We nearly made a mistake, but we didn't
Product ideation tends to be a conscious decision. This is a well-trodden path of many start-ups and we did follow this path. There are quite a lot of products that came about as a result of a process, they can be seen as by-products. A good example of this is Slack. Slack was originally the team communication tool used by a video game development company called Tiny Speck. The company was developing a 2D video game called Glitch. Glitch was launched and unlaunched, meaning Glitch was killed by its developers. Slack was subsequently released to the public and they signed up 8000 customers within 24 hours of launch. An example of a by-product becoming the main product.
Our journey began in 2010 as a three-partner consulting firm. The business model was to solve problems for small businesses. The main areas were systems implementation or upgrade as well as process improvement. Having sold products on partners scheme for companies within the SME market segment, we saw a gap in that particular market segment. Companies do not really care about small businesses as the product offerings are not really suitable. They are either not the right fit or they end up being to expensive.
Not too long ago, in one of our numerous marathon meetings we deliberated on potential products to develop. Suggestions ranged from Data Analytics, Inventory Management, HR system amongst others. Being geographically dispersed as a team, the discussion followed a spectacular unintended route. The team broke into clear geographical clusters. Needless to say, the discussions were very often unintentionally chaotic (a hallmark of a start-up).
Main Competing Products
1) Data Analytics
2) Inventory Management
Why Data Analytics?
The world is still hungry for data. We (I mean the group in favour) saw an opportunity to be a player in the data game and we were confident it was the way to go. The key thing was how do we offer a product that provides data to SMEs to help them run their businesses better and more efficiently. The premise is, understand the data and you will understand the business. You may be familiar with the likes of Google Analytics, concepts like Growth Hacking, Inbound Marketing, SEO Optimisation, A/B testing etc, they all play on data. We were "fixated" on developing the next big data analytics product within the Xero ecosystem, the decision was already made before we decided. It all made sense to us. Businesses must surely love this product, so we thought.
How could businesses not love a beautiful product that will churn out great business data on beautifully laid out reports which are accessible anytime, anywhere and on any device? This was the time to develop that killer business tool. The strategy was beating the competitors, we did review their products and they were littered with plethora of issues that we were going to fix.
Why Inventory Management?
IT has certainly revolutionised the way businesses operate, this is stating the obvious. Their (the group in favour) premise was simply, there is no good inventory management system for small businesses. Even if there is, it is way too expensive for very small retailers. There are quite a number of solid inventory management system out there no doubt. The problem encountered by small businesses stems from the fact that they needed a simple to use system that will offer both POS and Inventory management but most products tend to focus on one at the expense of the other. They saw the need for a solid product within that space. They were inclined to solving the need of small businesses, especially small retailers that needed a simplified yet robust tool that will cater for both POS and Inventory Management. They lost the argument.
Data Analytics won, then
We chose data analytics over inventory management, with the understanding that Inventory Management will be the next business area to tackle. Having decided on this data analytics project, the next step was to research it a bit more. This revolved around the product – what type of data?, developers to bring on-board and not forgetting the big one, cost. Sooner had we done this bit of research that we realised it was the wrong product to develop, a waste product. This is simple and blatantly obvious, data analytics can only be built on another system so not a complete product in itself. A data analytics product will need data from either an inventory management system, an accounting system or any other system that can churn out data, here in lies the fundamental flaw.
This fundamental flaw of a data analytics product made us to pivot, we moved away swiftly. We went for the second choice, inventory management. We can certainly agree that an inventory management system is a complete product in itself. There is a fundamental need for a product to satisfy the need of customers (businesses) but is also self dependent. Satisfying the need of the customers/businesses is the primary purpose of any product, anything other reason will set the product up to fail.
Welcome to PrognoStore
Pivoting away from the intended data analytics product gave birth to PrognoStore. PrognoStore in a way looks like a master stroke, with a single stroke retailers can knock off all three balls. PrognoStore is a 3-in-1 system that combines the POS system with Inventory management and also provides analytics.
1) POS - Intuitive sales screen, Automated ordering, Customer management to improve customer service
2) Inventory - Stock control, Manage Product/inventory suppliers, Low stock/re-order level notifications etc
3) Analytics/Reports - Real time stock reports, stock related data
We pivoted before spending a single cent on the data analytics product, the story of Slack briefly mentioned above is different. Were we lucky? No-one really knows as the data analytics product could have been a winner and on the other hand, we could have failed woefully. I stand firmly behind the latter. How will your story play out? As PrognoStore or as Glitch? One key point to note, if your product is not fulfilling any need it will be difficult to hit the numbers. Have you developed any product or planning to, we will like to know how your decision was made.
This article was previously posted on Medium