Monday, July 22, 2019

Product or Service Success Does Not Automatically Mean Business Success

Product or service success does not automatically mean business success
I have written many times about project success, and why I think it must be defined on three separate levels. These levels are:

1) Project delivery success: Will the project delivery be successful? Essentially, this assesses the classic triangle of scope, time, and budget.

2) Product or service success: This refers to when the product or service is deemed successful (e.g., the system is used by all users in scope, up-time is 99.99%, customer satisfaction has increased by 25%, and operational costs have decreased by 15%).

3) Business success: This has to do with whether the product or service brings value to the overall organization, and how it contributes financially and/or strategically to the business’s success.

In a LinkedIn discussion around project success, some people challenged the notion that numbers 2 and 3 are separate levels. They are.

Here are some examples that will to help explain why product success doesn’t necessarily equal business success.

Imagine a new investment product for a bank that has a high margin but also carries a significant risk for the bank, not just the customer. The product was wildly successful and many clients bought it. Many more than expected, which made the risk profile for the bank too high.

Now imagine that this one product is still very successful and is creating revenue and happy customers but it goes against everything that is defined in the new strategy of the company, and this is blocking the company from moving in a different direction.

Or that this very successful product with many happy clients, instead of helping the company to get additional clients, is actually cannibalizing their existing clients.

Or that this very successful new service in the direct business of the company is competing with services offered through partners of the business, and these partners are so pissed that they jump ship and it results in a huge net loss.

All the above are true stories that illustrate how product success can be completely different from business success.

For smaller companies with only one product, or a very small product/service portfolio, you might argue they are similar and very tightly correlated.

But for larger companies with bigger portfolios, I’m of the opinion that product success and business success are fundamentally different. This is reflected in the three separate levels I recommend to define project success.

In a nutshell: Be aware that product or service success does not automatically mean business success.

When you need some guidance on how to define and measure project success have a look at my Project Success Model here or by clicking on the image.

The Project Success Model
Posted on Monday, July 22, 2019 by Henrico Dolfing