February 26, 2023
3 Trends That Will Dominate Product Development in 2023
3Pillar Chief Evangelist Scott Varho shared 3 predictions of trends that will dominate product development in 2023, from understanding the power of innovation over invention to prioritizing digital customer experience to productivity overshadowing performance.
The article below originally appeared on VMBlog.com, a website that regularly publishes articles related to AI and machine learning, edge computing, public and private cloud computing, and more.
If 2020 is the year that accelerated digital transformation, 2022 is the one that challenged it. Businesses struggled with workforce disruption, inflation and an economic downturn. Many companies pumped the brakes on spending, halting product development and putting customer experience programs on the chopping block.
In 2023, the companies that continue to build for growth and invest in digital, even during a recession, will survive. Over the next decade, 70% of value in the economy will come from digital products and business models. More immediately, in the next few years, 56% of companies anticipate most of their revenue to come from digital channels.
There are strategic considerations to be made while building, though. In 2023, successful product development will involve companies considering value over novelty, prioritizing digital customer experiences and focusing on performance instead of productivity.
1. Companies that Understand The Power of Innovation Over Invention Will Be More Competitive
The companies that will thrive in the next wave of the digital economy won’t be the ones clamoring over the shiniest new technologies, such as artificial intelligence (AI), crypto or Web3. New inventions capture our attention, but innovation is doing something in a new way that generates value. Using something that’s been around for a while can be more innovative than using something that has just been invented.
For example, instead of using an invention such as machine learning (ML) to make product recommendations, using a decision tree in a new way can be more than sufficient to drive product recommendations. Plus, it’s more cost-effective and quicker to build and far less costly to maintain or troubleshoot. It can pay off to focus more on value-generating products than inventive technology.
Organizations that will thrive in 2023 won’t build technology for technology’s sake. They will assess their target market(s) to determine the why behind the technology, test their hypotheses in a low fidelity, lean way and ultimately understand where the value lies.
Relatedly, knowing your customers and users (in B2B, they are different cohorts) better than the competition is an enduring competitive advantage and, in most cases, will outperform a technical advantage. If the definition of innovation is to do something different that generates value, then advances in behavioral insights will become increasingly critical next year and beyond.
2. Prioritizing Digital Customer Experiences Will Be Crucial to Business Success
As the world becomes increasingly digital, businesses should prioritize digital customer experiences, including experiences that have been traditionally out of reach for digital. Customers are no longer differentiating between digital and offline satisfaction with your brand. The pandemic accelerated this trend – it did not create it.
A clear and prevalent example of this is in the restaurant industry. QR codes were considered dead before the pandemic, and are now on most tables. This trend has drastically increased the number of people who know how to use QR codes. At the same time, the latest smartphones now have QR readers built into their cameras (you used to need a separate app to read QR codes).
The leaders in what follows will be those that seize the increasing comfort level customers have with digital channels, even in experiences that have been traditionally out of reach. This blending of the digital and offline worlds will undoubtedly continue. The winners in 2023 will seek to provide integrated experiences superior to either all-digital or all-offline.
3. Productivity will Continue to Overshadow Performance
Sadly, most product teams will remain stuck in a regime that cares more about productivity than the performance of their products. This trend is rampant and often seen by management as a way to enforce accountability and execution of strategy. The problem with this is that some of the biggest innovations I’ve been a part of came from engineers who courageously stopped work and pointed out that there’s a pattern or technology that could help us get better results.
These moments had a far greater and lasting impact on results than if that engineer had kept their head down and finished their tickets. Teams that are told “velocity” is the most important metric will naturally favor getting work done over either doing work better or challenging how the work fits into accomplishing the goals of the product.
Neither piles of tickets nor lines of code make a product. Yes, we break down our work into tickets to make it digestible, but we should always keep sight of the mission to deliver value in the short, medium and long terms. We should be willing to take a hit on productivity if it means we are obsessed with performance and constantly thinking at the macro and micro levels about how to deliver greater value.
As we head into a new year, the organizations that consider value above all else when building digital products will thrive. That includes creating new value with innovation, engineering value-generating digital experiences and delivering value with high-performing teams.
If you’d like to hear more of Scott’s perspectives on technology, product development, and building a culture of sustained innovation, tune in to our Innovation Engine podcast, which he hosts.