by Scott Hoffpauir, Managing Partner

In my last blog, we discussed the difference between growing and scaling. To recap, growing is increasing revenue at the same rate as your costs while scaling increases revenue faster than your expenses. Scaling comes down to doing more with less. While my last blog focused heavily on the customer lifecycle, this one is on scaling product development.

When your business is getting started, you almost always focus on a minimum viable product. This product offers basic functionality that provides value to your customer base. It’s a great way to get started, because the sooner you get your product in the hands of customers, the sooner you’ll start making money.

However, once you get your product out of the door, three things always happen. First, you’ll want to add more functionality. Second, your customers will request new features. And last, your development team will tell you about all the shortcuts you took to get the product out the door.

So, how do you manage this headache? An excellent way to solve the problem is to break product development into three categories: the strategic bucket, the customer bucket, and the technical bucket.

The strategic bucket contains all of the things you want to add to the product. This list consists of additional features to complement what you already have, new components you can upsell, and enhancements to allow your product to be sold in new verticals or geographies. Your business plan should drive the strategic bucket. Typically, you’ll have a clear vision on what you want to achieve, but inevitably you won’t be able to execute as fast as you think.

The customer bucket contains all of the requests you get from customers and prospects. This bucket should only consist of improvements that drive revenue. The bigger the opportunity, the higher priority the feature gets. For this grouping, you should always push back on requests to determine which are “nice to have” versus those that are deal breakers. Most importantly, don’t stray too far from your strategic business plan. There’s a fine line between enhancing your product and creating a custom solution.

The last bucket focuses on your technical debt. This bucket consists of all of the things that keep your development and engineering teams up at night, such as software architecture, high availability, capacity, performance, security, and third party components. Think of your technical bucket like Cinderella. The other two buckets are the ugly stepsisters that get all of the attention while your technical debt gets mostly ignored. Although it’s hard to translate the technical improvements directly to revenue opportunities, much like Cinderella, you can’t ignore them.

So, how do you manage your technical debt while still adding new capabilities to drive revenue?

I’ve always found you need to allocate one-third of your overall development bandwidth to each bucket. This approach means your organization’s time is split equally between the strategic, customer, and technical buckets. With that said, in the early days, you’re probably going to put more into the strategic and customer buckets to ensure your product provides value and generates revenue. However, companies that succeed in the long run never forget their technical debt.

For the technical bucket, it’s essential to improve your product continuously. You should start by understanding your goals for the future and when you want to achieve them. For example, if your product needs to support one million subscribers, then you should realistically estimate when you’ll hit that milestone. Take that timeline and work backward, putting together a phased approach to improve your product incrementally. Do the hard architectural things first, setting the groundwork for incremental optimizations. Allocate a dedicated team to focus on these tasks and keep moving things forward. Your goal is to address your technical debt in a “just-in-time” manner.

There is one certainty, and caution, in scaling your product. Your sales team will likely try to over commit to win business, and your developers will worry your product isn’t perfect. You have to manage your resources across the three buckets to help ease the commitments and calm these fears. As you begin your product scaling journey, it’s essential to plan for roadblocks upfront, prioritize key areas, and continuously put enough energy in each bucket. This approach will help you address issues before they become catastrophes and ensure your business is a success.