The development and launch of a new digital product, which is focused on the end consumer, is part of business’s digital transformation. It is one of the effective strategies for adapting businesses to current realities. Covid-19 has only accelerated the processes of actively moving in this direction. In particular, the largest U.S. market shows growth in the segment of e-commerce at more than 30%. This means that if the trend continues, offline retail will lose most of its customers, and this will stimulate the transformation of business models towards new digital products.
Ukrainian realities differ in market size but the trend of developing and launching digital products is the same as in the US. Our observations, as a service team, show that the most active players from traditional industries are telecom, banks, gas/oil products, service projects, and energy.
New digital products are refining an idea, developing or structuring a value proposition for a future product, validating and confirming the idea, interactive prototyping, developing and launching an MVP.
How to increase the chances of product’s success or a new line of business - let's break it down by looking at the typical mistakes we have encountered.
This is probably the most common mistake businesses make nowadays. They manage to sell the idea internally, find a budget, brief a team, and even inspire them to "get it all done". Many businesses decide to do a mobile app or some kind of marketplace. These are the most popular platforms or digital product models we've come across.
Then you start looking for those who develop your product. As a rule, the process of finding a development team goes quickly. Terms of reference are drawn up, the scope of work and a fixed budget for development is agreed upon. And off it goes.
Time goes by. Usually, it takes from 6 months to a year. Often there is also a change of team due to disagreements in the process - as a rule, these are deadlines, or teams "fall off" at the stage when they see the first releases, how it looks or works.
The key problem lies in a simple one - the chances of success of new digital products from large companies or corporations equate to the same statistics as technology startups (92% of launched projects die, Startup Genome Report). And that means that best practices and models (frameworks) for new product development need to be applied, just like tech startups.
And there's nothing strange about businesses wanting to get things done quickly and get the product out there as fast as possible. Innovation always comes with a high probability of error and failure, and expecting instant results is normal among business leaders.
If you are at this stage now or recognize yourself - it is better to stop and roll back one step and still work out an interactive prototype of the product, test it and then determine the minimum functionality of the first version of the product, looking for a solution with development.
An interactive prototype of your idea will allow you to determine a common understanding of the entire team, how the future product will not only look but also work. For example, all interactive prototyping activities can be done in the Figma service.
Most of the time we encountered teams from marketing departments working on a new digital product idea. With deep involvement of CEO or C-level executives. In only one case large bank team worked in a specially created department and even in another office. The bank hired consultants from the Big Four, and the first step of the project was to form a separate department as an innovative business unit.
The problem in the approach is that teams get tired of new processes, do everything much slower, and face conflicts of interest. After all, they had and still have, old work and tasks to perform.
The new digital product requires first and foremost a sprint approach and a methodology that also involves a different project management culture.
To start small, and first of all to bring the "new" outside and within the existing structure, a new unit. The latter, or it is also called an outpost, works according to its own and new rules, independent of the existing direction.
The advantage of this approach is that the new direction allows you to create your own technology startup culture and not get the "virus" of the old processes and approaches. Provide focus and concentration. The integration of the newly created outpost with the current structure is also important. Ideally, this integration takes place through CINO on the outpost side and the CEO on the company side.
In innovative projects, where the degree of uncertainty is off the charts, it is impossible to estimate a specific deadline for a finished and successful product or project. You create a fixed budget and redo it 100 times. In this model, all parties aim to meet deadlines and budgets rather than create new value for future customers.
Estimating time resources is most effective in the sprint model. A specific scope of work is identified and allocated to the sprint. The key rule is that the current sprint cannot be undone, but you can adjust the next sprint or cancel it altogether. This approach involves working through as many right and wrong decisions as possible. If you cancel work in the process, you won't know the final result.
Estimating the cost of the project is most relevant in paying for the team's work using the Time and Material model. The essence of the model is to pay for the team's time spent on tasks. The flexibility is that the team can dramatically change the development process (whether it's design in general or engineering development) any time the project needs it. This is ideal motivation for all parties.
The development team aims to create value and results, regardless of what tasks will need to be performed (understandably, within their competencies), and the client or stakeholder to be as involved in the process, because any delays to approvals or approvals are paid. And familiar to everyone fixed estimate is suitable only for simple projects where the amount of work is known in advance.
We develop a large number of features of a new digital product to satisfy the user (customer) as much as possible.
This is where the problem of failure lies - creating products that customers simply don't want. Without confirming hypotheses and problems, every new feature is just increasing the budget and development time.
Develop a minimum viable product (MVP). In the first stage, to determine the minimum set of features, we recommend using a priority matrix - difficult or easy to implement; desirable or mandatory for the user.
The main criteria for a successful MVP is that it should make you want to pay for the product. And the fact of speed, including the speed of failure. For many business models, the speed-to-market factor is key. And it's almost impossible to do that with a product with a large feature set. And it's impossible to build a new product without talking to customers.
The difference between a digital product and a physical product is that every user (customer) action in a digital product model can be tracked and measured (unlike offline products, where this is often problematic).
Most of the teams we've worked with are so tired of the long process of uncertainty, development and are hungry for results - turn on a massive advertising campaign to get new customers. Or create a brand in the process of development, while not knowing what the output will be.
In practice, it's really hard to launch an experiment or MVP without a name or in raw form, but the essence of the digital world also comes down to narrow targeting, which means that your experiment won't be seen by all of your customers or millions of users.
With a massive advertising campaign, we usually just get traffic and, at best, new customers. And once the ad campaign ends, the churn rate is extremely high. A brand is only worth building when you've gotten proof of growth or found a market.
Define performance criteria to track key metrics while you're still testing or validating hypotheses. Prioritize performance metrics and decide how we will collect and segment our customer or experiment data. The bottom line is to move as quickly as possible from the MVP phase to the validation phase of solving customer problems with the first version of the product already in place.
It is impossible not to make mistakes. The more and thewe make them, the higher the probability of success. In any case, it is worth starting with the formation of a key project team, making it a separate area.
To speed up, you have to attract service teams to the project, which will help to build the first version of the product and gradually recruit your team. And don't have any illusions that you will be able to get the ideal configuration of the team at the first stage: you don't know what it will be and what you will need during the work. So the ideal formula is part of your own and part of the external to the project.
And most importantly, get a common understanding of the culture of experimentation within.
Let's create more digital products that customers will love!
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