Developed by Gibson Biddle, Former VP/CPO at Netflix and Chegg, a DHM product strategy challenges product managers to ask questions about how products Delight customers, are Hard to copy, and generate incremental Margin.
The idea that underpins DHM product strategy is continuous improvement. It asks product teams to ask themselves questions, including:
How will this product delight customers now and in the future?
What can we do to ensure others can’t easily copy our idea?
How can our product generate incremental margin so we can invest in an even better one in the future?
To better understand DHM product strategy, seeing how it compares to a more traditional product strategy is useful.
The traditional approach to product development involves conducting market research, defining target personas, then creating a product that meets the specific needs of those personas. It’s a fairly linear process without much flexibility.
DHM product strategy, on the other hand, is centered around a continuous collection and analysis of real-time customer data. This more flexible approach allows product teams to identify and respond to evolving customer needs, ensuring that the products they develop remain valuable to customers and profitable to the company over time.
With the DHM model, the customer always comes first.
Developing with this model means understanding a user’s pain points, needs, and desires, and then creating a product or service which solves their problem while creating an emotional connection. This emotion leads to the delight that keeps them coming back.
Protecting the product is another core pillar of DHM. This means creating a product that is hard for competitors to emulate and can be achieved through various means, including brand power, sunk costs, offering something competitors don’t, implementing complex processes, and more.
The final pillar of the DHM model is ensuring a product delivers incremental margin. This involves creating a sustainable business model for the product which generates profits while also delivering value to customers. Striking this balance can be achieved by reducing costs, streamlining operations, adjusting pricing models, and more.
The versatility of the DHM product strategy means it can quickly unlock a variety of benefits for a company, including:
Provide clarity on product definition, development, and functionality priorities
Emphasize a customer-centric approach to product development with a focus on customer delight
Enable prioritization of critical product features and functionalities for business focus
Leverage real-time data for informed business decisions
Applicable to businesses of all sizes and across various industries
Because Gibson Biddle is a former Netflix executive, Netflix is the best example of a company deploying a DHM product strategy.
Gibson goes into great detail about how this was applied, but the short version is that the team leveraged four strategies to achieve each pillar of DHM:
Personalization. Make it easy for members to find and watch movies they love, which improves content suggestions for members and increases the likelihood of retaining those customers.
Original content. Delight customers with exclusive content while investing twice as much in content as its nearest rival.
A better viewing experience. Invest in tools to improve the viewing experience, such as Ultra HD video, custom playback speeds, and other hard-to-copy technology.
Interactive storytelling. Build tools for studios and members to create and choose their own adventure — a move that competes for consumer screen time in all-new ways.
Implementing a DHM product strategy will naturally differ from product team to product team, but the main steps are similar.
Product managers can carry out a series of exercises to help them define the ways their product:
Creates a hard-to-copy advantage
Offers unique pricing models
From these exercises, product managers can choose 4 to 6 hypotheses to test over a 12 to 24-month period. The overarching strategy is then drafted and shared with colleagues for feedback. You can use airfocus's product strategy template for this.
Once executed, these exercises enable product managers to create a customer-centric product that stands out in the market and optimizes profit margins simultaneously.