Building New Products in Companies

Every company big or small would like to expand their business depending on their product or service offerings after they have established a stable position. The motivation is to reinvest a part of the earnings/profits in seeking out new business opportunities/revenue – Pretty similar to how we reinvest our savings into new investments

Some ways in which business can expand are

1. Expand the same business through more partners i.e. expand in same segments within the same industry. Ex:- Quickbooks in Healthcare, Colgate in Bathing Soap
2. Build a new business in the same industry but a different segment. Ex:- Quickbooks building a messaging service
3. Build a new business in a different industry. Ex:- Apple building a car

Type	Company	Current Industry	Current Segment	Target Industry	Target Segment
1	Quickbooks	Software	Ledger for Small & Medium Businesses	Software	Online Payment processing for Small & Medium Businesses
2	Quickbooks	Software	Ledger for Small & Medium Businesses	Software	Ledger for Large Companies
3	Apple	Personal Communication Hardware	Consumers & Businesses interested in information sharing	Transportation	Consumers interested in Personal Mobility

Whereas 1 emerges naturally as part of the business setup, since it is less risky for the owner and easy to convince new customers within the same vertical, 3 is far more risky and only big companies with a deep appetite for risk and ability to attract talent in the new field have the inclination as shown above

Build a new business in the same industry but a different vertical

This seems to be the most sought way from my experience since it provides two things

1. Re-use or retool existing resources
2. Manage risk by using the same domain knowledge
3. Neither too risky like 3 nor too conservative 1

Nevertheless, even the above one is far more challenging task unless planned and executed extremely well with clear objectives

Key factors that influence the success of a new Product

1. Industry Domain Knowledge
2. Business Model
3. Product Strategy & Go-to-market Strategy
4. Execution Strategy – Product, Process & Project Management – Tools & Processes
5. Company and the team experience with building market-fit products
6. Target Segment – B2B or B2C or usually a combination
7. Company Culture

Having worked in a couple of companies that were seeking market-fit for new business models I can tell you that it is an incredibly challenging as well as satisfying experience when incubating a product or building an MVP from an idea. It doesn’t matter if market-fit is achieved and the product starts generating revenue or not, and highly likely it won’t unless the stars align :) aka solid research with a plan, but the knowledge obtained from exploration is very rewarding – Especially a lot of deeply held convictions and assumptions will be proven incorrect.

Though the list above may seem daunting for any company a couple of key items would be the beginning steps. This will be covered in another post.