Essential Reading On the Products Vs. Services Dilemma
Here is a collection of superb articles that shed more light on the “Products Versus Services” duel and help you make some decisions.
Software Products vs Services: Are You Making Money While You Sleep?
This article explains the essential difference between products and services - products make money while you sleep. Many companies start out providing services and decide to try and convert to product companies. However, this “productizing” is not easy and runs into challenges. The author explains why it is hard to switch from services to products. Inherently a services business looks very different from a products business - different skill set, different financing, different decisions and goals.
Marketing Services vs Products - Is there a Difference?
Is a Service ultimately a Product? We have heard about the 4Ps of Marketing (Product, Price, Place, Promotion). Do these apply to Services? Or are there any Ps for Services? The article highlights the 3Ps of Services Marketing as: Physical Evidence, People, Process. Physical evidence is the environment in which a service is delivered. People play a large role in the experience the service delivers. Process is how the service is delivered, the steps and methodology. Ultimately a service must offer a compelling experience and must have a competitive advantage over other providers.
Services vs Products - A Revenue Dilemma
What is the single biggest difference between building a services business and a product business? SCALE. Scaling a products business is a factor of how fast it acquires customers. Scaling a services business is all about how fast it acquires employees whose time can be billed. Products can create barriers to entry against competition. Services depend on relationships which can change as people change. As the article points out, the essential difference in revenue is that with Services, today’s work does not lead to future revenue, whereas with Products, future revenue from today’s work is the only hope.
Product vs. IT Mindset
It’s all about the mindset. Marty Cagan articulates why the IT mindset is a death knell for product innovation. He argues that large companies have an IT mindset, which is more about creating processes for execution, which comes at the expense of techniques for innovation. This is a “project” mindset, which is far different from a “product” mindset. He draws upon industry gurus like Ben Horowitz and Steve Blank and shares their thoughts on the failure of large companies to innovate. He highlights ten problematic behaviors that companies need to avoid in order to foster true product innovation. This is more Product vs Project than service, but is quite applicable to this discussion as well.