Getting Your Leadership Team Onboard with a Productization Strategy

Services organizations who want to pursue a strategy of productization first need to make sure their leadership team understands and supports the strategy. This includes building a business case for productization, collaboratively defining the new business model, and modeling necessary behavior change.       

Organizations bring in outside consultants for many reasons. They may need expertise they do not have internally. They may want a fresh perspective on a problem or solution. They may simply need extra capacity to complete a time-sensitive project. All of these are projects my firm loves to do.

Sometimes, however, organizations hire consultants to force change for a strategy on which leadership is divided. This reason is usually not stated explicitly but becomes obvious when consultants see the team’s dysfunction lack of alignment. These types of engagements are trickier, and honestly, unpleasant. While outside consultants can support change, ultimately it is the job of the CEO to align the leadership team.

The good news: there is a formula for doing this well. Act on the following tasks to help bring senior leadership on board:

• Build a business case for a product strategy
• Define your new business model
• Model the necessary behavior change
  
  

Build a Business Case for a Product Strategy

Begin by crafting a strong, data-driven argument for a product strategy. Your goal at this stage is to give leaders a sense of both the value of productization and the consequences of not doing so. The right product strategy can offer a variety of benefits, including reaching a larger market, better profit margins, increased revenue visibility, higher valuations, and the ability to compete with tech-first businesses that now also offer services, to name a few.

Build a business case for product strategy by thinking through your organization’s specific financial goals and consider the impact of not diversifying your core business offerings. This might involve seeking out case studies of other comparable companies who have recently productized and understanding the competitive landscape of your industry, including tech-first companies that are targeting your customers.  

Collaboratively Define Your New Business Model

Once the leadership team has agreed to begin a productization strategy, it is imperative to collaboratively define your new business model with all members of the C-suite. The goal of these conversations is to prepare your team to be as ready as you are to take the leap into a product strategy. One client began this process by assigning each member of their leadership team to independently produce a short write-up that answered four key questions:

• What type of business do we want to be?
• Why do we want to do this?
• What does success look like?
• What’s the one thing we want to be known for by our customers and investors?

This exercise generated varied visions of what the business could become, and it gave the team valuable insight into each member’s starting points. Through continued discussions, these initial roadmaps helped the client chart a course to an agreed upon destination.

Strive to facilitate these conversations with trust and an openness to productive disagreement. One Head of Product shared, “Even if there is disagreement, it’s essential to get enough alignment that you come out of that meeting with one voice and one message that everyone rigorously sticks to that governs our strategy around product-market fit.”

These conversations may also result in some leaders deciding to opt-out of the strategy and leave the organization. That is okay. For example, Brian Joseph, CEO and Founding Partner of RevJen, a business that provides nonprofits with executive peer groups and training, decided to “burn the boats'' and leap into a full-scale transition from a customized consulting business model to a product business model. Brian began by discussing the new direction with RevJen’s founding partners. Through these conversations, they reached an amicable solution where two partners decided to leave and one stayed to help manifest the new direction of the organization. Brian and his partner then shut down the services arm of their organization to focus entirely on product development. In this instance, the C-suite agreed to restructure to support the new business model.

Change Mindset and Model New Behavior

Productization requires that leadership shift their thinking and behaviors around how the organization creates value for customers. Again, if your organization has historically created value by offering services, your leadership team will need to move away from seeing individual expertise and time as the primary value, and instead consider how the productization of that expertise and effort creates value.

This is hard.

It’s hard because it challenges leaders’ personal sense of worth.

I know first-hand how challenging reframing your worth can be. When Vecteris began to introduce new products, I had to remember that the business’s value to customers was no longer entirely centered on my expertise. Instead, the methodology created by our team and codified by our products delivers value to our customers. I had to change how I define success, which requires courage and time.

Making the decision to productize can also feel risky, as an organization may need to say “no” to immediate (and familiar) sources of customized services revenue to create the capacity to productize. Leaders who have a scarcity mindset—thinking about the needs of few customers over the potential to serve many more--will struggle with this and will need to change to be successful.  

Vecteris has developed a cultural transformation program, SPARK Productize PathwayÔ, to help companies struggling to evolve their cultures to support a productization strategy and follow a standard process for creating and launching new products successfully. Based on capability assessments, data insights, and proven expertise, we help teams build new capabilities and adopt a productization method that reduces risk and accelerates results. Unlike traditional product management training, we use a learn-by-doing approach to grow your team’s product competencies, while also developing a new product concept ready for launch.

To learn more about SPARK, contact us here. You can also start by taking our Product Innovation Maturity Diagnostic to access your organization’s current capabilities and design the program based on your growth goals.