Generating value in product-based businesses

The ingredients that make a successful product are customer insight, existing distribution sales and capital, according to Daniel Roney, managing director of product development company Detekt.

Part of the Australian delegation for this year’s Global Entrepreneurship Congress, hosted in Riyadh, Saudi Arabia, Roney told Digital Nation Australia that as digital transformation soars, the businesses creating the most value are also investing in physical products.

“The ones that have gone beyond [digital platforms] into a physical product have really dominated the market and generated the most value in terms of valuations of business,” said Roney.

However, to add genuine value through products, there are a number of key criteria.
“Products on their own don't create a successful business,” he said.

Customer insight

According to Roney, how well businesses know their customers and have a deep understanding of their core needs is the first ingredient to a successful product-based business.

This is a key focus for Detekt as the company works with clients to design, engineer and manufacture consumer and commercial products.

“The most important thing at the beginning, is to really go deeper into understanding the problem, to really analyse in depth what they're trying to solve,” said Roney.

“Not just to follow their initial idea, but to actually help them go deeper into it and understand more about the customer experience, and the customer journey and basically, how — which is the most important thing — we can actually shift the current behaviour."

Sales distribution

Organisations that are unfamiliar with commercial product sales and don’t already have their own existing sales and distributions before developing a product, may face issues he said.

“A lot of businesses, especially in the tech space, who call themselves start-ups, they often don't have an existing sales and distribution channel,” said Roney.

“We often identify that that’s something they need to deal with quite early in the business, they need to establish that. It doesn't happen overnight.”

Capital

Finally, organisations without budgets big enough to withstand the lengthy product development process will also come up against challenges.

“It is a fairly long process to be able to develop a new innovative product, especially when there's a digital integration, where it requires like a software platform, apps, and then physical products. If they don't have the funds prepared, or they don't have avenues in mind, that can often delay the process,” he said.

This delay can be costly, Roney noted, “You might have the idea first, but if you can't take it forward to something tangible and basically get into the market, you'll get taken over really quickly.”

Editor's Note: Velvet-Belle Templeman travelled to Riyadh, Saudi Arabia as a guest of MCI Australia to cover the Global Entrepreneurship Congress.