Shifting from Feature-Centric to Value-Centric Product Development
A look in the value creation equation of product development (or, falling in love with the problem space)
In the fast-paced world of technology and innovation, businesses often find themselves on a relentless quest to deliver more and more features in their products.
Imagine a race where the finish line is perpetually moving. In the tech world, that's often how it feels. We compete with time and competitors to deliver more features, thinking that this will ensure our product's success.
And what’s worse, most often this feature-centric approach is deeply ingrained in the development process of companies. However, the truth is that the obsession with shipping features isn't the key to success.
You can think of it like this: You have to provide value to customers (address unmet needs) in order to get value in return (revenue).
So the question essentially becomes: how can we provide more value to customers?
In order to understand how to provide value, you have to shift the focus to the problem space.
Obsessing with features
If you work in product development this will probably sound familiar: There is always a bottomless backlog of features, every stakeholder has a specific (and urgent!) request for certain functionality and the CEO has a certain pet feature they want to see in the product.
However, in this race to deliver, we frequently lose sight of the true goal - to create products that genuinely meet the needs of our customers.
More features equals more value, right? Unfortunately no.
The challenge with this thinking is that it can lead to the development of products with a plethora of unused or underutilized functionality.
Or, in other words: product bloat.
These features may look impressive on paper, but if they don't address real customer needs, they can they can become mere distractions.
For instance, think about all the apps on your smartphone. How many features do you actually use in each app? Research indicates that between 60% and 80% of features in many products are rarely or never used. This is a costly oversight in terms of resources and a missed opportunity to build features that would actually lead to happier customers.
The Need for a Shift in Focus
Imagine this: instead of rushing to check off a list of features for the next release, to work cross-functionally to understand what the unmet needs of our customers are and deliver specific solutions to address them.
Instead of simply delivering more, we should be aiming to deliver what matters most.
This is the essence of the value-based approach to product development.
Plotting the path to value
Shifting to value-centric product development is not merely a change in mindset but a transformation in your entire product development approach.
Here's how to make it happen: invest resources in understanding customers, frame goals around value created and continuously iterate to improve.
A key component is to invest in product discovery in order to understand your customers deeply. Define your ICP (ideal customer profile) and stick to it. Conduct interviews, surveys and gather feedback about the pain points and unmet needs of your customers. Ensure that you're not just building what seems like a good idea but what solves real underlying problems.
It also is crucial to define clear success metrics for every initiative before you even start development. Put in (electronic) paper how you will measure the success of each proposed feature or initiative. Ask:
What is the right metric to use that is directly or indirectly connected to user value?
What is the baseline for the selected metric?
What is the potential uplift for the selected metric if we build the feature?
How and when can we actually measure it?
Does it worth the cost of building it (and the opportunity cost of not building something else)?
Notice that this way, features are not done when they are released (a customer retention metric won’t move the day after the release!), but after we can measure the impact on the selected metrics.
Finally, it really helps to adopt a continuous iteration mindset, instead of going big-bang-everything-perfect. Recognize that the first version of your product won't be perfect. In fact, it shouldn't be. Put the product in front of your customers early, in order to learn, gather feedback, and iterate based on real-world usage. This approach lowers the risk of spending too much resources to bring something to life that does not provide value.
The potential upside
The core argument remains the same: You have to provide value to customers (address unmet needs) in order to get value in return (revenue).
Let’s examine this cause and effect relationship in more detail.
Customers hire a product to cover a specific set of needs (see Clayton Christensen’s Jobs-to-be-done framework). A product that seamlessly aligns with customer needs has the capacity to elevate satisfaction levels. Happy customers are not only more likely to remain loyal but also become vocal advocates for your brand. Customer satisfaction is the bedrock upon which lasting customer relationships are built.
Also, in the world of subscription-based businesses and beyond, customer retention is a vital metric. As you would expect, customers are more inclined to stay with a product that meets their needs, thus reducing churn rates. The result is a more stable and predictable customer base, which is crucial for sustainable growth.
The cumulative impact of improved customer satisfaction and enhanced retention has the capacity to translate into substantial revenue growth. Satisfied and engaged customers are more likely to make repeat purchases, and tend to act as brand advocates, which can drive new customer acquisition.
In the long run, revenue growth is the ultimate testament to the success of a value-centric approach, establishing a strong and sustainable position in the market.
Challenges and How to Overcome Them
Shifting from feature-centric to value-centric product development requires a change in mindset, processes, and sometimes even the company culture.
Securing the resources to be able to consistently explore the problem space requires significant internal selling. Organizational gravity has a tendency to pull discussions into the solution space (“but we just need a button there!”), while you need to be shifting the discussion into the problem space. Be ready to be challenged about the front-loaded cost of discovery work.
Stakeholders with domain expertise and not familiar with the process are the most difficult ones to convince. “Don’t waste time figuring out what to build, I will tell you. You can thank me later.“ (although they don’t usually tell you the second part). The curse of knowledge at work.
As a product leader you will have to present a structured case for these investments and be able to convince management and peers to make it happen. You will need to show how the process works, what are the benefits and point out specific examples you can start with. And when you get support, you have to make sure to show some quick results if you don’t want this trust waivered.
Conclusion
Shifting from a feature-centric to a value-centric approach in product development is not a simple switch; it's a strategic transformation. But it's a transformation that's essential for success in today's customer-centric business landscape.
It's about delivering what truly matters to your customers and reaping the benefits of higher customer satisfaction, retention, and revenue.