The Gartner Hype Cycle, which looks at new technologies and their maturity, is a must-read for technology leaders. Hence most will be familiar with the term “Trough of Disillusion”. It describes the stage of a technology following its hype, which is usually when it is implemented and fails to achieve all the lofty goals and promises that were tied to it previously.
The underlying dynamics that so reliably produces the hype cycle is twofold:
(I) It clearly reflects the emotional reactions of humans to their perception of reality, not the underlying technology.
Hence the move from hype to disappointment is a change in perception of reality, not a change in reality.
This is an important difference to an actual change in reality, which is actually progressing differently and independently.
(II) The dramatic drop-off in enthusiasm witnessed is a direct result of our struggle with understanding exponential progress intuitively. A technology is described with its future promise, yet today’s implementation feels very far away. We lack the appreciation that the progress will not be made in a linear fashion, but that technology improves exponentially. Hence we always overestimate change one year out — and drastically underestimate change five years out.
Now the same dynamics holds true for applications of foundational technologies — especially new digital products created in organizations that lack the digital maturity to understand the underlying dynamics.
The Digital Product Hype Cycle
Once a new digital product initiative is planned and approved, the teams working on it invariably start to communicate internally and sometimes to customers. That is necessary, as often they need support or protection from other stakeholders during the process, and to ensure that they involve them and feed them with updates.
This communication necessarily creates expectations with all stakeholders.
Typically, they get involved in early workshops and ideation, later see some designs they gave feedback on or test some prototypes, and often get regular verbal or written updates on progress. Almost never do they spend significant amounts of time with the project team or engage with early releases of the development process. This leads to a build-up in expectations, as they only have positive touchpoints with the new product and fill parts of the picture in their mind with fantasy.
When the MVP is then finally ready, everyone is excited to have a look and is very quickly disappointed, returning to the product team with communication about what they had understood it to be, what is missing, and other signs of disappointment.
This is the dangerous phase during which the future of the product is then decided. How do we take it forward from here?
Linear Investment Vs. Exponential Returns
Too often do we see organizations disengage from the product, pull funding, or move teams to the next topic. All the work of the previous months is put in a drawer because it failed to generate initial excitement.
Yet all that happened was the occurrence of a change in perception of reality. The underlying reality never changed.
The identified original problem, if it was valid to begin with, is still valid. The solution, if it was validated through market feedback along the process, is likely still going in the same direction. Sure, some features or tweaks are missing and it is not the ultimate solution to everything just yet — but that is where the real work should start and not end.
At this point, it is important to keep a dedicated Scrum team committed to the product, continuously working on and improving it, through user testing loops, data-based backlog prioritization, and continuous new releases. The team needs to work through any friction and market resistance, and that takes time.
The beautiful thing about this linear manpower investment is that it can produce exponential returns. All the work that has been done and will be done keeps on compounding. With every loop the product gets a few percentage points better, with every new user there is more data to analyze to improve even further until the breakthrough point is reached.
Every overnight success has been a long time in the making. These are the features of exponential returns we do not intuitively understand.
Operating Teams Matter
Beyond the digital product itself and its direct fitness, another important factor is the operating team behind it. While a Scrum team will keep testing the product with customers, understand what can be improved and continuously ship new versions, the operating team is responsible for sales, marketing, onboarding, support, customer success, and general operations.
The operating team needs to be experienced in digital product operations, the particular market they are dealing with, as well as the particular operating domain the product is aiming at. No small feat. Without experience, the team will likely miss the mark in terms of communication and messaging, have a hard time correctly onboarding customers, and won’t understand how to make the customer succeed.
Great operating teams work hand in hand with the Scrum team behind the product development to ensure that every encounter they have with a customer, be it on the sales or operations side, is analyzed and reflected in the prioritization of the product backlog. Without a committed operating team, a digital product is likewise doomed to fail after its release, as even the best built product needs to be actively supported.
When To Actually Pull Funding
Now that is not to say that every single digital product should receive continued investment. Of course, there are also cases of lost causes, where continuing to invest would be throwing good money after bad.
How can we effectively differentiate between scenarios where we need to persist and scenarios where we need to cut our losses?
One important piece of that puzzle are key engagement metrics. Instead of looking at user numbers or revenue numbers, the utility of the product needs to be defined in terms of the user’s jobs to be done and then measured around those. Whatever the core value proposition of the product is needs to be broken down into smaller engagement metrics, such as time to completion, abandonment rations, or similar, and tracked over time. If there is no improvement over time, things are not going in the right direction and the exponential undercurrent is not there.
Another way to evaluate the product is through customer feedback.
If customers are telling you they love it and yet don’t use it, or if they straight-up say that it is not of value, there might be nothing that is compelling enough to have a positive business case. The best customer feedback is when the customer is generally engaged with the problem, positive about the solution, and has constructive feedback on how it can be improved. That shows real interest.
Stakeholder Management And Better Budgeting
There are also improvements that can be made to how stakeholders and budgets are managed. To alleviate the overall pressure on the product team and the tendency to cut compelling products, we need to set everything up in a smarter way to begin with.
Stakeholders should definitely be brought in early and continuously, but they should not be shown a rosy picture. Expectation build-up is very real and toxic.
They need to understand how small the MVP will exactly be and should be shown in-development prototypes that are buggy and not styled perfectly, so they are not left to fill blanks with their own fantasy. Reference cases from other companies and product creation processes (look at the first versions of Facebook, LinkedIn, or Twitter) can help to explain why the first version is not the end but the start.
Further, organizations should always plan for and allocate about double the manpower or budget to the product initiative as was originally estimated or planned to get to MVP. You need to have enough runway after releasing the MVP to actually launch, learn, and iterate a few loops before feeling the metrics and budget pressure. Otherwise the tendency will always be to stop providing fresh budgets to disappointing first versions, which nevertheless have real potential.
It is also important to plan for the operations of the product from day one — by understanding who the operating team should be, ensuring that they have all necessary expertise on the team, and involving them in the product development process, so that they can hit the ground running.
Hype cycles can be found in many areas. They are a function of human psychology and very reliably occur when information is only partially available and fantasy fills in the blanks.
This often happens with digital product development projects: Hopes are high, people get excited, yet first versions never live up to expectations.
Proper expectation management, transparent communication throughout the project, budgeting with foresight, and understanding what the operations and maintenance of a digital product entail are all keys to avoiding disappointment and cutting promising initiatives too early. Digital technology is no cure-all, yet if approached correctly, organizations can really leverage the exponential nature of it.
Sebastian Mueller is Chief Operating Officer at MING Labs.
MING Labs is a leading digital business builder located in Berlin, Munich, New York City, Shanghai, Suzhou, and Singapore. We guide clients in designing their businesses for the future, ensuring they are leaders in the field of innovation.
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