🔱 #7 - Importance of Vision, Organization Maturity
Also, Apple might be launching a new subscription service (raking in billions)!
Hello Fellow Learners!
Last week, as I was talking about ‘Scaling Products’ at an internal tech talk, I was asked an intriguing question. I answered it, but I felt that I had not done proper justice to the question.
The question was: "If an organization is actively listening to their customers, but doesn't have a compelling vision, why does it not have a Product Market Fit?"
As preface, you should know is that I was talking about this Product Market Fit Framework for identifying organization type:
If you see closely, you’ll find that the bottom right quadrant is focusing on the customers, something we’re all told to do — everywhere we go.
How is it that they do not have PMF? There is a product that they’re building and it’s meeting up to the markets needs. They should obviously have PMF.
Vision and TAM
We know that a vision is something that an org plans to achieve in the coming 5-10 years. It decides what the organization will do to achieve that vision. A.K.A, what the organization won’t do, if it comes in the way of the vision.
TAM — Total addressable market — is the total potential customer base. It’s all the customers your products could have, today. TAM is used to determine if your product is a niche product (catering to only small segment of the market) or a general use product. It’s essential to know this because the larger the TAM, the larger your savings through economies of scale. Subsequently, smaller the TAM, the higher your costs.
Now, let’s understand how the organizations in the bottom right quadrant work. I’ll explain with an example, ridiculous as it may be:
You start a birthday party organizing company that caters to ONLY people turning 30. Your vision is - “No one should have a bad start to turning 30”.
Now, when you start out in your community/area, this is a good proposition. Every month you have a handful of customers — their tastes are fairly similar. You can keep the price down to COGS + 30% margin, since you can limit the number of packages to 2-3. This allows you to purchase things in bulk, make adjustments to contracts to get a better rate for yourself and negotiate better rates for freelancers to join you full-time.
As phase 2, you expand your operations to a nearby community/area. Uh-oh, the demand for custom parties is going up. People are asking for more and more complicated concepts for their party… it takes you a while to adjust to the demands, but you add more package to account for the market needs.
Now, here comes the kicker — your margins are spreading thin. There is inventory and people on hand who’re not being utilized efficiently.
You see where I’m going with this. The more areas that you expand to, the more changes you’ll have to make to your business.
That is, while your customer engagement is high, your product is getting split and the business is on the verge of collapse.
Therefore, even if an organization is actively listening to their customers, without a strong vision statement, they’re bound to become a projects company.
As your customer base becomes bigger — the ability to differentiate signal from noise can only occur if you know what a signal is… i.e. if you’re tuned to a particular frequency. That frequency is the compelling vision. The broader (hence unconvincing) your vision, the more ‘signal’ you get from the market and hence more noise. Alternatively, more defined (and hence compelling) your vision, the finer your tuning and hence, lesser the noise.
In summary, the reason an organization, that lacks a compelling vision statement but actively listens to their customers, is that they're only getting a Product-Solution Fit. PMF also requires business viability - because without it, you won't sustain the active listening for long.
Maturity Model(s) for assessing the need for Product Management
Some of you might have already read this, but this weekend, I prepared two maturity models to assess when an organization should be ready for Product Management. As it stands, some orgs do not really need a Product role - depending upon where they fit in the maturity model(s) and the PMF mapping.
You can read more about that here: https://rkakodker.medium.com/is-your-organization-ready-for-product-management-8fa7fdc0949c
Apple planning to offer hardware subscription services
Sources inside Apple are claiming that the hardware giant is planning to start a subscription service for iPhones.
From a product view, that’s a great way to ensure that people sign up for Apples’ subscription services (Apple One) and ensure a recurring revenue.
I predict that this will allow Apple to slow down their roll out of Apple hardware - the constant need for creating new devices has taken toll on Apple’s innovation abilities. By giving more value on the software side, Apple will continue to be number 1 on customer satisfaction — parallely ensuring that there is a steady stream of revenue.
Let’s run the numbers:
There are about 900 million iPhones in the world. Even if only 20% of those (180mn) sign up for the service, Apple can expect a monthly revenue of $9bn (at $50 p.m) or $108bn. Contrast that with $191bn Apple made from iPhone sales alone in 2021.
That’s nearly half the revenue they make, just through the subscription. Also, the subscription allows them better control on the supply-chain - guaranteeing volumes through the subscription.
There is also the environmental effect — sustainable technology development can be sped up with Apple knowing that revenue is guaranteed.
Though, like most other Apple rumour, this may be nothing. However, I really hope that Apple goes ahead with this — purely because of the fact that it will help innovation and save the environment.
Alternatives to Pagination on Product-Listing Pages
If you’re in ecommerce, you know one of the biggest debate is on deciding the length of the product listing page. Do you go with pagination or infinite loading?
The folks over at NNGroup have done a brilliant summary — with an expected ending: your mileage may vary.
Check it out here: https://www.nngroup.com/articles/alternatives-pagination-listing-pages/.
Product Thought of the Week
Thank you for reading! Hope you have a lovely week ahead!