3. Types of Companies and Products

In this section, we will discuss the different types of companies and products and the impact these distinctions have on product management.

Types of Companies

As previously mentioned, companies can be categorized into different types based on their relationship with digital products. These types influence how product management is approached and the role it plays within the organization.

1. Digital Companies

Digital companies are those whose core business revolves around digital products. These companies, such as Locaweb and Conta Azul, develop and sell digital products like software and online services. For these companies, product management is central to the business strategy, as the success of the company depends directly on the success of its digital products.

2. Traditional Companies

Traditional companies, such as Bradesco and Lopes, have been around for many years, often predating the digital age. These companies originally offered non-digital products or services and have since adopted digital technologies to enhance their offerings. In these companies, digital products are used to add value to existing services or to improve customer experience, but they are not the primary business. Product management in this context is important but serves as an enabler rather than the core of the business strategy.

3. Traditional Born-Digital Companies

A third type of company lies between digital and traditional companies, which we refer to as "traditional born-digital" companies. Examples include Amazon (as a retail store), Netflix, Spotify, Airbnb, Google Ads, and Uber. These companies operate in traditional industries but were established with a digital-first approach. Although technology plays a significant role in their operations, the core products are often non-digital, such as movies and series for Netflix or retail goods for Amazon.

In these companies, product management is crucial for leveraging technology to enhance the business, but it is not the central focus. For example, while the Netflix app is important, the primary product is the content it provides—movies and series. Similarly, Uber uses technology to facilitate ride-hailing, but the core service is transportation.

Impact on Product Managers

The type of company significantly affects the role of a product manager (PM).

• In Digital Companies: Product management is the core function, directly influencing the company’s strategy and future. The PM is responsible for the product that is the company’s main revenue source, making their role central to the organization.

• In Traditional Born-Digital Companies: The product could exist without technology, but technology enhances it. Here, product management acts as an enabler, playing a key role in improving the business's results. The PM’s role is important in strategy definition, but it is not the core focus.

• In Traditional Companies: The company’s primary product existed before the advent of digital technology. Here, digital product management is often seen as part of a "digital" or "labs" department, working to demonstrate the value that digital products can bring to the broader business.

Types of Products

Platforms

A platform is a type of product that increases in value as more people use it, known as the network effect. For example, WhatsApp’s value grows as more users join because each new user increases the number of potential connections.

Platforms can be categorized into:

1. Single-Sided Platforms: Examples include WhatsApp, Facebook, and Instagram, where the platform connects users with each other.

2. Multi-Sided Platforms: These platforms involve multiple types of users, such as buyers and sellers. Examples include:

   • Exchange Platforms: Connect buyers and sellers, such as Uber, Airbnb, and Mercado Libre. Offline examples include shopping centers and marketplaces.
   • Content Platforms: Connect content producers with consumers, often involving advertisers. Examples include Facebook, Google, and traditional media like TV networks.
   • Technical Platforms: Connect specialists with users, like operating systems (Android, iOS) or professional services (hospitals with doctors and patients). These platforms often require participants to have specialized knowledge or qualifications.

Managing Products vs. Managing Platforms

• Product Management: Involves focusing on a single type of user and delivering value specifically tailored to them. This approach is straightforward and direct.

• Platform Management: Requires understanding the value for each type of user on the platform and managing the relationships between these users. It is more complex, as it often involves balancing the needs and interactions of multiple user groups.

Examples of Platforms

• Gympass: A three-sided technical platform involving gyms (specialists), companies and their HR departments, and employees. Each side receives specific value from the platform, and the platform’s success depends on the participation of all sides.

• Lopes: A real estate platform connecting clients, property owners, and brokers. It operates on a tri-match model, where the goal is to find the ideal match between client, property, and broker. This is a technical platform because it involves real estate experts (brokers and franchises).

Project vs. Product

• Project: Has a defined scope, clear deliverables, and operates in predictable scenarios. It focuses on the completion of specific tasks, such as building a data center or launching a product.

• Product: Focuses on achieving a specific outcome and is continuously evolving. It involves constant validation of ideas and is better suited to volatile environments. Products have ongoing lifecycles, such as a software service that receives regular updates.

Physical vs. Digital Products

• Digital Products: Easier to iterate on, with rapid development cycles based on user feedback. Updates can be deployed frequently and remotely.

• Physical Products: Development is slower and involves logistical challenges. Each feedback cycle requires the physical product to be delivered to users, making updates and iterations more challenging.

Examples include:

• iOS (Digital Product): Regularly receives updates that users can easily download and install.
• iPhone (Physical Product): Has a controlled development cycle and requires significant logistical efforts for distribution and updates.

Understanding the type of company and product is essential for effective product management. It shapes the strategies, priorities, and challenges that a product manager will face in their role.