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Digital products are different! Are they? Understanding the challenges of digital product development Uwe Friedrichsen – codecentric AG) – 2017-2022

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Uwe Friedrichsen Works @ codecentric https://twitter.com/ufried https://www.speakerdeck.com/ufried https://ufried.com/

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What is a “digital product”?

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Doesn’t that have to do with digital transformation?

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What is “digital transformation”?

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Probably the bullsh*t bingo word of the decade

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1st wave of digitization Digitization of business processes (Automation of business processes) • Started 40+ years ago • Peak 20+ years ago • Today mostly completed Customer Employee IT Need Need IT IT IT IT Employee Employee Employee Employee Business support systems Business offering (supplier driven)

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Customer IT Need Need IT IT IT IT Business offering (supplier driven) Business support systems 2nd wave of digitization Digitization of business offerings (IT becoming integral part of business offerings) • Started 20+ years ago • Peak now

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Customer IT Need Need IT IT IT IT Business offering (supplier driven) Business support systems 3rd wave of digitization Customer need driven business offerings (Dissolving domain boundaries) • Started 5+ years ago API API API API API Business offering (customer driven)

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Digital transformation • IT gradually widened its range and influence • Support processes • Customer interface and interaction (e-commerce, mobile, ...) • Full revenue streams (API, platforms, ...) • Ongoing process, far from being completed • IT and business have become inseparable • Dissolving domain boundaries drive companies out of their traditional business domains

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Business and IT are the same side of the the same coin. The other side are the market and your customers.

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What is a “digital product”?

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Beats me ... ;)

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Can be a physical product or service augmented with an IT solution think, e.g., app-augmented Bluetooth headphones

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Can be a physical product or service based on an IT solution think, e.g., Lieferando or DoorDash

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Can be a purely digital offering with a UI think, e.g., Spotify

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Can be a purely digital offering without a UI think, e.g., Stripe

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Are there any commonalities?

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Commonalities of digital products • Software is an integral part of the business offering • Or even the only part of the offering

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Commonalities of digital products • Software is an integral part of the business offering • Enters a market of over-supply • Users decide about the success or demise of the product

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Commonalities of digital products • Software is an integral part of the business offering • Enters a market of over-supply • Often novel offering • Users cannot tell you upfront what they will like

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Commonalities of digital products • Software is an integral part of the business offering • Enters a market of over-supply • Often novel offering • Success cannot be “planned” upfront • Value of decisions can only be understood after the fact

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Commonalities of digital products • Software is an integral part of the business offering • Enters a market of over-supply • Often novel offering • Success cannot be “planned” upfront • Uncertainty will be your companion • Better make it your friend

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How can we tackle digital products?

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Let us make a big plan a.k.a. the 12-month MVP

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Does not work!

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Let us go “Agile”

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Source: Heart of Agile, https://heartofagile.com/ Could work ...

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Source: SAFe, https://www.scaledagileframework.com/ ... but usually it does not

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Problem: Long feedback loops are bad for tackling uncertainty

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Tackling uncertainty

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Internally controlled Externally controlled Effort spent Units produced / Output The effect of uncertainty Under uncertainty we cannot predict upfront which kind of performance we are going to produce Idle performance No value Value-adding performance Creates value Value-reducing performance Destroys value

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Uncertainty means you cannot predict the value that will result from your effort

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Every feature is a bet against the market

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Under uncertainty you do not maximize value by optimizing efficiency of efforts (a.k.a. cost efficiency), but by detecting and cutting idle and value-reducing performances as soon as possible

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The higher the uncertainty, the shorter the feedback loops with the users must be Reduces the probability of wasting lots of money with idle and value-reducing features

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How can we tackle digital products?

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Hypothesis-driven development 1. Create a hypothesis regarding the effect of an effort 2. Do smallest action suitable to measure an effect 3. Measure effect and evaluate hypothesis a. Further develop hypothesis if expectations met b. Drop hypothesis otherwise (optionally pivot) 4. Repeat

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How do we get user feedback?

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Gathering user feedback • Implement business metrics • Track user behavior • Respect GDPR • Augment with traditional techniques (e.g., user interviews)

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How can we accelerate our feedback loops?

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Try DevOps ... in its original meaning (see, e.g., https://itrevolution.com/the-three-ways-principles-underpinning-devops/)

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Market capability teams (plus optional platform teams) Autonomy (decentralized responsibility) Control via purpose (vision, goals, constraints) Cloud native (Microservices) Continuous Delivery Heterogeneity Cloud & Serverless Resilience (incl. chaos engineering) Automation & Observability Mastery Measure outcome (not output) Beyond budgeting (and BetaCodex) Flow (batch size 1) Lean EAM Continuous improvement T-Shaped people (being empathetic) DevOps Quick feedback loops (OODA loop) Curiosity ... but be aware that it will trigger a lot of additional change

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DevOps triggers change • Organizational change • Capability teams, platform teams, etc. • see Team Topologies * * https://teamtopologies.com/

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DevOps triggers change • Organizational change • Technology change • Cloud – with self-service! • Infrastructure as Code • Compliance as Code • Security as Code • ...

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DevOps triggers change • Organizational change • Technology change • Process change • Products, not projects • Beyond budgeting * • Continuous learning • ... * https://bbrt.org/

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DevOps triggers change • Organizational change • Technology change • Process change • Architecture change • Small, functionally independent units • Domain-driven design or alike • Dependability, observability, ...

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DevOps triggers change • Organizational change • Technology change • Process change • Architecture change ... and more

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Do not try to code faster, try to code smarter Implement fast feedback loops and detect idle and value-reducing performances faster

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You will not be able to build digital products effectively if you are not willing to change the way you do things

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But what about quality?

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You need quality ... in varying dosages

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Understanding the product lifecycle

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The manager’s trilemma ...

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Good Fast Cheap Optimizing for quality and cycle times will result in higher costs Optimizing for quality and costs will result in long cycle times Optimizing for cycle times and costs will result in reduced quality You may pick two

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... can be used to describe a digital product lifecycle

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Good Fast Cheap Extract Expand Explore 1 Digital Product Lifecycle

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Explore (discover) • Find product-market fit • Speed and cost-efficiency are king • Most ideas, i.e., code will be dropped • Just enough quality to not distort user feedback

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Good Fast Cheap Extract Expand Explore 1 2 Digital Product Lifecycle

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Expand (grow) • Paying customers use the solution • Speed and quality are king • Quality in terms of dependability is a must • Sweet spot of DevOps

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(Truth is: You will cycle between explore and expand in this phase)

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Good Fast Cheap Extract Expand Explore 2 3 Digital Product Lifecycle

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Extract (harvest) • Maximize profit • Cost-efficiency and quality are king • Default mode of most IT departments • Sweet spot of “Enterprise-scale Agile” • Phase usually very short for digital products

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Addendum: API-based products

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APIs are like GUIs: If they suck, your users will reject your product

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AX is the new UX AX: API Experience (see, e.g., https://speakerdeck.com/ufried/getting-api-design-right)

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Summing up

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Summing up • Digital product means IT is an integral part of the offering • Usually accompanied by lots of uncertainty • DevOps is your friend • But be aware of the resulting change • Mind the product lifecycle – no “one size fits all”

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Digital products are familiar and novel at the same time

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The future is already here – it's just not evenly distributed. ― William Gibson

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Uwe Friedrichsen Works @ codecentric https://twitter.com/ufried https://www.speakerdeck.com/ufried https://ufried.com/