Last week I spoke with a potential customer who read my article, “13 Common PLM Implementation Problems And How to Avoid Them”, and reached out for help.
“We’re having all of the problems you listed in your article, Helena,” our potential customer began. “Can you please help us get it right?”
I agreed to assess how we could help his company and after he gave me some background and explained what they were selling, I asked him, “What are your products?”
“We’re a customer-oriented company,” he said. “Our products are tailor-made for our clients. We work on projects; we don’t have products as such.”
“Why don’t you have products?” I asked.
“Our clients always have special requests, and so we can’t productize our offering.”
I thought it might.
The problem with selling projects, not products
I know far too many businesses that depend on always-different products and project-to-project revenue to keep the lights on.
Their process changes every time there’s a new project, and the people involved in the process are the brain of the operation.
As they provide highly customized solutions, they need an experienced team who can function with a high level of uncertainty from day to day and week to week.
Building and maintaining this type of team is costly and resource heavy, which makes it very difficult to maintain healthy margins. This leads to big challenges when it comes to scaling.
But the most pressing problem with tailor-made products is that it is very difficult to capitalize on the lifecycle value. Forget revenue-adding services at scale – your product isn’t standard, and your services can’t be standard, either.
If your organization is dependent just on projects, you need to define your product first.
Defining your product first
Productization means packaging your solutions in a cohesive and standardized offering of well-defined products and related services.
A productized offering reduces the “chaos” that often happens when “every project is different” and your solutions are always customized for a wide variety of clients and needs.
PLM can surely help you gain efficiency and manage information smartly if you still focus on projects.
But remember the “P” in PLM? PLM is all about products.
The number one reason why Product Lifecycle Management is not working for your organization is that you keep “reinventing the wheel” in every project and always-different products.
Productization is key.
Here’s the deal.. If you want a healthy, scalable, and sustainable business, don’t sell projects anymore. Sell products.
Sell Products, Not Projects: 5 Reasons Why You Should Productize
#1 – Products are easier to sell, deliver, and support.
The more standard and repeatable your products are, the easier it will be for your team to sell, deliver, and support them.
As a project-oriented organization, you probably have a lot of salespeople who love to tailor your solutions to the customer. They’re always selling something different to make the customer feel special and close deals.
Here’s the good news. You can still offer configurable add-ons or options for your products. Your products will be made of standard modules, and your sales team will still be able to put together an offer that makes the customer “feel special”.
By focusing on products and a standard way of delivering them and serving clients, your business can scale and grow easily while your products, at their core, remain the same for all clients.
#2 – Products keep quality and reliability high.
Every “special project” adds potential for a problem to slip through the cracks.
Product quality is an important competitive issue. Quality products help you improve your customer retention, build brand trust, and boost your product’s lifetime value.
When your organization delivers products in the same way every time, you can keep quality and reliability high.
#3 – Products are cheaper.
Tailor-made products that are always different can increase the cost to deliver your solutions, and probably result in a higher price for the customer.
The more variations there are in your offering, the harder it is to work with standard specifications and standard processes.
A common benefit of productization is built-in efficiency at a great price.
#4 – Products make your organization more efficient.
Tailor-made products often involve reinventing the wheel for every project.
I know of many organizations that depend on a few key “heads” who know how to “adapt” the product every time. These people are often close to retirement, and their knowledge is either in their heads or locked in a master spreadsheet that only they can operate.
A productized offering also relies on people. But with productization of your offering, your sales process, the timeframe for delivery, the interfaces between teams, the software you use, and your operations can be standardized.
Because the work method is now defined, your team can focus on the part of the process they’ve been hired to do.
#5 – Products unlock lifecycle value.
Lifecycle value: this is a biggie. Productization helps you focus on services for your best clients and run your business in a more systematic and predictable way.
Lifecycle is at the core of PLM. Without a well-defined product, you won’t be able to capitalize on its lifecycle value.
Shifting from projects to products
Shifting from projects to products isn’t easy.
A product mindset must be baked into your business. Every day, every project, every interaction, every moment.
Breaking away from the way you’ve done things for so long is always difficult, confusing, and risky. But if you’re feeling the itch that my potential customer and so many others have felt with project-specific solutions, then it’s more of a risk to not work on your products.