Product Failure is An Opportunity
“Fail faster” is something nobody really wants. Failing slowly is of course worse than pulling the plug early on a badly performing product. However, the ultimate goal is to succeed faster. Obviously. Failure is just the inevitable ingredient to create successful businesses and products. What people mean when they say fail faster is in fact “learn faster”. Learning comes with trial and error. So, to successfully pivot, it is important to carefully analyse and document the exact reasons for what went wrong to maximise learning. Otherwise, too many unsuccessful pivots end not just the product but perhaps the company and your career.
The word “product life-cycle” implies that products do come to an end. The lifespan of a product is difficult to predict, especially at early stages. And yet, clearly articulated actions for what happens when the measure of success is not met anymore are rarely part of product planning. Pivoting done well means the team doesn’t lose direction and can build on the insights for new product development. Pivoting in that sense is a different term for risk mitigation. In finance this is known as a “stop-loss order”.
Pivoting also means tidying up the house and spring cleaning your inventory. I call it “marie-kondoing”. The reason for Marie Kondo’s success is the house holders’ increased ability to focus, when only household items are kept, which provide the highest value going forward. The same principle accelerates growth for products, when resources that are thinly spread across multiple initiatives are all focused on the most successful value drivers.
As a product manager I hosted a regular workshop called “Cutting Club”. The main purpose of the workshop with a select group of stakeholders is to decide, based on evidence, if a product or feature can be removed or “cut”. We ask three questions to decide if we end its life. The questions are about the product’s value, its benefit and its purpose.
1. Is the product still adding value to the business or its clients?
A product or feature might have been successful at the time of release, but technical capabilities improve and user expectations evolve. Therefore metrics of success need to be revised to assess a feature’s ongoing value. If the value has become unclear, the feature should be cut.
One of the most successful pivots was from a dating site that dramatically reduced its vast number of features based on the highest user engagement. The product team discovered that visitors mostly used the video upload feature and stripped down all other features over time. The dating platform “YouTube” rebranded as a video website and sold in 2006 to Google for USD 1.6 billion.
2. Does the product have an imbalanced cost benefit?
A feature should also be cut, when the cost of maintaining or growing it would outbalance the potential value for the business.
A great example is Tiny Spec, a former gaming company. The game “Glitch” was the first product launched in 2011. Tiny Spec also worked on an internal communication tool and eventually made it available to outside users. The messaging feature “Slack” quickly became more successful than the game, and Glitch was cut in 2012. Eight years later, Slack was sold to Salesforce for over USD 27 billion. The Glitch pivot was more than just a feature retirement, but a fundamental change in direction of the company and enabled a clearer focus in customer acquisition and new product development.
3. Is the product’s purpose met by something else that exists?
In a large organization several departments might be working on similar products, competing with each other over resources. For smaller companies it’s typically competitors who pose the largest threat. A product should be cut when a product’s purpose is met by a similar product of higher growth potential.
Odeo was a small podcasting startup in 2005. It allowed users to call a phone number to leave a message, which automatically created a web-based podcast. Eventually the founders discovered a different use for the product where phone users could send a text message to that number, which automatically created a “status update”. Unfortunately for Odeo, Apple moved into the podcast space and the product wasn’t able to compete anymore. The company cut the podcasting product and focused on its status update service instead. They called the product “Twttr”. Only a few co-founders and none of the investors saw a big potential in the service. The decision to pivot in 2006 came at the right time and allowed the team to fully focus on the Twitter product and all of its 5,000 users at the time.
For Odeo, pivoting was a defensive move due to competitors taking market share, but not every pivot is a do-or-die situation. For Tiny Spec, the Glitch pivot offered a clear path to growth by re-allocating resources more effectively on Slack. For all companies it’s impossible to build new products without revising or removing old ones and shifting priorities.
“There’s a trick to the ‘graceful exit.’ It begins with the vision to recognize when a job, a life stage, or a relationship is over — and let it go. It means leaving what’s over without denying its validity or its past importance to our lives. It involves a sense of future, a belief that every exit line is an entry, that we are moving up, rather than out.” (Ellen Goodman)
