Four critical pieces to keep in mind as you design your next (smart) product.
Q&A with Dr. Todd Hostager
Gartner predicted that in just three years, half of all IoT revenue will come from companies that don’t even exist today. For new companies and start-ups, this is a tremendous opportunity. But, for market-leading organizations the pressure to integrate digital devices into your product mix has never been greater. The challenge that all companies are facing, new and established, is not why go digital, but how.
Drawing on more than 20 years of experience working with clients on business plans and strategies, Dr. Todd Hostager, Logic PD’s Director of Digital Strategy Curriculum, shared his thoughts on the requirements of bringing a connected device to market and the challenges that companies need to overcome when developing their digital product strategy.
Let’s start at the beginning. What is a digital product strategy and how is it different that a traditional product strategy?
When most people hear “digital product strategy”, they think about an eBook or a smartphone app. But in reality, a digital product strategy is much more than that. A digital product strategy transforms the fundamental nature of your product’s value proposition, shifting how you do business and the entire design and development process.
Digital products deliver additional value from the data they generate and the information you can create from it. Having access to this information allows you to better understand your customers and stakeholders to optimize their user experience. At the same time, a digital product generates new revenue services beyond the sale of the physical product.
How would you recommend a company begin to understand their customers and optimize their user experience?
You need to focus your digital product design efforts by first understanding how your users are currently interacting with your product. From there, you can explore key digital product functions to help you identify the smart and connected features your customers and users want.
Digital stakeholder journey mapping is a great way to do this. You map critical points in each stakeholder’s journey throughout the entire product lifecycle so you can pinpoint where adding more information can drive additional value for your user.
For example, if the product is food we need to map each touchpoint including how it is produced, processed, transported, stored, prepared and served. By adding a smart sensor-based solution, we could prove that all ingredients are being kept at the proper temperature while being transported.
The key is focusing on digital design options that will yield maximum information value for customers and other stakeholders along the entire journey, greatly improving your odds of a successful market launch in the process.
So your product’s success can be directly linked to the value of your product’s information. What are some challenges companies face with that new reality?
Yes, the success of your digital product lies in creating and delivering valuable and actionable information. This means you need to pay close attention to where you get your data from and how it will flow through your product and the cloud, to users and other devices.
Simply identifying data source options is the easy part. The hard part is designing how your data will be combined, accessed and displayed to be transformed into valuable information in the eyes of your users. I have seen product after product fail because the company didn’t pay close attention to what stakeholders actually want to know. Understanding this will provide you with what you need to competitively position your digital product in a crowded marketplace.
Let’s switch gears to another critical piece of your digital product strategy. How do companies make money with a digital offering?
Your business model is more than just a piece of your strategy. Your digital product strategy guides where you want to go and what you want to do. Your business model defines HOW you are going to do it.
The big challenge with a digital business model is that there is not a one-size-fits-all option. There are a lot of moving parts and areas you need to consider, from market segmentation and pricing channels to operations, legal and the amount of risk you are willing to take on. Success comes from pairing the right digital product with the right business model. If you get that right, you will succeed.
What advice would you give companies or product managers that find all of this overwhelming?
There is help out there. Your traditional product management background is essential to get started but guidance or expertise in managing the differences for a successful digital product strategy will benefit you in the long run. Even though it seems the odds are against you, it can be done and done successfully.
And the result is a more competitive solution to the problems your customers are now facing. Increased pressures for greater accountability, operational efficiency and reduced costs are bearing down hard on those who buy and use your products. You can benefit from these pressures by delivering smart product solutions providing the additional information that your customers so desperately need in order to meet these new demands.
In response to these needs, we are soon launching a digital product strategy curriculum series, detailing the specific steps to develop connected product solutions for the digital age. The curriculum covers seven essential pieces of a digital product strategy including business modeling, competitive positioning and how to secure funding. For more information, visit the Digital Product Strategy Series page.