The top 3 fallacies of product development - We’ve learned the hard way

Andrew Butel
October 1, 2020

Our approach at EndGame is to build long term partnerships with our customers as their product team, because building software products/services for businesses (whether you are a startup or tech business) is, at the end of the day, not just about building a bunch of software.

It is about building and operating a long-term profitable business. Where the goal of your business should be to stay in business, and the goal of your product/service should be to match and change to be what your customers need. No project plan can define that.

Don’t try to define a market to fit a product, build a product to fit a market.

It is well known fallacy nowadays, and pitfall #1 for tech founders, that those who treat the software part like, say: building a house; in that you plan it with the help of an expert, get experts to help you build it, it costs some predictable amount of time and money, and finally it is done. These people, also tend to anticipate that all you need to be a successful business is to have a rock solid plan (road map of features) and some top dollar domain expertise (often the founders themselves) in order to build the right product or service.

Miraculously, they just build it, and customers come flocking to their front door, and the business takes off! time to retire! right?

In other words:

Fallacy # 1 — “if you build it, they will come”

This is still the most prevalent position and mentality for the vast majority of tech founders, which accounts for why so many tech startups and businesses still fail. Essentially, spending a ton of time and money, getting to market and finding out that you spent all your money on building the wrong thing. The market that your product thought existed, wasn’t there.

So then, what is the right thing to build?

The truth is, that if the answer to that 100 million dollar question was easily known by anyone then those people would already be sipping cocktails on their 40 meter long yachts in Monaco, giggling at your ignorance.
They are not by the way.

If you are an entrepreneur or a founder, and you think it is just a matter of predicting what the market wants, and you have what it takes to predict the future market (i.e. a crystal ball), then you may actually find it easier and cheaper, and more rewarding, to go play the stock market instead. Because product markets are no less predictable.

We know from bitter experience, because we’ve been there and done that, that real tech businesses neither succeed like that, nor operate like that on a daily basis.

Yes, you do need a really good solid idea at the start, but understand that it is just an inspiration for product innovation, not the product innovation itself. It simply sets an initial direction. What really counts is how you execute that inspiration and how you reshape it into a product/service that people will actually pay money for.

Ideas are cheap, execution is everything.

For execution to succeed, it has to solve a real set of problems your customer actually have, and it has to improve their lives over and above what they are already using today to solve that problem. Remember, your customers are already using various solutions to solve their current problems (some are good, some are not so good). But, they are always on the hunt for better solutions. This is how humans evolved after all. So you now have an opportunity to go after.

At EndGame, for over a decade now, we’ve been building products for a wide variety of industries and entrepreneurs, so we’ve learned a thing or two about the fallacies that entrepreneurs operate under and how prevalent they still are for many entrepreneurs still struggling in market.

We have come to recognise and realise that discovering a new product/service that has found a paying market by customers who actually find value in your product (over and above the other options they have). And to make that business profitable, is a full-time and arduous venture that lasts as long as your business is in business. It is a continuous process, and changing the software part to adapt to that is a critical piece of the process.

Yes, the software may in fact be a very important part of that delivery of value to your customers, the actual vessel for that even. But on no planet in this universe can that software product/service ever done or finished.

It requires continuous investment to make a better and more desirable product/service as your business grows, and it requires that you change the product as you scale the business, with your market as it inevitably changes.

The is no such thing as launching a software product or service anymore. No one is waiting in the internet to knock down your door!

First, you have to pay to go find your customers. Then, you have to prove to them that your thing is 10x better than what they already are using. Then your thing has to actually solve their problem better, and continue to be the best at solving their problem for years to come. — known as creative destruction

Fallacy #2 — assuming that innovation is predictable

It is vitally important that you recognise that you never really know your paying market, and that you have to discover it in-market often using your product as the actual instrument to identify and measure it. This is key to building the right tech product.

A product that your market wants, not a market that your product wants.

Which, quite remarkably is often not the product/service that you may have envisioned it would be when you started on your venture. That’s what pivoting is all about, finding the product/service that the market will buy.

The temptation by many founders, particularly those who held former corporate roles, is to try and predict and plan your way out of these unpredictabilities and uncertainties, because of the extra discomfort that they present to the majority of people used to operating in stable businesses.

After all, who in their right mind is going to grant you funding for something that: (1) you can’t describe accurately to any great level of detail, for (2) a market you are guessing that might exist, and that (3) costs some significant amount of money to succeed in a market that you can’t accurately estimate, and (4) that will take a giant period of time getting right enough to be successful?

No corporate business operates with that kind of level of uncertainty everyday, because that is not what corporate do. They are stable businesses, with stable business models, and stable income that already know where they make money from. They can only change one small step at a time, and they never at risk of their main line of business doing that.

That’s exactly what your startup wants to grow up to be one day. But it is something that necessarily should not begin that way at all.

In reality, you have to ‘adapt to the uncertainty’ to succeed as a tech startup, and that requires that those designing and building your product/service must work very closely and effectively with their market. The level of complexity and collaboration required to succeed at that is far beyond the complexity and abilities of corporate initiatives.

For succeeding in highly complex situations where uncertainty and peril is at every turn, there is no better way for humans to operate than having a small team of smart, diverse individuals, who work very closely together towards a common goal, with clear objectives. And that requires a great deal of focus and effort for founders and entrepreneurs, in defining and communicating those objectives.

Fallacy #3 — The founders have all the knowledge and good ideas

Innovation in tech companies does not come from the top of the company, it comes from those designing and building the technology.
- they are not typically at the top of the company!

At EndGame, we have found over the years of building products, that by partnering with our clients on their venture, and embedding a product team into their business alongside their founders and decision makers. That a better product is ultimately discovered, built and delivered to market. It’s the win-win situation we are looking for.

That is generally far better for that businesses runway, far better for their bottom line, and far better for their brand than suboptimal alternatives like: offshoring, or building in-house IT departments. Especially in the early stages of the company, especially if this is the first time round for the founders.

There are very few tech company founders that start new companies that are NOT experts in the field of their new product/service. Which implies that they are in-fact experts in their respective areas and are trusted as experts by those around them (and themselves) to make key decisions about what their business and product should be — naturally. They are assumed to have the best knowledge about what the product should be and do. Especially by any staff that they subsequently hire into the company.

However, expert at say: construction, finance, law, or banking (whatever field you like) does not automatically endow you with expertise in designing and building a product/service for a market familiar to you. Not only are they vastly different skill sets (executing product development versus practicing law for example) but you also need to appreciate being a customer in those markets (that you may have been) is a wildly different perspective and mindset than providing products/services to those markets. Which you are doing now. The lesson that all retailers eventually learn, that:

you are not your own customer anymore.

This expertise bias experienced by founders coupled with the fact that they typically start at the top of the company in the highest level roles, often leads to an established flow of ideas/innovations from the top of the company to those doing the actual product/service work (who are generally not at the top of the company). This may be just fine at the genesis of the company when the founders pretty much represent the whole company and probably doing all the work, but as more and more people come on board and the company starts to grow in size beyond the founders, the separation between top and bottom of the company stifles critical innovation in the product/service. Generally, at just the time when the innovation becomes the pivotal key to growth of the product/service.

It’s a critical problem because of unintended consequences. Those that may have been doing the design/discovery work will no longer need to make the effort to be wired into their customers, nor will they need to focus on discovering their market anymore, nor measure their customers actual behaviour and performance. Key to building a better product. Prioritization and evidence based decision making will have departed. The founders have been established as the “voice of the customer” that should not be challenged. This manifests as the Hippo effect, and it stifles critical collaboration and innovation from that point forward.

We see this fallacy manifest itself all the time in small companies, and it is because those companies are mixing their business strategy with their product strategy (i.e. into one strategy) where the founders feel utterly entitled to exert their ideas and authority as experts driving the business. But not separating the two strategies is not a recipe for success in creative industries, like building tech products.

The people who are far better at innovating products/services, who are exceptional at knowing about the latest tech innovations, and have the ability to bring them to bare to solve end-user problems are the tech and product people at the heart of the tech company. These people make 100’s of design decisions everyday just making software that people can use. They know what will work, and what won’t work and what is possible and how to leverage it. They know what the tech can do now (as it evolves) and they know how to apply it, and where. What they need the most is clear direction from the business strategy about what problems to go after. What risks they can take, and how to measure towards success. No one can guarantee success, since its a moving target. This is the actual engine of innovation in a tech company. It’s not in the executive suite. Tech companies learned this decades ago.

How can EndGame help you?

A virtual product team at EndGame can be any size you need, depending on how fast you want to go (i.e. your expenditure rate at any one time). We can resize that team up and down at your pace. The operating cost of any team is fixed and predictable (one of the few things that are in this game).Yes, you can go smaller or larger and yes you can go faster or slower, it is up to you.

We recommend keeping the team small and cross-functional and collocated but very tightly integrated with your business, but they must co-own the product strategy with you.

The ideal product team of about 7 individuals has capabilities like: engineering, product design, user research, and is guided by strong product management.

But the most important thing to mange for the product team to be most effective is not product features and roadmaps, but defining the business objectives you want to reach with your business as it grows. The product team then plans what the product should do and how it should do it to meet those objectives. This process requires high cohesion between the team, their customers and your business to stay focused on growing the business.

While you manage the business strategy, EndGame plans with you and delivers a product strategy and product/service to meet your strategic objectives.

This is how it works. The virtual product team plans to your strategic objectives with you and your business, and they use those to identify opportunities in-market to go after. They also share any findings, insights and surprises learned from the product in market. The opportunities are either identified from the market and customers use of the product, or from demands from customers of the product. This forms the beginnings of a product strategy to move forward with.

The team then researches the opportunities and identifies and proposes candidate solutions that can be built to solve those problems — usually one or more solutions. Then, to help identify the best solution they may identify one or more experiments to perform in-market to indicate which of those solutions would be the most effective right now with customers. Those experiments help inform the best solution to go after right now. They build and deploy that solution and test it on your real customers for effectiveness in-market. They track the performance of those solutions in-market and assess the success criteria for it. If the solution is not effective, they improve it, or in exceptional cases pull it from market in favour of the next best solution that performs better in-market.

It is very tempting indeed to skip this rigorous validation process and just assume that your original idea, and your first delivery of that idea will do the job of providing value instantly to your customers (new and existing). But invariably that shortcut yields no learning or improvements to your product, it limits the success of your product, and possible innovation in it. And, long term, that impedes your future business strategies and aspirations. You have a functioning product, but no market or revenue growth.

We will help you not reaching that objective.

So you want to build an MVP?

A good MVP is a viable way of discovering whether you can find a market for your product or service, to help inform you of whether you should continue to invest in your big product idea or not. The general goal, is to answer as many questions about the problems your customers actually have, and whether your product actually solves real problems your customers have before the money dries up. It is all about discovery, not about delivery at this point. Let’s say that another way. The focus in not to get in front of customers a polished product. The goal is to discover if this product is actually solves their real problems. Your early adopters and your backers could care less if it is polished, they already trust you that it will get there one day.

A great outcome of an MVP it is to come away with a handful of micro-discoveries like: “gosh!, I never knew those people [that market segment] also have that problem, and this product could help them”. Or “wow, this really isn’t a problem they need our product to solve”. Or “nobody even bothered to use that feature at all”, I wonder why? Or, most powerful, “our competitor is in fact not Google, Facebook or Microsoft, our competitor is simply the ease of a notepad and pen”.

Without these kinds of deep insights to your customers, all your MVP has achieved is to confirm your own biases that your product solves exactly only the problems you already thought your customers may have had, and that it solves them perfectly. Which would be great if it were true, but it won’t likely be true. But then again you won’t know that either. Which is a very difficult position to be in, in terms of making a decision to continue your business or not. Now you are on track to build something that nobody wants and no body will pay for.

Despite what most tech founders [egos] may think, this isn’t a game about knowing or having all the answers up front, and being the smartest person in the room. This is a game about knowing how to uncover the truth about your customers and critically, exploring better solutions with your product team than you might have had yourself.

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