A Six Step Guide to Digital Product Creation

Launching successful digital products is extremely difficult. In fact, 95% of products that are introduced each year fail. The digital product landscape has become much more complex and specialized – from grocery delivery apps to customer service chatbots – digital products shape the way we live, connect and do business.

However, it takes more than a killer novel idea to make it rich and successful. The process of bringing the digital product to life, from an idea on paper to practical reality, with development, testing and refinement is daunting and where many fail. While you can never guarantee success (who knows when a once-in-a-lifetime pandemic will dramatically change the world and markets), you can greatly reduce the risk of product failure by taking a methodical and intentional approach to how you build digital products.

While each product is different, successful digital product creation requires an intentional chain of steps to validate. Through our tried, tested and validated iterative approach, we collaborate with clients across industries and verticals to define, launch and scale successful digital products in-market at pace. A digital product is not simply a mobile application or a website. We think of a digital product as having these four components:

(1) A clear user value proposition, that is (2) delivered through a value-generating business model and is (3) supported by an operational model that optimizes consistent delivery of services, which (4) customers and/or employees interact with through digital interface(s).

As you can see there is a lot necessary to get right in building digital products. So, where do you start?

The Six Stages of Digital Product Creation

At Prophet, we take an agile, insights-driven approach to helping our clients develop valuable and successful new products. As quickly as possible we move from assumptions to concrete knowledge fueled by market evidence around every element of the potential product. Our approach breaks the process into six specific stages:

1. Opportunity Definition
2. Rapid Experience Design
3. Alpha
4. Beta
5. Core
6. Retirement

Let’s dig into how these phases work in sequence to reduce risk and increase chances of success.

Stage One: Opportunity Definition

The opportunity stage is one of the most critical phases of digital product creation. Before even beginning to sketch a design or write a line of code, it all starts with defining a valuable opportunity asking, ‘what is the problem that needs to be solved, is it worth solving and does it match the strategic goals for the company?’  Often, businesses think they already understand the problem, and this is precisely why many new products fail.

Prophet’s Experience and Innovation experts bring a human-centered design approach to the process of defining and designing these opportunities. It will often start by uncovering and designing a compelling experience strategy for how a company can distinguish and deliver value for its customers in desirable ways across the entire customer journey. This perspective, along with our deep expertise in service design and business design, defines initial concepts and objectives that formalize compelling product opportunities aligned to our client’s business strategies.

Questions we focus on answering in this phase are: 

• Can we find valuable opportunities that match the strategic goals?
• Who is the target audience, and do they have a large enough problem in line with the client’s aspirations?

Stage Two: Rapid Experience Design

The goal of this next stage is to iteratively validate and refine the opportunity and assumptions with target customers to gain essential evidence, deep dive into their unmet needs and embed decisive learnings. This level of fast-paced evidence-driven learning can be eye-opening for clients used to longer bureaucratic cycles of decision making and analysis paralysis.

Through this rapid process, we quickly arrive at a minimum viable concept (MVC). There are many steps to get to a fully finessed product, but we need to start with a concept from which we can get quick iterative end-user feedback so that we can best understand the opportunity and a possible solution. In this way, the MVC lets us quickly and cheaply test while we are iteratively improving our understanding of the opportunity.

Questions we focus on answering in this phase are: 

• Can we design a solution for the target audience’s needs?
• Does our evidence indicate the solution can deliver on the target audience’s unmet or underserved needs?
• Can we define the functional capabilities necessary to deliver the solution?

Stage Three: Alpha

Armed with the best probable solution to the problem, the alpha phase is focused on the design, build and testing of the components of the product offering. Technical functionality, customer support, business models, content and data requirements enabled by strategic organizational coordination all become the levers we nimbly adjust to build the product offering. This requires frequent and consistent testing with target customers to refine every element of the product offering. Ultimately, the goal of this phase is to deliver the minimum functionality necessary to achieve product/market fit.

Questions we focus on answering in this phase are: 

• Is this a sustainable product people will consistently reuse and/or pay for?
• Does the evidence indicate that this solution would deliver differentiation and is there a viable business model?
• Is there the will/skill/bandwidth to deliver this minimal viable product (MVP)?
• Have the necessary people/process/data/capabilities been identified to deliver this solution at scale?

Stage Four: Beta

At the beta stage, the mythical product/market fit has been reached and now it’s about proving active customers would use the product consistently through a valuable business model. Groups that may have lightly engaged previously across marketing, sales, corporate development, legal, compliance, operations and others, now become fundamental to the success of the product and its go-to-market strategy. This is when we actively pursue approaches to grow the audience, reduce operational and customer acquisition costs and build new functionality to attract new customers without losing existing customers. It is an artful dance requiring sizeable bets to be placed on people, process, data and technology all while taking a measurable outcome-based focus on how to grow the business.

Questions we focus on answering in this phase are: 

• Can we build scalable and profitable business value?
• Does our evidence identify a scalable business model with a route to profitability?
• What is the go-to-market strategy for scaled commercialization?

Stage Five: Core

This fifth phase is the promised land, where all the work has paid off and we have a validated product in the market, delivering customer and business value.  At this stage, we no longer need proxy metrics for product success but can move to standard business accounting and processes to support sustained growth in the enterprise – the scaling phase.

Despite the effort that has been expended up until this point, this is still a very common point of failure for products as they transition from incubating a new product to delivering through existing business metrics and accounting. This is part of why it is important to bring the company along on this incubation process to avoid organ rejection and yet keep enough distance to give novel and innovative ideas the space to grow. This product can be sustained either through an existing business unit within the company or by creating a wholly new business unit.  Either direction will require the product team to adopt a new set of goals, focus and investment to scale in a competitive market while consistently delivering value for customers.

Questions we focus on answering in this phase are: 

• How do we structure the functional and operational capabilities within the company to scale this product successfully?
• Which capabilities require partnership with outside companies, where might new capabilities need to be built or companies acquired to fuel growth?

Stage Six: Retirement

All products and services companies deliver will, at some point, outlive their value to the business and/or their customers. The ability to objectively evaluate which products and business lines to employ focus and resources is critical to the longevity and stability of the company.  In this way, we need to understand not only when it has outlived its use, but how impactful it will be to sunset the product line to the brand, the bottom line, the current customers and the larger market.  Through these lenses, we can begin to understand whether we will need to plan a migration of customers to another product offering, spinoff or sell this product to remove it from the brand and company responsibility, or simply turn off the lights.

It is very difficult to deprecate something that has been such a part of your company’s history, but being a resilient business requires tough choices about capital and resource allocation for sustained growth.

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