5 trade-offs between time and performance for successful startup product launches

June 1, 2020 Corporate Blog

Most inventions have a small amount of time to be commercialized before a similar or competing idea dominates the market. When new products launch, it is important to understand the trade-off between product performance and time to market – and where technology fits in.

The optimal time to market vs. performance

The optimal time to market and performance targets can be determined by modeling the company’s cost structure to the market characteristics. This was discussed in detail in New Product Development: The Performance and Time-to-Market Tradeoff by Morris A. Cohen, Jehoshua Eliashberg, and Teck-Hua Hoand here (direct download). It is a very insightful, 40-minute read. Fortunately for you, we decided to give you a summary of the main points of the trade-offs between time and product performance below.

The authors created and tested a model that works for industries where there’s a short window of opportunity, a high rate of product change, and customers who put some emphasis on product performance. The main take-aways for new product development are:

  1. Focus on biggest chunk first – add features later: Maximum time should be allocated to the most productive development stage when consequent features will add incremental functionality. For example, developing a base product, which then grows and improves with more features. Kinda like Amazon’s transformation from an online book store to an online everything store.
  2. Judge product development needs against the market and competition: Depending on the type of competition you face, it may be better to develop a better product, rather than to develop it faster. If the market potential is large and the product will have a large margin, focusing on performance is key. Also if you face only intermediate competition, focus on performance to create an outstanding product.
  3. Don’t rush: Trying to get to market too fast to recoup your initial investment as soon as possible may lead to low-performing products that have been introduced too early.
  4. Launching new is more cost-effective than replacing old: It is harder to profitably develop new functionalities or replace an old product the more performance the existing product has. The profitability increases and development hurdle decreases when there’s higher demand, new profit margins, and a limited window of opportunity.In other words, for very complex products that need new replacement features, it is harder to keep development profitable than when launching new products, and in many cases, it is better to focus on performance than time to market. This, of course, changes when there’s only a short window of opportunity to introduce new products or features, even if the existing product still has high performance.
  5. The process is important, but…: Improving the product development process always yields a better product, but does not necessarily shorten time to market.


Applying the 5 principles

We’ve actually had first-hand experience with new product launches. In one particular case, the product was extremely successful in its sphere precisely because it balanced time-to-market and performance effectively.

The startup founder wanted to create a new app for doctors. Their core strategic focus was on creating a high-performance product.

  • A low-performing product would ruin its reputation and doctors would never trust their application again (#3).
  • In their case, they had some competition but overall had time to focus on performance, rather than rush to market (#2).
  • They developed the main product first, without some of the desired features that they were going to implement later (#1).
  • To keep the product profitable during further development they opted to work with a technology partner from the beginning (#4).
  • As the tech partner, we took care of any of the product development process changes, so the founders actually didn’t have to worry much about their time to market changes, as deliverables were dictated by a comprehensive SLA (#5).

The result was that the application not only launched successfully and was highly acclaimed by doctors, but it was actually soon acquired and integrated by a major healthcare company.

So, are you ready to scaleup? Contact us

Feature image by Freepik.com