Speed and the product lifecycle

23 Feb

If you’ve looked at any of the material on technology products, you’ll have seen this curve:

Innovation adoption lifecycle

To a first approximation, this tells us how fast a product will sell over time, and knowing about the types of people in each of the segments will tell us how to tailor the messages we put out about the product.

I did a spreadsheet to see what happens.

profit_no_devel

Wonderful. Look at all that lovely profit.

But before we can sell something, we need to develop it.

Let’s add some development time into the project. And let’s remember that we have to borrow the money from somewhere to do it.

profit_devel_6m

Not only do we need to borrow to do 6 months of development, but also we make less profit.

And, of course, everyone wants to make sure that the product is as good as possible before releasing it onto the market.

Bad idea.

So they make the product better – and it sells 50% more than it would have done. But they take 50% longer to do that.

profit_devel_9m_more_revenue

Ok, we made slightly more profit. But it happened later, and we got more in debt to do so.

And what happens if they were wrong about the value of the features? What if we didn’t sell any more?

profit_devel_9m_same_revenue

Ouch. We don’t break even until right at the end of the product’s life.

Now, to be fair, there’s a fair collection of assumptions in those graphs, and I don’t pretend they are anything like precise. But that does look to me like a really strong argument for getting the minimum viable product out as quickly as possible. Now I get to try and explain it to the engineering team…

 

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2 Responses to “Speed and the product lifecycle”

  1. rdn32 2013/02/23 at 15:12 #

    Part of the trouble with the concept of “early adopters” is that there is more than one sort.

    Some people will adopt a technology early because it solves a problem that they have, and for which they need a solution. For them, an incomplete solution is better than no solution at all; “worse is better” is a reality, not just a slightly dated cultural reference. They may well be fairly patient about wrinkles getting ironed out, and will see the benefit of being able to provide feedback that will guide further developments.

    Other people are early adopters because they want (or need) to be seen as early adopters. They need a “wow” factor to stay interested. In the long term, however, they are likely to go off an find something else to adopt early.

    The real difficulty lies in being able to tell the difference. Whilst it would be nice to be able to clearly distinguish engineering from fashion design, but I suspect that horse has long since bolted.

    Perhaps we need a variant of the 5 Whys of root cause analysis, directed towards the work being done rather than its interruptions, starting with the question “What problem is this solving?” and repeatedly following up with “And why is that a problem?”

  2. richwalker23 2013/02/24 at 15:04 #

    I think there are ways to distinguish the two, and Geoffrey Moore provides clues in “Crossing the Chasm”. My simple test would be:

    Is this person looking at a new technology as a way to transform what they do in their industry, or is this person buying a shiny thing because they are excited?

    If they are trying to transform their industry, then they are going to be a difficult customer, but they are the difficult customer you want, because you have the opportunity to create a new market niche, and hopefully to get paid for doing that…

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