Commodity and Differentiation feature

Mainly, we can divide product features set into 2 category: Commodity and Differentiation. Commodity is the set of core features that every product that play in that market space must have. For example, if you are developing a word processor, content formatting capability is a must; If you are developing a CRM product, ability to track contact and opportunity is a must. Customer always expects the feature will be there in the product. It is not compelling to have them, but surprise of not to have them.

Differentiation, as its spelled, is product feature that differentiate one product from another. Differentiation feature is what that give a product market advantage or to serve a niche in the market space. It is the type of feature that:
a) Nice to have but not essential to product of that class.
b) Allow the product company to charge more for their product.
c) If implemented correctly and used to maximum advantage, it can redefine the game, become a commodity and possibly turn the company to become the market leader.

For example, in a word processing product, it is nice but not essential to have a full drawing and diagramming capability. User who write article or book need to have both content formatting capability and graphics drawing capability within the same product because they need to have illustration for their content. Usually, they don't mind to pay a little more to get the extra feature that they want. But for majority of user, they might not need this capability to be included.

Commodity feature can also be implemented in different product in different ways to include different functions and capabilities which in turn can become a differentiation fact. For example, in automobile industry, airbag is a commodity feature because it is an essential safety feature. You can't sell a car if you don't have airbag. However, while most cars have only one airbag at the driver seat, having the second airbag at front passenger seat is a compelling safety feature (This is just a hypothetical example. This is true many years ago, but today most car have two airbag as standard).

Product Planning : Vision first, not Feature first.

I believe that for a product to be successful, it is very important to get the product planning right. Product planning is the first activity when product team starts to think what to build for vNext or vNext+1 release.

Some people start this activity by listing down a list of features that they think they want to include for the next release. While feature list is important, I don't think that is the right way to start. Customer does not buy software product just because it has cool feature, but because the product itself has a compelling story that make them to be more productive.

Given the feature list, now the question is what features we should deliver for the next release to make it more compelling? Some people will look at their resource and time availability and pick a set of feature that can be delivered with that time frame. The problem with this approach is that your product may end up with a set of dis-integrated features and perceived as half baked.

So what you can do about it? Remember in the first paragraph: the product itself need to have a compelling story to tell for it to be attractive. You marketing guy need to be able to articulate a smooth flowing story to their customer where they can show how various features and functions can be used in a coherent way. To achieve this, you need to have a product vision.

Product vision describe what you want the product to be able to do for your customer and how far you want to take the product to. From the product vision, you derive a set of core values that deliver to that vision. Then you look at what features and functions are important in order to materialize the core values.

Product vision is important for the following aspects:

a) It allows you to articulate a simple message to your customer. Customer can clearly see what you are doing and be less confused.

b) Your customer can easily see whether what you deliver is align to what they want. Successful company treats their customer as their partner. They share vision, roadmap and progress with their customer so that they can engage in a stronger long term relationship and move forward together. As a customer, you don't just to pay money to get some products. You want to ensure your vendor is able to help you to be successful.

c) Product vision allows you to clearly identify the strength and short coming of your product. If give you a roadmap of what you should do next to improve the product in the future.

d) Product vision establishes a single view point for all people in the team. Whatever role your team member is in the product group, all of them are able to articulate the same message when asked. And more importantly, no people will be lost at direction.

e) It give you a focus point for not to be diverted by distraction. If there is a sudden market change, you can easily see whether the changes will actually affect you and what you can do to re-align your goal with the market.

f) It give you a base to prioritize you feature. Features and functions that do not fit to materialize the vision should be at low priority.

g) If your developers are faced with conflict and hard design decision, they can make the decision based on which materialize the vision better.

It is important that the product vision is spread as wide as possible so that everyone can march in the same direction. Product vision that is not shared by everybody in the team is as good as none. How can you be motivated and convinced if you don't know where you are going and what you are contributing to.

But what if you are a solution or consulting house? What if you are not building product, rather you build custom software or implement third party software product as solution to your customer? How does this apply to you?

In such cases, it is important you first understand their business problem, the environment they are operating under, what is their IT direction and what they hope to achieve from the solution. Then you derive a solution map that correspond to their business and IT goal. Your solution map consists of a set of milestones each with specific goal and deliverables and you deliver based on that promise. This approach can form a healthy strong and long term relationship with your customer because both have a common understanding and expectation as early as the project start. In case their business environment and competitive surface change, it allows you and your customer to easily re-prioritize each other goal and evolve the relationship without hurting each other benefits.

Business agility is the ability to adapt to changing business environment and accept the fact that change is part of the game. However, you can only change and understand the change impact if you have some sort of ground work to based upon for assessment. After all, how can you change course if you don't even know where you are heading. Product vision gives you this ground work.

Product Development vs Software Development

In software business, a lot of people use the term product development and software development synonymously. However, IMHO, I think it is two distinct discipline or job.

Software development mainly consist of major phases and activities such as understanding requirements, software design and architecture, coding, testing, QA and other engineering practices such as performance and technical benchmarking.

However, in software business, simply developing and shipping software is not enough to keep the company going. The company needs not just to develop the software, but to develop a product.

Product development include activities such as analyzing market trends and customer need, crafting a product vision of what you want to deliver and how you differentiate from your competitors, creating market awareness and communicating your vision to your customers, develop a strategy to capture and fulfill the market need, platform to deliver the product and of course shipping the product just in time to capture the market.

Once you have the software piece ready to ship, you also need to make sure you have the necessary infrastructure to support your software, for example training your customer support personnel, documentation, maintenance release, and channel for customer to provide feedback and so on.

Then, you need a plan to nurture the product. This includes branding; strengthen the customer relationship, making the product more mature by fixing short coming and incorporating customer feedback and so on.

All these are part of the product development activities.

To sum up, I would like to use the following diagram to illustrate my point:



Click to view in full size.