This is the second of three articles that explores the challenges of using Failing Fast strategies in enterprise. On the previous article we presented the Failing Fast strategy and talked about MVPs. On this article we’ll cover the problems B2B companies face in failing fast.
Fat MVPs
Setting expectations with customers tends to be easier when there is less history or reputation from the company providing the product. If you have no history of delivering exceptional, feature heavy products, the expectation that you will deliver such products on a new business is lower. This becomes even more visible if you are trying to business at an enterprise level. There is a level of expectations that are “a given”. Thinking of software as an example, if you want to sell an enterprise solution it is likely that you have to provide: security, resiliency, support, documentation. The company will expect these things regardless of the core functionality of the product. This will make the process of establish a lean MVP much harder and costly.
Contracts and SLAs
Let’s assume you can fund the minimum scope to get a valued product that lives up to the enterprise standard. In addition to that, procurement and legal teams may challenge you to prove its value.
Selling products or services to other businesses often requires some sort of legal framework establishing requirements for the delivery timelines and expected product functionality. It is common to have contracts signed that define delivery dates for delivery and setup. Product malfunctions are often covered by service level agreements (SLAs) that define support actions and mitigation plans. In addition support agreements may also be in place, which often requires its own clauses and SLAs. Compensation terms are often attached to delivery timelines and SLAs, in case of breach.
Having to deal with contracts, SLAs and support agreements, makes it harder to test MVPs quickly and increases the impact of failures. Contracts may even prevent pivots on the product, as companies may be required to support the product for a period of time.
Reputation fallout
As mentioned above, setting expectations become much harder when you have a reputation to defend. Justifying the failure of a product, or simply removing it from the catalogue may be a very tough conversation with a customer. It opens precedents that may hurt your relationship with the customer and your overall reputation in the market. A bad experience with one product may change the perception of the market against your other products.
MVPs in Multiproduct Bundle Offers
A concrete example of a reputation fallout where the MVP can hurt the rest of the product line may happen you include an MVP product or feature as part of a more complex product or set of products. Companies often require to fill gaps on their product lines. These products often have ties with the existing product line and make a more compelling proposition, when bundled together.
Customers buy into the bundled product expecting a robust, complete offer, but may get heterogenous mix of quality. In case of bad acceptance on the MVPs, companies may be forced to over invest and be unable to pivot or back away from MVPs. In addition, the sales on the more mature products may be hindered.
Real Scenario: Failing Fast Problems
Sleek Groom
Let’s take an example to visualize how these problems can occur, with an imaginary established fashion brand that makes wedding suits for men: Sleek Groom. Recently Sleek Groom decided that they wanted to improve distribution and setup a franchising business for their brand.
To make the stores more appealing Sleek Groom decided to complement their product line with shirts an other accessories. This gives grooms a chance to buy a complete matching outfit and positions the stores as one stop shops. However, Sleek Groom’s proficiency is in doing suits or tuxedos and have little experience in bow ties, shirts and shoes. Nonetheless, Sleek Groom decided to take the endeavor anyway, and start a MVP line of matching shoes, bow ties and shirts.
Expensive New Product Lines
Sleek Groom has an extensive suit collection. This, which forced them to have a wide accessories line to match the different suit models. Classic Oxford shoes in different colors to match the classic suits funky boots the younger reverent grooms and numerous bow and ties of different colors.
Sleek Groom offers high end suits, build with expensive materials, to match the suits Sleek Groom had to build premium (expensive to design) accessories as well.
Bad Shoes = Weak Stores
After rolling the new product lines, one of Sleek Groom’s MVPs failed, the shoes, even though good looking were uncomfortable for most men. This could represent a huge risk for the franchise business. The premise of starting new MVPs was to fill the gap required to start a groom store franchise. If Sleek Groom wishes to drop the shoes product line, the premise no longer holds.
The stores that have invested in Sleek Groom’s business will bank on the promise of a complete product set. Therefore, they can force Sleek Groom to invest on the weakest products, in order to offer a entire matching suit to customers and be a one stop shop for grooms. The stores owners could be protected contractually to get stock for the different product lines. These contractual ties may prevent the brand from dropping a product line gracefully and without extra costs. Moreover, the reputation fallout on the shoes prevents Sleek Groom to close further franchise deals and hinder sales on their existing high end suits, putting it in jeopardy.
In conclusion, the fail fast strategy proved to be disastrous and to be very hard too follow. Should the strategy have been different?
Next Steps
With all these problems does that mean that once companies grow into enterprise, they should stop innovating? Should they not pursue fail fast strategies. No, no! On the next article we will look into possible solutions to work around the hurdles of innovation.