{"id":58400,"date":"2024-04-20T11:01:21","date_gmt":"2024-04-20T09:01:21","guid":{"rendered":"https:\/\/intellias.com\/?post_type=blog&p=58400"},"modified":"2024-06-24T11:13:22","modified_gmt":"2024-06-24T09:13:22","slug":"eliminating-guesswork-from-product-engineering-with-the-glass-box-strategy","status":"publish","type":"blog","link":"https:\/\/intellias.com\/product-engineering-glass-box-strategy\/","title":{"rendered":"Eliminating Guesswork from Product Engineering with the Glass Box Strategy"},"content":{"rendered":"

At the end of the 19th century, German philosopher Georg Hegel coined the term Zeitgeist<\/em> to describe an invisible agent or force that characterizes an epoch.<\/p>\n

The Zeitgeist of the 2020s might be captured in the terms attention economy, digital-first thinking, permacrisis, hyper-individualism, conscious consumption<\/em>, and the up-and-coming AI economy<\/em>.<\/p>\n

Democratized access to information, technologies, and capital has made product engineering faster and more accessible to growth-driven entrepreneurs.<\/p>\n

We\u2019ve also seen that small teams beat bigger players in terms of speed. Instagram had 13 employees<\/a> (and a high-growth product) when it was acquired by Facebook. Mojang (the company behind Minecraft) had 37 employees<\/a> when Microsoft acquired them for $2.5 billion.<\/p>\n

At the same time, larger enterprises are successfully reinventing themselves with new digital products. Nokia pivoted from hardware (smartphones) to software as a service (SaaS) products for the telecom industry<\/a>. Amazon went from being an online bookseller to building out a platform business with stakes<\/a> in eCommerce, cloud computing, advertising, media, and entertainment. Walmart is no longer just a grocery store chain. The company also operates a profitable retail media ad network (Walmart Connect<\/a>) and offers financial and insurance services.<\/p>\n

New product development has never been easier\u2026 and has never been harder.<\/p>\n

Launch rates for digital products are at an all-time high, but failures are frequent. \u2013market fit, overly optimistic revenue projections, and shifting consumer demand are common reasons behind unsuccessful launches.<\/p>\n

\n\t\t\t
\n\t\t\t\t
\n\t\t\t\t<\/linearGradient><\/defs><\/svg>\n\t\t\t\t\t

According to CB Insights, 35% because of insufficient need or demand for the product. Another 20% get outcompeted.<\/p>\n\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\tCB Insights, <\/span> Plaid x AccentureThe Top 12 Reasons Startups Fail<\/span><\/span>\n\t\t\t\t<\/small>\n\t\t\t<\/blockquote>\n\t\t<\/section>\n

Large or small, new or veteran, companies across the board are pressed to show strong financial performance to stakeholders and investors alike. With recession looming, profitability<\/em> becomes a more important metric than growth at all costs<\/em>.<\/p>\n

The other side of faster product engineering is a lower tolerance for time-to-value intervals. And productivity growth in mature economies including the UK<\/a>, Germany<\/a>, and the US has been slowing down or in decline since the early 2010s, despite ongoing digitization efforts.<\/p>\n

The abundance of competing products makes it hard to carve out a niche. In the words of Paul Graham<\/a>, you want to launch to a market where there are \u201cnot just people who could see themselves using [your product] one day, but [who] want it urgently.\u201d<\/em><\/p>\n

In reality, however, you must always balance between creating a product that a lot of people want a bit of or a product that a few people want a lot of. The latter is always better, as it indicates a stronger market fit.<\/p>\n

The goal of effective product engineering is to first help you figure out what the market wants and then to provide it with the least risks and the most rewards.<\/p>\n

Software product engineering: Key concepts<\/h2>\n

Before we dive in, let\u2019s recap the key concepts.<\/p>\n

Product engineering<\/b> is an iterative process for producing an item (product) for sale. It includes steps such as ideation, design, development, launch, and subsequent scaling.<\/p>\n

In our case, we\u2019re primarily talking about software product engineering \u2014 aka the process of transforming a rough concept (a meal kit delivery service) into a market-ready digital product (HelloFresh<\/a>).<\/p>\n

A product, in general, is something that people want or need. Great products are built for specific audience segments and fulfill a particular need (or create one!).<\/p>\n

The process of figuring out what people want from new products is called product thinking<\/b>.<\/p>\n

\n\t\t\t
\n\t\t\t\t
\n\t\t\t\t<\/linearGradient><\/defs><\/svg>\n\t\t\t\t\t

The simplest way to define product thinking is that it is the skill of knowing what makes a product useful \u2014 and loved \u2014 by people. As with all skills, it can be nurtured and developed; it\u2019s not just an instinct one does or doesn\u2019t have (and even instincts are trained, after all).<\/p>\n\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\tJulie Zhuo, <\/span> co-founder of Sundial, former VP of Product Design at Meta<\/span><\/span>\n\t\t\t\t<\/small>\n\t\t\t<\/blockquote>\n\t\t<\/section>\n

Product thinking is often confused with the product vision.<\/p>\n

A product vision<\/b> is a mental image of the aspirational future: your concept of the value the product will generate. Having a clear vision of the outcome is great, but it\u2019s not enough for creating a feasible and detailed product roadmap.<\/p>\n

A product vision typically lacks a clear sense of direction. Markets send mixed signals on the size of demand and users\u2019 preferences. Drilling down to the most promising segment of the total addressable market may force the team to chase conflicting priorities.<\/p>\n

To figure out the optimal path forward, leaders rely on product thinking \u2014 a continuous, data-driven evaluation of your idea across different phases of the product development cycle.<\/p>\n

The guesswork of product development<\/h3>\n

The product success strategy resembles a black box.<\/p>\n

\"Eliminating<\/p>\n

Whenever you try something new \u2014 be it holding a fork with your non-dominant hand or building a gaming system for self-driving cars<\/a> \u2014 you\u2019ll get several types of reactions.<\/p>\n

First, you\u2019ll have people who think that your idea is weird. They\u2019re not impressed and probably won\u2019t be an ideal target audience (at least not right now).<\/p>\n

Then, you\u2019ll have people who would probably love your innovative approach but aren\u2019t aware of it yet. For example, meal kit providers like HelloFresh struggled to scale<\/a> because their target audience had a problem (same old boring meals) but didn\u2019t yet know about a new type of solution (new recipes delivered to their door every week).<\/p>\n

Likewise, early market entrants like Uber and Airbnb paved the way for new product concepts and had to persuade their audiences that Ubering was better than hailing a cab on the street and that staying at an Airbnb was cheaper than staying at a hotel. Granted, their gambits paid off.<\/p>\n

But countless companies fall prey to consumer reluctance.<\/p>\n

How come? Because though most consumers say they want new products\u2026 they aren\u2019t necessarily interested in using them.<\/p>\n

\n\t\t\t
\n\t\t\t\t
\n\t\t\t\t<\/linearGradient><\/defs><\/svg>\n\t\t\t\t\t

Customers with a lot of expertise (experts) may not search, because they think they already know what\u2019s best. At the other end of this spectrum are customers who are clueless. They do not search because they do not know which questions to ask, where to find the answers, or how to interpret the information if it arrives.<\/p>\n\t\t\t\t<\/div>\n\t\t\t\t\n\t\t\t\t\n\t\t\t\t\tDuncan Simester, <\/span> Head of the Marketing Group at MIT Sloan School of Management<\/span><\/span>\n\t\t\t\t<\/small>\n\t\t\t<\/blockquote>\n\t\t<\/section>\n

\"Eliminating<\/p>\n

Source: WIPO \u2014 Global Innovation Index 2022<\/a><\/em><\/p>\n

\u2026And yet a bigger R&D budget doesn\u2019t always translate into better product development and innovation.<\/p>\n

A PwC analysis<\/a> of the world\u2019s largest corporate R&D spenders found that high rollers with massive annual R&D budgets like Roche ($10B), Novartis ($9.5B), and Johnson & Johnson ($9B) trailed behind relatively thriftier companies like Siemens ($5.8B), Oracle ($6.8B), or Facebook ($5.9B) in the Innovation Index.<\/p>\n

Of course, the level of R&D intensity (investment measured against sales) is much higher in companies in industries like healthcare versus digital companies. Still, as industry analysts have concluded time and again<\/a>, it\u2019s not the size of the R&D investment that counts but rather how it is used.<\/p>\n

So how can you maximize the value of your investments in new product development and reduce the risks of taking the wrong turn?<\/p>\n

At Intellias, we do this by adopting the glass box product engineering strategy.<\/p>\n

The glass box digital product engineering strategy<\/h2>\n

At the concept stage, product development resembles a black box.<\/p>\n

Your team has more questions than answers:<\/p>\n