24
Jul

Revisiting Ready Fire Aim Product Development Methods

We last wrote about “Ready, Fire, Aim” product development strategies in early 2012. But we are presently working with a couple of clients who have implemented the same strategy. So it makes sense for us to take a post to this blog to update our position on the method.

While we understand why this method makes sense for many early stage technology businesses, we still must express our strong advice to very closely monitor product performance, together with market perception of product performance, as products designed with this methodology are rolled out to the public for purchase.

“Ready, fire aim” does not include enough product testing time. So we advise clients to actually expand product testing as cash becomes available to pay for beta programs, etc. Product testing should include not only the technical performance of the product, but also the product concept. Manufacturers need to test the assumptions about markets upon which products were originally conceptualized. It’s best to pour cash into testing efforts earlier than later.

Early stage technology businesses implementing this technique should also make the best effort possible to carefully pick the customers who will be first to implement the products in targeted markets. Certainly revenue is a tough driver on this one. Most technology businesses will jump at an opportunity to service a large and influential customer very early in a product cycle. But why take the risk of closing a big sale with a prestigious and influential customer only to find your product is not working as advertised? A much better strategy would look to see the market at the periphery with some early sales to ensure the product is working as advertised and as expected.

Where possible, we advise not using a “Ready, Fire, Aim” method of building products. So, if possible, make sure to carefully position and prove your product concept before you build it.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved

11
Jul

Streamlining Development Processes can Deliver More Revenue for ISVs

In an article titled Steve Ballmer’s hits and misses from Build 2013 keynote, Derrick Wlodarz, who wrote the article, notes “Rapid Release is the New Norm”, and judges this point to be the ” . . . single facet of Ballmer’s speech (which you can watch here) [which] was by far the biggest theme of his near 25 minutes on stage”. We agree with Mr. Wlodarz’s assessment.

As innocuous as it may seem, the timing of product release, together with a businesses ability to hasten the development cycle, can result in a substantial contribution to revenue. Consider this example. Let’s say it takes an ISV 3.5 years to release a new software platform. The retail price for the new platform is set at $125.00 per computer. With a universe of, say, 100 million computers adopting the platform in the first year of its release, the bottom line contribution from the new product is $12.5 Billion for the first year in new revenue — certainly not a shabby contribution at all.

But let’s say the product development cycle is cut down from 3.5 years to 1 year, while at the same time the retail price of the software is reduced to $45.00 per computer. In the first year, the same 100 million computers are outfitted with the new software, for a $4.5 Billion revenue contribution for the first year. The next year there is another release, which magnetizes the same 100 million adopter for another $4.5 Billion revenue contribution. As well, a second 100 million jump on the first of the new releases in the second year for another $4.5 billion revenue contribution, and so it goes. The end result of the 3.5 year product life cycle is, perhaps, an additional $12.5 Billion over and above the contribution of the old product — a full 100% increase in revenue contribution, and, therefore, a really big deal.

The old adage “time is the enemy” is no less true for software than for any other product line. If Steve Ballmer can achieve the heightened efficiencies he alluded to at this conference, we think it’s a very very big deal.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved