The third blade of the Windmill Theory within Powered By Change (PBC) is the Product blade.
This blade is about what is produced by people with purpose. It is the answer to the question of why the company is developing something and what it is doing. Product encompasses both products and services that a company offers. For simplicity it’s referred to as Product. The Product blade is the vehicle through which organisations monetise ideas and inventions. It is the execution of an idea that leads to revenue or income generation. It is vitally important as idea’s are cheap but execution is everything. If an idea cannot be executed, there will be no monetisation.
This monetisation aspect requires several principles to hold true. Firstly, the product needs to be suitable from an internal perspective. That is, there needs to be an alignment of the offering with the company’s elevated and specified purpose. If this internal suitability does not exist then it doesn’t make sense to offer the product. Secondly, there needs to be a feasibility fit. That is, the organisation needs to have, or be able to acquire, the resources, skills and technology to be able to execute the product. This also necessitates the company having the processes in place to enable execution. Thirdly, there needs to be a product-market fit. That is, the offering needs to be desirable. This means that whatever a company is offering must fulfil a need in the market. This is usually resolving a mess or a problem. If there is no market the product won’t sell. Finally, the product needs to be viable from a financial perspective. There is a need to be able to sell the product at a price people are willing to pay that must be considerably lower than the cost of making the product. Consideration should be given to the type of business model that is most appropriate to do this and how that decision impacts on profitability. Combined, each of these four principles draw on all the blades in the Windmill Theory. Therefore, it is important they are all operating effectively as the outcome is reduced revenue and profitability. Within the Product blade itself, the toolkit is designed specifically to address this issue.
The Product blade is a reflection of how companies innovate and draw inspiration for products, drawing of course on the findings and outcomes of the other blades. It is important to note, that a product is essentially an avatar for a service, which in this sense means an outcome. This means that utility is only derived from a product once it is used to derive an outcome or benefit. Therefore, products and services are vessels to create utility. When a product is not in use, it provides zero utility or value. Therefore, it is vital to ensure when a product is used it delivers value in spades in the most simplest and understandable way possible. If not, people won’t continue to use it. Again this goes back to the third principle outlined above of desirability. Therefore, in creating product offerings, it is important to always ask what mess, or problem, is it solving and how will this make people’s lives better. This provides the inspiration to create and innovate then offer what the company does into the market.
The Product blade helps to mould all of these elements together through its interoperability with the other blades in addition to its own three sub-blades which are complementary and equally important. These are:
- Candle versus Mirror – understanding how products and services are offered in the market and reflects the type of commercial relationship with customers
- Transposition – the curiosity to look for inspiration in business models and innovations across other companies and industry verticals that could be applied to their products
- Mess Finding – identifying messes that need to be fixed because where there is a mess a market exists
It’s important for the Product blade to be effective because there are consequences in terms of organisational financial viability and sustainability if it is not. It is through offering products to the market that a company generates revenue and profit. If the Product blade is not functioning effectively this can manifest in the following ways:
- No product to sell (unviable company)
- A suboptimal or even wrong product is being offered (i.e. no product-market fit which means it is not solving a mess or delivering utility)
- The products don’t align with the company’s purpose and don’t make sense (i.e. no internal suitability)
- Lack of innovation and speedboat activities and too great a focus on oil-tanker activities (jeopardises long-term success and impedes the ability to pivot and change)
- Inappropriate business model (unviable product)
All of these issues ultimately impact on the company’s bottom line. The end result will be a lack of revenue or bankruptcy.
From this perspective it makes sense that company’s invest the time and energy into ensuring the Product blade is optimally operable. Long-term survival is dependent on this blade being effective. If the company is not innovating it will not be able to adapt to change and use it to drive the company forward. Change comes from many forces including: changing consumer preferences, technological advancements, economic conditions, regulatory changes, competitive forces and, as has been recently highlighted, health related issues. Having the product blade operating effectively will enable businesses to utilise such changes for innovation to foster perpetual success.
Product is all about how companies innovate to grow, transform, improve and change or don’t. The concept of innovation is not a recent phenomenon. In fact, it has existed since the dawn of time, in different ways within nature. For humankind, arguably one of the earliest inventions was fire on demand. As with so many inventions, much of what is created can be used or abused, so there is a choice to be made between use and abuse. There needs to be a balance between how we can use things in a good way and the risk of what can go wrong. This is true also for the fire on demand example, which is balancing how fire can be used to cook food making it more digestible versus ensuring people aren’t burning themselves. It is a good reminder that what is produced has consequences.
Often when set out to fix something with a new product, other problems are created that need to be addressed. It’s a falsehood to think that once one problem has been fixed, we can stop and avoid even realising the new messes that have been created. There’s no finite point in invention. Rather it’s an iterative cycle of betterment and improvement. There is a need to have a mindset of “what are the consequences of what we are doing?” And to identify how we can continually improve so the new messes created are cleaned up along the way. Everything inside the product blade has that balance and help to carefully structure the choices of what is being produced.
The PBC solution has been designed to specifically facilitate the creation and execution of profitable products that fuel innovation and deliver value.
- Product is about what is produced by people with purpose.
- Products are the vehicle through which companies can execute on their ideas and innovations, provided those products are suitable, feasible, desirable and viable.
- Consequences of an ineffective Product blade are reduced cash flow leading to insolvency. Therefore, it is essential this blade is optimised.