves and extends the lead over time, and anticipates the next disruptive generation of products

You can use this list of goals to evaluate anyone’s approach to vision or strategy (mine or others). We will check back with this list any time to remind ourselves what we aiming for with our product vision efforts.

Readers: Did I miss anything? What else should product vision accomplish?

Tags: book, product vision, sidebar

When Product Vision Goes Right

Tuesday, October 21st, 2008 | vision book | 2 Comments

We’ve looked at bad product visions, so let’s now look at good ones.

The effects of good product vision are represented in this diagram. It’s called a Feature -> Objective Chain diagram because each feature of the initiative leads to an outcome, which leads to other outcomes in a chain. This type of diagram is useful for understanding the “whys” behind a set of activities.

Click to enlarge, or download a printable pdf poster of this diagram

When I look at successful products, I see two echelons: some product visions are “pretty good” and others are outstanding. In baseball, a pretty good vision is like a consistent single and double hitter. It gets the job done reliably. An outstanding visions is like the slugger who hits home runs. Its success is more spectacular. Some parts of this diagram are activated by pretty good visions; “outstanding” visions activate more parts.

Pretty good product visions

With a pretty good product vision, there is a clear idea of which customer problems you intend to solve. The idea is well-justified and grounded in a solid understanding of customers and their needs. However the product is not necessarily a radical advancement from what has been done before. Some of the best performing companies have consistent visions that are “pretty good.” Given competent execution, they can do very well year after year, as long as competition is not too hot.

Here are some of the effects described in the chart:

A good product vision is executed more efficiently. The concept is complete, so it gives clear guidance to the team. Major flaws in the idea are shaken out early, before development begins. It is coherent and well-justified, so the definition is more stable, which avoids wasted effort. Features that wouldn’t be appreciated (and rewarded) by customers are avoided, saving more time.

Products with clear visions have a lower risk of failure because the idea is well-justified, executed more quickly, because it gets to market before the window of opportunity closes. The feedback loop is tighter, so remaining flaws do not linger.

A product with a good vision has long-term direction. The ideal product is fleshed out systematically over multiple releases. Today’s product is a step towards that long-term vision. This gives us clarity and peace of mind about the trade-offs we make now. We avoid over-scoping to cram everything into this release, which adds risk to the current project. If cutbacks must happen, they can be done intelligently, without undermining the value of the current release, by shifting the line between the SSNiFs addressed in version x and version x+1.

Products with good visions are easier to sell. Someone once said, “you don’t have to lie to sell a good product.” By definition, a product with a good vision satisfies important unmet customer needs, so selling can be more an act of education than of persuasion, and it withstands scrutiny. Customers who really like our product spread the word through word-of-mouth and positive reviews.

Great products improve our brand reputation, because people who are happy with our products are happy with us. That trust makes it easier to sell future products.

So what is wrong with pretty good visions? It may seem less risky to take solid incremental steps rather than swing for the fences, but this carries its own risks, as the breakthrough opportunities are left to competitors.

Outstanding product vision

Breakthrough products come from outstanding visions. Think of products like the Nintendo Wii, the iPod, the iPhone, the Toyota Prius, Netflix, Amazon and others. These are the visionary products and services, and they can have astronomical success.

As the diagram above suggests:

Outstanding product visions are founded on deep insight into the customer situations and needs, and the opportunities that competitors leave behind. (These are key elements of the Understanding layer of the Design Pyramid.) This insight leads to great product visions. Important unmet customer needs are addressed far better than competitors. The product is therefore of higher value to customers.

A beautiful example of this is the Nintendo Wii. In 2006, Microsoft, with the XBox 360, and Sony, with the PlayStation 3 were competing head-to-head for hard-core gamers, with increasingly complex, violent games preferred by adolescent males. Nintendo realized that there were legions of regular people who would love to play videogames casually, if they could only be made more accessible. They designed a system with a simple, intuitive controller that anyone could pick up and wave in the air for instant gratification, without having to make sense of a dozen buttons. The games were genuinely fun for throngs of casual gamers, young and old. Casual games called for good, not great graphics, which permitted Nintendo to use older, cheaper technology for the Wii. Whereas Sony and Microsoft were selling their cutting-edge consoles at steep losses, the Wii was sold at a profit from the beginning. Two years later, the Wii is still in high demand.

Products with outstanding visions can be extremely profitable. Development costs are lower, because the product is executed smoothly and irrelevant features are avoided. Sales costs are lower because of the positive reputation of the product and the brand. Revenues are higher, because of increased margins and increased sales volume.

Products with outstanding visions are more defensible. Is not the first to market that matters, but the first two adequately address an important set of customer needs can grab and hold onto the market share for years.

Visionary products are harder to catch up to for two reasons. First, the farther ahead the vision is, the bigger the lead, and the more time the company has to milk the idea before competitors catch on. Second, competitors tend to have trouble inferring the real vision behind the design. Others may copy the features, but if they do not understand the vision behind it, it will be a poor imitation. By the time they copy where you’re at now, you’ve advanced to the next version. Outstanding vision leads to long-term business success.

A good example of this is Apple’s iPod. Device manufacturers kept trying to copy and outdo the iPod’s feature set, adding things like voice recording and FM radio reception. But year after year, they missed essential parts of the product vision, which is that how you manage music and get it onto the player is an important set of scenarios and needs. Apple provided iTunes desktop music management application, and used the more expensive Firewire connectors in the very first iPods. These made obtaining and transferring music to the device easy and fast. Device manufacturers had a blind spot to that part of the vision, because their forte was hardware, not desktop software. Apple’s integrated solution was the first to pass the bar of usability. They went on to successfully position the iPod as the coolest player. “iPod” became synonymous with “portable digital audio player” and their success snowballed. Apple was so successful with the breakthrough iPod that they have dominated the market for stand-alone music players from when they entered it to now, as the market fades away. (The age of is almost over, as mobile phones subsume audio playback functionality.) While competitors could see the iPhone’s features, they were unable to decipher the underlying vision, so they left the market to Apple for years.

Strong product visions have a long-term time horizon. Great product visions define not just one iteration of a product, but a long-term time line.

The years of evolution on an iPod and iTunes illustrate this well. The early iPods were distinct because they uniquely solved the needs for simple, efficient music management. Later, the music store was added, addressing the needs to learn about and buy music efficiently. Then, a way of syndicating audio programming was integrated, giving birth to podcasting. Video support was added, followed by purchasable TV shows, followed by movies that could be rented for viewing on a laptop, on a TV or on the iPod. Notice that each step didn’t just add features; each step expanded the set needs (aka. they covered more SSNiFs). I cannot say whether Apple was able to foresee and premeditate this multi-year strategy. But it nevertheless demonstrates meaningful long-term expansion of a product vision by expanding SSNiFs and needs, where every step, even the first one was a valuable, high-quality products.

Now that we’ve seen what bad vision, pretty good vision, and outstanding product vision brings, we can summarize what it is exactly that we will want to get out of our product vision efforts. Stay tuned.

You can download a printable pdf poster of the Product Vision Feature -> Objective Chain diagram.

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When Product Vision Goes Awry

Thursday, October 16th, 2008 | vision book | 2 Comments

To understand the importance of a product’s vision, it helps to look at the best and worst cases. Let’s start with the worst.

When a product vision goes awry, it comes in various flavors: hasty, stagnant, copycat, and fundamentally flawed. Each has its own root cause.

Hasty product visions

A hasty product vision is one in which little or no diligence went into defining the problem to solve.

Hasty product visions come about for several reasons. An organization is sometimes compelled to leap before they look. There are various reasons for this. Sometimes it’s driven by a suddenly enlightened leader with a certain idea of how things ought to be. Sometimes it’s an urgent response to a competitor’s threat. Sometimes it’s driven by a cultural impulse toward action, regardless of direction or destination.

Products whose visions are given short shrift suffers from a host of predictable issues. The vision is highly sensitive to new information, information that might have been discovered early on with the right vision process and a bit of time to execute it. When critical insights arise during the development phase, they alter the product definition, shift the requirements, discard good work, prolong the schedule and burn out employees.

A hasty vision is probably incomplete. Parts of the effort are left rudderless, and team members must fill in the blanks as they go. The product tends to be unconsciously pulled in different directions and it loses its coherence.

A hasty vision lacks cohesive long-term direction. Since the current version wasn’t fully thought through, it’s unlikely the subsequent version will be, and the chaotic pattern is apt to repeat itself year after year.

Stagnant product visions

A stagnant product vision is one that stays roughly the same year after year.

This happens when a company has been wildly successful with a product. There is a natural inclination to preserve the goodness: existing customers despise change; investors don’t want to see a disturbance in earnings; the technology is entrenched and would be prohibitively expensive to replace. Companies with established products have a lot to lose, and nobody dares to mess with success.

Stagnant vision leads to incrementalism. Small features are caked on year after year, leading to bloat and complexity. The fundamental way of thinking about and solving the problem is never questioned.

This is a fine position to be in, as long as it lasts. The organization is sitting pretty and the money is rolling in. The trouble is, it never does last, and it’s almost impossible to tell when the reign will end. A new competitor with nothing to lose will eventually emerge with a completely new way of looking at the problem, and it will render the old product obsolete. (This is the subject of The Innovator’s Dilemma.) The only question is who will obviate our successful product first — them or us?

Copycat product visions

A copycat vision is one that is defined in terms of the competitor’s product.

Organizations resort to copycat visions when they lack rich insight into customer needs, or the confidence and culture to do something different. They trust their competitors’ instincts on what to build more than their own.

Organizations also fall into copycat visions unwittingly, when they believe that they have invented a better mousetrap. In other words, they have a product which solves the same well-known problem, but better. This is rarely good enough because competitors are constantly working on their own technical refinements, and are likely to quickly meet or beat incremental improvements in specifications. Only when the advancement is profound, say 50% - 200% better or more, is there a chance of winning with a better mousetrap. Otherwise, the product falls into the same pattern of solving the same problem as competitors — another way of saying that the visions are identical.

The problem with copycat visions is that the products become more similar and commoditized over time. Everyone races to deliver about the same thing at a lower price, because that is the only dimension left to compete on. The game ends when someone starts selling the product at a loss, or for free.

Fundamentally flawed product visions

The faulty visions I’ve described so far are the result of not really trying. But sometimes an organization musters the courage to do something truly different. The vision is carefully thought through, and sounds compelling. Yet it may still be fundamentally flawed.

A fundamentally flawed vision solves problems that are simply unimportant to customers, or which are already satisfactorily met by alternatives. The tragedy of flawed visions is that they are doomed to irrelevance from the very beginning, and yet nobody realizes it at the time.

This realization creeps up slowly. Unease infects some employees with the realization that the story is not playing out as predicted. The concern spreads. There may be protest, but the original champion sticks to plan. Time ticks on and capital diminishes. Eventually, it becomes obvious that the underlying assumptions were wrongm, and the leaders shift course to salvage some value, sometimes multiple times. Money runs thin, the best people flee, morale plummets, cubicles get dismantled.

This story will be familiar to anyone who has worked at a startup that went belly up. It happened to me at GO Corporation in the early 90’s, working on pen-based computing. I could not beleve that so many smart people — founders, employees, investors, the press, ISVs, customers and competitors — could be so completely wrong about the prospects of we were building. The experience began my obsession with studying product vision.

How can we tell if our earnest attempts at visionary products are fundamentally flawed? Subscribe to the RSS feed or the email newsletter and read on!

Do these patterns seem familiar? What products come to mind when I describe hasty, stagnant, copycat, or fundamentally flawed visions?

Tags: product vision

The Components of Product Vision

Tuesday, October 7th, 2008 | vision book | 4 Comments

Earlier, we defined the vision of a product as “a mental image of what a future product will be like.” What exactly is it that we are imagining? What are the components that make up the vision? It’s important to know so we can know when our visions are complete.

A complete product vision has two components corresponding with its two primary beneficiaries. They are: the product concept — the idea and the story of how it will benefit customers — and the business model — how the product will benefit its sponsors.

Product vision is made up of a product concept and a business model

As the diagram suggests, the product concept is the heart of the vision. The rest of the business’s activities are in support of the product and its imperative to satisfy important unmet needs.

The product concept

The product concept is the story of how the product will meet unmet customer needs. The plot is always the same and goes something like this:

Once upon a time there were a set of people (your potential customers, the damsels in distress). They were in an unhappy situation, out of which sprang a need. Others (your villainous competitors) try to help, but they failed to get it just right. Suddenly you came a long (our hero, the sponsor), with just the right solution. Your customers were relieved of their unhappy predicament, and they rewarded you for it.

Here is an how it looks filled in with a familiar example:

Once upon a time there were mobile people with a lot of time on their hands while out and about (customers). They ride the train, wait in line, or work out for hours a week (situation), and it gets redundant and boring (need). There are other things to help while the time away (competitors), like books, magazines, videogames, but these are either not durable enough, not appropriate to use with one hand while standing, walking or running. Our product, a small, durable, high capacity audio player (the solution) provides countless hours of diverse audio to entertain, stimulate and inform people while out, about and bored.

Thus, the product concept should have these elements:

who the customers are
the pertinent situation(s) they are in
what need(s) stem from the situation
who your competitors are, and how they are failing to fully satisfy the need
how your solution satisfies the need

These elements should be familiar to you if you’ve learned about SSNiF scenarios as a way of modeling customer’s needs.

The story of every successful product, past or future, can be told with this storyline. All the pieces are required in order to have a product concept that is qualified to be judged, something we’ll get to later. But now we at least know what the story should look like.

This story gives guidance for the team to create it. It’s rooted in tangible scenarios of use. At any time the development team can invoke the scenario to put themselves in the customer’s shoes to recall what they are trying to achieve. The big picture can be broken down into smaller, more specific scenarios (little SSNiFs), which in turn serve as the vision for each feature.

What is not part of the product concept?

The product concept does not attempt to specify the precise feature set, its design, or the technology to be used. Instead, the vision informs those choices. It’s good to have a rough idea of how the product will be realized as a proof of concept or prototype. But if other design ideas or technologies emerge that solve the need better, we should be willing to discard the original thinking, because if we don’t do so, our competitors probably will. Defining the vision in terms of the usage scenarios keeps it independent of implementation and lets us evaluate those choices against a clear standard.

The business model

A commercial product might make customer ecstatic, but if we don’t have a clue about how we will extract money to fund its continuing development, it won’t be addressing anyone’s needs for much longer.
The business model is the story of how it will benefit us, its sponsor. It has the following elements that are typical of a business model:

How it will be economically built and supported? (development, manufacturing, support)
How it will be profitable: how it can be built economically, generate revenue, and optimally priced?
How will it generate income and turn a profit (revenue and profit model)
How users will find out about it and obtain it? (sales, marketing and distribution)

Both components are needed

Both components are necessary for a complete product vision, but sometimes organizations try and get away with just one or the other, with predictable results. The big idea without a business model was the pattern for failure during the dot-com era. And a business model in support of a product that fails to address important needs makes for a hollow vision. The product will sell only to the extent that customers can be fooled into thinking otherwise.

Focus on the product concept

My focus in this blog is much more on the product concept than the business model, so much so that I will sometimes take the shortcut of equating the product concept with the product vision. There are several reasons for emphasizing the product concept.

First, business models are a well-developed field. You can even go to school and get a degree in it. On the other hand, systematically conceiving excellent product concepts is simply not well understood yet. It’s a black art which I hope to shed some light on.

Secondly, it’s not always necessary to innovate on the business model. Off-the-shelf models often suffice. If you are creating a gadget to sell through traditional retailers, giving away a razor in order to sell razor blades, your business model is not a wheel needing reinvention. (That said, it is worth sifting through possibilities to innovate on the business model. Google’s way of selling advertising with AdWord/AdSense, and Apple’s way of selling music through iTunes are salient examples of product visions with innovative business models.)

Third, many organizations are already good at the traditional business essentials: engineering, manufacturing, sales, marketing and distribution. It’s the product concept they have trouble with.

Finally, the effects of a great or a flawed product vision are profound. Getting it right can set the stage for colossal success, and getting it wrong predestines a product to failure, as we shall discuss next.

In the mean time, take a step back and look at your product. How complete and well defined is the “mental image of what a future product will be like?” according to the elements listed here?

Product Vision Defined

Monday, September 29th, 2008 | vision book | 2 Comments

“Product vision.” We hear the phrase all the time. We have a sense of what it means, but there’s a vagueness to it. A crisp definition is hard to come by. But if we’re going to get serious about product vision we’d better straighten out our semantics. So what is product vision, really?

Let’s start with the dictionary definition for the word “vision” alone, excerpted from the New Oxford American Dictionary:

Vision

1. the ability to think about or plan the future with imagination or wisdom

2. a mental image of what the future will or could be like

This is already pretty close to how the phrase “product vision” is used. When we say “Apple has great product vision” we mean vision in the first sense of the word, that Apple is “thinks about and plans its future products with imagination and wisdom.”

When we consider a specific visionary product like the iPhone, the thousands of decisions that went making such a coherent product must have been driven by a clear vision, or “mental image of what the future [product] would be like.”

This leads us to a first cut at a definition for product vision.

Product Vision

1. the ability to think about or plan future products with imagination and wisdom

2. a mental image of what a future product will be like

There is one more usage sense that is missing. Product vision is also a field of study. There are conceptual models and practical methods that help us envision great new products. These frameworks can be taught, studied, tested and refined. Product vision is a discipline that can be studied, just like engineering, medicine, law, or design.

This leads us to our third definition:

3. the branch of knowledge and practice involved with envisioning future products

Having a concise, definition to reference will help us know when we’ve got a vision and help us to tell whether it’s any good. The definition the is a stepping stone to deeper ways of thinking about vision that will help us to conduct it systematically and with clarity.

How well do these definitions hold up to your usage? Please let me know in your comments.

Articles about product vision by D. Philip Haine