Since Melkki was found in 2015, we have had a great pleasure of working with clients in several industries. The most of Melkki clients have ambition to adopt digital into their service portfolio. Companies are often relying on market best practices and experiences from a number of consulting firms. These firms vary from global giants to local software development providers. With the help of traditional players companies have prepared amazing strategy slides or beautiful digital products, however the profitable revenue of this work is rarely achieved.
We have noticed that often digitalization is understood as ramping up quick Proof of Concepts or prototype to evaluate the idea and to obtain feedback from user experience point of view. Teams are not spending time on designing profitable business but rather release new features to customers.
Most of these PoCs and prototypes are technically sufficient enough to be introduced to internal evaluation boards or customer groups. Feedback is used to improve the product and to take it to the next level ultimately delivering value to the customers and creating new revenue streams for the company.
Up to this point, there is nothing new to gain from this article. However, from our point of view companies should look more thoroughly into the path from ideation to delivery. If you take a moment to read the rest, it might prove useful for you.
Why are there still so many failing attempts to build the new profitable product that lives long enough to damage the whole team financially and reputationally? And more importantly, why so many of these failures are noticed way too late? Could companies have better approaches to identify these failures earlier? The answer is yes, and there are many easy to adopt practices and frameworks on how to do that.
Before you think that surely not a PoC which proves a concept does not work is not a failure, it is a success, just as well as a PoC which proves a concept. We agree to this. Instead of rapid coding to proceed with as many ideas as possible, companies should be focusing their resources only to the most promising ideas from the beginning. After a couple of preparation steps introduced in this article coding may be launched with lower risk of failure.
There are important steps that can improve your hit rate of closing down failing “digitalization” endeavors before they hurt the company. Going through these steps gives you the opportunity to focus productively on the ideas that have more potential of leading to success.
Imagine how the idea will look like when the product is launched to your dream customer segments, and the whole customer audience is using your product. How does the business look like with all required elements to deliver to all customers? If you want to use a specific tool, you can design your value proposition and business with Business Model Canvas (BMC) invented by Alex Osterwalder (https://strategyzer.com/canvas). If you follow the steps to create a BMC you will find the possible flaws of the idea without writing a single line of code.
If your BMC passes the evaluation and there is still money left in the budget, you could look at the idea as a new company and how would that work. You will identify the majority of the items to be designed from the BMC. However, there will be a risk of missing the steps to be taken in scaling up your business and your team when your product starts to sell. By looking into how to scale up in more detail, you can design the operating model of the business by utilizing the Operating Model Canvas (OMC) (https://operatingmodelcanvas.com) invented by Andrew Campbell et al. OMC will increase your awareness in what is required to deliver value to your customers. It also helps you to gain better understanding of how the supply chain should look like.
Hang on, you do not need to code yet. Look at your burn rate so far! 5 out of 10 ideas are already verified not to succeed. Not bad.
How do you organize? You have already defined the value, customer relationships and operating model. Next, we would recommend you to spend a few moments on optimizing the supply chain. Are you really going to be able to ramp up your team and partners when needed? Why would your solution attract customers and why would your partners provide you with the best resources? What does the smallest core team look like? It would be great to provide the framework how to do this, however from our experience this is a combination of experience in business management, industry, lean sourcing and hard work. Our proposal is to look into the capabilities in your team and consider whether you need technology partner or sub-contractors, financial partner, supply chain to build or assemble your product, marketing partner or maybe joint venture with your partner. Melkki clients have awarded us with interesting projects (https://www.melkki.fi/clientstories) where we have matured our client’s ideas into deliverables that create value for the customers.
Proof of Concept or prototype (MVP) is the next step (finally…). The benefit of the previous steps is that now you can repeatedly evaluate your business after making changes to the product based on your customer feedback. You can also guide your team of internal or external developers while steering the business as a whole. We would recommend Lean Startup by Eric Ries (http://theleanstartup.com/) as a guide towards a successful MVP.
By following these steps, you will be able to verify your idea, as a business, more efficiently than starting directly with developing the PoC or the prototype. Our clients at Melkki have gained real value by adopting these steps into their digitalization efforts. Thank you for reading the article. Please provide us with feedback (contact@melkki.fi) and keep up the good work.