Key Takeaways
1. Productization is crucial for services businesses to scale and compete
"Scalable products help to grow revenue at the same rate without having to add costs at the same rate."
Benefits of productization: Services businesses can achieve significant advantages through productization, including improved scalability, better profit margins, and higher valuations. Productization allows companies to grow revenue without proportionally increasing costs, as scalable products can serve more customers with less human intervention. This shift often leads to gross profit margins of 60-90%, compared to the industry standard of 40% for customized professional services.
Types of productization:
- Productized Services: Standardized, packaged services with fixed pricing
- Products: Off-the-shelf offerings with standardized features
- Products as a Service: Ongoing, subscription-based solutions
Market drivers: The need for productization is driven by several factors, including:
- Accelerating digitization and use of technology
- Increased competition from digital-first startups
- Changes in B2B buying behavior favoring self-service options
- Desire for improved revenue visibility and higher company valuations
2. Create a product-friendly culture by focusing on people, not just processes
"Change is always ten times harder than you expect. Without a clear vision for the strategy change, people won't change their behavior."
Vision and behavior change: Successful productization requires a clear, compelling vision from leadership and a commitment to changing organizational behaviors. Leaders must articulate why the shift to products is necessary and model new behaviors that support innovation and product development.
Key cultural elements:
- Strong, well-articulated vision
- Behavior change from the top down
- Hiring or developing the right skills
- Diversity of experience and thought
- Company-wide technical acumen
- Test-and-learn mindset
Example: Jennifer McCollum, CEO of Linkage, developed "The Linkage Way" to cultivate behaviors supporting the transition from customized services to scalable solutions. This framework focused on 20 desirable behaviors, such as "I ask questions and I bring ideas" and "I adopt new technology," which were reinforced through regular discussions and integrated into performance management.
3. Align leadership and resources to support product innovation
"To be successful, we must fully commit and invest."
Investment strategy: Organizations need to allocate sufficient resources to fund both product development and product launch. This typically requires changing shareholder expectations and setting aside 1-2% of revenue for initial exploration, with full concept development and launch costing 5-20% of revenue.
Alignment elements:
- Shareholder and executive team alignment
- Determining investment amounts
- Allocating investments across product portfolio
- Freeing up resources from existing operations
- Aligning incentives for sales and development teams
Decision-making framework: Develop a clear framework for evaluating and prioritizing new product ideas. Consider factors such as revenue potential, confidence in success, and effort required. Use tools like the RICE method (Reach, Impact, Confidence, Effort) to score and compare opportunities.
4. Define and solve urgent, expensive customer problems
"If I had an hour to solve a problem, I'd spend 55 minutes thinking about the problem and 5 minutes thinking about solutions."
Problem identification: The most successful products address urgent and expensive customer problems. Avoid developing solutions in search of a problem or focusing on minor annoyances rather than significant pain points.
Research methods:
- Customer and prospect interviews
- Surveys
- Customer advisory boards
- Online data analysis
- Existing product usage data analysis
Five Whys technique: Use the "Five Whys" root cause analysis method to dig deeper into customer problems and uncover the underlying issues. This involves asking "why" multiple times to get past symptoms and identify the root cause of a problem.
5. Co-design and develop products with customers and partners
"Co-creation is about helping the customer imagine a different future."
Co-creation approaches:
- Charter advisory boards: Involve select customers in product development
- Sell-then-build: Test market demand before full development
- Wizard of Oz testing: Simulate product functionality manually
- Concierge testing: Provide high-touch service to beta users
Development partnerships: Consider options to build, buy, or partner when developing new products. Partnerships can reduce up-front investment and risk while providing access to complementary capabilities.
Iterative development: Embrace a Minimum Viable Product (MVP) approach, focusing on building the smallest experiment that can prove or disprove assumptions about a business idea. Continuously solicit user feedback and iterate based on learnings.
6. Launch boldly, overcoming fears of cannibalization
"If you don't cannibalize yourself, someone else will."
Addressing cannibalization fears: Use the 3 C's framework to mitigate concerns about new products cannibalizing existing services:
- Customers: Clearly define target segments for new and existing offerings
- Complementary: Develop products that enhance existing services
- Christensen: Consider the risk of disruption from new competitors
Pricing strategies:
- Multi-tiered pricing (e.g., Good, Better, Best)
- Freemium models
- User-based or enterprise pricing
Effective messaging: Focus on the "product of the product's product" – the ultimate benefit or outcome customers seek. Develop a lead message, secondary messages for each persona, urgency drivers, and clear differentiators.
7. Continuously iterate and improve based on user feedback
"MVP 'learning loops' are only helpful if we commit to continuing to develop and evolve our product after we've launched it."
Ongoing testing: Implement both user testing (evaluating if users will use the product) and usability testing (determining if users can use the product effectively). Continuously gather feedback to identify opportunities for improvement.
Iteration process:
- Collect user feedback through various channels
- Analyze data to identify patterns and pain points
- Prioritize improvements based on impact and effort
- Implement changes in regular product updates
- Measure the impact of changes on key metrics
Building a learning organization: Foster a culture that values continuous improvement and learning from both successes and failures. Encourage open communication about product performance and user feedback across all levels of the organization.
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FAQ
1. What is "Productize: The Ultimate Guide to Turning Professional Services into Scalable Products" by Eisha Armstrong about?
- Transforming Services to Products: The book provides a comprehensive blueprint for professional services firms (consulting, marketing, training, etc.) to convert their expertise and offerings into scalable, often tech-enabled, products.
- Productization Framework: Eisha Armstrong introduces the Productize Pathway™, a step-by-step method tailored for service organizations to innovate, develop, and launch successful products.
- Real-World Examples: The book is filled with case studies, practical tools, and stories from leaders who have successfully navigated the productization journey.
- Avoiding Common Pitfalls: It highlights the seven most common mistakes organizations make when shifting from services to products and offers actionable solutions to avoid them.
2. Why should I read "Productize" by Eisha Armstrong?
- Growth and Scale: If you lead or work in a professional services firm and want to grow revenue without proportionally increasing costs, this book offers a proven roadmap.
- Competitive Advantage: The book addresses how to stay relevant and competitive in a market increasingly disrupted by digital-first and tech-enabled competitors.
- Practical Tools: Readers gain access to downloadable frameworks, templates, and diagnostic tools to apply the book’s concepts directly to their business.
- Cultural Transformation: It goes beyond product development, focusing on the leadership and cultural changes required for successful productization.
3. What are the key takeaways from "Productize" by Eisha Armstrong?
- Think Big, Start Small: Begin with a bold vision but use iterative, small-scale experiments to test and refine product ideas.
- Solve Urgent, Expensive Problems: Successful products address real, pressing, and costly customer problems, not just frequently mentioned annoyances.
- Be Fearless: Overcome internal resistance, especially fears of cannibalizing existing services, and embrace bold moves to innovate.
- Productization is a Journey: The transition requires new skills, organizational structures, and a test-and-learn mindset, not just process changes.
4. How does Eisha Armstrong define "productization" in "Productize"?
- Scalable, Packaged Offerings: Productization is turning customized, people-intensive services into scalable, often tech-enabled, products that can be packaged, named, and sold repeatedly.
- Innovation Ladder: Armstrong describes a progression from customized services to productized services, to products, and finally to products-as-a-service (e.g., SaaS, DaaS).
- Mix of IP, Tech, and Service: Every productized offering combines intellectual property, technology, and service in varying ratios depending on the business model.
- Recurring Revenue Focus: The goal is to create offerings that generate recurring revenue and higher profit margins compared to traditional services.
5. What is the Productize Pathway™ method in "Productize" by Eisha Armstrong?
- Six-Part Framework: The Productize Pathway™ includes: Create a Product-Friendly Culture, Align to Support Innovation, Define the Right Problem, Co-Design and Develop, Launch Boldly, and Manage & Iterate.
- Iterative, Customer-Centric: The method emphasizes continuous learning, rapid prototyping, and customer involvement at every stage.
- Avoids Common Mistakes: Each step is designed to help organizations sidestep the seven deadly productization mistakes outlined in the book.
- Action-Oriented Tools: The pathway is supported by practical tools and templates available for download to guide implementation.
6. What are the "Seven Deadly Productization Mistakes" described in "Productize"?
- Focusing on Processes Before People: Neglecting the cultural and behavioral changes needed for productization.
- Starting Too Big or Too Perfectly: Over-investing in untested ideas and delaying market feedback.
- Favoring Existing Business Over New Products: Under-resourcing new product initiatives due to short-term revenue focus.
- Not Solving an Urgent and Expensive Problem: Building products that don’t address real customer pain points.
- Designing and Developing in a Vacuum: Failing to involve customers and stakeholders in the design process.
- Starving Products Due to Fear of Cannibalization: Avoiding innovation that might disrupt current services.
- Stopping at the MVP: Not iterating and improving after the initial product launch.
7. How does "Productize" by Eisha Armstrong recommend creating a product-friendly culture?
- Vision and Leadership: Start with a clear, inspiring vision for productization, modeled and reinforced by leadership.
- Behavioral Change: Focus on changing behaviors across the organization, not just processes or structures.
- Skill Development: Hire or develop talent with product management, technology, and analytics skills, not just subject matter expertise.
- Cross-Functional Teams: Break down silos and encourage collaboration through agile, multi-disciplinary teams.
- Test-and-Learn Mindset: Foster a culture that values experimentation, rapid feedback, and continuous improvement.
8. What is the importance of solving "urgent and expensive problems" in "Productize"?
- Market Fit: Products that address urgent and expensive problems are more likely to be adopted and valued by customers.
- Avoiding Wasted Investment: Focusing on real pain points prevents building solutions that no one wants or needs.
- Customer Research: Armstrong advocates for hypothesis-driven research, customer interviews, and competitive analysis to identify these problems.
- Segmentation and Personas: Understanding which customer segments experience these problems ensures the product has a large enough market.
9. How does "Productize" by Eisha Armstrong suggest organizations should co-design and develop products?
- Co-Creation Approach: Involve customers, employees outside the core team, and developers early and often in ideation and prototyping.
- Rapid Prototyping: Use MVPs, concept testing, and pre-development market tests (like sell-then-build or Wizard of Oz) to validate ideas quickly.
- Leverage Existing Assets: Catalog and repurpose unique intellectual property, data, and processes as the foundation for new products.
- Iterative Development: Continuously solicit user feedback and refine the product through multiple iterations before and after launch.
10. What strategies does "Productize" recommend for launching and marketing new products, especially regarding cannibalization fears?
- Address Cannibalization Directly: Use the 3 C’s framework—Customers, Complementary, Christensen—to analyze and mitigate cannibalization risks.
- Tiered Pricing and Packaging: Offer multi-level pricing (e.g., Good-Better-Best, Freemium) to attract different customer segments and maximize value.
- Compelling Messaging: Focus on the ultimate benefit (“the product of the product’s product”) and tailor messages to different personas.
- Sales Enablement: Equip sales teams with the right tools, training, and incentives to sell new products, and communicate the vision repeatedly.
11. How does "Productize" by Eisha Armstrong advise organizations to manage and iterate on products post-launch?
- Customer Success Focus: Develop robust onboarding, usage measurement, and customer success processes to maximize renewals and upsells.
- Data-Driven Improvement: Monitor key usage metrics (like the “One Metric That Matters”) and gather qualitative feedback to guide enhancements.
- Regular Roadmap Updates: Maintain and update product roadmaps based on market feedback, performance data, and evolving business goals.
- Portfolio Management: Review the entire product portfolio regularly to allocate resources, spot cross-sell opportunities, and ensure strategic alignment.
12. What are the best quotes from "Productize" by Eisha Armstrong and what do they mean?
- “Think Big, Start Small.” – Encourages organizations to have ambitious goals but to begin with manageable, low-risk experiments.
- “If you are not embarrassed by the first version of your product, you’ve launched too late.” (Reid Hoffman, quoted) – Stresses the importance of launching early to gather real market feedback rather than waiting for perfection.
- “If you don’t cannibalize yourself, someone else will.” (Steve Jobs, quoted) – Highlights the necessity of self-disruption to stay competitive.
- “The most successful companies take a co-creation approach to both design and development.” – Underlines the value of involving customers and stakeholders throughout the product development process.
- “Productization is a critical part of the growth strategy for business services.” – Emphasizes that turning services into products is essential for scaling, improving margins, and increasing company valuation.
Review Summary
Productize receives mixed reviews, with an average rating of 3.92 out of 5. Readers appreciate its clear framework for product development and actionable insights for professional service firms looking to scale. Many find it useful for mid-market to enterprise companies, praising its emphasis on customer collaboration and innovation. However, some critics argue that the content is too generic, lacks specificity for small businesses, and doesn't provide enough guidance on identifying productization opportunities. Some view it as a marketing piece for the author's services, while others find it a valuable resource for product management.
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