In the second webinar of "The USM Revolution" series on the Unified Service Management method, we received more live questions than we could handle online. A live question from that webinar was:
"What is the current understanding of Product and Service? ...In my understanding Level 1 and 2 of the Value Maturity Model is more 'Product Management'."
The short answer is "Forget the concept of 'product', we live in Service-Dominant logic times". A 'product' is what you produce, and in a modern economy you only produce services. Nevertheless, many people still use the term 'product'.
The longer answer would be this.
In most of the previous century, economy was largely focused on delivering goods. Transactions were mostly one-off transactions focusing in the thing that was transferred. At the end of the eighties, beginning of the nineties, economy slowly shifted towards the service-dominant economy of the 21st century. In that service-dominant economy, businesses learned that most of their turnover was created by the continued support of the things they had provided to their customers. Even in the lifecycle of a 'product' (that 'thing'), it became clear that 80+ % of the turnover was created after the initial delivery of that product. Customer loyalty programs, technology dependency, long-term agreements, and many more tricks were used to retain the customer they once hooked. In this shift, organizations learned to focus on the continuous support of the facilities they made available to their customers. That's why USM defines a service as a supported facility.
In the past century, the term 'product' mainly referred to the goods that were transferred in the transaction. The concept of 'service' was mainly used for the after-sales support. You can still find the remainders of this: just walk into your garage when you bring your car for some maintenance, and you may still find a sign above a door that says 'Service'. And how many cars do see in daily traffic, carrying the term 'service'? In a couple of decades, the meaning of the term 'service' completely changed from the old 'after-sales support' to the modern 'continuously supported facility'.
If you now look at the USM Value Maturity Model, you'll find 'technology' and 'system' on levels 1 and 2. Only level 3 says 'service'. This doesn't mean you cannot provide technology and systems as a service: it only says that you don't focus on the continuous delivery of the support component of that service.
The term 'product' as used in the previous century, now mostly aligns with the term 'facility' in the definition of a service as a supported facility. And it most likely even refer to the goods component of that facility.
Conclusion: Using the term 'product' should be done with care: the risk that you are misunderstood is huge.
Which carries us back to the short answer: "Forget the concept of 'product', we live in the Service-Dominant logic times" 🙂