TE Connectivity

Physical products have been at the heart of many companies for a long time and, especially at companies that design and manufacture products, there are typically well-established organizational structures, domain knowledge, processes and practices that have been built up around product portfolios. And rightly so, what is a company without a product?

But the world is changing.

Prominent thought leaders and consultancies, such as McKinsey and Deloitte, have long proclaimed that all companies, regardless of their industry, are transforming into software companies. This notion has become increasingly evident in the last decade due to the rapid development of the Internet of Things (IoT) and Industrial IoT (IIoT). Today, many previously unconnected and static products, such as toasters, cat food bowls, doorbells, and factory machinery, have been transformed into connected data-generating nodes. These products now provide valuable data for local decision-making and aggregate insights (e.g. toast preferences by zip code) for manufacturers. This is software that must be imagined, designed, built, managed and continuously improved over time as an integral part of the physical product.

Despite the widespread technological advancements taking place, there are still many companies that fail to recognize the significance of this shift. It is true that not every product will be connected and require its own software. For instance, if you bake cakes, manufacture individual components, or develop new pharmaceuticals, your products may not require a software component. However, the shift towards software orientation is not solely about the products sold by a company. It encompasses the way a company operates on a day-to-day basis, including its external engagement with customers. Today, customers prefer digital channels at every phase of the buying journey, which is why it is crucial for companies to adopt a software mindset. Additionally, internal operations, such as managing prices, supply chain decisions, defining customer and market strategies, and recruiting talent, all require a software-centric approach.

  ​Today, customers prefer digital channels at every phase of the buying journey, which is why it is crucial for companies to adopt a software mindset.  

Applying a product management approach to customer experience at a traditional company may sound simple but it is perhaps one of the most challenging pivots that companies must make as part of a digital transformation as it impacts everything from decision-making norms and talent management to funding models and overall organizational design.

Here are the must-haves I believe are necessary to make this pivot:

1. Executive commitment - True digital transformation is impossible without executive commitment that goes beyond messaging in town halls. What is required is a learning mindset when it comes to topics like customer-centricity, technical debt, MVPs and focusing on outcomes over output, and a willingness to change how things have always been done at a fundamental level: funding, organizational structure, talent, where/how decisions are made, and addressing resistance quickly and directly.

2. Cross-functional alignment - Creating exceptional customer experiences requires intentional design and coordination across multiple functions, elements, and platforms such as marketing, sales, operations, digital technology, data, algorithms, CRM, customer-facing websites, and PIM. These must work together to achieve shared goals and outcomes. However, in traditional companies, functional teams are often incentivized to compete with each other, leading to a zero-sum game in terms of budget, executive attention, and recognition. To achieve cross-functional alignment, companies need a culture that reinforces abundance and collaboration to solve problems together. This approach enables teams to focus on opportunities rather than competing for resources, resulting in a more cohesive and effective customer experience.

3. Talent transformation in technology/digital domain - There is a lot of digital talent available in the market: talent with experience managing software, optimizing commercial platforms and technologies, architecting complex tech stacks, selecting digital vendors and making buy vs. build decisions, designing digital experiences, and being digital product managers. If you only look internally at existing talent or externally for those with decades of experience in your historically non-digitally-oriented industry, then you will miss out. While upskilling is an important consideration at any company with a large employee base, to succeed with digital transformation you must consider when to hire from the outside for key roles and be willing to compromise on deep industry-specific experience. Developing company-wide digital and deeper technology expertise requires an evolution that may make non-digital-native leaders uncomfortable so leading with a mission of empowerment allows organizations to educate existing leaders without feeling threatened, while also empowering your digital experts.

4. Continuous investment - The day a company stops investing in one of its products, is the day that product starts to become obsolete. And yet with reliance on project-based funding, this is how many traditional companies treat their customer experience and the essential digital capabilities on which the company operates. Projects come and go, that unpredictability means lack of stability in talent and domain knowledge, leading to ramp up times for new projects that are slow and expensive. Software companies treat their customer experiences and associated digital capabilities as strategic assets with continuous investment that enables retained talent, domain expertise and – critically given the speed of technology evolutions and revolutions these days (see generative AI) – agility and velocity in responding to new insights, opportunities and risks.

5. Empowered Product leadership - Finally, to achieve superior customer experience in a traditional company, it is crucial to have product leadership that is empowered, accountable, and responsible for the major commercial capabilities and domain spaces that drive that experience across all channels. In today's business landscape, modern product leaders focus on solving the most critical customer problems in ways that deliver business value. They are customer-centric, data-driven, outcomes-oriented, and use external insights on customer behavior, competitors, and markets to make informed decisions. They are also agile and responsive to new information, learnings, and insights, and they understand how to use technology, people, process, and data to deliver the best results. To be successful, in addition to points 1-4 above, this product leadership must be actively protected by strong sponsorship as they challenge and attempt to drive change despite entrenched cultural norms and ways of working.

Digital transformation is hard but it doesn’t have to be elusive. Modern product management offers a model that can be successfully applied in traditional companies, with the right support. It is a journey you have no choice but to take – so why not get moving!