Product Development Maturity Curve

We know that technology is becoming part of the fabric of every business.  A successful company integrates technology into their core business, making it a irreplaceable component of how it goes to market.  In this discussion we’ll break down the maturity levels of each company and how technology changes the way it engages its customers.

Let’s break down each stage on the Product Development Maturity Curve, with each being a stage a company might be operating in, or even have products in various stages.

Level 1: Legacy

The Legacy stage is when an organization is low tech, operate an existing business, and deliver it without modernized technology.  In this stage, the legacy product operates unaligned to its customer base.  It is a legacy product that has fading customers… think, Netflix’s DVD service.  There are still people who get DVDs shipped to their house… but every year it shrinks and shrinks.  I do still see Family Video around… even more a Legacy service.  The companies know it is legacy, but there is still an ability to get return from the investment and deliver until it completely fails.  There are even technology platforms in this category, where companies continue to use them, and pay for them, well into extended support.  A few descriptors of a legacy product.

• The customers understand the product is legacy
• The customers are recommended to build a modernization plan
• The revenue is maintained through sustained engineering
• Zero marketing effort goes toward this product

Level 2: Legacy Product

The Legacy Product is when an organization is delivering a legacy product but it is aligned to the current market expectations.  Think Blockbuster when people used to be comfortable renting a movie from a store, watching it, “being kind and rewinding”, and returning it.  The expectation was that this was how you got a movie to watch at home that you hadn’t already purchased.  We all know the modernization story, how Blockbuster missed out, and how even the replacing product (shipped DVDs) eventually became legacy… but, at the time it was the normal way we got movies and there was a whole culture surrounding it.  Going to the movie rental place, browsing, looking for new releases, the box cover itself, and the return slot.  This was just how it was done.  A few descriptors of this stage:

• The product is mainstream
• The product is not disrupting an existing market
• The product can be easily copied with no patent infringement

Level 3: Customer Platform

The next stage is the establishment of a customer platform.  In the case of Netflix it was the positioning of a platform that would provide a new browsing experience in contrast to Blockbuster.  Channeling a truly disruptive innovation, the platform was less feature rich than going to the store.  I couldn’t have my movie today, I needed to ship it back in a way different than I previously expected, and it was a subscription.  However, the experience became the new platform and approach that most DVD renters became comfortable with.  A few descriptors of this stage:

• The product is a “platform”
• Cross-sell opportunities abound but are not fulfilled
• The customers are loyal to the platform experience
  

The Monetization stage is the positioning of new revenue through the customer platform.  This includes building new value streams, increasing customer value, surfacing data, making connections, introducing common users, or providing unique experiences.  The monetization of the platform is made possible because of the platform loyalty and through the adjacent buyer/seller experiences that are made possible.  A few descriptors of this stage:

• The platform has strong loyalty and user base
• Adjacent opportunities are being pulled into the customer experience
• Adjacent opportunities are monetized

Level 5: Disruptive Innovation

The Disruptive Innovation stage is where a product is brought to market that secures a set of customers in an unserved part of the market, often one that is considered inefficient or low-value for the established market.  The product may even disrupt the existing company’s product that is in-market.  Example, what if Blockbuster released a version of Netflix DVD service and started competing with itself?  It is tremendously difficult to compete with your own company.  Disruptive Innovation brings a new product or changed product to market with the goal of capturing a new market.  A few descriptors of this stage:

• The product addresses a market that us under served
• The product releases a platform that is less “feature rich” but attracts a wider group of users
• The customers find the new product more cost effective but better aligned
• The product competes with the existing market on its own terms

Level 6: Industry Changing

The Industry Changing stage is where the Disruptive Innovation completely replaces the existing market and brings a new experience to bear.  The innovation is now not just serving a subset of un-served users, but instead is capturing the market and becoming mainstream itself, just in a completely new market or industry.  The industry changing market replaces the current approach with a new one.  For instance, streaming replacing DVDs, powered by the initial disruptive innovation, then changing the distribution approach, then moving into content as the product.  Netflix started just replacing the experience to get movies, eventually changed the distribution experience, then eventually became a content producer not just a content distributor.  A few more descriptors of this stage:

• The market’s preferred experience has completely changed
• The market would not return to the old experience
• The market opens angles for new entries
• The product serves the market’s new expectations

Cyclical Nature

Interestingly enough, the cyclical nature of the entire process is on display with Netflix lately.  The company that changed the distribution of movies and even its own identity now lives in a Legacy Product which has become generalized.  Many, many content producers have copied the model and Netflix is now simply responding to the existing threats instead of following / defining the new opportunity.  The mantra “it is difficult to disrupt yourself” couldn’t be more true in this instance.  Even companies that commit to that disruption struggle to put enough energy behind it.

Where is your company on the curve?  What are you doing about it?

Nathan Lasnoski