Successful products (including services) solve a clearly defined customer need. Unfortunately, successful product design (i.e. the process of getting from need to solution) can sometimes feel like it’s equal parts science, art, and magic. Buyer behaviors, market trends, feature design, technical considerations, financial trade-offs and value all factor-in. Equally important (and often overlooked), is the ability to reach scale and operate at scale. Products can find a market niche and still fail because they operated under the weight of a delivery system that was never designed correctly to begin with.
New products don’t need to launch at scale. In fact, it’s often preferable to “dip your toe”. Minimum Viable Product (MVP) launches are a popular way to quickly introduce a new service and gauge market demand ahead of a bigger investment. That said, scaling plans should be ready to go depending on demand velocity, linearity, and seasonality. It is critical to understand what “demand at scale” will look like from initial prospect interest through the sales process to activation, operation, billing and support. Where will these customers be? How do we ensure a reasonable delivery timeframe? What degree of automation is needed to ensure expected order volumes don’t “break the factory”? What infrastructure is needed to support these? Ultimately, how much time does each “widget” require from members of each functional organization throughout the value chain? How do we ensure that the product’s supply chain remains uninterrupted and at a consistent quality level throughout a possibly exponential ramp? How do we maintain exceptional customer service and support until the product reaches a stable level of demand? How does our organization ensure that the design and operation of a scale-based product feels the same for the first customer as it does for the millionth?
Few organizations genuinely commit to designing and marketing products for scale. The difference between success and failure in this area can be as simple as ensuring that the up-front product planning process addresses the challenges and opportunities a product demand at scale – but doing so requires expertise and experience in both. At Ronin, we focus on five key areas to ensure client products are ready to perform at their optimal economic return rate.
- Clear Launch Milestones. Products can fail for many reasons. Demand may fail to materialize despite our best research and preparation. Customers may not see the value, or the market may not be ready. We often hear of products failing because production either overcommitted or under committed to inventory or delivery. In the telecom service industry, miscalculating fulfillment and infrastructure needs can adversely impact service delivery intervals, service quality and repair for initial customers, damaging relationships and harming sales confidence in a product for years to come. By staging production to match demand, organizations can limit their loss potential and better match production scale to demand volume. Best practices for product development organizations comprise a series of if-then gates – if the product clears its initial 90-day launch window with accelerating growth, the next stage of production is unlocked and committed to for a specific period of time. Where supply chain concerns govern the ordering of component products, or where a specific input – such as backbone capacity or operations team staffing – affect scale production planning, consider ways to eliminate friction, such as staging vendor orders or contract labor arrangements.
- Commitment to ‘succeed or fail at market scale.’ There’s nothing worse than a product that dies due to unfulfilled demand. Was the product a sustainable success? A long-term failure? Worse yet, was some element of initial demand due to scarcity? There’s no data to be derived from a situation in which a market turns against a scarce product with no forecasted increase in supply. As a result, making a commitment to scale for a new product ensures that at least one factor – supply – will be removed from consideration in determining the product’s ultimate success or failure.
- Shared services to support multiple products. Successful providers operating at scale work to reduce the marginal cost to serve customers – and deliver products – by sharing services across the product development, launch and support backplane. Customer service, billing, technical support, marketing, information technology, sales, and F&A are all areas that can be leveraged to support multiple products in the market at scale with minimal investment. This is also an opportunity to implement digital transformation strategies through automation and orchestration. Where a specific organizational department is not being tasked to provide support for product operations at scale, look into why – and make it an organizational policy that backplane groups work together to drive down the unit cost of a deployed product over its useful lifetime.
- Strategic product payback. Products built for scale have a better ROI, but can also have a longer payback timeframe given up-front investments in network architecture, promoting, and supporting products at scale. It is also important to take into account the other benefits that accrue from a scale-based product launch, from market share defense to brand positioning to line extension to recurring revenue. Scale is not only vital for a product’s success – it is a vital component of long-term enterprise success because it creates value.
- Design scale into the product. From the customer’s perspective, that means that the same quality and customer experience should be delivered whether they are the first customer connected or the millionth – touchpoints, intervals, functionality, and quality should all remain the same, even if initial customers need to undergo a more manual process while product is being vetted. From the corporate perspective, that means that the marginal cost should be declining over time as economies of scale and efficiency are being reached.
Ronin Technology Advisors is a trusted service provider for organizations looking to re-imagine, re-engineer, and redesign their product and service strategies to operate at speed and at scale. We have been selected consistently for our ability to unlock enterprise value in product design, marketing and management operations. We’d like to be a part of your scale-based product success stories. To learn more, contact us at 303-678-1844 or at email@example.com.