Why do products fail?

Many Product managers and thought leaders (such as Marty Cagan and Christina Wodke of SVPG fame) have professed various theories about why products fail. Most of them have pointed their fingers at the execution methodology, waterfall like processes instead of truly agile empowered teams, or incompetent engineering teams or sandbaggers.

I think that such a narrative brings a very narrow perspective and fails to uncover the true underlying reasons for failure. First, we need to define what product success is. Many of the researchers have based their definition of failure or success on the really big stories, how the Apple ipod succeeded where others failed to garner market share, or how Google succeeded where other search engines failed. Another set of researchers consider reaching the $ 1 billion valuation mark as the true measure for success and bring those anecdotes as examples. In my opinion, in this world of cut-throat competition and ever mushrooming startups where the lines are really tight, and a products story will often be written by luck and timing, we need to make the definition of failure much more forgiving. In my opinion, if the product is able to gain enough market-share to cover cost of operations, or is able to be acquired at a price higher than the money poured in with about 10% left over for the employees, that would still be a very decent result.

Now, with the definition of product success out of the way, lets then delve into the main topic - why do products flounder or fail? In my opinion, and this is based on my own past experience, I think execution issues, while they may be present, are usually secondary reasons, and are often resultant of failures in other departments in the first place.

I mostly find that product failures are more often than not strategic in nature. Many of them boil down to a failure to read the market properly and incompetency in executive leadership in identifying when to pivot. Here are the common causes of product failures that I have encountered.

1) Inability to find the right product market fit

The ability to find the product market fit is a very difficult problem that most startups and new products fail to navigate. The product market fit is often abandoned and instead, incremental differentiators over established competitive products are tried at random with an aim at pleasing the sales force. Also, many a times, what the startup discovers as a product market fit, may just turn out to be a short-term silver patch, or even worse, a sub-optimal positioning as a low-cost player or a narrow market scope, that in the long run, becomes unsustainable. Without the right product-market fit, products try to pander to every market segment and every new sales demand, however disruptive that demand may be, leading to poor execution, lack of focus, the dreaded belly up.

2) Biting off more than one can chew

Often the product team is given to fight it out in a market that has well established dominant designs that are not about to be disrupted. In such a scenario, a product company has to be really well funded to be able to compete. This is clearly a strategic failure. The fact that more funds are required to even enter the ring should have been clearly visible right from the start. Alternately, the executive and product management team are possibly not very well versed in the domain, which could also lead to a similar situation. Getting into such a market without a proper strategy for raising funds is basically setting up for failure. Usually, this ends in a highly overworked, demotivated team.

3) Incompetent Executive Team

In order for any product team to do well, it is essential that the Executive leadership team has to be aligned and knowledgeable and directionally clear. I have found, that in many cases, this is not so. Sometimes, that leadership is not really interested in building a sustainable technology. At other times, for sales focused executive teams, the product team is provided very short term objectives. The product team is often not empowered to take long term, strategic decisions, but forced to dance to competitive positioning needs. Worse still, the CEO and the executive team comes with the baggage of waterfall style executions and infeasible roadmaps - these archaic and statically defined artefacts get in the way of agile executions, and customer centricity, quickly leading to suboptimal products that are very easily overtaken by competitors.

I have put forth the top three reasons for product failure here, and there are many more, and in some cases, it will be due to the incompetency of the product team, however, such cases are few and far between.