The way we build products has fundamentally changed.
As products have gone from being delivered in a box to being delivered over the Internet, there’s been a dramatic shift in how customers consume, demand, and interact with products.
This fundamentally changes how products need to be built.
While we have gone through many different product development methodologies over the years, the key thing to keep in mind is that what drove us to change in each of these previous shifts wasn’t simply changing for changes’ sake or simply because a group of people got together and decided to do things differently.
All these previous shifts happened in response to a change in how customers consume products, creating a spike in demand. To respond to this spike, we had to fundamentally change how we built products–from staged to iterative to continuous.
Today, it is no longer enough to simply build what customers say they want, because by the time you build that, you learn that what they really wanted was something quite different.
In this new world, the only way to ensure you build what customers want is to engage them continuously.
The old way of building products used to work at a time when there were huge barriers to entry and few competitors. Even if you got the product completely wrong, you had time to course correct and get back on track.
But fast forward to today…with the Internet, open source, and cloud computing, it has become cheaper and faster than ever to introduce new products which means there is a lot more competition than before—both from incumbents and new companies starting up all over the world.
Did you know that there were 100M startups in 2018? That's a rate of 1 startup every 3 second!
In the old world, failing to deliver what customers wanted led to failed projects. But in the new world, continually failing to deliver what customers want, leads to total business model failure.
This is because customers today have a lot more choices than they did before. If they don’t get what they want from your product, they simply switch to something else.
On the other spectrum, the most successful companies today realize that good ideas are rare and hard to find. And that the best way to find the next big idea is by quickly testing lots of ideas.
While the early adopters for this new way of working were certainly high-tech startups mostly building digital products, over the years continuous innovation has been increasingly applied in many different domains and it works even at massive scale.
Some of the most valuable companies in the United States like Google, Netflix, Amazon, Facebook, etc. all practice a culture of rapid experimentation.
The best way to find the next big idea is to continuously test lots of ideas.
Companies that learn fast, outlearn their competition and get to build what customers really want.
When you outlearn your competitors once, you stand to launch a new innovative product and capture market share. But whatever is worth copying will eventually be copied. It is only by continuously outlearning your competition, do you stay relevant to your customers and see your business model continuously thrive and grow.
This is the essence of Continuous Innovation.
When you’re going really fast under conditions of extreme uncertainty, you can’t afford to spend long cycles analyzing, planning, and executing your idea. You need a more iterative approach that involves continuous modeling, prioritizing, and testing.
As opposed to stop and go innovation, continuous innovation is a mindset of constantly challenging the status quo — even if you currently are the status quo.
Every company needs to simultaneously optimize its existing business model (sustain) and search for the next evolution of the business model (disrupt).
It's about simultaneously playing offense and defense with the competition.
Existing product development processes no longer work when you're moving fast and trying to build products under extreme uncertainty.
You need light-weight dynamic models that can quickly adapt to your learning.
Building a product no one wants on time and on budget isn't progress. You need to swtich from output based metrics to outcome based metrics.
Because planning and tracking projects this way consumes a lot of time and resources, you can only afford to make a few big bets at a time.
We've built a curated framework of frameworks for systematically taking a product from concept to product/market fit before running out of resources.
