Why It’s So Hard for a Services Company to Build a Real Product

The in-house product gets complained about by every department, constantly. Leadership is rattled too — where exactly is this going wrong? Why can’t we even copy the competition properly? Why does it always fall just short?

I’ve wondered about this myself. A services company lives and breathes customer requirements all day — it should understand pain points better than anyone. So why do the products these companies actually build usually turn out mediocre?

It’s not a capability problem. The business model is fundamentally different at the root.

A product needs standard customers. A service needs core customers.

The product business runs on as many standard customers as possible — meeting a generic need, selling one single thing to thousands of strangers.

The services business usually runs on a handful of core customers — sometimes revenue rests on just a few big accounts — meeting customized needs.

These are two opposite ways of thinking.

• Someone building a product is thinking: “Out of a thousand customers, how many of them would also need this?” — so they converge toward something general and standardized.
• Someone running a service is thinking: “What does this big account need, and how do I take great care of this one deal?” — so they diverge toward something custom and specific.

At a services company, the product manager never out-shouts the project manager.

A services company’s revenue lifeline rests on the people directly delivering projects, and their voice is always louder than an abstract ask like “design one generic solution for a thousand future strangers.”

Over time, the product gets pulled and reshaped by the specific demands of specific customers, until what you end up with is a patchwork of everyone’s individual requirements — not a distillation of one shared need.

So this “product” ends up being something everyone can use a little bit of, and nobody can really use well.

So why does a services company even want a “product” in the first place?

Because having a common development framework lets you demo something to a customer quickly, which helps close deals earlier and speeds up the final delivery once you’ve won the business. Here, the product is, start to finish, an accelerant for the service — never the goal itself.

The product’s first real user isn’t the customer — it’s the internal delivery team. They’re the ones patching and tweaking the “product,” and customers only ever see the version the delivery team has already modified and repackaged. They never touch the product in its raw, original form.

Over time, the engineering team picks up the same habit: since this product never faces the customer directly, with delivery acting as a buffer, it’s fine if the build stays a little rough around the edges.

Put it all together, and that’s why a services company has such a hard time building a genuinely good “product.”