The Paradox of Product Service Management: Bridging the Gap between Traditional Service and Modern Product
The concept of an oxymoron, as defined by Merriam-Webster, refers to the combination of contradictory or incongruous words. Examples include “deafening silence” or “bittersweet.” Similarly, product service management can be seen as an oxymoron, as it combines the traditional conceptions of product and service. The distinction between tangible products and intangible services becomes blurred when they can be consumed simultaneously within the same software or app.
The Blurred Lines between Product and Service
As technology continues to advance, the lines between physical and digital products have become increasingly blurred. This has led to a shift in the way we think about product and service management. The traditional product operating model, which focuses on selling digital goods, is no longer applicable to digital services. Instead, we need to adopt a new mindset that takes into account the unique challenges and opportunities presented by service product management.
What is Product Service Management?
Product service management, also known as service productization, involves extending the product operating model to a service business. This means applying a customer-centric approach to value delivery, typically used in digital products, to uplift services. Product managers in service companies often don’t have a specific title, but they work closely with engineers, designers, and business stakeholders to deliver value to customers.
The Product Operating Model: A Cohesive Set of Practices
The product operating model refers to a set of best practices in product management, demonstrated by successful tech companies. It involves bundling everything we understand as indispensable to perform good product management, including discovery and experimentation, data-driven decision making, lean and iterative thinking, and customer-centric thought.
The Key Differences between Product and Service
The main difference between product and service is the level of human involvement in the value delivery process. Products, even digital ones, rely on the user to extract value, whereas services rely on at least two people: one providing and another consuming. This fundamental difference leads to a series of discrepancies between service product management and regular product management.
Tech Isn’t at the Center, People Are
In service companies, the core value is built on top of providers’ expertise, rather than technology. This means that people, such as teachers, doctors, and creatives, are the ones who earn the company’s money. While technology and user experience are still important, they take a backseat to the provider’s expertise.
Service Providers are Users as Much as Clients
In service organizations, providers are users as much as clients, and their needs must be taken into account. If providers are unhappy, they will walk away, and the value delivery loop will be broken.
Exponential Growth Isn’t Always a Good Thing
Unlike products, services don’t scale as easily. You can only stretch human providers so thin before you lose your capacity to deliver value. User growth must always be in tandem with either provider growth or an increase in provider efficiency.
Preparing Your Service Business for the Product Operating Model
To successfully apply the product operating model to a service business, three key changes must be made:
Standardizing Your Offer
Services can only become subject to product rules when they have a concrete, observable manifestation. This means creating bundles or packages that abstract all the customization your service proposal can encompass.
Undergoing Digital Transformation
It’s impossible to apply digital product practices to a service that has nothing to do with digital technology. Digital transformation is about putting tech at the center of your strategy and making the business revolve around it.
Creating an Active User Base
An active user base is essential for measuring the success of your service iterations. This can be composed of subscription users, renewable client contracts, or a structured pipeline of one-shot consumers.
By adapting your service to a lean mentality, you can iterate and learn with experimentation, making the best decisions to maximize value delivery. Product service management is a people-first tech business that is poised to succeed in an increasingly digital world.