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Four Ways to Minimize The Risk of Building the Wrong Product

Product ApproachProduct Strategy
8-Dec-23

Have you ever come across the claim that 90% of products fail? The original statistic dates back to 1997, a time before the digital era, and was put forth by the late Clayton Christensen while assessing the general failure rate of products in the market, not specific to digital ones. The encouraging news is that, after witnessing the launch of hundreds of digital products at Dialexa, I estimate the failure rate for digital products tends to be lower, likely falling within the range of 50-70%. Nevertheless, launching a digital product still involves significant risk–especially when you consider the increasing necessity of data-driven decision-making.

The Context In Which We Build Products Has Changed

IBM asserts that every product is becoming a digital product. When we consider the widespread use of mobile devices, the internet, and AI, it becomes evident that most aspects of our lives will be mediated through technology. Whether it’s in healthcare, supply chains, or education, virtually every human experience will intersect with technology in some way.

The more adept we become at adapting to change while managing businesses and teams, the more strategically positioned we are for future success. The traditional approach of defining an OKR, securing a budget, and steering a product to completion without actively gathering and leveraging data for swift market adaptation will become obsolete. Many companies may face failure not due to the shortcomings of their product but rather because of their inability to respond swiftly to market dynamics with data-driven decision-making.

The Story of My Own Failed Startup

I am a fellow product builder, and my first startup, Blurtt, launched in 2012, failed. I extensively chronicled the intricacies of Blurtt’s failure in a 2014 TechCrunch article. During that period, I found myself pivoting too frequently, driven by a desperate pursuit of product-market fit with limited access to data. 

Notably, in 2013 and 2014, companies like Amplitude and Pendo emerged, highlighting the nascent stage of data-driven decision-making for products. At the time, obtaining meaningful data often necessitated the creation of custom dashboards or grappling with the obscure and challenging interface of Google Analytics. The current shift toward a Zero Party and First Party data environment is a positive development, offering more control and valuable insights in contrast to the challenges faced during my earlier startup endeavors. At this stage in the evolution of digital product development, if you aren’t using data to make product decisions, your risk of failure is almost 100%.

Four Things Every Product Owner Should Remember

Since joining Dialexa, I’ve seen hundreds of digital products launched. These are four things I would do differently if I had to do it all over again as the owner of a product:

INVEST UPFRONT TO DEFINE THE PRODUCT

According to a 2019 Pendo study, software companies invested up to $29.5 billion in features, with 80% of them being rarely or never used. For a product leader, establishing a meaningful connection between features and the value they bring to the target user is crucial to minimize the time and effort expended. At Dialexa, we employ a process known as Value Orchestration to achieve this goal. 

Our Product Definition capability at Dialexa involves a collaborative effort by a multidisciplinary team. This team, typically composed of a product strategist, a designer, and an engineer, operates within a consistent methodology. It is this collaborative and multidisciplinary approach that enhances decision-making, ultimately contributing to the success of the product.

From day one, key artifacts are created roughly every two weeks throughout an eight-week engagement that will produce the recommended experience, features, architecture and roadmap for a successful custom software build. With a clickable prototype in hand, you can validate the market before writing a line of code.

VAlIDATE THE MARKET WITH QUALITATIVE AND QUANTITATIVE DATA

In the startup world there is a popular phrase, “Leave the building.” Collecting user feedback is critical before you invest any more time and energy on an idea. By conducting user tests with a test script and a clickable prototype, the team learns if the product is hitting the mark with the target audience before a single line of code is written. Skip this step and you will waste time and resources building the wrong thing.

ITERATE QUICKLY THROUGH THE VALIDATION PHASE

Based on user testing feedback, the designs for the prototype will be updated and features will be prioritized. It can go through another validation phase where you test the updated user experience. By working through this Product Definition phase, a company will have a validated and well defined MVP feature set along with a future backlog of features to add. Dialexa will also deliver a high level project plan to create the MVP along with an updated estimate for the build.

ACCEPT THAT FAILURE IS NOT THE END BUT SIMPLY MORE INFORMATION

Depending on the size of the company and its leader, the tolerance for experimentation, risk and failure will be different. This is why I believe investing upfront on an eight-week project to minimize the long-term risk of a new product or idea is critical. This won’t mean that you are inoculated from the risk of failure but you will improve your chances of success.

Do These Pain Points Resonate With You?

Reach out to us so we can help you, whether you have a new product need, a new version of an existing product or want to integrate a new technology or experiences (such as GenAI). We can facilitate the creation of scalable and future-proof solutions, faster with better business outcomes.

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ABOUT THE AUTHOR
Image of Jeanette Cajide

Jeanette Cajide is a senior strategy and operations executive with experience leading teams to create, launch, and scale new ventures. Before Dialexa, she worked at Goldman Sachs, Accenture, and Merrill Lynch and has launched several technology startups. She has an MBA from Northwestern, an MPA from Harvard, and a Bachelors from The University of Texas at Austin.

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