A client entering a new market with a new product stated to his management, “We might need to do a second release, but after that, we will not need to spend any more on engineering.” Everyone around the room nodded in agreement and the meeting moved on to other topics. Not wanting to embarrass anyone, I kept quiet until after the meeting. New market products seldom can be built so well that one or two releases are enough. It is dangerous to think anything other than entering a new market is the start of a learning process that will mature when the users are comfortable with the product’s capabilities.
The dream of simplicity is easy to understand. The pressure to show quick profitability can become a distortion field that is hard to escape. People providing the funding for a project often want to see quick results and people building the product want to get funding. To get funding (be it an external investor or management within the company) one needs to be credible and to be credible one needs to have confidence and show an understanding of the marketplace. It is actually a credibility builder to know where your market is and admit that it is not well understood. The people giving you money should understand the dynamics of new markets, if they do not you should tell them. Having been on both sides of the fundraising equation, I can only say that when I did not hear people say they knew things would change once in the marketplace, they lost credibility. There are two strong reasons why new markets will require many releases of a product.
First, there is the need to minimize complexity. Building the minimum viable product (MVP) is essential for both complexity reduction and market fit. The essence of an Agile process is to manage complexity by starting small and iterating to something shippable. Waterfall has the same need. Adding too much complexity in the first release will mean a very long release cycle, which means a very long time before getting customer feedback, which means a lot of code that may need to be re-written when the real requirements are determined. More products have died from too much complexity than from too little complexity. K.I.S.S. really applies here, big time.
Second, new markets are particularly insidious because there is so little data about what the product should really look like. It is not until the customers use the product for a while that you will know what the product should do. Adding a lot of capability without the real customer usage data is a mistake. Fewer features in new products can improve market fit because adoption of new products is often inversely correlated with the complexity of the product. If you add too many things when people are trying to understand your solution, they may be turned off or just plain confused by all that “goodness” you added. Besides, when the product is not yet in the market place it is very hard to really understand how people are going to use it. Getting rid of rarely used features can create huge customer problems, so not putting things in that are not sure winners is the right strategy. The features that ultimately are needed to gain market share are discovered when customers are actually using the product.
Anyone who has gone from Release 1 to Release 6 of the same product is astounded that Release 1 even sold. I once delivered a Release 1 product in which we thought the maximum devices we would need to manage was 400. Release 5 supported 1 million devices. The features set, the market, the usage of the product, and the customers’ real needs are just not well understood, and besides, most new products are not fully exploited in the first release. Market requirements evolve as customers understand what they really want the product to do.
Avoid creating disappointment by assuming you can see more than one release ahead. Assume that your first product will generate some revenue and teach you what Release 2 should look like. Assume that Release 2 will teach you about Release 3, and so on. There is an old rule of thumb that most products don’t really work until Release 3 shows up, that is certainly what Microsoft did for many years. You are in good company when you admit up front that new markets are a learning experience. You are trying to capture a big market which may take some time.
© 2011-18 Westerly Consulting LLC, all rights reserved