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What Are The Risks In Digital Product Development That You Should Know And Reduce

What are the risks in digital product development that you should know and reduce

In 2019, digital experience is a key part of every brand. You wouldn’t be reading this if you didn’t know it already. But we need to be honest for a second.

Even if digital products can have a massively positive impact on a brand, digital product development is still a high-risk venture. And we’re not just talking about the risk of competitors out developing you.

Each year companies spend millions of dollars on digital products that ultimately fail to achieve adoption or provide the expected results. This risk can’t be eliminated, but it can be mitigated.

The main risk in digital product development is losing sight of what matters

1. Your customers

It’s easy to think that you know exactly what digital experience your customers want. As an expert in your industry and line of business, you may say that you know what your customers would need better than they do. This thinking creates tremendous risk for your digital product.

Spotify is arguably the leader in music streaming. Does the fact that they’re big and successful mean that they guess at what customers want? No. Spotify will run simple A/B tests with 1% of their user base to gauge the value of a potential feature before ever investing development time into it. This helps them optimize their development list.

Behind every idea for a new feature there’s a guess about what that feature will do for users and how it will improve your product. If you don’t validate features, then it means you’re making a lot of guesses. Some of these are probably bad guesses and they’ll go on living in your product for a long time. That increases your risk of losing customers and revenue due to creating a product that doesn’t serve their needs.

2. The product’s core purpose

What is your digital product’s core purpose? You can think of it this way, Uber gets you from point A to point B. So if Uber decided to use its resources to deliver food too, it’s not going to add an extra tab to its current app. Instead, it will create a completely new app with a core purpose of delivering food. They did this and called it Uber Eats. This allows them to keep each user interface streamlined, which gives users less information to digest and allows them to make decisions quickly.

In 2019, product development takes less time than ever before, which leads to overdeveloped products. These bloated products lose consumers. To avoid this, you need to align with and optimize around the product’s core purpose. Sometimes that means listening to some of your customers while ignoring others.

Confronting the hidden risk of being close-minded

No one considers themselves close-minded. But after working in your business for a few years, it can become difficult to accept outside ideas. This is because you become an expert on your line of business, the customers you serve, and what you think they want. When you hit that point, you may think that you know your customers better than they know themselves. But, this is never true. Why?

Who invented the hashtag? You may say Twitter, but you’d be wrong.

Users (specifically, Chris Messina) invented the hashtag and Twitter saw the trend and adopted it as part of their product. They were open to where the market was naturally going and adapted to it.

The risk for Twitter would have been seeing the hashtag and saying, “This isn’t important. We know better.”

Creating a tectonic shift in mindset

A good portion of the risk in digital product development comes down to the mindset of those driving it. Specifically, when they approach it with a do-or-die mindset that doesn’t take into account the current digital landscape.

Digital product development is the exact opposite of physical product development. This is because digital products:

  1. Change at will
  2. Continuously evolve
  3. Change as quickly as needed

This means that you can’t be married to the product you ship. It can change, progress, and improve. And if it doesn’t, then you probably built the wrong thing.

One of the best ways to mitigate risk is to ensure that the team driving the project understands this agile mindset and is getting a complete view of the project. This requires building a cross-functional team that brings together tech, creative, and business expertise to learn lessons together.

How to mitigate the risks of developing a digital product

  1. Understand how technology changes affect your entire organization. This includes looking at how it affects your culture, changes the way you interface with consumers, and creates new structure within your organization.
  2. Look at your product development methodology. Are you still looking at it from the standpoint of physical product development? Or have you embraced the flexibility of digital products? Are lines of business empowered to create and own their own digital products?
  3. Consider how your executive team gives marching orders. If your executive team hands down a laundry list of features, then your team may end up building the wrong product. Instead, they need to state a clear core purpose around the customer need for the product and give their team the freedom to find the right way to solve it.
  4. Test your hypothesis in market before building. Testing a prototype of your solutions with your customers and in market will help you validate the solution and ensure produce market fit.
  5. Reward failure. The faster you fail, the faster you’ll get to the right solution. By rewarding failure, your team will be able to keep making progress instead of being stifled or trapped by an ultimatum.

Learn how we put this methodology into practice to help a 29,000-employee health care network through the digital transformation process.

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