The big mistake is thinking of technology as an end in itself, isolated from the need we are going to satisfy, when it should be the means to deliver that useful value proposition.
The Role of Innovation in Growth and Market Adaptation
Innovation applied to new products, services, and experiences is a growth engine. In turn, for this innovation to develop, it needs an ecosystem integrated by a series of conditions, from the business fabric to the human factor or the legal framework, which is usually slower. However, beyond energy and enthusiasm, to move from innovation to its concretion in product development, we must always apply a rigorous methodology.
Startups vs. Traditional Companies: Agility in Product Development
The much-idolized (sometimes excessively) startups have this very clear: innovation and product development, along with extreme agility in market launch, are part of their DNA. In a pre-COVID context, the more skewed timelines between a startup and a non-startup could be more tolerable for the latter, which, in addition to a (more or less) generous market share, has resources and inertia in terms of product portfolio that gives it financial muscle to undertake that development in its portfolio. But in the current context, with a drastic reduction in revenue or, in some sectors, a direct cut-off of income, organizations that are “not pure players” or were born and evolved in a pre-digital context, their seams can be seen. Urgency can act as a catalyst and accelerator for new launches, but it is a bad companion if our roadmap is not clear or if we force it to fit into unrealistic timeframes. What we could call ‘digitize me slowly, I’m in a hurry’.
The Importance of a Clear and Objective Value Proposition
Let’s pause on a concept assumed to be key, but which in certain moments some organizations may not tackle with enough rigor and objectivity: the famous “Value Proposition”. Let’s remember that it is the factor that makes a company different and useful compared to the competition and is appreciated by users. And the 3 bold words are absolutely key. Netflix’s? Clear, simple, and direct based on three axes: quality content (original or from third parties) personalized for the user, multi-platform accessibility, and an affordable pricing model.
“Launching an initial version of a product, service, or experience should already fulfill that value proposition, and future improvements should fine-tune the delivery of that value across its various dimensions, whether it be in the product itself, its delivery, warranties, or other elements.”
And that is (or can be) the trap of product digitalization. Digitalization as the core or as the vehicle for delivering that proposal. A very significant decision that can generate many doubts when what we should be working on is a translation to the digital environment of a product/service that already existed in its “non-digital” format.
Challenges in Digitally Transforming Products and Services
It must be taken into account that any product subjected to the pressure of digital transformation becomes a service. It’s as true as the fact that the more powerful the experience delivered (at a sensory level) in an intangible or “non-physical” product/service, the more difficult it will be to transform it digitally without losing value for the customer. Just look at sectors like live events, whether musical or sporting (for example): their digital transition is neither fluid nor harmless, and can lose “layers” of value for the customer during this process, forcing them to reformulate their value proposition and/or alter their price and hope that the turnover is compensated by a greater number of units (tickets) sold thanks to digitalization and being able to reach customers who would not have attended otherwise.
Market-Driven Digitalization and the Risks of Rushed Decisions
Ultimately, the pressure to digitalize should also come from the market and demand. The prospecting for digitalization opportunities by companies severely affected by the 2020 pandemic lockdown in some cases was more like searching for gold, an activity where searching, filtering, and searching again for the precious metal required time. But economic urgencies are terrible and we can’t afford to be bent over swinging a plate in a river with patience until we find that product that will allow us to achieve a minimum positive profitability.
That’s why Lean models are very valid for these processes because, among other factors, when well applied they should allow for great agility by shortening the time to market, that unproductive impasse (in terms of revenue) between product development and market launch and the start of the desired monetization and future profitability. But alas! The tricky value proposition. The customer is king, and when it is weak, the pressure of Marketing and Communication can end up being sterile and also increasing the already tight profit and loss account of the new product.
“History has given us numerous epic products that forever transformed a category (Walkman, within music players) or even an entire industry (iPod) and that were not explicitly requested by the market. But it is equally true that they were products that came to satisfy an already existing need but one that was not optimally met and could clearly be improved upon, with technological progress acting as the essential facilitator.”
A big mistake is to think of technology as an end in itself, isolated from the need we are going to satisfy, when it should be the means to convey that useful value proposition. A means that undoubtedly elevates the value delivered, but that should not be the starting point. The other big mistake is overestimating the perception of real value delivered that our customer has. In short, digitalization, yes, but the beginning and the end are always the same: “customer” and “value”.
