by Syed Hoda, Innovation Leader | 1 Oct | Thought Leadership
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Picture this. Your company is building the next big software idea to disrupt an industry. After months of painstaking development, you&#;ve prioritized resources (and pinned your hopes) on the new product announcement. Everyone has their eyes set on a market success story after the big launch. Yet, a simple misreading of the customer is all it takes to derail your chances of success. Even worse, its cumulative effect, combined with other product development mishaps, can be devastating for long-term profitability&#;especially for smaller independent software companies.
The missteps that hinder growth through innovation are not new. Software builders have consistently faced key challenges the revolve around three themes: &#;For Whom?&#;, &#;What?&#;, and &#;How?&#;. It&#;s time to call out the five innovation killers stunting growth so software companies are armed for success.
Software companies frequently fall at the first hurdle by failing to get to the heart of who their customer really is and &#;for whom&#; their products are created.. Too often product decisions are based on assumptions, rather than understanding who stands to benefit most from the end solution. This flawed approach inevitably culminates in a clash between the product and end user. Teams may build with the buyer in mind, when in many cases the buyer is not actually the true customer&#;they are just purchasing on behalf of other users.
So how do you know who your true customer is? Start by pressure testing who has the most to gain from what you&#;re trying to deliver (or the most to lose if your offering doesn&#;t deliver on expectations). Holding multi-disciplinary workshops creates a more complete picture and ensures that the loudest stakeholders don&#;t have a disproportionate influence, in turn opening the door to more thoughtful, customer-centric innovations. However, identifying the customer is not enough&#;you also must understand their needs. A study by Pragmatic Marketing also found that 60 percent of product failures stem from a lack of genuine comprehension of customers' needs. Wants are different than needs; if all you do is ask customers what they want and then deliver on those asks, you may eventually go out of business. That&#;s because customers articulate their symptoms, but often don&#;t know the root cause of their pain points. The 5 Whys technique is effective for this reason&#;asking &#;why&#; at least five times helps you to probe into the problem and go beyond surface-level symptoms.
This makes sense when you consider innovations that have been adopted by millions around the world, such as the Amazon Kindle. Although numerous eBook readers had been available, none effectively solved a key problem for the avid reader&#;getting instant access to a large digital library at their fingertips while maintaining a comfortable reading experience. Amazon was able to deliver an experience readers loved, but supported by features they never knew they needed (such as wireless connectivity, a built-in dictionary, and search functionality) by working backwards from customer pain points. Fast-forward from its debut in , and the Kindle&#;s success is thanks to continuously innovating on behalf of readers. It has stayed ahead of readers&#; evolving needs, building in audiobook capabilities, a personalized bookstore experience, Kindle apps and more.
Questions to ask your team:
You can survive a certain amount of technical debt, but if you don&#;t have a strategy for &#;how&#; to address critical product issues, you can end up digging your business into an early grave. In fact, a study by McKinsey and Company found that technical debt accounts for around 40 percent of IT balance sheets. Stripe also revealed that engineers dedicate nearly a third of their time to grappling with technical debt.
Quick workarounds to your tech stack may seem like a good move in the push to deliver new products, but over time it becomes harder and slower to build on messy architectural foundations. As a result, it prevents you from working on truly innovative projects. It&#;s important to ask, does our tech debt reflect the company we were, or does it reflect the companywe&#;re trying to be and the customers we want? Additionally, are we spending time fixing past issues or requests that are no longer relevant to our customer?
Untangling your organization from damaging technical debt relies on finding a healthy balance between the old and the new in your infrastructure. This means continuously analyzing which issues are most tied to future value and customer need. Once you&#;ve validated this, you can effectively prioritize improvements over time.
Questions to ask your team:
It can be tempting to pursue a product with all the bells and whistles. But launch delays and technical debt can also rack up when teams pile new functionality (&#;what&#;) onto products without considering &#;How&#; broadly useful they are to the customer. Interestingly, Pendo found that a staggering 80% of features in software products are rarely or never used.
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To prevent feature bloat from ailing your innovation efforts, first you need to get the core value in good shape. Slack, for example, initially focused just on core messaging capabilities before expanding into more feature-rich collaboration tools once they had product-market fit. Figuring out which features are nice-to-have and which are must-have (based on customer pain points) enables you to streamline the build and stay focused on outcomes. After you've launched, you can keep improving your product iteratively by tuning it to evolving user needs and use cases
Questions to ask your team:
AI, perhaps the most timely example of &#;what,&#; is one of the most transformational technologies we&#;ve seen in our lifetimes, and we&#;re just at the beginning. As a result, boards and investors are putting immense pressure on companies to showcase their generative AI strategies, asking &#;Where&#;s the generative AI in our offering?&#;
Many are rising to the challenge in a bid to capture a lucrative share of the market. IDC research shows that over 50 percent of software companies are investing significantly in generative AI to transform SaaS applications. For some, this could be the start of powerful benefits such as faster, better decision-making and dynamic personalized content. But for many, rushing to implement generative AI can leave them stuck with flashy, but impractical solutions that fail to solve real problems. Which is why, unsurprisingly, Gartner found that 85% of AI projects fail due to unclear objectives and obscure research and development project management processes.
&#;The answer is generative AI, what&#;s the question?&#; should not be your foundational strategy. Solutions regularly fall short of expectations because they start with the technology, not the customer&#;s pain point. Generative AI shouldn&#;t just be a marketing tool to grab investors&#; attention or used for the sake of it. If applied properly, it expands the art of the possible. Challenge your teams to define what 20% better looks like versus 200%, or % better. What are the big ideas where technologies like generative AI or machine learning can transform what&#;s possible? And what are the best use cases where there is lots of inefficiency, costs, and data?
Questions to ask your team:
Does your leadership team have thoughtful &#;buy, build, or partner&#; conversations? The most successful automotive companies have learned to never build all the components for a car themselves. They form partnerships to get the best possible performance, quality, and efficiency from each part, whether that&#;s the engine, the brakes or any other mechanism. This same &#;how&#; principle can be applied to building software solutions.
Far too many organizations have a build-first mentality, which can slow down the development cycle or deliver subpar features. For example, when there are several great payment modules available, why waste time building when you can integrate another (probably better one) right away? Software companies are unlikely to have the necessary expertise or maturity in every aspect of product development, but partners can vastly speed up and improve the product roadmap.
The right partners can also present a lifeline when talent shortages threaten to sink innovation efforts by bolstering teams with cross-functional capabilities. According to IDC research, over half of software companies say a lack of developer skills and expertise is a barrier to building new cloud-native solutions. A study by BCG also found that 44 percent of talent constraints. This challenge has been magnified in the development of scalable, generative AI solutions as the talent war rages on for data engineers, prompt engineers, AI security experts, AI architects and more.
Questions to ask your team:
Does your organization face one or more of the above challenges? This is not just a question for the Chief Product Officer. This is a discussion for the entire leadership team, bringing together internal operational perspectives along with external go-to-market knowledge and experience. Additionally, these five challenges are not meant to be treated as a &#;check the box off&#; topic, but rather a cultural mindset. Think of this more as a journey of continuous improvement (through frequent practice) rather than a destination.
When the frantic pace of disruption is becoming less forgiving, software companies can&#;t afford to be blindsided by innovation killers. But the core of these five mistakes boils down to the same truth: Successful product development relies on knowing the true customer and their needs (not wants), before you can thoughtfully build and deliver that value
The challenges explored here rarely exist independently of one another. Balancing the need for speed-to-market while ensuring ideas deliver real business value ultimately comes back to working backwards from the customer. In taking this customer-first mindset throughout product development, software companies will be far more likely to reach both predictable outcomes and profitability&#;on a consistent basis. Reach out to learn how AWS can help set your company up for success to deliver business value.
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