The ” Known Good Product ” Litmus Test

The ” Known Good Product ” Litmus Test

By: Jim Gitney   |     December 13, 2015

Known Good ProductIt doesn’t matter what size your company is or what industry you are in. Every company is challenged with delivering a Known Good Product or Service  Let’s face it, companies are only about offering products and services. When working with clients, I often ask their definition of a Known Good Product and am usually surprised by their inability to give me a good answer. They often say that it is a function of cost or quality or customer satisfaction or profitability, but I typically never hear them say that a Known Good Product or Service requires the optimization of a series of variables. The simple definition of a Known Good Product is one that meets the needs of the company and the market for Function, Quality, Delivery, Service, Safety, Reliability and Cost.

Intuitively obvious to the most casual observer you say? Each of these variables have an impact on the success of the product or service in the market place and more importantly have an impact on the design of the product or service and all of the business processes that support it. When leading reviews of the performance of existing products or services,I always apply the Known Good Product litmus test by asking for the key performance indicators for each of the variables that make up a Known Good Product. Most product managers and senior leadership will focus their attention on cost, but not Total Cost. They typically know what it costs to produce a product or service, but don’t know how much cost they are incurring from the other variables and when they do, they typically don’t apply it to the Product/Portfolio P&L.

They haven’t set the appropriate measures to do so and certainly don’t set goals for these as part of the product development process. Setting Objectives for a Known Good Product isn’t that difficult. Managing those objectives is a completely different story, because it requires the participation of every function in the organization and will sometimes will be at odds with functional objectives.

Every product and service will have a unique set of requirements and it takes a coordinated team effort to manage those especially when the portfolio consists of products and after sales services which are part of a well thought through Product Lifecycle Revenue Model. The next time you are sitting with your product teams, apply the Known Good Product litmus test and see what they have to say about it.

Then, ask them if the goals and objectives they have set support the company’s strategies. You may be surprised by how much of a change in mindset is required by the teams in your organization that manage products and services. Once that mindset is achieved, you may also be surprised at how much more profitable those products and services are and how much more successful you are at implementing strategy.


About the author
 Jim Gitney is the CEO of Group50® Consulting and specializes in the development and implementation of manufacturing and supply chain strategies as well as product portfolio management. Jim and the Group50 team are all former executives with well-known manufacturing and distribution companies who understand what it takes to put together and manage the implementation of successful product and service strategies. 

Group50 has designed a series of strategic assessments, workshops and strategic execution tools that help product teams learn how to effectively manage their products and develop effective Product Lifecycle Revenue Models.  You can reach us at (909) 949-9083 or send a note to

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This entry was posted in Manufacturing and Distribution, Product Development, Strategy 5.0, Total Cost of Ownership, Weekend Thought, on December 13, 2015

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