Nobody sets out to fail. And yet, 95% of all digital products don’t make it past their first year. Most of these failures can be grouped into one of three categories.

01 Product-market fit

“They don’t want it!” – What has been built doesn’t solve a real problem for real people, is too expensive, or we’re failing to communicate the benefits clearly enough.

Now, who’s to blame? Whose responsibility is it to ensure a good product-market fit?

While many digital agencies offer services in strategic planning and market research, most companies prefer to keep this kind of work close to the chest. With all relevant domain knowledge in-house, surely your team must be best suited to figure out what to launch and for whom, right?

While this might be true in theory, reality tends to be more complicated. Many companies skip adequate market research, usually to cut costs or meet a deadline. And while a truly agile product development process can make up for a lot, nothing can really replace a modicum of upfront research and design.

An experienced partner will be able to identify what this minimum requirement looks like, and guide you through a simple process to give you some needed structure. A lot can be achieved by talking to representatives of all stakeholders (including the actual users of your work) during the discovery phase. This kind of discovery can take the form of a facilitated workshop, enabling everyone to put their cards on the table early in the project, or a small research project (5–10 30-minute interviews will go a long way to cover the basics). Even if time and money don’t permit in-depth research, you should do what you can to get your bearings early:

Who’s your customer and what are their needs and pains? What kind of work do they need to get done? What’s their cultural and societal context? What do and don’t they know?
Do your customers understand your vision? What language is required for you to explain the value proposition to them?
What are they willing to pay for your product (assuming that they will in fact pay at all)?
Who are you competing with? What other products and services like yours are there in the market already?

A good partner will be more than happy to help you put together a small project to get answers ahead of time, as it will help ensure their success just as much as yours.

Example

Some years back, the digital lab operated by a luxury car brand asked us to create a validation process around a novel take on ride-sharing services like Uber or Lyft. The team had developed a concept that was looking to introduce a new demographic to their high-end vehicles, by having a chauffeur drive them for the first and last legs of business trips.

The idea seemed pretty solid at first glance, but our team decided to talk to the target group anyway. As it quickly turned out, the plan had two major flaws: the target demographic, as defined upfront, didn’t actually really exist, and its closest approximation had no interest in being chauffeured in the backseat of a fun car – they wanted to drive themselves!

Knowing this, the product team decided to pivot and change the approach quite significantly, likely saving countless hours and a ton of money in the process.

02 Execution

“What we have built doesn’t work!” – We’ve made mistakes in the way our product is designed, built, or delivered to customers or users.

User researchers don’t tend to be too fond of the term ‘validation’. Whatever you call it, though, testing what you build is crucial to knowing if and when your work hits the mark. No matter how hard we try to remain objective, we all bring assumptions, expectations, and our lived experiences into the projects we work on. Without testing, the products we build will likely work only for us.

Validation doesn’t need to be complicated. Whether you’re testing your user experience or information architecture, prototypes allow you to get user feedback early and often without a hefty price tag.

An experienced partner agency will have tools and processes in place to test a version of your product quickly and efficiently.

03 Organizational challenges

“The way we work gets in the way!” – There isn’t enough money or time to complete the project, we don’t have a clear vision for what we’re building, or we get caught up in bureaucracy.

(We will talk more about cultural and organizational challenges later in this guide.)

Hierarchy, budgets, cultural misalignment, or “they just don’t get what we are trying to do” – as organizations grow and mature, processes and structures can turn from enablers to roadblocks.

But you know what? That happens everywhere. An experienced partner will have found ways to navigate complex organizations and can provide you with guidance on how to work around most limitations you will encounter. In many cases, they will be happy to do so on the side, as it unblocks their teams and helps ensure progress.

While many companies dream of establishing a culture of innovation, many would be more than happy to just get unstuck.

Our take

As companies grow, they find themselves building structures to support all the added weight that comes with more employees, more products, more money.

Many organizations believe that change is brought through wide restructuring efforts, through waves of hiring, firing, and reassigning. And while that certainly will have some impact, we’ve found that real, lasting change (think: innovation, new products, better processes, less politics…) is almost always brought by individuals on a mission. And we’re not talking about your CEO.

The people who make change stick are the engineers, the designers, the product owners who are dissatisfied with their working environment, who have had enough of clutter, noise, and politics. They take matters into their own hands, find hidden paths to bypass gridlock, and get stuff done. Finding and supporting these unsung heroes will get more done than any corporate restructuring.

Julia Backström Chief Operating Officer, DK&A

But what if we fail anyway?

Well, here’s the bad news: you will fail almost certainly at some point. The trick is to fail as quickly and as cheaply as possible. Your agency partner should enable you to do just that.

Still can’t stomach the risk of even a small failure? Bring your partner into the boat with you! An experienced agency might be willing to absorb some of the risk with the promise of a reward if they succeed. Identify key metrics which allow you to measure success as you progress. Tie part of the payment to it and have your partner sign off on it. With their incentives aligned with your success, your partner will be more willing to go the extra mile and your risk of failing catastrophically will be minimized.

Example

Most of our projects are set up the same way: a customer pays us to deliver on a pre-defined scope and we bill them by the hours spent to do so. This approach works well for long-running engagements and work on existing products or services.

Smaller companies and startups often struggle to agree to run Time and Material (T&M) projects, however. Where funds are limited and “runway” savvy founders have an eye on their return on investment at all times. In these cases, we sometimes suggest a different project mode called “value-based pricing” (VBP). VBP ties some of our compensation to the overall success of the product or company.

Say a company is looking to launch a new subscription product, and their success is defined by the amount of subscribers they can retain over the course of 12 months. Given that we’ve done our homework properly, we might consider to tie a part of our cost (plus usually a premium on top) to the retention of a jointly defined number of customers over a specific time. This way, our incentives are aligned directly with our customers and we can use the tools we know best to ensure that they – and we – walk away happy.

VBP relies on well defined, jointly agreed-upon Key Performance Indicators (KPIs), which will, well, indicate whether a project was successful or not. As part of our payment is usually deferred until after our customer has been able to reap some of the benefits, they get to enjoy a longer runway and the security that comes with it – perfect for startups.