In this video, I'm going to talk about the product portfolio and the importance of why you need to understand what products you have and what price model you have for them.
Hi Matts Rehnstrom here, Shaper of Business Excellence. Welcome to this series where I'm going through all these important business components and the relationship between them. Why? Because if you could understand them and the relationship between them, then you can start working with them. And then you will excel as an organization in each and every one of these components which will help you take a huge leap I would say to business excellence.
Because all these are important for you to be excellent in your business. We have been talking about a lot of these green components that are higher level components where the management top management team are involved and maybe the board as well, with business idea and strategy and strategy goals and all of those high-level things.
And those are very important for the high levels of the organization to understand and to work with. And what those components give us is clarity as these high-level concepts of the business idea, strategy and strategy goals are communicated down to the lower levels of the organization.
So people working with the details understand the big picture and the big WHY and how and who and all those questions. In the last video, I talked about the business model and if you haven't seen that video, by the way, you can always find it here on my blog. So you can catch up if you haven't seen them before.
Anyway, in the business model, I talked about the value proposition and the importance of having an understanding of what it is that you deliver. What value you are creating and that value we talked about as well in the business idea, but now we talk about it in the business model and we dovetail it into what I'm going to talk about today then.
And that's the product portfolio. If you open up the product portfolio you will see that it contains all the products you have and it may have several layers of products. You also know then what to charge for each product and also, if you're transparent with the product catalog, your clients, then know what to expect.
And that is clarity as I said, you are transparent. So it's clarity and clarity gives us peace of mind because now they know what they can ask us for and we know what we should deliver or can deliver to them.
In the clarity matrix, which is also another video that I had earlier, we talk about the importance of having clarity in order to have e peace of mind and then to be able to focus on the details in our business and to excel in those.
I see too many organizations that don't really know what their product catalog is all about. It could be either that they don't really understand or they have never thought about it.
They, of course, they do their thing every day because they deliver their value to their clients, but they miss a lot of things. They leave a lot of money on the table or they miss a lot of services that they could offer their clients because they haven't gone through in detail all the products that they have.
That is one way I see that you don't really understand your catalog because you haven't listed it. The other way is what I'm seeing is that they have too many products there. It's chaos because the list of products just goes on and on and on, and it's not built in a structured way, which means that neither you or the clients know, what can I order?
It's like going into a building and saying, "Okay, what services can I get here and what can I buy?"
And if you don't have that clarity, then the customers can't have that clarity either. So you need to begin with having your clarity. You need to make sense of everything that you do and then you can tell the clients what do you can do for them.
The other thing that I see is that people don't really understand the concept of products and as I divide products, yes, to make it easier, I divide products into a service.
A product can be a service, so the service is where I do something for someone. It could be within elderly care for example. I go home and I helped the older person with whatever they need, take a bath, cook food for them or helping them, cleaning their kitchen or whatever service they need.
If you call me and I gave you an answer or if you email me and I gave you an answer that is also a service. Teaching is a service.
But the other part of the product could be goods, something tangible, something that I give you. So in education and training for example, then I might give you a book. I might give you a folder that is goods because it's hardware, you can touch it.
And for elderly care goods could be a pressure mat that someone has or it could be an alarm clock, not an alarm clock waking them up, but an alarm on their wrist where in an emergency, you press it and get help.
That is goods because now I give that to them and the services to maybe tune it so it works. Tell them how it works, but the hardware, the alarm on their wrist, that is goods.
So now you understand then about the service and goods and that brings us to that a product can be then both service and goods.
For example, if you go to any restaurant and you're going to have lunch, then you have both a service where you can order food and they deliver the food to you. But also the food itself, does it taste well or not? So that is the goods.
They deliver the food but the service is how they present it to you. So for a fast food restaurant, for example, you have the service, it could be quick, it could be nice and the food could be good as well, hopefully.
So this is what I divide then when I'm talking about a product and that is what you need then to do in your product catalog. You need to first of all identify what services do you have, what, what a goods do you have, and then you create the products out of it.
Because as I said, serving someone food is both serving and food, which means that it's a combination of them both. I don't pay $10 for the food and $5 for the service.
But otherwise, it's not in the price table. You can’t see, okay, this is what it costs, this is the food and if I want to have good service, I need to pay for it. If I don’t want to have bad service, I don't pay for service.
That is not how it works because the restaurant has made its choice about this is the level of service we should have. So that's why service is included in the product then.
And the product also contains the goods, the food. So you need to go through this and identify all of these services and goods that you have and bind them together if necessary, into products and then also be clear of how you charging for them.
Is it something that I can just buy? I can buy this and it costs $10 or 10 euros. Or is it something that is just coming along? So if you do this, you get this, or if you have already paid this much for a yearly service agreement with us, you have it. We have a yearly service agreement and then you get this, this, this and that.
So then by understanding your product portfolio, you will understand what you can deliver to whom and what price you have for it, what offer you can make. With that said, then we're moving over to the next component in the next video. And if you'd like to have a copy of this poster, you can have it for free just by clicking here and it will take you to a page where you can download it.
And with that, then let's go and shape our business for excellence.
Matts helps Business Analysts, especially those who work in government administration, to design efficient and high quality business processes for their clients so they are able to deliver value in a sustainable and transparent manner. With over 20 years of advanced business process design in both IT and government, he can show you a simple ‘Business Excellence’ formula which dramatically reduces the time required to design a process as well as ensures it is created in a way which is optimized for the people who actually do the work. The health of the business and the people working in it is always at the forefront of how I help business analysts design their processes. ➔➔If you are a business analyst who wants to ensure you deliver the best possible outcome for their clients (especially if your current project is not running perfectly according to plan!) then Matts can help you.
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