Product Marty Cagan

Build New or Fix Old?

Often I’m asked what the right balance is between new product development and investing in improving existing products. I suppose it’s natural for companies to want to have some sort of percentage guideline, but I try to get companies to think about these investments a little differently. To me, all of these projects are product investments, and rather than worry about whether you’re investing enough in new product lines versus existing product lines, I would rather have the team worry that they’re investing in the best opportunities.

Expanding your product offering so that you can offer additional products to existing customers, or acquire new customers, can be a great thing. Improving your existing products so that they generate more revenue from your existing customers, and make it easier to get new customers, can also be a great thing.

But the real key is that each of these projects is a product opportunity, and as such, it’s the responsibility of the product team to assess the benefits and the costs. Then it’s the responsibility of the management team (ideally the product council if you’ve already adopted that idea) to ensure the company is pursuing the best of the opportunities. This might be all or mostly new product opportunities, especially if the company is just getting started, or it might be mostly product improvement opportunities. It is not a bad thing to be opportunistic when it comes to choosing your product investments.

That said, I will say that many times the very best product opportunities are sitting right under the company’s nose. For example, often by far the biggest bang for the buck comes from improving existing products that are not performing at the level they should be, often for usability reasons. For example, you might find that for every 100 people that explicitly begin the subscription process for your product, only 9 are making it through to successful completion. You know that if you can improve that number to 18, you’ve essentially doubled the revenue for that product. That’s a pretty great opportunity if you can find a good solution. And the ironic thing about this type of opportunity is that it is often the most straightforward to solve. A bit of prototyping and user testing, and you can quickly identify the issues and come up with better solutions that are often not hard to implement.

Or, you may find that you’re carrying hundreds of customer service staff to help your users as they struggle to configure and use your product. A better design for your product can often eliminate the need for a large portion of that staff. And that’s just the cost savings. The even bigger win may be the improvement to customer satisfaction and your corresponding NPS score.

I often come into a company and look like a hero when I point out these “opportunities” and they generate big returns. But I think what’s really going on is that there is a tendency in software companies to assume that the product is essentially already as good as it can be, and continued investment won’t make much difference. Companies tend to believe that their products are inherently complex; or they think that a 9% conversion rate isn’t bad; or that they just need to spend more on customer acquisition marketing or advertising; or that investing in customer service is just a necessary cost of doing business.

But what’s actually going on is that the product is weak, and the company is just trying to make the best of what they have.

At one level this is just another symptom of companies under-investing in design and user experience. But more generally the truth is that many products out there are actually poorly done, and rather than improve a product to the point where it can generate real revenue and success for you, many organizations view it as easier to create a new product. But unless they change the way they produce that new product, they’re likely going to just end up with yet another product in need of improvement.