Manage product not a function

In today’s corporate environment company comprises of various function/departments. Often innovation and product excellence is  lost when company concentrates on multiple activities such as employe management, product performance and profitability, meet various statutory requirement, maintain various applications and so on.

Top management has a box full of issues, concerns, glitches which have to be dealt with. How could one manage this humungous task of organization management

A different perspective:

Create products as a business unit, make products and service as a profit as well as a cost center instead of an entire function.

Take for examples products such as Mailing, Hosting, Cloud, Security services etc. What if we make each product as center of excellence.

Lets look at how this type of management drill down, case in here “Mailing Product”.

Cost involved to sell each product – R&D (Innovation), People (Salaries), Operations (help-desk costs, Administration costs, Technology , Facility cost, Travel, Infrastructure) etc.

Profit – Revenue-Cost

A dedicated support function (Compliance, Sales, Procurement, Support etc) can be setup to these individual product (Dedicates resources for Mailing, Hosting, Back up etc). Hence mail service is not just a product in X company it is their individual value stream, a revenue center and a center of product excellence where the objective is to create more innovative products.

Each product have similar center of product excellence teams that strive to be on top. Even the measurements against these particular product becomes manageable.

Typical measurement lists for a product:

1. Number of support calls logged

2. Revenue per head count

3. Number of complaints

4. Delivery within time.

5. Revenues, Profits and so on…

This is a decentralized way to run a company but one may try to see if such management style reap any benefit.

I credit Jack Welch who forced me to think products as individual center of excellence (reference: Straight from the gut)

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2 thoughts on “Manage product not a function

  1. Manage as a Product not a service makes sense when you think in terms of something like IT Support actually becoming a profitable enterprise instead of a “cost of doing business” – but the model is not necessarily to expand a company’s future profitability via an inventions and innovations perspective – take a company like corning who made the gorilla glass for apple i-Phones or an aviation and defense aeronautics company…they have to be prepared to innovate on a ‘to be’ product that may well fail many times before it produces a successful and measureable ‘product’ it is this spirit of innovation and ‘tolerance to failure’ that agile development is intended to address

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