The Six Secrets to a Successful Product
When the iPhone debuted in 2007, it was immediately hailed as a magical device. The day after it hit the market, every smartphone that came before it seemed downright decrepit. Despite some limitations — like no high-speed data and no third-party apps — everybody wanted at least to touch one. You could learn it inside and out in an hour, and it felt just right in the hand. The mobile world was transformed. 15+ years later, whether you have an iPhone, Android, or Windows device in your pocket or purse, its daddy was the original iPhone.
Product launches like the iPhone are one in ten million, but successful product launches happen frequently (albeit with much less fanfare). I’ve worked with hundreds of companies from the garage stage to Fortune 1000 over the last 25 years. My work has spanned corporate strategy, go-to-market approaches, and product positioning, I’ve seen a lot of successful products come to market and a larger number that “coulda been a contender” but fell flat. Here are my keys to building and launching a successful product.
1. Apply superior talent
If you’re building a software product or physical device, you need the right talent to conceive, design, and manage the development and production of the product. If you have an idea for a product, but don’t have the talent, go find and hire it. Optimally, there are two types of early talent:
A technical visionary and leader who can conceive of and design a product and then lead a team that builds it.
A product manager who matches the market to the product requirements and makes sure that the right thing gets built. For the product manager, it’s not all about the technology. It’s about features, pricing, positioning, channels to market, and many other things. In a really young company, the product manager might also be the CTO or CEO or a committee that makes key decisions, but pretty quickly, successful companies add someone who serves as the flywheel in the middle of product development, sales, marketing, implementation, and support. It’s a job with few direct reports and a lot of influence. In Silicon Valley, the product manager is often the third or fourth hire — after the CEO, CTO, and maybe a senior technologist. In the rest of the country, most companies haven’t gotten the hire the product manager early memo.
By the way, using outside resources to build your product — whether it is software or a physical product — is an option. The keys to outsourcing development are:
Protecting your intellectual property through proper contracts.
Finding the right development partners.
Managing the process so that you and your partner collaborate to get the best possible answer. Partnerships with ideas instead of simply contracting development with a spec are much more preferable. It’s all about the right answer.
If you’re nervous about outsourcing development, look around your office and then go home and look at the devices in almost every room:
Foxconn and other companies make iPhones.
Almost all Dell Computers are built by huge Original Design Manufacturers in China, Taiwan, and South Korea.
Most of the software you use was built using contract development shops on behalf of major brands.
Every gaming device you’ve ever used was built by a third-party — not Nintendo, Microsoft, or Sony.
2. Embrace the market and let it lead you
Companies' biggest mistake is failing to understand their market and potential customers out of the gate. You need to build a straw man for your product — even if it doesn’t exist — and socialize the concept with people and companies that would be potential customers. You need to be able to explain:
What your product does.
Why it’s new and different.
What value it provides.
How much you think it will cost.
When you think you’ll be able to deliver it.
This means taking some chances because most people won’t sign an NDA to discuss your product over coffee. Find people you trust, refine your idea, iterate, and widen your circle. Then apply those ideas to your concept and design.
3. The calendar is not your friend. Speed with quality is critical.
Most industries are global now, and more investment dollars are available from more private sources than ever. The logical conclusion is that you need to be super-secret; however, the main learning is that time is of the essence. I have worked with several CEOs who have lost track of time. Eighteen months after I finish my work, the CEO will call me, saying, “We’ve made so much progress. We’ve done X, Y, and Z.” Except that the product was supposed to me in the market 12 months earlier. Entrepreneurs are optimists, however, and love to tout their successes. My response is usually a more tactful version of, “Have you looked at the calendar lately?” While you’ve been working away, companies in the fast lane have passed you.
4. The minimum viable product is key — revel in the feedback.
Customers don’t expect your product to be perfect out of the gate. They do expect your product to provide something different that adds value by being easier, more efficient, or cheaper. Lots of customers like to try new things, and they like to provide feedback. Getting v0.9 in the hands of customers, gaining feedback, and making modifications for v1.0 will save you time, make v1.0 of your product better, and make things easier on your budget in the long run because you won’t mass produce the wrong thing.
5. Never lose the passion for your product, because the best products last a long time.
As companies get bigger, they tend to view their products as parts of a portfolio, which, for business purposes, might make sense. In reality, their customers are married to individual products. They expect continued greatness. Most of the time, however, products that were once best of breed gradually slide down to average. Playing catch up when new products leapfrog your offerings in the market is hard. Just because a product reaches v3.0 and has a broad customer base doesn’t mean it shouldn’t continue improving. Let’s look at a few companies that continually improve their products and some that don’t:
Apple
Launched with an extreme passion for products and customer experience.
It lost its way from the late 80s to the late 90s.
Found its way back and continues to innovate with beautiful products.
It’s all about the products and user experience.
It’s also about an integrated experience combining design, manufacturing, chips, operating systems, software, logistics, and the sales & support experience.
Microsoft
Generally takes a more price/performance-based approach.
Has hits and misses in most of its product segments, but is relentless in making up for missteps.
All of its major product lines have improved substantially in the last five to seven years. See Marketplace 365, Windows 10, and Azure.
Has embraced “open source technology” and made it their own with great results.
The new CEO, Satya Nadella, has infused a renewed love of products and customers. Microsoft is once again among the most valuable companies in the world.
IBM
Created modern corporate computing and the industry-standard PC.
The old phrase was, “Nobody ever got fired for buying IBM!”
Since 2000, the company has lost its way.
IBM no longer sells many products that are considered best in class. The transition to cloud and mobile has been slow and inconsistent in execution.
IBM’s Red Hat acquisition is a $35 billion bet on cloud infrastructure that may determine the company's long-term future.
Constantly innovates.
Corrects technical and UI mistakes quickly.
Listens to its users on issues related to service performance, which is hard, because they have 2.5 billion of them.
Creates innovative services for advertisers both on the web and on mobile.
Acquires best of breed companies to broaden its platform faster — sometimes paying a hefty premium.
Hit significant headwinds over content moderation, its new cryptocurrency, consumer privacy, government relations around the world, and anti-trust concerns.
6. Great products lead to great exits.
Most companies don’t start with an already mapped-out exit strategy, but they want to eventually monetize their investment in time and capital. Three things drive high-value M&A transactions:
Market-leading products. Therefore, keeping your eye on the product ball is critical. So is coming up with multiple products that are well-received and popular.
Superior talent at the management level and below. Some acquirers are willing to pay $1 million per programmer for a high-performing software company before they value other parts of a company. Again, the talent is directly connected to the quality and market share of the product.
Great financial performance. Why do you get great financial performance? Because customers love your products and tell their friends.
In Closing
NewPlan has a deep customer base across many segments of the technology industry, from hardware component makers to enterprise software and online media. As you think about your planned and current product offerings, I’d like to ask you some questions:
Do you sell high-quality products or services to a target market?
Do you believe your products are the best in class in their market?
If they aren’t the best in class, why not?
If your products are best in class and you wanted to find a buyer, how much more would an acquirer pay for your company?
Do your employees believe in your products?
Do your customers value your products more than they did three or five years ago?
How does the market view your products versus competing offerings?
Business models vary by target market, but products make the world go round. So love your products. Your love will be paid back a ka-billion times over.