Product Model Concepts (LEGO dub)
It can scarcely be denied that the supreme goal of all theory is to make the irreducible basic elements as simple and as few as possible without having to surrender the adequate representation of a single datum of experience.
Value Exchange
Value exchange is the foundation of the product model.
Customer Value
Customers have needs, pain points, and desires (together, "opportunities"). They are willing to pay for access to products that alleviate their pain points or satisfy their needs and desires; opportunity solutions that make their lives or work easier, more efficient, or more pleasurable.
Business Value
For-profit businesses exist to sustain themselves and grow. To do so, they produce products that solve customer opportunities and offer access to the benefits of these opportunity solutions in exchange for value.
The company uses the value captured from customers to sustain itself.
To grow, the company must develop its products to efficiently provide more value for customers. This is done in some combination of the following ways:
- By increasing value offered to existing customers by (a) solving more of their opportunities or (b) improving existing opportunity solutions ("Deepening PMF").
- By expanding the surface area of the value proposition by solving opportunities for customers with related problems in adjacent markets ("Broadening PMF").
Ideally, each version of the product released to customers Deepens and/or Broadens PMF.
The Product Model
The product team's role is to develop their product to maximize the value the business can capture while minimizing the costs required to deliver the product.
To consistently and efficiently deliver value to customers, product teams must work to understand their customers' opportunities and then build and deliver products to solve those opportunities in ways that are valuable to customers and profitable to the business. The product model is a framework of concepts that has been proven to reliably produce value propositions with high product-market fit.
Below is an overview of the product model concepts and how they fit together to build impactful products.
Opportunities
Customer needs, pain points, and desires.
Design
How a product looks and works.
Most people make the mistake of thinking design is what it looks like. People think it's this veneer - that the designers are handed this box and told, 'Make it look good!' That's not what we think design is. It's not just what it looks like and feels like. Design is how it works.
--Steve Jobs
Opportunity Solutions
The pain points alleviated and the needs and desires fulfilled by your product.
Value Proposition
The benefits customers can expect to receive from your product; the customer needs, pain points, and desires your product solves and how it solves them.
Product-Market Fit
Product-market fit is the alignment between a product's value proposition and the opportunities of its target market, indicating that the product's value proposition satisfies a real need or demand in the market to a degree that customers are willing to pay for it.
Achieving initial product-market fit is a critical milestone for any product because it indicates that the product has found a solid foothold in the market and has the potential for long-term success and growth.
It's important to note that product-market fit is not a one-time achievement; it's an ongoing process that requires continuous monitoring, iteration, and adaptation as market conditions and customer needs evolve.
Product Vision
Once the product has achieved initial PMF and the product team has a solid understanding of their target market and its opportunities, the product team can use these learnings to develop a vision for the product. The product vision:
- is a compelling, customer-centric description of the future you're trying to create for your users,
- unites all product teams with the shared goal of making the vision a reality,
- is a great recruiting tool, and,
- is the main thrust of the value proposition of a future version of your product.
Product-market Fit Is Implicit In Vision
Implicit in this future value proposition is future product-market fit. To set this vision as something worth striving for, product leaders must believe that this value proposition will solve important or difficult opportunities for a significant number of customers thereby allowing the company to capture significant value in exchange.
Product Strategy
Strategy is the decision-making framework that guides the teams' development of the value proposition from its current state to the future state described by the product vision.
To work efficiently, teams need guidance in the form of strategy to focus and align their efforts, and to help them make tradeoff decisions. It is the degree of prescriptiveness of this guidance that separates empowered product teams from feature teams stuck in the build trap.
Strategy is a deployable decision-making framework, enabling action to achieve desired outcomes, constrained by current capabilities, coherently aligned to the current context.
--Stephen Bungay, The Art of Action
Strategy Deployment
Strategy deployment is the process of translating a company's strategic objectives into a set of actionable initiatives for each time horizon (e.g., short-, medium-, and long-term). Its purpose is to ensure that employee's daily decisions and activities are aligned with the company's long-term strategy.
By deploying the strategy in this way, organizations can ensure that everyone is clear on what needs to be done, by when, and by whom, and can track progress against the strategic objectives over time.
Discovery
Discovery is the process of using quantitative and qualitative data to gather evidence to support hypotheses of opportunities, solutions to those opportunities, and their impact on business goals.
The product model approach to discovery minimizes waste by clearly identifying and defining opportunities and associated assumptions and risks and thoroughly testing proposed solutions before determining a solution is ready to be built. By testing hypotheses quickly and cheaply before building, product model teams more consistently deliver solutions that advance business goals, reducing time to value. Feature teams who don't take the time to gather evidence and test hypotheses thoroughly may have quicker time to market, but Marty Cagan estimates that 70-90% of features developed in this manner do not deliver the necessary business results.
