Systems vs Products

Yesterday night I was at the Silicon Valley Product Management Association(SVPMA)'s monthly meet and had the opportunity to hear Adam Richardson from Frog Design speak about managing Systems vs Products. Frog Design is a strategic and creative consultancy, which works with companies to design product strategies and designs products for their clients based on those strategies.

The main topic was about the management of the technology eco-systems(the technology eco-system around technology products), rather than just the products themselves. Let's call these eco-systems "System "

Some key take away from the talk were

1. It is not about a product in isolation anymore. These days systems matter more or aw well as products sold in isolation.
2. Systems are hard to manage because they are abstract. Most products ( at least the physical one or those with some form of UI) are tangible - Whereas the eco-system around a product is abstract.
3. Systems are hard to manage because they cut across organizational boundaries and functional business units. In other words, a slightly dictatorial approach to building systems works better than the democratic approach. Steve Jobs and Apple are a great example in this regard. Without Steve Jobs, the various functional units inside Apple could not have collaborated to build such a good eco system around the iPod.
4. Since managing systems is harder than managing products, a company which does it right has built a great barrier to entry. The iPod has built such a good eco-system around iTunes, Mac, music and cool marketing that it is hard to replicate that experience easily.
5. Product Managers should ask themselves what sort of organizations they are in , in order to pull together the various functional units- top-down vs bottom-up, faith-based vs proof-based organization really matters.
6. In the early stages of a market, when the user experience has not been standardized, you can have a closed system with high margins. However, once the user experience becomes standardized and the market matures, open and modular systems tend to work better and your profit margins fall. And at the far end of a mature market i.e. when the user experience of your product overshoots the expectation of the market is when you run into the Innovators' dilemma.
7. All the stages mentioned above are fuzzy i.e. think hard about what stage of the market you are in.
8. Feed the system vs product mind set right into your MRD, at the very earliest stages of a product development. Once it becomes a PRD, it is very hard to change the product mindset to a system mindset. May we should call this a SRD??

In essence this was great talk.
Thanks to SVPMA organizers/volunteers who made this happen.