We ended the last essay with ‘The next time someone asks you what you do, or what digital products are, tell them you build digital tools to help make people’s lives better. Because if a product isn’t offering value and making someone’s life better, is it even a product?’ Let’s dig into this a bit more. What is a product and how might we make someone’s life better? Why does a product exist?
Much like Peter Drucker says a company exists to create a customer, I believe that a product exists to create value for someone, creating a customer. That is its sole purpose. A product may also make money for a business, but this is not required. I’ll keep the viability of a product separate from the viability of
“Man is a goal-seeking animal. His life only has meaning if he is reaching out and striving for his goals.”
As goal-seeking creatures, we are usually trying to find ways to get from here, our present state, to there, our goal or desired state. A product is something you [verb]1 to get to your desired state. As we covered last time, “a digital product is digitally based meaning interactions occur through a digital interface.”
- You use Uber to call a cab, taking to to a destination.
- You use Hopper to book a flight
- You use a straw to consume a cold drink, satisfying your thirst.
- You consume an apple (product), satisfying your hunger.
- You read a book (product) on an interesting topic, increasing your knowledge.
These example are simplistic representations of what a product might be. A product provides value by enabling us to achieve some state we desire. Value can be created in a variety of ways such as through utility, information, social capital, or security—this all depends on the customer’s desired state. To be clear, this is a very abstract/philosophical way to think about products and now how we generally imagine them on a day-to-day basis. I usually reduce a product to ‘a thing that lets you do something’. Bain, a global consulting firm, has compiled a hierarchy of 30 ways of creating value, mapped in a similar format to Maslow’s hierarchy of needs. This can act as a starting point for understanding the motives people have for using the products they do.
Looking at this pyramid, we can get fairly creative with the ways we provide value for customers with our products:
- How might we provide value through information?
- How might we help the customer make money?
- How might we create a sense of belonging?
As product designers, we usually build a product with an intended way of creating value for customers through a specific set of features. However, it’s up to potential users to determine how they choose to realize that value. As a product team, we can only create value potentiality. For example, we may think we are offering entertainment and nostalgia with Pokémon GO, but without planning to we also offer people a sense of affiliation and belonging. It’s as if our product is simply a platform for value. There will often be emergent sources of value as people begin to adopt the product more widely and that’s the beauty of it. When people take a product to places you never imagined, it can feel magical.
Descending the rabbit hole of value
As we begin to consider what our customers want, we have to determine their end state. But how? It often requires some digging through research, conversation, or insight, but you may end up falling down the rabbit hole of value in pursuit of understanding.
A popular framework for identifying a customer’s end state is Jobs To Be Done. The commonly used example is a situation where you’re a drill manufacturer. A customer’s desired end state is not to buy a drill. A customer is buying the drill’s output—a hole in the wall—hence “Jobs to Be Done”. While true, if we dig deeper we may learn they only need the hole in the wall to mount something like a picture frame so we can instead offer adhesive hooks. At what point do we stop digging for the truth? Taken to its logical extreme, we learn that the customer wants to mount a picture of her children who have since moved out. Her “job to be done” is to actually fill an emotional gap which presents a very different framing for our potential products.
Knowing this, do you think the customer wants us to solve her problem in creative ways? Should we create a product like an ‘always on video platform to connect with her loved ones’? It will often be the case that what she really wanted was the drill all along? It provides value along multiple dimensions, one of which was drilling a hole in the wall to mount a family photo. We need to accept that sometimes people just want that product because they have preconceived notions about how they plan to solve their problem. This is not a bad thing, but there are certain constraints you need to operate within.
Side note: Innovation often means finding ways to serve the customer’s need in a way they have never considered, but as you can see it’s a delicate dance.
Principles of Product
In science there are fundamental truths, things presently accepted as true, known as first principles. These are the foundation that science is built off.
I believe there are some first principles when it comes to products (these may be sub-principles of a single one).
- A product exists to provide value.
- Value is defined by the customer, not the creator.
- A valuable product, one that is used, has benefits that exceed the cost associated with using it. This is expressed as
Value = (Benefits × Desire) / Cost
This formula in is the basis for my value hurdle framework which we will explore in the future. If we accept these things as true, then all products being used are providing value to the user, otherwise they would not be spending their resources on it. Feel free to dispute this core belief.
In thinking through this piece I asked myself what are instances where there would be conflicting evidence of this principle?. Is my statement on value too semantic or subjective to truly ever be proven true or false? I’m not sure if it’s a cop out or just a generally unknowable sentiment to say usage is proof of value, because there is no other reason for someone to use a product. Sometimes we believe people use products that don’t provide value. But, according to who? How would I know they don’t have value? There are extreme examples where someone may not directly receive the value from the product. They may value their job, their relationship, or their life enough to be using a product they are forced to use.
Here’s a helpful thought experiment as you start to refine your product mind. Whenever you run across a new digital product, especially one you’re dismissive of, ask yourself “in what situation might this product provide value? to who?” Let’s run through an example.
Lime Bikes are e-bikes that you can rent easily by the minute—think CitiBikes or Car2Go but with e-bikes. This typically introduces a variety of questions such as:
- Who needs an electric bike?
- Why would you rent a bike instead of a car if they costing about the same?
Taking the inquisitive approach, let’s think about why someone might prefer an electric bike.
- You don’t need to worry about finding parking for your bike, unlike a car. This makes transportation simpler.
- The destination you are choosing may be more easily accessible by bike.
- The borrower may want exercise and not own a bike.
- Maybe it’s a social event with a friend, where they both rent bikes to explore the city together.
- The borrower can’t drive taking carsharing off the table.
While you may personally see no value in the product, perhaps you’re not the target. This exercise is valuable when evaluating ideas, products, or even companies from an outside perspective. I hope that gives you a sense of how you might start to think about products. This approach was inspired by Ramit Sethi’s D-to-C (Derisive to Curious) principle.
The Art of Product
One interesting and enlightening thing I learned while reading Leonardo da Vinci’s biography is that there is more to art than it seems. My only previous measure of art was realism; I felt the more realistic a piece was, the “better” it was. By having a
Building up your value vocabulary allows you to evaluate products more broadly. Many economists or even behavioural psychologists fail to understand consumers, often deeming them irrational. I believe this is only the case if your only lens of rationality/value is utility. By completely omitting other ways for a customer to realize value—social, emotional, informational, or other—they are looking at customer behaviour in a very one-dimensional manner. Generally when something doesn’t makes sense, it’s likely due to your expectations and understanding of the world. There is an implicit “to me” missing from the end of the sentence “that doesn’t make sense”. As Brent Beshore says:
“Rationality: In the moment, people act rationally, always. The question is what information, preferences, time horizon, and biases came into play? Removes ability to write-off people/behavior. Forces learning and empathy.”
The core product truth that I believe, “People only use products for which their benefits exceed their costs” helps us understand why someone might use a product you see as asinine or useless—they are receiving value from it. It’s now on you to figure out what that value is and possibly offer a better alternative with your product.
I will wrap up with an important caveat: just because a product provides value, doesn’t mean it’s going to be successful. Products that have value consistently fail. In short it happens because the product is not enough. It’s not creating enough value for enough people.
- Sample verbs would include using, consuming, sharing, or displaying the product. ↩