One of the conclusions I have drawn from my more than 40 years in the talent development supplier industry is that few firms have a handle on how to consistently develop market-viable products or programs. In fact, in an informal survey I conducted with 24 talent development suppliers, I found that, on average, 70 percent of the revenue of supplier firms comes from their very first product, even 20 and 30 years later. When I am talking about product, I mean any offer you provide your clientele. This could be a highly customized program, an off-the-shelf product, or even a consulting service.
Of course, this could be interpreted that they all actually figured out quite well how to develop a product, given it had sustained their business for many years. But few have been able to repeat that early success, relying almost exclusively on product extensions to bring in additional revenue. The question then becomes, what is in the structure and process of these firms that allowed them their early success, yet hindered their subsequent product development innovation? My guess is their first products were more based on the whim, insight, and even genius of their founders than a well put together product strategy discipline.
What, then, would such a strategy look like? In general, there would be two different documents. The first would be a market requirements document (MRD). This document would identify the key market drivers, the market size, market saturation assumptions, and a financial analysis that puts these data together into a projection of expected top- and bottom-line performance for each product.
The second document would be a product requirements document (PRD) that defined what topics, length, format, and so on of new and existing products were necessary to meet the identified market requirements. Sounds relatively simple, except for the discipline required from largely entrepreneurial businesses. The result would be a strategic product road map placed side-by-side the market and product initiatives and the time horizon over which they would be rolled out. This road map would delineate the timeframes from the initial research, then the development of both the MRD and PRD, all the way through the market and product initiatives, ending with the period of first revenue for each product. This type of road map can help a business plan for the resources needed over a period of years, and how and when there will be a return on this investment.
Combining a market analysis with a product development plan can result in what is called an Ansoff Matrix, first published in Harvard Business Review in 1957 (see figure below). This is a simple two-by-two window, as shown below, that can give you a line of sight to your overall product strategy.
From this matrix you can not only decide your specific product strategy, but also ascertain where your relative risk lies. The highest risk would be when you have to diversify by selling new products to new markets. The lowest risk would be when you have to penetrate an existing market; that is, expand you current offering into a market in which you are currently selling. Medium risks occur when you are developing new products for existing customers or doing market development by selling existing products to new customers.
Putting together a forward-thinking approach to developing your offerings will save considerable time, money, and effort. But, most importantly, it will better ensure you are able to meet the needs of your customers while effectively affording your development plan.
What have you done, or could you do, to integrate your market and product development initiatives to create a strategic product road map?
For more insight, check out The Complete Guide to Building and Growing a Talent Development Firm.