Over the last eight months, there has been a dramatic shift in the way consumers interact with businesses. According to a study conducted by McKinsey, the Covid-19 crisis has accelerated the adoption of digitized customer interactions in North America by three years. There has also been a seven-year increase in the rate with which companies are developing digital products and services. If you didn’t believe us when we said now is a good time to bet on yourself (again), there is further proof.
After losing our biggest client in 2018, we took the leap and began building a product through equity investment. We shifted our mindset, found the right partner, did our homework, raised money, and uncoupled the product from the agency. Now our minimum viable product (MVP) has been built, and we’re ready to launch to beta. The journey has been filled with lessons — ones I hope to continue sharing with you to help your team avoid the same mistakes we made.
1. Commit a Full-Time Team for No Margins
The agency playbook tells us that to survive, margins and utilization need to be at full capacity. Accepting that you won’t make money now (or in the short-term) is contrary to all that we’ve been taught and experienced as agency owners. To give your product the best chance for success, go against your instincts and commit the right amount of people to the project — even though the bottom line may look terrifying. If everything goes right, the margins you are foregoing now will be kicked downstream with a multiplier.
The process of building an agency and a product is different and requires competing mindsets. We attempted to create a digital product that had market validation in the past, but we didn’t adequately resource the project, so it failed before reaching MVP. And this narrative is common. Inadequate resourcing accounts for 22% of unsuccessful projects.
2. Adopt an Agile Approach
Older methodologies, such as the Waterfall approach or Water-Scrum-Fall, are not flexible enough to meet the current demands of product development. Agile forces teams to decide on MVP early and work through short sprints until achieved. With the understanding that projects rarely go according to plan, Agile is designed to adapt to the unknowns and the unknown unknowns.
An important disclaimer: If your team is not fully competent in Agile design and development, your product should not be your first attempt. Trialing Agile on your product means attempting to solve the product’s problem and the delivery, which is never recommended.
3. Designate a Product Manager or Owner
Many CEOs feel they are best suited to be the product manager. Before electing yourself to the position, consider how autonomous your agency is. If the agency requires leadership to run, doing both is not easy and may compromise each venture’s success. Instead, identify someone internally or hire an experienced product owner. You can still influence the direction but do so at 1,000 feet. I took on the Chief Product Strategist role and continue to find it challenging dividing my time between the agency and product.
4. Seek an Experienced Advisor
Client and investor expectations are radically different. The responsibility agencies have to clients is to design, build and ship. Once the solution is live, our job is complete. Investors require reports on progress, burn, trajectory and forward-planning. They need to know the go-to-market strategy, marketing, product fit and continuous improvement plans. These updates go far beyond typical client work and may feel foreign to agency owners.
Reach out to your network and solicit guidance from an experienced advisor. Nurturing a product long-term surfaces many unknowns for agencies that have only been concerned about moving from project to project. The earlier you seek counsel, the better prepared you will be to respond to investor, product and market needs throughout the build and post-launch.
5. Prepare Your Go-to-Market Strategy Earlier Than You Think
Preparing your product for launch is almost as important as the build itself. Ask questions such as: Who will be the business-as-usual team? Do we hire a full-time marketer? How many features should be included in Beta? These are all critical components of the process to consider.
As the CEO, your best chance at success is to have the discipline to step away from designing and building the product, trust your team and focus efforts on going to market. If you begin launch planning when the product has nearly reached MVP, you’re too late.
There is not a lot of money to fund this step. Most of the dollars raised are used up by the build. With infinite possibilities of launching a product, it can be challenging to know where to allocate the small number of resources left to get the biggest return. If you don’t have experience with go-to-market planning, reach out to an advisor as soon as possible.
The Journey Continues
Building a product and running a digital agency does not get easier or less risky (not yet, at least). Some CEOs pivot completely, go all-in for a product and shut the agency down, but we are running the two in parallel. I chose this path because the risk of being stretched too thin appeared better than running a deficit. I grossly underestimated what it was going to take to run both and have a family.
In addition to committing a full-time team for no margins, adopting an agile approach, designating a product owner, seeking an advisor and preparing your go-to-market strategy early, consider the constraints on your time outside of work. Knowing yourself and what you can handle is also a crucial part of the product development process.