Monday, December 9, 2013

Shifting from inside-out to outside-in

Brutal truth time: the product development process inside most information businesses is fundamentally broken.  

Most leaders of information businesses with whom I speak intuitively know this to be true.  But few are able to put their finger on exactly why things are so broken.

Here's the answer: information business product development processes almost always proceed from the inside-out.  They start with the data, analytics, or insight that the firm has - and proceed almost immediately to questions about how to take it to market.  

The result?  An information product or service that meets the company's needs more than the needs of its customers.

It's easy to understand why.  Product development teams are pressed to do more with the assets the company already has.  They have a time crunch to get things done quickly.  And they're often measured on the short-term returns on those products.

But that thinking is completely spɹɐʍʞɔɐq.  Sorry, backwards.  

Remember our discussion on what makes a great information business?  In a nutshell: great information businesses are built on proprietary data, embedded in a business process, and delivered through software.  

Therefore, a great product development process must focus on these same elements.  In particular, effective product development efforts in the info biz usually start with the second element - the customer's business process.

Here's what an outside-in product development process looks like.

Note that these questions take the discussion in an entirely new direction.  Rather than focusing on what we have, we focus on what the customer needs.  And, equally importantly, we zero in on the value delivered - which is key to effective pricing in the info biz.

Moreover, this line of thinking allows us to assess the "embeddedness", or stickiness, of the offering.  If we determine it won't be embedded enough, we can change course quickly - or move onto a different product offering long before we waste time bringing it to market.

So, in a sentence: Product development in information businesses must start with the customer's business process and work backwards to the product offering.  

How do you know which process to target?  Stay tuned - we'll cover that in an upcoming post.  

How have you developed products in the information services business?  Any tips for your peers?