DNA Test: Solution or Product?

In my experience most B2B software companies, even successful ones, have to ask themselves this existential question at some point in their history. How they answer it and what they do next has a profound impact on how realstic their growth expectations are. Note, I'm only talking about companies who describe themselves as Product companies to customers, prospects, and employees. I'm not talking about custom software companies.

Let's take the startup example. B2B startups are different than B2C startups in that its common to build a B2B "product" around the needs of a launch customer because they are willing and able to pay you to do it. This path works for a time as you add more customers who want more features and are willing to pay you for your development expense.

This is where things get interesting on the topic of DNA... viable, profitable, growing companies can be creating continuing down this path and never fundamentally changing the mindset to serve each customer by building specific features that they ask for and for which they are willing to pay.

This is the persistent Solution DNA model. It's appealing in so many ways... first, you can bypass Product-Market Fit analysis because the customer in question is telling you they will use it. Second, you reduce apparent financial risk in that you don't have to self-fund your roadmap with your transaction and hosting fees since the customers are paying for development. Third, the customers are happy in the short term because they are getting custom results- exactly what they are asking for- without paying the custom software premiums.

Unfortunately, this Solutions model, the one that exists in the space between a pure Product model and a Custom software model, has significant limitations especially over time. What started as a single code base starts to strain under the weight of several realities:

• Customers usually aren't willing to pay for tech debt or platform modernization efforts therefore the code base starts to age becoming more buggy, more expensive to maintain, etc.

• Timelines are harder and harder to predict and commit to however customers who pay for development want you to commit to timelines

• Last but most importantly, your offering falls behind true product oriented offerings from competitors who are thinking beyond what customers are asking for to what they really need which limits your sales success and customer satisfaction

It doesn't matter whether your company has been in existence 2 years or 20 years, you've got to ask who is really driving your roadmap. If your answer is your customers, think about whether this is the end game you really want. The transfomation to a true Product DNA requires full committment from leadership and is not easy but is possible.