June 28, 2023

A new era requires design profitable products

Since 2000, half of the companies in the Fortune 500 have disappeared.

In the last decade, new organizations have needed to change their business models at least 4 times before reaching profitability. In 2022, the technology sector lost US$4 trillion, only in the US more than 130,000 employees were laid off, we are in a moment of contraction after a decade of permanent expansion... it is time to think about profitable digital products for the new era.

Product design in the decade of easy money.

The past decade has been characterized by exploring different strategy models for digital products, all designed for long-term profit. Starting with the acronyms I highlight the following models:

  • GLEe (Get big, Lead, Expand)
  • GEM (Grow, Engage, Monetize)
  • DHM (Delight, Hard to copy, Monetize). 

In this unbridled race to grow without thinking much about how to make money, the user experience practice blossomed like a magic bean.

But having a great UX is just not enough to guarantee a product success. Thousands of companies hired UX teams trained in DCU (User Centered Design), hundreds of online courses and trainings were born. This resulted in a significant improvement in the user experience in most products. On the other hand, the indiscriminate use of design and interaction patterns also led to a certain linguistic and aesthetic conformism. The role of the designer in many cases was so constrained by the needs of the user that he forgot or did not know how to add value to the business. They didn't require it either.

Profit Profit Profit.

The Profit era was born as a response to the proliferation of digital products that, although they satisfy user needs, never become profitable. The mantra of "The profit follows the users" repeated over and over again began to fade in recent years, where the lack of results returned to the diffuse, weak and finally false promise.

The exaggerated success of the easy money era changed course. The conception of digital product design turned to a rationalist model where the construction of products has profitability as its unavoidable objective.

The new era describes an orbit of return and recovery of the primary objective of any company, to earn money, making an oblique displacement with respect to the directional axis of events. This need for lateral displacement, not flight, allows correction without resigning anything learned. So, what will define this new stage?

The user experience will continue with a relevant role.

UX is an important part of creating a product that sells, but it's not a silver bullet for transforming businesses, conquering competitors, or driving profits.

The DCU focuses on the users, today, this brings many benefits since we build at least an effective, efficient and satisfactory product for our audience. Of course, it also has some risks, such as that we stray from the path of the strategy, that we lose our identity or that we believe that this is enough to obtain profits.

There is another conception of design that is often in constant tension with the DCU, the speculative or critical design. Speculative design is riskier and focuses on tomorrow. It feeds on observations, intuitions, experience. It can lead us to new, transformative scenarios, hypotheses that anticipate very profitable future needs in the medium or long term. And yes, the main risk is that it can take a long time to find a path or it can fail altogether.

While the vast majority of products our industry builds today are using user-centric approaches, setting aside some space to take chances, to think of alternative approaches, unexpected twists, can add tremendous design value.

Minimum Profitable Product (MPP)

A deepening of inflation and unemployment is estimated for 2023. This context of high uncertainty led companies to start with preventive measures, among which budget and personnel cuts stand out. Companies like Coinbase, Twitter, Meta, Salesforce, Microsoft, and Amazon have cut anywhere from 1,000 to as many as 11,000 employees per company.

Against a backdrop of restraint, slowdown and contraction, companies will turn to a more proven playbook to succeed in a world of slower growth, higher inflation and more expensive capital. In this framework, investment in the construction of ambitious and innovative high-risk products is no longer as tempting as the safe search for returns in ever-higher interest rates. Companies need to see the result of their investment, and ensure that they receive profit for having made it.

The Minimum Viable Product, or MVP, was a great concept that helped us a lot in the earlier era of product design. One was marked by “free money” and traction as the main driver, when all that was needed to obtain financing was to validate that the product was used by as many people as possible. I'm not implying that this was wrong, I'm saying that it was the best process in the context.

Today things are different. Money is not readily available and everyone wants their product to make money and not just attract an audience. To help us succeed in this new era, a new process is needed. We call it the Minimum Profitable Product or MPP, a process built to focus on what matters, how to create a product that appeals to an audience that is willing to pay for it, and ultimately how we transform the company to enable this product and make significant profits.

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