How to Build A Successful Product in the Hyper-Competitive New Economy
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How to Build A Successful Product in the Hyper-Competitive New Economy
Times are changing.
From 2008-19, we saw a 10x increase in the number of products out on the market.
That means 10x the competition.
That means it has become 10x harder to gain sufficient market share to keep your product - and, by extension, your business - going.
Add to that the realities of lower budgets, lower consumer spending, difficulties in raising capital?
Achieving or maintaining success with your product just became a lot harder.
Want to become a Future Builder - somebody who build products that really have impact? That really matter?
In the following article, we’ll show you how to map the terrain of the New Economy, then outline 4 specific principles (& actionable tips) you can follow in order to not just survive, but thrive.
Why the New Economy is so competitive
Before discussing how to build the future in the new reality we find ourselves in, what is that new reality? And why is it essential to understand?
Primarily, it is because this new reality will persist.
I.E. Economic difficulties are unlikely to go away within 12 months.
That is because of the following key factors:
Increased Competition
As already mentioned, there are an order of magnitude more products in the market. That trend is only continuing, with a whole host of tools to help entrepreneurs launch products with very little effort &, in many cases, no cost.
Take my business, Prod MBA, for example. Rather than hiring a large sales/marketing team, needing to invest in custom-coded products, & hire a content team, most everything can be automated or streamlined. That means I can (happily) bootstrap the business as a solo-preneur with zero employees, using freelancers for specific tasks where needed.
Even for digital products, the explosion of no-code tools & access to world-class developers around the globe through platforms like Upwork (at a fraction of the cost) make it far easier to launch products.
With a whole host of highly-skilled product people laid off, we are likely to see competition increase despite recession, as all these product people become Future Builders, working on their own products, rather than going back into employment (as happened in 2007/8).
Lower Budgets Are Here to Stay
Because this recession is likely to last 2-3 years, forget about that nice bloated budget you enjoyed over the last few years.
In the New Economy, you will be expected to achieve a lot more with less. That means being disciplined in who you hire, and creative in trying to find ways to achieve the same outcomes with fewer fixed costs.
You’ll also find yourself under more pressure to deliver results & more accountable to the profit/loss margin of your product area than before.
Furthermore, borrowing has suddenly become a lot harder. For startups, that means it’s a lot harder to raise investment. For established businesses, that means it’s a lot harder to get a loan from the bank.
The result?
Gone are the days of spending, spending, spending to fuel growth at any cost.
Balancing the books is suddenly back in fashion.
Breakdown of Demand
On top of companies tightening their belts, and seeing greater competition, a prolonged recession means less consumer demand.
We are just seeing the first signs of it, as people’s average savings start to drop to zero. When people run out of their savings, they are then forced to stop spending on all but the most essential products (e.g. paying their rent, rather than paying for 5 different streaming services, for example).
This will make it even harder to convince users to stick with - and ultimately pay for - your product.
4 Things to Focus on To Build The Future in the New Economy
In terms of building successful products in this new reality, you need to be extremely focused. That means being crystal clear - and aligning your teams - on the following 4 key principles:
1/4 Carefully Select the Problems You Are Solving
Future Builders understand that selecting the right problem to solve can determine the success or failure of a product.
The problem your product solves is the foundation upon which everything else is build: Your product vision, your product strategy, the specific solutions you build to solve that problem.
Therefore, if launching a new product, be extremely disciplined in assessing which problem you believe will help you build for success.
Actionable Takeaway:
We suggest always focusing on assessing how acute the problem is that you are proposing to solve. To do so, simply rate the problem from 1-5 (1 = the target market doesn’t even care about this, 5 = the target market is losing sleep every night because of this problem).
Successful products don’t necessarily need to solve acute problems (e.g. I wouldn’t consider Google Search as solving a super acute problem), but it will make everything else a hell of a lot easier: Easier to acquire users if they are super motivated to solve a problem, easier to activate them to use the product, easier to charge them money for your product.
👉 Use this Miro template to put this into practice
2/4 Not Being Specific About Your High Experience Customer
A High Experience Customer can be defined as the kind of person within your broad target market who you believe will get a huge amount of value from your product.
An example: The HXC for a product like Miro could be a “product leader”, for example, because collaboration is absolutely essential for them to do their work effectively. In contrast, a developer might use Miro, but it’s not that important a tool for them.
If you do not focus on a HXC in the New Economy, your product will die.
Because of increased competition, if you try to target too broad a market, that market simply will ignore you; they won’t care what your product does.
In the New Economy, you need to be extremely specific in terms of who you believe should use your product.
It’s not good enough to say, “Our product is perfect for all business owners”. There are too many good products for that kind of audience. Instead, you need to say, “Our product is perfect for first-time startup founders in the UK”.
Better to carve out a niche of fewer users who really love your product (& pay you for it) than to have a mass of users who gradually trickle away to better, more specific competitors over time.
Actionable Takeaway:
We suggest starting by defining a broad target market (e.g. business owners). Then try to go down 2-3 levels, getting more specific at each level. Example: Business owners → business owners in the UK → startup owners in the UK → first-time startup founders in the UK.
This mental exercise will help you find a more specific target market to focus on when deciding what to build.
👉 Use this Miro template to put this into practice
3/4 Lack of Differentiation Means Death
It’s important to try to solve an acute problem. And to ensure that you find a very specific audience (your HXC) who suffer from that problem.
However, none of it matters if you cannot then offer themselves that is genuinely differentiated.
I.E. A product that is both unique, but also provides a lot of value to that target audience (see our recent article on tactics to differentiate your product).
When it comes to differentiation, don’t make the mistakes that many product teams make: Assuming that, just because you think your product is different, your audience will too.
What Future Builders understand is that we can only know something is truly differentiated when we validate what we are proposing to offer the target market (our unique value proposition) out in the real world.
Actionable Takeaway:
Rather than jumping to building a prototype, why not simply write out what you are proposing to offer your target market first & see whether they engage with it? We call this the MVO, Minimal Viable Offer (see our video tutorial on crafting this here).
To validate an MVO, write out a single sentence outlining:
Who the product is for
What ideal outcome the product will deliver for them
How you deliver that outcome in a unique way
For example, before launching the first Prod MBA bootcamp or building any course content, I tested a landing page on our HXC with a single MVO statement (“We Fast-Track Your Path to Product Leadership”) & a sign up form to apply to that first cohort.
4/4 Execute With Laser Focus
If you’re in a position where you have traction & are growing your product steadily, that’s great. But it’s only half of the challenge.
Alternatively, if you’re struggling to find any traction & growth with your product, then this point is still important to understand:
You must be ruthlessly focused when it comes to execution.
With fewer resources & greater competition, you simply have less room for error. Less room for wasted time building things that don’t need to be build. Wasted time in meetings. Wasted time in building overly-complex features.
But execution isn’t just about velocity i.e. how quickly we build things.
Execution is really about building things that are aligned with our product strategy.
To illustrate the point: Imagine we work at Superhuman, the hugely successful email application. Superhuman’s product strategy is to focus on speed (i.e. being “the fastest email experience ever”, in order to save their HXC of busy tech professionals lots of time).
Superhuman wants to execute quickly, sure. But they only execute on things that help them deliver on their product strategy i.e. provide an ever faster email experience. If something doesn’t help them make email faster, they don’t do it. Simple as that.
Actionable Takeaway:
In your own case, firstly, you need to make sure you are clear what that product strategy is. That comes down primarily to being clear about what it is that makes your product different (your unique value proposition). Is it about doing one thing way better than the competition? Or completely questioning convention in how you approach the problem? Or leveraging new technology?
Whatever that product strategy is, you must then, as a Future Builder, be relentless in keeping your team focused ONLY on executing on things that are relevant to that product strategy. That requires constantly revising your backlog, it means relentlessly repeating the product strategy, it means relentlessly keeping stakeholders aligned.
👉 Use this Miro template to put this into practice
Conclusion
Future Builders - those building products that will have real impact - know that the New Economy requires a new way to approach product building.
Gone are the days of endless resources, of stable user problems & outcomes, of focusing on velocity.
Product builders will only succeed by accepting the new reality we find ourselves in:
A lot more competition plus fewer resources to build with.
Therefore, the key to success - to building the future - comes down to a ruthless focus on the few things that really matter:
Selecting the right problem to solve
Delivering value for your High Experience Customer
Strong product differentiation
Laser focus on executing on that differentiation
Do these 4 things & you will be able to have an outsized impact with your product work. Don’t do them? You’ll find yourself staring failure in the face.
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🚀 Check out the next Prod MBA bootcamp, where we help product people become Future Builders by getting you to build a real product from zero to revenue, whilst mastering our product playbook in the process.