When the Going Gets Tough – Innovate!!
This is a tough time to be starting a business, but many people in technology or with deep industry experience who have been recently laid off are doing just that. Companies with existing product lines are facing tough choices too. Can you afford to sit on your hands while your sales dwindle? So let’s imagine you’re one of those folks…
A little depressing in these times but...
You’ve just been laid off. You have great experience in your field. You have an idea of what you want to do. You think a cloud/on-demand business is the way to implement the idea, especially in this economy. You know the venture capital market is pretty tight for new startups (!!!). Between the severance you got when you walked out the door, money from the three F’s (Friends, Family & Fools), and what you might be able to get from a second on the house (if the banks will cooperate) you could get going, but from what you’ve heard, you don’t have anywhere near the $3-4 million startups used to get in their “first round.”
Or let’s take the another way: You have an existing software product. With the economy in the tank, your license renewals and new sales are not meeting quota and the budget you had for your next version is no longer possible. You really need the boost the new modules in your product plan could give your sales, but it looks like you’re just going to have to wait it out and cut costs. Meanwhile a competitor, that released their latest version in early summer, is also struggling, but at least they are getting sales – by targeting your base.
In one way, both these folks are faced with the same problem – they have to innovate their way out of a tough time. Their solutions are likely to be somewhat different, but their underlying issues are much the same. Hiring staff, heading off on a new venture that can leverage their experience and the issues in this economy seems to be beyond their reach. In the end though, the smart ones will innovate their way out of it.
I read an article today in Manufacturing Business Technology from Sidney Hill. He alternatively takes the side of the potential customers and the ISVs – and points out that:
“This will indeed be good for a number of the companies on our emerging vendors list—companies like Plexus Systems, which offers a SaaS-based ERP suite; and New Momentum, with a SaaS-based product that helps manufacturers reduce myriad supply chain risk factors.
If you read our emerging vendors coverage, you will notice that the SaaS model is not the only innovation in the manufacturing software space. You’ll learn about companies like River Logic, a newer vendor offering a solution with a new twist on supply chain optimization; and Zontec, an established vendor of statistical process control (SPC) software that now makes SPC results available through mobile devices like the iPhone.
This issue proves that innovation continues in all economic climates. Let’s just hope that the Emergency Economic Stabilization Act of 2008 clears this current storm sooner rather than later.”
The smart approaches we’ve mentioned before, building to the long tail. knowing your market, and developing a strong, service-based approach remain key and will save cash, but there is one additional tool which is also worth consideration – many companies today are leveraging outsourcing services for product development. It is certainly beating our own drum, it is in fact one of our core services. But from that point of view, there are some important points to consider before going down this road.
Companies that provide Outsourced Product Development (OPD) for software-based products fall into two broad categories:
- Classic product management consulting for the front end of the project – market analysis, product definition, feature prioritization, and specification phases.
- “End-to-end” OPD practices within software development consultancies that offer at least some portion of the front end (there is a lot of variance) tied to the in-house software development team.
Each approach has its downsides…
A management consulting approach tends to be more expensive for the front end, but it may offer specialized market analysis and vertical expertise not available elsewhere. Once the “front-end” part of the project is done, you are then faced with either developing the resulting product specs in-house or finding a development team that can translate the product specs into technical specs and project plans. That can involve several iterations as both the product specs and the development plans are rationalized. Depending on the approach the consultancy uses, your team may be less involved than you would like. Time and cost constraints can limit collaboration with the management consulting team.
An end-to-end practice can greatly streamline the translation of the product specs to technical specs and project plans. If the development team is integrated into the product definition process, many of the downsides of projecting impractical features or configurations can be exposed early. But, if the OPD team is remote and not easily accessible during the process – poor communication and the lack of collaboration with the in-house team can result in the proverbial “camel – a horse designed by a committee” situation. Worse, if the development is begun before the problems are completely understood, the expensive camels can be packed up and ready for market before you realize what is in the box. And yes… It happens a lot more than we like to think.
But let’s say you’re not scared off by these possible downsides. You’ve been around the block a few times and you know that issue mitigation is necessary regardless of how you approach the problem. The key is knowing the issues and making appropriate judgements as you go along. Is there a simple bulleted list of issues to watch for that would help make a judgement?
Yes – there is. And you can find it in the second installment in this series as we explore the critical considerations you need to know when selecting an OPD team. Join us for the second article in this series: OPD – Product Development “In the Cloud.”
Useful? Copy, paste and Tweet It!
When the Going Gets Tough – Innovate!! http://bit.ly/4GnV
