We published a post or two to this blog, recently, on the topic of why it makes sense for product marketers at enterprise IT ISVs to focus, entirely, on equipping products with no more than a minimum set of requested features. As part of our presentation on this topic we recounted our opinion as to how the approach of both businesses that constitute “Wintel” computing, namely, Microsoft® and Intel®, which amounted to exploiting a complex instruction set computing (CISC) method, actually exposed them to competitors who have now better served the market with so-called smart devices that actually operated on a substantially reduced set of capabilities. In fact, in our opinion, the App phenomenon is actually a bridge that developers can use to build processes on anything that will run, nevertheless, on reduced instruction set computing (RISC) devices, including tables, and smart phones.
There is nothing new about our position. In fact, most business schools espouse the same type of “lean” approach to product design. What is worth repeating about this approach, in light of our recent collaboration with an esteemed client, Rehmani Consulting, Inc. on the design of an enterprise IT computing product that has recently won an award from a major publication in our client’s market, is that a disciplined approach to this minimal product design method can produce opportunities for follow-on products, which can keep revenue flowing far beyond an otherwise normal product life cycle.
We like to refer to this approach as the “razorblade” strategy. This strategy can be summarized with a quick reference to manufacturers of men’s shaving equipment. In fact, the revenues these manufacturers receive from sales of the non durable components of men’s shaving systems (namely razor blades, disposable razors with non replaceable blades, and shaving aids like shaving cream) far outweigh the revenue they receive from sale of the durable component, meaning the razor, itself. After all, these non durable components have a limited life span. Periodically users must replenish their supply of these components, which usually costs them precisely the same price each time.
In fact, we are keen on product marketing that can leverage a “razorblade” strategy. Another plus for this approach is that it affords manufacturers the capability of producing products that scale, based upon customer requirements. In other words, the same product “chassis” can be used to service a wide range of customer requirements. Building new solutions at a higher level upon a uniform chassis is, of course, less expensive, which should lead to greater profitability.
In the next post we will look at two examples of a “razorblade” strategy.
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