Pros and Cons
I’ve always believed in a market-driven approach to product development. In most cases, I still do. Market driven means you’re building products that customers want to buy. Product driven means that you’re building products then trying to find a market for them. Giving customers what they want makes sense, right? Of course it does, but there’s just one problem – customers are not always good at knowing what they want when it comes to new product categories. They’re great at extrapolating features from existing products to new ones, but not so good at predicting the success of completely new products.
Consumer products companies, and B2B companies to a lesser extent, spend a good deal of time and money trying to determine what customers want to buy. It’s smarter and less expensive to do the homework up front rather than risking the launch of a new product that’s doomed for failure. Steve Jobs surprised many people when he made the statement above about product development, but Apple is one of the few companies that has been successful with a product-driven approach over the last 15 years. The iPod, iPhone and iPad were home runs, but prior efforts like the Apple Lisa, Apple III, Power Mac G4 Cube, and a few others never made it to first base.
Market-driven is the less risky and more sensible approach in most cases. It requires companies to look to current customers, potential customers, and channel partners for advice and feedback that can help them make strategic product decisions. It also requires them to know their market, know their customers, and know the competition in order to filter out unnecessary requests and focus on products that can be successful.
A product-driven approach tries to take advantage of a company’s internal marketing and technical expertise to develop products they think will fill a gap or reach a new customer base. It’s risky, but companies that know the market needs and do the research can develop products that leapfrog the competition. This is where innovation comes from, and, in my opinion, is the only way to make great improvements.
Which Approach Works Best?
It depends on the circumstances. Market driven companies usually benefit from consistent growth and strong customer/partner relationships. I believe that a product-driven approach is a short-term strategy that can move a company forward in big steps, but that successful product-driven companies must eventually transition to market-driven companies for long-term survival.