„Being product-led… is about differentiation, learning and problem-solving, … and moving teams closer to the “edge” — the users and customers.“ (John Cutler, Amplitude)
When I first rubbed shoulders with the tech industry as a student in the Silicon Valley in the 1980s, most of the companies were thoroughly engineering-led. Driving the cutting edge of technology, building moats around their franchises with IP. Mass adoption however was slow or failed altogether (anyone remember the IBM PC Junior?). Engineering-led companies typically have a high cost of sales and tend to face profitability challenges.
Joining Apple shortly later, I saw, starting with the invention of ACT!, Customer Relationship Management (CRM) give rise to sales-led companies, where upsells and regular renewals became key business drivers. Products in sales-led companies were and are often still tech-driven and complex, so convincing customers remains hard work. Sales cycles are, more often than not, long and what there is of customer focus is achieved by means of customisation. Which in turn has a tendency to create tech debt and costly complexity on the part of the vendor…
The rapid adoption of the internet brought about marketing led-companies. At Dell, for example, we already started in the late 90s to optimise web site content (the order we presented products in had a massive impact on sales!) and pore over customer data in order to drive conversion and reduce customer acquisition cost. With the internet’s transparency becoming the great equaliser, competition has become intense for these companies. Understanding and focusing-on user- and customer behavior makes all the difference.
The advent of the smart phone, the resulting consumerisation of IT, as well as Lean Startup methods and in particular Dave McClure’s seminal 2007 „AARRR – Startup Metrics for Pirates“, finally produced a new breed of product-led companies. Firms like Zoom, Slack, Figma, Pendo, or Productboard are characterised by data-driven user research and -analytics to fuel a product development that optimally monetises user value and helps scale effectively.
Successful digitalisation is all about user- and, by extension, customer value. If customers fail to perceive value in a product, they defect faster than ever. According to Blissfully’s (2019) SAAS research, 39% of mid-sized companies changed on average 28% of their software stack between 2017-2018 alone.
Product-led companies therefore do not respond to user problems after the fact. Instead, they rely on actual usage data to help anticipate where in the product journey users are likely to get stuck. Product-led organisations ensure that everyone and every part of the company is focused towards delivering as much value to its users as possible – with every iteration.
Learn more about why being product-led matters:
Projects to products: What it means, why it matters
– Anthony Crain explains why P2P is the critical factor for a successful digital transformation
How to Spot a Product-Led Company
– Michelle Yeck discusses why most successful long-term businesses are “product-led”
Looks like the weather is switching back to summer. Time to get my bike out of the shed…
Enjoy your weekend!