Digital or traditional

When I wrote about what is a software product, I mentioned different ways we can categorize software products. In order to categorize a software product we can look “to the way that the product is delivered to users (online, offline, web, app, embedded), or according to what it does: e-mail, e-commerce, payment, e-mail marketing, content management, education, communication, collaboration, reports, entertaining, operational system, ERP, CRM, etc. Another way – my favorite, because puts the user in the center – is to look and categorize products according to for whom it solves the problem. From this point of view, we can have three types of software product: for end users, for companies or mixed”.

These categorizations have a direct impact on the daily work of the product manager, i.e., different types of products require different types of product management skills. Managing an ERP is different from managing an e-mail marketing product. Managing an online product is different from managing a mobile app product. Managing a consumer product is different from managing product for companies.

Most recently I realized another way to categorize not only the software product but also the company that owns the software product and this categorization has a HUGE impact not only on how a product manager manages her product but also on the role of the product manager in the organization that owns the product.

Digital companies

We all know digital companies. Google with its main product, Google Search and GMail. Amazon Web Services. Facebook. Instagram. WahtsApp. SAP. Salesforce. Zendesk. The companies I worked for (Locaweb and Conta Azul). All of these companies sell their software product to their customers. The product is the core of the company. If there’s no software product, there’s no company. Can you imagine Google without Google Search software? Or Instagram without the Instagram app? Or Zendesk without Zendesk software?

In these companies, product management is the core of the company. Product management is responsible for defining a good portion – if not all – of the vision and the strategy of the company. The role of the product manager in this company is central.

Traditional companies

In the other end of the spectrum, there are what we can call the traditional companies. These companies sell product and services that are not software. However, all of them are in a way or another passing through some sort of digital transformation, i.e., learning how to use digital technology to improve their business. Examples of improvements that can result from the use of digital technologies are:

  • enhanced customer relationship.
  • data gathering and insights.
  • innovation through rapid experimentation.
  • increased process speed and quality through automation.

I’ll give some Brazilian examples but if you know other worldwide examples, feel free to mention them in the comments. Itaú, one of the biggest Brazilian banks founded in 1924, is investing a lot to become digital, with internet banking and their app. From time to time they launch TV campaigns to show this transformation. Itaú is 91 years old. Magazine Luiza, a physical retail chain founded in 1957, has also been investing a lot in its digital presence. They are well known in Brazil for their online presence and their app.

Other good examples of traditional companies investing in digital are airlines and hotels. They have websites and apps so customers can buy tickets, make reservations, interact with their customers.

In traditional companies, their product or service exists, and probably existed for a long time without digital technology. Executives and shareholders are beginning to understand how digital technologies can impact their business and are investing in digital transformation. In these companies, software product management is an enabler, but it is not the core. Normally is part of a team named “the digital team”. Product managers will have to earn their space, showing how technology can impact the business.

The third type of company: born-digital traditional companies

These type of companies have traditional product or services that can exist without technology. However, since they included technology since their beginning as a strategic capability, they look like digital companies.

Everyone considers them as tech companies and, in a sense, they are. Technology is at the core of their strategy. On the other hand, when we take a closer look, their product is not technology. Their product is enabled and potentialized by digital technology. Amazon’s products are goods (books, computers, cell phones, etc.). Netflix and YouTube’s product is video content. Spotify’s product is audio content. Airbnb is an advertisement business that generates leads to the advertised houses being offered for rent. Google Adwords is also an advertisement business that generates leads to whatever product or service is advertised. Nubank, a Brazilian digital bank, offers credit card and bank account services like any bank. Uber and lyft main service is transportation. Rappi, a Colombian delivery service, and ifood, a Brazilian food delivery service, are what I just wrote, delivery services. And Gympass offers access to 42k+ gyms and studios network.

Traditional born-digital companies

Their products are not technology. Their products are not software. Digital technology and software enable and potentialize their products. For this reason, product management is very important but is not central to the definition of the company vision and strategy. Product managers will have a very important role in defining and executing the company vision and strategy, but they will not have a central role.

Summing up

There are many ways we can categorize software products:

  • How they are delivered: online, offline, web, app, embedded
  • What they do: ERP, e-mail, collaboration, entertainment, etc.
  • Whom they serve: end-users, companies, hybrid

And all of them have a direct impact on how the product manager performs her job. However, besides looking to the product itself, the product manager must understand the nature of the company who owns the software product, since this will have a direct impact not only on how the product manager performs her job but also on her role within the company:

  • digital: product management is responsible for defining a good portion if not all of the vision and the strategy of the company.
  • traditional: product management is an enabler, but it is not the core. Product managers will have to earn their space, showing how technology can impact the business.
  • born-digital traditional: product management is very important but is not central to the definition of the company vision and strategy. Product managers will have a very important role in defining and executing the company vision and strategy, but they will not have a central role.

Digital Product Management Book

Do you work with digital products? Do you want to know more about how to manage a digital product to increase its chances of success? Check out my book Product Management: How to increase the chances of success of your digital product, based on my almost 30 years of experience in creating and managing digital products.

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