Why good products don't always become successful products

People continuously come up with new products. They also invest a lot in them. However, they often don't work out in the end. There's no market for them, so they quietly fade away. And that is, of course, a waste. That's why, in the coming weeks, I will discuss three open doors and why, in practice, they often remain closed. 

In this piece, I discuss open door number two.

OPEN DOOR 2: Your "product" is not the product

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You've thought about building the perfect solution, a good product. You know exactly what new features are on the backlog. Your product's specs are perfectly tuned to solve all customer problems. Yes, real customers. 

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Well done," you say to yourself. Of course, there's quite a bit of money and energy leaking away due to all the coordination with our suppliers. And yes, the rest of the time is spent on customer support. No, we don't really have time to expand the team. The strategy? Well, it's just the product. And selling that to our customers. Listen carefully to what they want and then build it. Explore new channels? Nah, they can find us anyway, right? 

Sounds a tad exaggerated, but we hear these kinds of responses quite frequently. Yet, a quick glance at the lean canvas reveals that "the solution" is only a part of the larger picture: the business model. And that is sometimes overlooked. 

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Why people often forget this

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One of the reasons people forget this is: that we often think from the what. From features that affect the user. Because those represent direct and measurable value. More features = more customers = more sales. At least, that is the perception.

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And that's not entirely unreasonable. Because that's what we observe. The external aspect. The customer. People feel that this has the most influence on the success of the organization. This way, you can at least achieve the quarterly objectives. Short-term impact, that's when things are going well. In reality, it's a harbinger of failure.

A second reason why it is often forgotten lies in the people who develop products. They prefer to focus on implementing something new and find perfecting the problem-solution fit much more interesting than the peripheral aspects. They are usually very skilled at that. However, they are generally not champions in terms of business models, marketing, strategy, positioning, or organization. 

Then you could just buy that, I hear you thinking. Or build a team that can do all of this. A patchwork of skills and expertise that fit together perfectly. So that the entire organization develops uniformly, and all aspects of the business model receive equal attention. Hooray! Yes, but in practice, it often doesn't go that way. Especially when the founders team is focused on features and sales. 

What goes wrong if you forget?

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In the best case scenario: you've been struggling for eight years, have a decent product, but the expected growth lags behind. A competitor with better organization starts nibbling away at your market share. After all this time, the team is moderately enthusiastic, and some have already walked away. Attracting new talent is also challenging. It's a certainty that it will slowly wither away if something drastic doesn't change. If that's even still a possibility.

In the worst-case scenario: you've been on this journey for three years and poured a significant amount of capital into it. Yes, you have a fine product. However, the business model appears not to be scalable after all. The costs of maintaining all the features catch up with you. The market seems to be genuinely smaller than estimated, and there's less traction because you can't effectively reach your customers. Still, the investors want to see the promised growth. The once strong bond between the founders starts to show cracks. Things go wrong. The plug is pulled. A substantial investment in a strong competitor becomes your downfall. 

75% (some sources claim even more) of start-ups invested in fail. And they really aren't all bad products. Of the top 10 reasons, only one is about the solution: "user un-friendly product." All the others are about the company, the founders, the business model, raising investment and so on. In other words, if you "forget about it," chances are your company won't make it. (By the way, I discussed the main reason in my previous article.)

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How does a good product become a successful product at MakerLab?

To make all facets of the product understandable, we use various tools, workshops and canvases. One is the Business Impact Model, which we developed ourselves. We are designers by nature. Therefore, this tool provides a visual way to map the business model. 

This model helps you to see the bigger picture. It provides an overview. It is a good basis for further experimentation. To scrutinize a supplier's value stream. To focus on the channels to your customer. To see if the business model is balanced. Whether there is no value leakage. And whether it is sustainable.

Why this works well

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Together with experts, you critically question the value of different parts of the model. And identify gaps and risks. All this as a basis for defining the most crucial assumptions. We validate assumptions in the business model first. Because assumptions are the mother of all fuck-ups, as an old hand in the field gently corrected me when I was still my reckless young self. They are directly linked to success or failure.  

The Business Impact Model is also designed to be easily adapted to new situations. For example, it can be used to draw out different scenarios. For example, what if you delete a supplier, or add an additional sales channel? And perhaps more interestingly, what if you choose a different business model? Not direct sales, but a service model. Or a two-sided market model instead of a peer-to-peer model. That changes your product significantly. And the kind of partners you need. What your cost centers or revenue streams are. It can also result in different communications: a new positioning to properly reach a different audience. So it can grow with the product or the organization.

In short, the most important thing we deliver is: a critical view of the entire product and development. The right acuity in establishing success criteria. And our own pragmatic, creative power to look for tangible evidence. 

This is how we at Makerlab ensure that we both solve a problem for a customer and that the product fits within a healthy business model. In this way, we secure the basis for scaling up. 

But more on that next time.

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