Small Business: Ways to Innovate

You are a small biz organization with a new technology product idea for your industry (please, don’t let it be the “Uber of X”!). How do you go about building it?

1. Outsource its development?
2. Use existing resources and build it on the side?
3. Build out a product development team internally to build it?

(Please see the Appendix at the end for my definition of a product development team if this is new to you.)

Outsourced development?

Most people take the outsourced approach here, but it has its draw backs. There are plenty of common complaints about 3rd party development, including:

• It's in the 3rd parties best interest to write code only they can maintain.
• If the 3rd party knows they are writing code they don't have to maintain, it may be hacked together with no thought for maintainability.
• They use antiquated technology stacks, or avoided best practices that make it difficult to bring development in-house later.

Another problem with a lot of the 3rd party development out there is it can leave a "do-what-you're-told" ownership gap, where if the business is driving what the product should do without providing clear guidance, goals, and focus then poor products are built that go unused or die on the vine. This hurts everyone. The business will blame the 3rd party for not delivering, and the 3rd party will blame the business for lack of direction and focus. Blame and ownership get obfuscated because no one ever had product ownership.

Problem: No ownership

Existing resources?

Another approach for small biz orgs is to build the product using its own existing people, maybe even with some supplementary hires.

One problem with a small biz building out new technology products is it's not a sustainable option to get the product idea to market. You have to be willing to dedicate subject matter experts and your tech talent to the process and not distract them with other initiatives and priorities. This rarely happens. Team members are going to be involved with other projects, or impacted by other initiatives around them to keep the lights on for the current business. Small orgs can't afford to take key people out of growing their current business to focus on a new venture. Also, the people they have are not always the best option for building out new technology either.

This path often leads to the project dragging out endlessly and no one happy with the progress.

Problem: No focus

Build out an internal product development team?

Some small biz organizations will decide to invest in building out a new development team. This is a costly investment that requires dedication to the idea and significant investment over the long run.

One real small biz problem is recruiting the type of talent that it requires to build out the product development team that will make this process a success. A small biz often doesn't have the clout, benefits, environment, or investment to attract enough high-level talent to build out a product development team. Plus, a small biz is not a start-up. It doesn’t have the appeal of a small team shooting for exponential growth. You are attached to the existing small biz, its reputation, speed, and allure (good or bad).

Problem: Can't Attract Talent

One final problem...

One final problem with a small biz building new technology products that applies to all of these options is understanding the product development process all together. Most small biz owners have built up their operation around core competencies that did not involve product development core competencies. User research, information architecture, user experience, prioritizing to an "MVP", A/B testing, agile development, and other methodologies that lead to a successful technology product are not their forte. Those few small biz ideas that do make their way to a successful product in the marketplace often stumbled to success, learned the hard way, or went way over budget.

Problem: Understanding the Approach

So what is the solution?

Look at how large biz organizations have succeeded in the new product innovation realm. A large company has the luxury and budget to take talent from the inside (and hire externally), move them into a focused team, and really build a product strategy. This product development team can take an intra-preneurial approach, lay out the roadmap, and go through the research, design, dev, test cycle that will help them fail fast and find the right path. These ventures can be very successful, and I’ve seen them produce great products that add tremendous value back into the business.

Small biz owners looking to build a new technology product need the same approach, but from an outsourced group. They need 3rd party companies to offer the entire product development team to deliver on the product strategy in a way that will reduce risk, prove out the problem statement, and define a winning solution.

This ideation process takes best-practice knowledge, technical expertise, and a team that already knows how to work together and enjoys doing so (not wasting time going through “storming” and “norming”). Finding an outsourced team for hire is the solution. Find a product development team that knows how to extract the subject matter expertise from your small biz, and then apply their own product development expertise in a true partnership to succeed.

This is where “venture builder” companies are excelling today, by focusing on building the team that can make great products first, then proving them in the market before bringing in the supporting cast to make a business. This is really just a outsourced product development team that is being funded to build ideas with business development.

You also see top tier products coming out of these product development shops like Metalab - who played a full product team roll in building Slack, a corporate chat client, worth $1.12 billion in a year. This is an outsourced team producing world-class products by focusing on being a product development team first.

Now this is not an inexpensive solution. You are not going to get a team for hire with a proven track record of success for cheap, but you get what you pay for and you couldn't get their level of talent any other way. Remember, many people spend years pouring smaller amounts into low cost developers trying to get the idea off the ground, but end up with a poorer quality product at the same price or they just fail slow and painfully.

Outsourced product development teams solve for the the problems above:

• Ownership - An outsourced product development team has a high-level of ownership in the outcome of the product being delivered. Revenue share, equity, and other creative solutions should be agreed to first, but when the team delivering the product has the right ownership established then the rate of success will follow.
• Focus - An outsourced product development team focuses on taking an idea and turning it into a product strategy and then executing it. They have to be dedicated to the project and don't have to deal with the distractions of keeping your day-to-day operation running.
• Talent - These 3rd party organizations building product development teams are the most attractive technology opportunities out there. Talented technology and design people want to work with other talented people to build great products. These outsourced companies exists for that purpose alone.
• Approach - These 3rd party teams are built to understand the best approach and practices. They can offer a centralized repository of "what works" and "what doesn't work" in multiple marketplaces and industries.

All these observations assume the 3rd party has a reputation for delivering, but the formula and process for success are built into this model. Interested in finding a great product development team now for hire? Me too. :)

Appendix:

What does a product development team look like anyway? This is going to vary from what some methodologies would tell you to do, but there has to be someone to fill these roles even if there are people playing multiple roles:

• A "Product Owner" who drives the vision of the product for the business by focusing on the true customer problems that they are trying to solve, core competencies of the team and business, and prioritization to prove/or improve the solutions the team delivers.

• An "Architect" who leads the assessment of the problems being proposed and the development team through a technical design process that can allow them to build the product incrementally without sacrificing the future.

• A "Facilitator" who keeps the team focused, organized, and continuously improves the process and health of the team.

• The "Talent" who care about the design/technology/quality, provide or build on the ideas of others, and are responsible for delivering the reality of the product and design.

While there are several functional disciplines that a product development team needs like UX/VisD designers, UI/JS devs, Backend devs, and a mix of other IT pieces depending on what you are building... the above roles are always needed in that team and can be done with no fewer than 3 people.

Thanks for reading!

-Josh