Finland ranks 60th in league table of mobile phone users. So when a bunch of Nokia engineers got together to figure out how to build the software the drove mobile phone usage they were obviously at a disadvantage. The fact that the sun hardly set for 73 consecutive days during summer also must have added to the insomniac woes. But I digress. The point is – when should intensity of customer proximity (in the physical sense, not the business behavior metaphor) matter for a product management team and what trade-offs can a business make when that intensity is low.
Let’s agree on one thing – being close to the customer is a sine-qua-non in product management (even if product management does not include product marketing). It is also true that innovation often happens closer to the source of talent and not necessarily near the point of consumption. What happens when the source and consumption have a few miles – perhaps a couple of oceans – in between.
Products that serve customer segments that are largely democratized in terms of practices and usages stand to make the most of leveraging the flat world. That is, higher democratization translates to higher indifference towards intensity of customer proximity. The game shifts to the talent source. Actually the game shifts to a combination of costs and talent source. A great example is possibly Banking applications. It is possible to segment banks and create a deep segment that has almost identical behavior – so it is immaterial if the product is built in Gdansk, Poland and deployed at a Bank in Johannesburg. So long as Gdansk can provide talent required to build the software – both Product Management and Development.
Now take the legal world. Legal practices tend to significantly differ across the world. Low market democratization makes it necessary that legal products products for say the American legal industry is built pretty close to the market – somewhere in America. The alternative is a bit messy. Keep business close to the consumption and development close to where development talent is abundant. Managing this divide, especially across continents, is a challenge.
Democratic markets offer great value to business to optimize production. Imaginative use of geographically dispersed talent base can lead to interesting business forays (like say the product development center at Gdansk matures to start understanding the requirements of local Polish Banks and morphs the main system to satiate the needs of the local market. A pretty low cost virgin market penetration strategy!).
If you have had experience in handling such situations either as a part of your business or as an outsourcing vendor, I would love to hear your thoughts.