Introduction: Why product thinking is business-critical
As technology becomes core to more organizations and how we live our lives, customer and user experiences are increasingly defined in the digital realm. Whether in banking, travel, retail or government, it’s apps or websites, rather than brick-and-mortar locations, that serve as the primary point of contact between organizations and those they service.
That means for the modern enterprise, creating a quality digital experience can’t be an afterthought - it’s crucial to successfully delivering products and services, maintaining client relationships and, ultimately, securing revenue streams and competitive advantage.
“Digital has become such an important touchpoint for customers in the way that they interact with businesses, get products and services and maintain their relationships,” says Natalie Hollier, Global Head of Product Innovation at Thoughtworks. “Succeeding is no longer just about who’s able to build the technology, or who’s first to market. It’s about who’s got the best experience.”
Awareness of the influence and impact of customer experience is on the rise. One recent study by Gartner found over 80% of marketing leaders expect their organizations will soon be competing mostly or entirely on customer experience. Other research shows positive experience translates directly into revenue. PwC, for example, found around three-quarters of consumers globally cite it as an important factor in buying decisions, and that it supports up to a 16% price premium on products and services.
Customer experience helps people decide between buying options
Clearly most enterprises recognize customer experience is important. Yet only 22% of customer experience leaders polled in the Gartner study believed they were outperforming in the eyes of their customers. According to PwC, over half of US consumers (54%) still feel their experiences with most companies need improvement.
Another study commissioned by Microsoft, zeroing in on financial services in Australia, found over 80% of firms had experienced the failure of customer experience projects, and that 40% felt as many as 20-40% of such projects fail – often with a hefty price tag attached. So why is creating an effective experience such a struggle?
The price premium of good customer experience
No easy road
There are a number of reasons designing an exceptional digital experience can be difficult. One is that many enterprises are saddled with legacy structures and processes that trap them in an ‘old’ way of doing things, so they’re in essence designing for those norms rather than customer needs.
“The challenge is established organizations have a way of working that becomes a drag on what’s relevant for today and tomorrow,” says creative evangelist and product innovation principal, Jeremy Abbett. “They’re used to doing something one way, and they’ve been doing it for decades. Originally, it was conceived and built on an idea that was historically relevant for its time. Then after a while layers and layers of other people build on it without taking into account the social, economical and technological changes that have occurred, so that the original idea is no longer in focus but instead the process around it.”
“With an enterprise you have an existing brand you need to protect, and customers with existing expectations,” agrees Hollier. “It’s obviously a lot harder to get something new out to test, because you need to work across different departments - sales, marketing, legal, finance - to coordinate getting feedback, even on something very small. So a lot of enterprises shy away from that.”
Another issue is that often, companies simply aren’t good listeners. Executives may be well-equipped to identify compelling marketing opportunities, but aren’t close enough to customer needs or problems to design relevant solutions, so they end up building products or experiences based on their perceptions or a hunch - with mixed results.
“Often we think we know what the customer wants, the value propositions and the products that we should launch into the market, but those often become outdated very quickly,” explains Sarah Sulistio, Thoughtworks Product Innovation Lead for China. “Jumping to building solutions without exploring the customer problem, based on what we think we know about the customer, is when the enterprise becomes rife with destruction. We see it all the time with enterprise clients disrupted by new entrants into the market who have a refreshed and renewed perspective on the customer.”
Breaking out of these patterns, to foster industry-leading customer experiences that stay current, requires a new approach to product design and execution that is constantly oriented toward customer needs and emphasizes constant improvement throughout the product life-cycle. It’s a state of mind called product thinking - and here’s how to cultivate it.
Product thinking principles
Development doesn’t stop
At its core, product thinking involves a shift from the traditional approach to development, where software or products are built to order and ‘handed off,’ to a more expansive, holistic process, defined by continuous ownership and improvement.
Traditional vs. ‘product thinking’ development cycles
“Modern technology organizations or product teams have moved away from a project mindset, where teams are handed down requirements to build a piece of software, get it done and then hand it off to a separate operations team to maintain it,” says Hollier. “Instead, they adopt product thinking, where teams are empowered to own a product end-to-end throughout its lifecycle, from envisioning and discovery through to delivery, and optimization or evolution based on customer feedback. Product thinking recognizes that digital experiences deliver value to customers in the same way that physical products and services do, so they need to be continually enhanced and refreshed to stay competitive.”
Before the product itself comes design - meaning effective product thinking begins with design thinking. In fact, according to Sulistio, “product and design thinking overlap. Design thinking is really about allowing the space to explore problems and find solutions through a process of free and uninhibited inquiry - being able to understand the customer by taking on the perspective of the customer. Product thinking extends beyond that to defining how to deliver, build and shape that product, launching it into the market, and collecting and directing continuous feedback, even if it challenges our understanding of what we may know of the customer - and in doing that, unlocking new possibilities of delivering value.”
Know thy customer
As customer (or end-user) value is the ultimate goal, customer-centricity is the defining characteristic of the product mindset. Most enterprises aspire to be customer-centric, of course, but many fall short of the mark, less due to deliberate neglect than the simple reality of distance.
“A lot of times with big companies, the further you get up the corporate ladder, the further away you are from the front lines, and what customers are actually going to the company for,” says Abbett.
This means many of the people making vital product decisions “are totally removed from the whole customer experience,” Abbett adds. “That makes it difficult for them to understand why they have to invest in whatever might improve the customer experience - in design, a process or in better code to optimize the product.”
Executives typically have no shortage of data (or opinions) on who their customers are and what they do. But, according to Abbett, genuine customer-centricity means moving beyond having just quantitative information on the customer, to empathizing with them, through regular interactions to experience the needs and issues they face. Ideally this allows enterprises to address the needs of customers holistically - an ability Gartner equates with the highest levels of customer experience.
The CX pyramid: A framework for powerful experiences
There’s no better way to get this perspective than requiring everyone involved in the product cycle - from designers to those in the C-suite signing off on development budgets - to at least occasionally serve on the front lines and take on some form of direct customer interaction.
“There are companies where every executive has to work one day a month in the call center,” Abbett says. “Right there on the frontline with other employees, taking calls, they develop empathy for the end-user and gain a better understanding of their customer’s needs, or the problems they face. It gives executives a firsthand, human-to-human view that can be very insightful.”
Data isn’t everything
Similarly, while data on customer trends and behaviors can play a powerful role in a more intelligent approach to development, enterprises can’t forget that data won’t always tell the full story, and needs to be supplemented with a degree of real-world analysis and experience.
“Data can actually turn out to be an inhibitor because it tells you what, but it doesn’t tell you why,” Hollier explains. “Teams that have analytics data or do A/B testing can say ‘lots of customers clicked this button,’ or ‘customers aren’t using that feature’ - but what we often see is that they lack the mechanism on the qualitative side to actually follow up with customers and get richer feedback.”
A major issue, according to Hollier, is that data about a product or service is frequently divorced from the context of actual use.
“Addressing the gaps between design and user experience requires finding out the behavioral needs of the people you’re building tools for, going out and visiting them in stores, at the airport, in a factory, and uncovering the surprising situations or needs that data, surveys or analytics don’t show you,” she says. “Enterprises can become very disconnected from the actual users, and we find it very powerful to bring teams back directly in contact.”
Once solid channels to the customer are established, “a key principle is using those channels continuously throughout all stages of the product lifecycle,” Sulistio notes. “The reason being that customer behaviors can change and evolve over time and at rapid speeds. The combination of both first-person interaction and data around how your customers are using your products help you maintain and refresh your understanding of your customer, ensuring you don’t build products that fail in the market or become obsolete later on.”
Through research on the ground the enterprise may identify customer needs or ambitions that challenge established convention, or point to opportunities beyond its historical or core business that aren’t being served. And according to Sulistio, the mark of a genuinely customer-oriented company is that it rises to the occasion.
“The best market leaders and innovators are the ones that find ways to service customer needs with their digital experience whether those needs are part of their core business or not,” she says. “True customer-centricity isn’t just putting the customer at the center when it pertains to your business and your domain and what makes up your traditional services, but being able to extend beyond that to service your customer.”
"The best market leaders and innovators are the ones that find ways to service customer needs with their digital experience, whether those needs are part of their core business or not."
Sarah Sulistio, Product Innovation Lead, Thoughtworks China
Build for real-world problems
Understanding customers gives the enterprise visibility over the problems they face. According to Abbett, designing and building to address those problems is the best way to keep development anchored to the experience of the end user, and to ensure a product’s eventual success.
“The challenge a lot of companies have is that engineers are trained to have solutions,” he says. “Effective design in general is about identifying the problem, and a good solution is quite often humanity-focused from the start. Figure out what you’re trying to solve for, what the outcome should be and then the potential solution - whether it’s code, more people, or something else altogether.”
Applying the right resources to a customer problem can be a delicate art - particularly given the tendency among many enterprises to institute a technology solution or feature where it may not be necessary or relevant, out of a misplaced effort to keep pace with peers.
“Whenever an industry leader is doing something, it becomes table stakes that other companies are expected to do,” notes Hollier. “It’s hard for organizations to keep up with the pace of technology innovation, but at the same time there’s a lot of tech for tech’s sake. For example, a common pitfall we see is companies wanting to build the same user experience as their existing website on a new medium like voice or mobile, rather than actually realizing the power of that medium and the context of how it’s being used - then designing a new experience accordingly.”
The goal, in other words, should be to “build the right thing,” as well as to “build the thing right.”
The Double Diamond model: Strategy and execution of the right solution
Similarly, if a company is looking to leverage an emerging technology like augmented reality (AR) or virtual reality (VR) to enhance customer experience, “how you use the technology has to be deliberate and intentional, not just for the sake of having something fancy that in reality isn’t meaningful for the customer or driving value,” Sulistio says.
The most successful recent use cases she has seen are in retail and food and beverage in China, where AR, robotics, and AI technology have been used to create highly immersive digital experiences in physical stores or restaurants - from AR playing a role in educating the customer about the brand, its history, and the optimal way to enjoy its products; to robotics capable of creating and serving cocktails in a distinctive, memorable way.
Creating a product-oriented organization
Along with learning more about its customer base, the enterprise aiming to excel at customer experience will need to look within. Particularly at companies saddled with legacy structures, product thinking often requires cultural and organizational changes.
“In a lot of companies that are more traditional in their approach, there’s no room for failure or learning - which are pretty much the same thing,” says Abbett. “Number one, there has to be an acceptance of questioning the status quo - that is, why are we doing this now when there are better ways? Number two, you need to have a bias towards action. If you have an idea and your company culture doesn’t allow it to be put into motion, nothing is going to happen.”
Cultural changes of this scale frequently “have to start from the top,” Abbett adds. “When you try to implement change, it starts when you work with C-level leadership. If they’re not personally willing to change but they want their organization to change, it doesn’t work so well.”
According to Hollier, senior management can set the right tone by creating a dedicated team or division tasked with the digital experience, “and then bringing in a strong digital leader as a way to seed it and spin it up.” At the same time, the number of high-profile ‘digital’ missteps - GE, Nike and Lego are among the big names whose digital units have struggled - show digital leaders need to have product sensibilities.
"You need to have a bias towards action. If you have an idea and your company culture doesn’t allow it to be put into motion, nothing is going to happen."
Jeremy Abbett, Product Innovation Principal, Thoughtworks
“If you take a traditional IT organization and simply rebrand it as ‘digital’ when they haven’t worked in that way before, they may not have the product and design capabilities that are needed,” she says. “That means the customer experience suffers. They might be building new digital products with terrible UI (user interfaces). Or they don’t have strong product management, so there’s no one looking at the roadmap, the analytics, making trade-off decisions and prioritizing. If executives are just telling teams what to build there’s a lot of anxiety and roadmaps can be long, leading to bloated products with a lot of features that aren’t being used.”
“The best product teams are outcome rather than output driven, and that sometimes requires a new operating model that focuses on prioritizing value rather than rewarding for the number of features or products launched into the market,” agrees Sulistio.
Start small and build for speed
According to Hollier, creating an arsenal of product teams that are small and tightly focused on specific goals or features tends to drive more positive results than tasking a single team with a massive transformational initiative, only to see it collapse under the burden of rising complexity and expectations.
“Having small teams means they can move quickly,” she explains. “Each team needs to have a clear mission, and a clear area of ownership where it can actually deliver on a promise of value to the customer or users on its own.”
Building teams that are diverse and cross-functional, blending designers, developers and business representatives, helps make sure that they’re efficiently self-contained and empowered to deliver a successful experience from end to end.
“If you have that cross-functional representation you can design and validate for desirability, viability and feasibility all at the same time, and you can do it much more confidently and quickly before scaling your ideas and your efforts,” says Sulistio.
Functional and cross-functional teams
“Teams need to be autonomous, to own an area where they can release to customers in the market or internal users, get feedback with analytics and user research, and because they own their product roadmap, iterate and evolve the product based on that,” Hollier adds. “They need to be able to move quickly and independently, not wait on 16 other teams to do things before they can get something out and tested.”
The other critical ingredient for successful team-building is a sense of “psychological safety,” says Abbett. “That means if I have an idea, I feel safe bringing it up.”
Teams may be ‘led’ by a product manager but according to Abbett the role is no longer about “someone cracking a whip.” Product managers are increasingly called on to serve as lines of communication with the business and the customer; to distil client or internal feedback into calls to action; and to identify the next big business opportunity.
“If you’re a product manager you’re not just thinking about the product, but also about the marketing, the sales, working with engineering to improve it,” Hollier says. “It’s almost like a mini-CEO, or business leader. You have to be entrepreneurial about it.”
For product teams to be effective, it’s also important that the enterprise removes obstacles in their path. The most common bottlenecks product teams face are bureaucratic.
“Often they’re slowed down by things that are outside their control,” notes Sulistio. “How the organization operates, how budgeting and prioritization happens, how they have to respond to requirements from the business.”
This means expanding the team to encompass, or at the very least communicating with, non-core functions that may be involved in the approval or sale of a product - such as legal, marketing, or customer support - so their concerns or requirements are addressed early. This is one of the biggest steps enterprises can take to promote a more seamless approach to development.
"If you’re a product manager you’re not just thinking about the product, but also about the marketing, the sales, and working with engineering to improve it."
Natalie Hollier, Global Head of Product Innovation, Thoughtworks
The secrets to scaling success
Typically, creating a single team isn’t difficult; nor is creating a small number of teams focused on a single product. But this isn’t a viable place to stop for enterprises that may be dealing with dozens or hundreds of products and services, and needing to create experience at scale. The challenge is building up to tens or hundreds of teams that work autonomously yet are also to some extent coordinated.
“A lot of times companies understand how product innovation works in a greenfield setting, if it’s just one product or app,” Hollier says. “But when it comes to the enterprise setting, where you have legacy technology you need to integrate with, and all these other touchpoints where the brand experience needs to be consistent, and a sales or legal department that has issues with you getting out and testing things, there’s much more complexity that you have to figure out how to deal with.”
Product lifecycle from solution fit to scale
“Where things can start to break down is when you have multiple parts of the organization delivering ideas to market without a unified vision of the customer experience, and a commitment to consistency in value proposition and design principles,” agrees Sulistio. “There can often be a lot of waste and rebuilding of the same things over and over again, in different parts of the organization, before getting it right”
Product thinking at scale requires the management of an entire innovation portfolio, as well as a constant backlog of ideas, with repeatable approaches to experimentation and the ability to dynamically allocate funding where needed, Hollier says. The only way to meet these needs is with a technological platform, infrastructure and design system that enable multiple teams to deliver products to market using (and re-using) the same basic technology foundations and design components.
“It’s not just about creating multiples of the product team or startup model, but putting in place the supporting automation, infrastructure and analytics, and processes that support that at scale,” she explains.
“Where we’ve seen product at scale working really well is having that platform thinking, building the platform foundation for multiple front ends and the quick innovation of products using the same middle layer of capabilities across the entire organization,” says Sulistio.
Providing a consistent technology, process and design foundation for teams to draw from not only reduces redundancy and waste; it also minimizes technical debt and friction, and enhances speed, experience and quality.
Sulistio cites the example of a global carmaker Thoughtworks worked with in China, where it knew it would have to adopt different approaches than those employed in other markets.
“When we first started, we were helping [our client] be a digital leader through delivering and launching products at impressive speeds that were specially designed for the Chinese market, from e-commerce to after-sales digital experience and even services beyond car ownership,” she recalls. “But over time, as we saw the rise of ‘super-apps’ in China and how customer behaviors had shifted, we began to pivot our approach.”
“We designed and delivered an experience where customers could access all services within the client’s ecosystem through a single touchpoint. And we were able to do so by leveraging the platform approach, where front-end teams could start up very quickly and use shared capabilities in the platform without having to build it themselves within their product silos.”
Conclusion: Creating the halo effect
Adopting a product mindset enables the enterprise to innovate and compete in the digital environment while continuing to service existing products and customers - and to ensure consistency and a more seamless experience across physical and digital customer touchpoints. But the impacts don’t need to stop at customer experience, and the benefits can extend well beyond increased revenues or engagement.
“Digital products are so pervasive that employees have the same high expectations that customers have for seamless digital experiences while doing their jobs,” Hollier points out.
That means by also turning the analytical (and empathic) lens inward, companies can design solutions that enhance the experience of employees - or better yet, employees and customers alike, raising the bar for the entire interaction and bringing benefits to all involved.
“Product thinking also applies to building experiences for employees,” Hollier explains. “Examples would include a clerk using an app to help customers check out on the spot rather than having to take them to a terminal; or investment advisors using a portal to visualize information to share with clients in a meeting on the spot.”
Product thinking, in other words, isn’t just about developing better products for customers - it’s a state of mind that applies a more tactical, results-oriented approach to value creation in any domain.
“We see data engineering teams apply product thinking to the data and data sets that they're building,” says Sulistio. “Enterprise and platform architects are treating different services and capabilities as products because they are built for consumption and shareability within and outside the organization. Product and design thinking can be a practice that’s embedded and applied to areas beyond just design and products, to technology and business regardless of whether there’s a front-end experience or even an interface. That’s where the culture shift can really happen - when you can extract product and design capabilities and use them elsewhere.”