What product development strategy is right for your start up?

There are two primary product development strategies and multiple ways of executing them, but there is only one that is right for your company. Finding that strategy and understanding the dynamics may be the difference between success and failure. It may also revert your perception of whether you are doing well.

Nicholas Nassim Taleb has an interesting concept of antifragility. Antifragility are strategies that benefit from shock or randomness, where fragility is the opposite.

A fragile strategy is the classical stock investment or lending money where most likely you will get an ok return, but there is the odd chance that you could loose all your money.

An antifragile strategy is counting on loosing money with the odd chance that you could gain a lot. Options trading would be an example. Here the unexpected is your friend.

Product development
I was thinking about how that could translate into product development strategies. Developing a product is similar in that you invest in it and expect to get a return.

The fragile strategy would be to continually try to develop the product so it performs a bit better in the market place. This is the typical way, and we know it from techniques such as A/B testing and constant tweaking to increase performance on some central product parameter. But this is also risky, because suddenly you may wake up and find out that your entire product line is obsolete even though you have continually improved it. This is what happens when companies are disrupted.

So, could an antifragile strategy be the solution and how would it look? I think it would be a strategy where you try a lot of things that are most likely going to fail, with the odd chance that you could hit it big time.

One scenario is launching a lot of products just to try and see. This is what google and Richard Branson do. There is no end to what they launch. A cheaper way to do this is to probe for demand through market research, prototypes or some other way to get input from the customer about the perceived value. The Lean start up movement is the champion of building cheap “fake” products that are good enough to verify a potential demand.

Another scenario is to launch a product in a market that you feel there could be a potential, but where no product has really had any success. Continuing to develop this product is certain to loose money, but something might happen. You may hit the right combination or market conditions could change. You just need to make sure not to make the same mistake twice

Choose the right strategy for you
Choosing one or the other strategy is not not self evident. Whereas the financial system seems to have most people following a fragile strategy it seems that the start up “industry” is following an antifragile, which is great for the very few people who have time, resources and luck enough to stumble upon a product that hits it big time. It seems to me that your choice of strategy should depend on what sort of life you want to live. Is it ok, although very unlikely, to one day not have a product? Can you live with continuing protracted loss? Do you just want a predictable return? or do you want to have the remote possibility to become a billionaire.


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