Weekend Reading – Utility is the Key to Product Value

“What the customer buys and considers value is never a product. It is always utility, that is, what a product or a service does for the customer.” – Peter Drucker, Consultant & Author

Two weeks ago I conducted Product Management training for a team in a legacy industrial corporation. In the lively discussions during the training, we came to discuss „utility“ vs. „usability“ and how they relate to a product’s „value.“

 Reflecting on this discussion on the long drive home, I came to the conclusion that it’s six components that contribute to a product’s value:

 There are three factors that determine the value of a product to its manufacturer or developer:

• Commercial value – The business benefits: revenue potential, margins, customer retention, etc.
• Strategic value – The alignment of the product vision with the company’s longer-term objectives and purpose
• Effort – The resources required to develop, produce, and maintain the product throughout its lifecycle

 Value to the product’s customers is again driven by three factors:

• Need – The requirement or desire to get a certain job done
• Business benefits – The gain from fulfilling the need of a number of stakeholders minus the cost of providing the product
• Utility – The ease and quality of getting this particular job done

When users are not customers (buyers), utility becomes their key concern because they do not immediately participate in the business benefits.

 Consider this: I recently consulted with a team in a corporation’s IT department. They had diligently worked with their supplier and meticulously adapted a new software product to the business process‘ requirements.

 Yet the mood in the business department that was supposed to use the new solution was rather foul, and migration to the new tool was slow.

 What had happened? The new product was built on less costly and more efficient technology. Hence, it clearly provided business benefits. And after the IT team’s considerable development effort, it also covered the functional needs.

 Yet the new software did not benefit the users any more than the previous solution. The – numerous – users made it clear that from their perspective, there was absolutely no reason to migrate; quite to the contrary. They had to learn a new user interface and change their way of working.

 In short, the new tool did not provide any additional utility. There was no additional ease or quality in getting the job done. The new solution also did not add any new functionality to address any additional tasks of the department.

 We know since Everett Rogers‚ (the guy who brought us „early adopters”, “late majority”, …) work on the adoption of innovations in the 1960s that „relative advantage, low complexity, and high compatibility with the user’s values“ are a key driver of an innovation’s success.

 In short, it’s utility that drives a product’s adoption.

 Utility is the sum of all a product’s functional and experiential benefits to a user. It includes solving the problem or job to be done and the experience while using it to do so.

 Creating a high-utility solution for the particular job to be done by empathizing with users and working with engineers to develop a product as compatible as possible with the users‘ needs and expectations is what designers on product teams excel at.

 For this reason, with their strong belief in 10x improvements as a prerequisite for breakthrough success, many in „Silicon Valley“ advocate „product trios“ as of recently, enhancing the collaboration between a Product Manager (responsible for business value) and an Engineer (responsible for technical feasibility) with a Designer who ensures the utmost utility for a user to drive a product’s development jointly.

 As in every Weekend Reading, here are some additional perspectives on the topic:

Attributes of Innovations and their Rate of Adoption

Chapter 6 of Everett Rogers‘ seminal work „The Diffusion of Innovations“ 

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