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why digital products fail

Why Digital Products Fail

digital product innovation

Another Mobile Wallet Bites the Dust – See Our Infographic Here

Why Digital Products Fail – The Mobile Money Example

In our last post we examined the relative success of the mobile money industry. This success has been  limited to specific geographic regions despite the industry being more than 12 years old. The numerous mobile wallet failures in more developed countries have shown us that this experience is not only limited to emerging markets. So why do mobile and digital products often fail when brought to market?

Voice and Data Success

Ironically for mobile operators today’s problems began with the remarkable success of voice and data. Back in the 1990’s when mobile networks were being established around the world, they couldn’t be rolled out quick enough such was the insatiable demand from the public. It was a rare example of a product with instant mass market appeal which effectively sold itself. The operators were addressing one of the most basic needs humans have –that of communication (or remote communication in this case). Furthermore in emerging markets the lack of fixed-line infrastructure meant mobile had an even greater appeal in meeting this need. The need to communicate digitally has seen a similar exponential increase in demand for mobile data in recent years.

Lean Product Development – Listening to the Market

However, beyond communication, what other basic human needs are there that mobile might meet and which the consumer would be
willing to pay for? The short answer is not many. For more than 12 years we have been told that financial services might be one of those needs. The reality is that while ‘financial access’ might be considered a human right, it is not necessarily a human need. I might want the right and ability to store money at a secure third party institution but my need could also be partially met by stuffing it in a mattress.

Clearly to ensure that the market demand is there for these products a focus on the consumer is required .The ‘build it and they will come’ approach that worked for voice and data has not had the same impact here. For success within this sector mobile operators and financial service providers will need to master digital product innovation.

Digital product innovation has long been an Achilles heel for the mobile financial services (MFS) industry. The runaway success of M-Pesa turned the head of many an operator who thought they could apply a ‘cookie-cutter’ approach to their own market without having to consult it. However the further away mobile money was launched from its East African stronghold the less successful it became. Nevertheless there was always an army of World Bank consultants, NGOs and academic theorists waiting in the wings to advise the operators on where they had gone wrong, what products they should have been offering and how those products should have been distributed.

why digital products fail

“This is our MFS unit’s performance”

Unfortunately many in the MFS industry have been too guilty of outsourcing their product development to the development economics sector rather than taking ownership themselves. This is not an advisable position to be in for any for-profit company. Instead of mastering product development most MFS offerings have fallen at the first hurdle of listening to the market. In the 250+ launches of mobile money we have seen to date most have failed to gain significant market traction. Yet each of them has sunk some up front capital costs and continue to spend ongoing op-ex in supporting products their markets don’t appear to want. The risk for the industry (and for the unbanked) is that senior management no longer see the business opportunity in MFS, enter cost cutting mode, stop investing and ultimately wind these MFS units down.

To listen to the market effectively mobile operators could do worse than to employ some of the lean start-up concepts for product development that we have discussed elsewhere.

Product Marketing – Communicating to the Market

Mastering digital product innovation is only part of the formula for market success. The other part is product marketing. In a nutshell this can be thought of as communicating effectively with your target market – crafting a compelling proposition around the new product so that potential customers are sufficiently interested to try it for themselves.

Product Marketing requires both an in-depth knowledge of your target market segment and of the product itself (often a rare combination in any one individual as we discuss here). For mobile operators it needs to be mastered for basic mobile money services on feature phones as much as it does for sophisticated mobile commerce offerings on smartphones.

Unfortunately, having failed to consult their home markets when designing their MFS products many mobile operators were not then in the position to market and position these prodcuts effectively. Ultimately they became sales-led organisations (centred on selling the products they already had) rather than product-led (developing the products the market needed).

Luckily however there have been instances within the MFS industry where both product development and product marketing have been handled correctly that others can learn from. And it is this we will look at in our next post..



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