Member Prem Uppaluru Speaks: Be Careful About Switching to Product Business

The Challenge:

The case at hand was brought to a recent Alliance meeting by an Alliance CEO whose consulting company was considering whether to create a successful new product or transform itself into a product company.

If you were in this situation, what would you do?

Service companies have to watch the temptation to get into the product business. To be successful, start with a product manager who knows how to define and go after different markets.

We have known each other for over two years and I know that you have deep expertise in your field. I also know that you are a very smart and pragmatic leader, and that the temptation to go into the product market is not personal. It feels like something your company can do. But I have to caution you, there is a big difference between selling services versus selling products.

Service companies listen to their customers and try to help them with a customized package application. A product company, on the other hand, tries to fill a need that is underserved by an entire marketplace. It's about understanding markets, not individual customers.

The problem is that service companies generally do not do marketing or product management. Yet these areas are critical for product companies. If I were in your shoes, I would hire an experienced product manager. "My" product manager would identify the features and functions the market needs and how to deliver my products to each market segment. This will require different channels, ecosystems, messaging and marketing programs, because these things are not the same for all market segments.

Service companies have to watch the temptation to get into the product business. It can be done, and you certainly have the skills and expertise to make it happen. But you must be careful, and to be successful, you must start with a product manager who knows how to define markets and go after market pathways.