How to develop a new product or service offering

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Mark Brinda, David Mortlock and James Dixon of Bain and Company write in this article about how forward looking tech firms are moving to a customer-centric approach to delivering new products and services called Offering Management (OM).

The line between products and services is blurring. Is it a product? Is it a service? Or is it both?

Perhaps it’s simpler to call everything an offering.

The basic principles of creating a new offer, however, are simple.

We design an offer, work out how to deliver it to customers and then get feedback and respond, improving the design of the product.

Traditionally, organisations worked out what they could do well, packaged that up into a product or service, and marketed that to customers.

This requires a combination of systems, processes and training – a number of individual pieces that need to be brought together.

All too often, however, we end up with a collection of pieces that don’t actually deliver an experience that the customer values.

The problem with this approach is that it starts with thinking about what we do first and of customers only later on in the process.

Offering Management tries to change that.

It keeps the same Design-Deliver-Respond development cycle, but asks product managers to engage with users much earlier in the process.

Rather than first making something and then asking whether a user likes it, this process suggests that we talk to users, find out their needs and then design the offer around meeting those needs.

It seems obvious, really, but many organisations just don’t do this.

They stick with the mousetrap fallacy – build a better mousetrap and the world will beat a path to their door.

The Bain study shows that organisations that manage their offerings well outperform their peers on a range of measures.

Organisations like IBM are establishing new roles and practices to create Offering Managers – individuals with responsibility to drive not just design but the entire customer experience cycle, from managing how the offer is going to be delivered and collecting and pushing for revised designs based on feedback.

The acid test for a new offer, according to the authors of the study, is whether we are gaining market share.

If we have successfully designed an offering around customer needs, we’ll see it in the numbers signing up for it.

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