Thinking about product elasticity in product management

I've been thinking about this topic for a while now, and how it applies to the world of product.

In economics, there is a concept of elasticity - which basically means if you change one variable, how much change will you see in a second variable. It's commonly used for detecting and predicting the change in price can have on demand. Products can be elastic or inelastic.

With elastic products, a big change in price will lead to a big drop in demand. These tend to be non necessity goods, or goods which can be easily substituted (e.g. buying a new television when your current one works just fine).

With inelastic products, a big change in price will lead to a smaller drop in demand. These tend to be goods which people depend upon, are necessities or have few substitutes (e.g. cigarettes, electricity).

There are SO many studies on price elasticity out there, I won't go into too much more detail. But I wanted to try to bring it into the realm of digital, applying a product management lense over it.

Outcome Elasticity

Could we measure outcome elasticity? If we change our customer experience, how much will this impact our outcomes (I love Jarrod Spools definition of outcomes btw)? What would the relationship between these two variables look like?

I've defined: Outcome elasticity = change in experience/change in outcome

As product managers, it's in our blood to continuously look for was to improve our customer experience, solving real customer problems in hard to copy ways which grow the business.

So therefore, if we made a lot of changes to our product or service (as all good product teams do), we would want to increase our outcomes whilst also delivering value to our business. In fact, we would want to do the least amount of work possible to validate our hypothesis, whilst delivering the biggest improvement in our outcomes (not asking for much here, hey...). An elastic product outcome should be the goal then.

In certain instances though, an inelastic outcome may be okay. For example, if a company is re-platforming its entire tech stack, parity of outcomes between old and new may be seen as a success (in the short term at least anyway). Over time though, the benefits of re-platforming should aim to grow and improve the value we deliver to customers and the business.

And if you throw the Kano model into the mix for good measure, over time, delightful experiences become hygiene and must haves - products might exhibit this type of relationship between experience improvements and outcomes over time:

I know i'm not presenting fully formulated frameworks so get back in your box Karen's, but I thought it might be thought provoking to a few people 🙂