A delicate balancing act that often goes wrong
Rebuilding a product is tough. I helped rebuild 5 products across different industries: oil & gas, health care, e-commerce, and marketing. Some of the revamped products were a big success, others a massive dud just burning heaps of money.
What can we learn from these vastly divergent experiences spanning various industries? Why did some rebuilds succeed and others fail?
Why is it so hard to rebuild a successful product? Rebuilding something that is already a success should be easier than building a product from scratch? The starting point is a product that already works and delivers value to customers and the business. You just need to take what works and make it better. Easy peasy right?
Rebuilding a product is not only challenging but also an expensive undertaking. The old product needs to stay running, and you need to keep on closing deals. Yet anything new you add to the old product will delay the new product. As a result, fewer deals will be closed because customers aren’t getting the new features they are asking for in order to sign their contract.
When you rebuild a product, you are faced with unique challenges you never encountered before. Successfully rebuilding a product requires a delicate balancing act: preserving the old, yet embracing the new.
How do you decide what parts of the product to preserve and which ones to eliminate?
Reflecting on all these different products that I helped to rebuild, I tried to identify the 6 most common mistakes I have encountered when rebuilding a product.
1. Being unaware of loss aversion
In the 70s, Pepsi started nibbling away market share from Coca-Cola. Pepsi achieved this by gradually improving its taste. By the 80s, Coca-Cola had lost a great deal of market shares to Pepsi, and the Coca-Cola executives began to worry.
Coca-Cola reacted by playing the Pepsi game: let’s improve our taste. Money was not an issue to devise a better Coke.
Around 200.000 randomized, double-blind, placebo-controlled taste tests were performed. Since the risk was huge, Coca-Cola wanted to play it as safe as possible and be certain the new Coke tasted better.
The end result of all this research and testing was a formula that obliterated the competition. It objectively tasted better than Pepsi, old Coke, and any other brand in the world you would pit it against. Everybody believed that the new Coke was going to be a huge success. After all, it is hard to argue with mountains of data.
Despite all research, excitement, and hype, the Coke II failed. It is labeled as one of the biggest business disasters of all-time. Coca-Cola received nearly 400.000 letters and phone calls from people who hated the new Coke. It was such a big disaster that Coca-Coca never admitted how much money they lost exactly.
Why did the new Coke fail despite all evidence backing up its superiority?
When releasing the Coke II, people were losing the old Coke and gaining the Coke II. The new Coke II did not just need to be better. Coke II needed to be twice as good to offset losing the old Coke. The phenomenon that people hate losing more than gaining something can be explained by loss aversion as part of the prospect theory.
Daniel Kahneman and Amos Tversky won the Nobel Prize for developing the prospect theory and founding the new field of behavioral economics. Kahnemann and Tversky figured out that humans evaluate losses and gains asymmetrically. Humans hate losing much more than gaining something equivalent. In some of their experiments, the pain of losing 1000$ could only be offset by gaining 2000$.
When you are developing a new product, you need to pay extra attention to what your customers will lose in the new product. The blow of losing what they had before hits much harder than the pleasure of any new things that are gained.
2. Pivoting to serve a new market, when you already have product/market fit
When you have a product with a product/market fit, it’s very dangerous to pivot. Having a product/market fit means you have a product that serves the needs of a specific market. By pivoting to serve a new market, you might alienate the existing market that brings in all the revenue.
I once worked at a company where they decided to pivot a wildly successful product. Building the new product was started with a deadline for when it would be finished, together with the ambition to serve a totally new and different market. Because of the tight deadline and the enthusiastic plans to serve a new market, nearly everyone was shifted towards building the new product.
This focus on building was a fatal mistake, and cost the company a lot of money. When serving a new market, you should prioritize learning over building. In the end, the product looked amazing, but it wasn’t solving a problem anybody wanted to pay money for. A lot of resources were wasted, and, in hindsight, it was inevitable the plug would be pulled on the product.
3. Insufficient understanding of why people use your product
Why do people use your product? How does it make the life of your users better? People buy a product, not because of what it does, but because of what it does for them. There’s a big difference between the two.
What is the job your product is hired by users to do? If you don’t know what’s the Jobs-to-be-done (Jbtd) of your product, how do you know what you need to rebuild? By viewing the product through the lens of Jobs-to-be-done, you can make decisions when rebuilding that will ensure you build the right thing that can make the lives of your users better.
Resist the temptation to start talking about which features your new product needs to have. Start first with understanding how your product delivers value to its customers. Customers are only willing to pay money if the product grants them progress in their lives.
If you don’t know what problems your product solves, by removing or adjusting features you may be throwing away customers at the same time.
4. Lack of prioritization when rebuilding new product
Resist the temptation to label every feature as a must-have, simply because it already exists in your current product. Making everything a must-have has the opposite effect it is intended to have.
The drawback of making everything a must-have is that nothing becomes important. It means you lose control over what is important and what isn’t. Since rebuilding a product is a delicate balancing act, this lack of control is even more dangerous.
I’ve written about it at length here, in case you want to learn more:
5. The migration strategy as an after-thought
Your old product contains a lot of customer information that does not exist in your new product yet. Do you need to get this information in your new product? If yes, how do will you transfer the existing data to the new product?
Migration as an after-thought can lead to big problems. Your new data model may not support copying over essential information from the old platform to the new, leading to costly rework. Making sure all information is copied over accurately is not an easy feat and requires painstaking work. It is either right or wrong. Not taking it into account, may cause your rebuild to take significantly longer than initially planned.
Already start migrating parts of your data early and often, as this prevents many problems down the line when you’re close to going live.
6. Nasty surprises because of an absent roll-out strategy
How will you introduce the new product to your users? Will you gradually replace parts of your existing product? Will you do a big bang release? How will your existing user base become familiar with the new product? How do you ensure that they don’t become stressed because they are forced to learn so many new things at once?
A smart roll-out strategy can prevent a lot of problems. You don’t want to be in a situation where a large chunk of the product becomes available to users with an immediate backlash as a result. Think about how you will roll out (parts of) your new product and gain feedback to make sure you are on the right track.
How users will react to your product shouldn’t be a surprise after you roll it out. It should only be a surprise to the new users you are rolling it out to.
Rebuilding a product brings unique challenges you need to tackle
Rebuilding a product is a delicate balancing act of preserving the old, yet embracing the new. Working on a new product is a distracting and expensive endeavor that will spread your resources thin. It is a race against the clock where any new feature added to the old product works for you and against you, both at the same time. Rebuilding a product is all about making the right trade-offs. Any decision you make, limits choices you are able to make afterwards.
The best advice I can give is that it is better to make wrong trade-off decisions than to make none. Very often, due to uncertainty or out of fear of making the wrong choice, no decisions get made. This results in a lack of focus and half-assing multiple things. Betting on many horses is often worse than making the wrong decision.
You can fix things later, but if you’re in too deep on many wrong paths, that’s when you get stuck and there is no way out. Of course, try to be diligent and not make hasty decisions you’ll regret later, but sometimes you just need to roll with what you know and make a call.