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Friday, November 25, 2011

Product Focus

7:24 PM Posted by Deepak Nayal No comments
One of the top news of the technology world doing rounds nowadays is Google's consolidation of its product portfolio. This consolidation is the brain child of its new CEO, Larry Page, who apparently got this advice from Steve Jobs himself. Jobs was the master of consolidation. While his competitors used to release a plethora of products in the market, Jobs used to work on just a handful. For example, while the existing leaders of the mobile phone market had dozens of models in the market, Apple put its weight behind just one, which eventually ended up changing the dynamics of the industry. 

This brings us to the key advantage of consolidation and the reason that Google is killing all these projects - focus. While one can argue that by working on all these projects Google was putting its eggs on multiple baskets and investing in future, the increased threat from the much more focused competitors, such as Apple and Facebook, required the search giant to pick its battles carefully. 

In the software world, the problem that comes up due to lack of focus is bloatedness. Almost all of the old guards of technology, such as IBM, HP, Oracle, SAP, and Microsoft, suffer from this problem - be it product portfolio or product features. It does not take a business degree for someone to understand that by consolidating the product portfolio, a company will have more resources (time, people and money) in hand to work on lesser projects. This will affect the product in every way, from product development to marketing. I think the reason companies such as the ones mentioned above become so bloated is that it is the easy thing to do. Just keep adding features to your product and keep upgrading the versions. I am not against adding features to products or increasing the product portfolio, as long as that does not come in the way of user experience, if not improve it. 

The best examples of bloatedness can be found in the enterprise software market. The truth about such products and packages is that their customers buy them not because they want to, but because they either already have a lot of investment in the older versions or there is a lack of other players with proven track record. The cost of moving on to another vendor is high. However, the consumer market is a different ballgame altogether. Consumers do not have much, if any, baggage to carry, and do not hesitate in switching vendors. This is why in the consumer market - unlike the enterprise software market - the current install base or past achievements do not matter. You might be the dominant market player in one year, and scrambling to save your declining market share the next. A better product, even from a small company, with the help of good marketing can easily prove to be a threat to an existing leader. This makes innovation very important in consumer market, and innovation demands focus. It is much harder to try to innovate on ten things than it is to on one or two. Hence the portfolio consolidation and the focused approach to product and portfolio. All current technology pioneers - Amazon, Apple, Facebook, Salesforce, Twitter and Google - either already practice this focused approach or are trying to get there. 

It is this product focus that plays in the favor of startups as well. As companies grow, they become victims of their own success. Their big size and huge budgets actually start working against them. It sounds like one of those karate lessons of using your enemies strength against them, but if you look at the technology industry, it is very true. Their big sizes do not allow them to focus on niches. Microsoft might have a huge collaboration software division with hundreds, if not thousands, of people working on the next release of their heavy duty collaboration software suite. But a small startup (such as Box.net or Dropbox) with a focused offering can still carve its own niche and be successful. In fact, startups have been playing this 'focus' card now for almost as long in the past as one can recall. 

Focus is important but also very hard to practice. A focused approach towards product development can prove to be a matter of life and death for a startup, and lack of one can lead to downfall of a market leader. Looking at Google's management restructuring and rearrangement of product portfolio, it seems that Google has finally got this message. And looking at Google's past, I am certain that they are also very capable of executing this focused approach much better than a lot of other companies.

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