As SMBs grow, their product development processes often fail to scale. This is especially challenging in phases of fast growth, such as a scale-up or small business who may have been more successful than anticipated over time and never had their processes streamlined. A World Economic Forum report indicates that 67% of SMB executives worldwide cite expansion among their main challenges, specifically highlighting issues such as scaling operations (1).

So why is the challenge of scaling product development processes so difficult and how can it be improved? Let’s start with a process tailored to the realities of your company situation.

Challenge of Scaling for SMBs

Startups and microenterprises (<10 employees) often lack dedicated R&D and product departments, relying on a small team of founders who all contribute to innovation efforts. This is perfectly fine for this stage as there are fewer communication lines, lower complexity and less need for a structured process and any overhead that creates.

As the company grows into a small enterprise (10-49 employees), product development methodologies may begin to formalize. However, resource limitations still create challenges in scaling and the company may struggle to implement clear and efficient processes.

Typically, the medium enterprise level (50-249 employees) is where the ceiling for growth occurs if the product development process is not addressed. Roles become more dedicated and the number of lines of communication between employees explodes. Each person has a smaller piece of the whole information pie and many more people to coordinate with.

A McKinsey report indicates that in the United States, micro-, small, and medium-sized enterprises (MSMEs) employ nearly 60% of workers and produce almost 40% of value added nationally (2). However, these businesses are only half as productive as large companies, highlighting challenges in scaling operations and innovation.

So how does a growing organization implement a fitting product development process that can scale and address their individual needs properly? Let's look at 3 practices that, when combined, can get your innovation engine running full speed.

5 Situational Realities (5SR) Framework

There is no one-size-fits-all development process for every company, despite what many experts will try to tell you. The first place SMBs need to focus is having a clearly articulated understanding of the reality of their business situation in order to tailor the development process to fit. If you want to run fast, your shoe has to have a tight fit and that is what the 5SR analysis defines - the right fit so you can increase velocity.

A 5SR Analysis consists of analyzing the following aspects:

• Industry Type - Are your customers businesses (B2B) or consumers (B2C)? If they are businesses, are they selling to other businesses or directly to consumers?
• Customer Base - Do you have one customer, dozens of customers, hundreds or tens of thousands? The base and composition of your customers will impact your product development process heavily.
• Risk Profile - Risk needs to be considered at both the industry and company level. Are you calculating and somewhat risk averse or is your advantage taking risk and moving at breakneck speed? What about your industry?
• Maturity - The maturity is assessed both at the industry and organizational level. Are you a startup or an established company? How mature is the industry and how accepting of innovation??
• Offering - What are you selling? Are you selling a product or service? Is it a pure software product, physical only or a mix of the two? Your operating model itself is perhaps most influenced by your offering.

These aspects will inform future decisions such as the definition and detail of your roadmapping process and the agility and amount of rigor you need in your Project Execution Model. 

Strategic Rationalized Roadmap (SRR) Process

A Strategic Rationalized Roadmap (SRR) should be thought of more as a living, iterative process than a static document that is created once and followed blindly. Let's break it down.

The Strategic aspect of the SRR takes into consideration 5 major factors that need to be accounted for: macroeconomic events, industry and technology trends, customer concerns and user needs (read more on this topic in our dedicated blog post here: Building a Product Roadmap: 5 Factors SMBs Need to Consider). 

Considering and iteratively aligning these ensures that near term decisions align to a longer 5-10 year strategy for your organization. Beyond, let’s say, 18 months this is mostly speculative and will change, but the long-term portion of the roadmap acts as a cardinal direction for a long journey. Once you start along the path you will overcome obstacles and have to adapt, but the end destination is directionally correct.

The Rationalization aspect establishes an iterative process between the product, marketing, engineering and project management teams (as well as other functions). This is a critical aspect in defining an ambitious, but realistically achievable roadmap as one must take into account technological capabilities, resource availability, skill level and the priority of other projects in the pipeline. Without rationalization, a roadmap is just a product management wish list and not steeped in reality.

The level of detail and rigor required in your SRR varies on the type of organization and industry you are in and should be informed after considering your 5SR Framework analysis.

3D Project Execution Model

We prefer to maintain a project execution model that is as lean and iterative as possible. With that being said, some industries and markets simply require more traceability and rigor in terms of documentation and quality. The simplest model is referred to as the 3D model and consists of 3 fundamental phases: Discovery, Development and Delivery. Each of these phases has a minimum of 1 'Gate' before and after for a total of 4 gating events. You can think of these as mandatory checkpoints to proceed to the next phase, while each phase can be adapted with the fitting amount of iteration or sub-checkpoints as required.

Critics may argue this is simply a stage-gate model, which is where the concept for the gating events occurs, however these are important for the organization to gain cross-functional alignment on where in the lifecycle the project is and to ensure the next phase is setup for success.

An initial Gate is important before discovery presenting the idea and ensuring that the resources are available from marketing, product and R&D to perform initial discovery. If product starts this alone, there will be a situation down the road where engineering is needed but not available, grinding the process to a halt. Similarly, the gate before development ensures the engineering teams are ready and understand the concept while the gate before delivery ensures the go-to-market teams have what they need for a solid launch. A final gate, sometime after launch, ensures that quality is under control and the product is fully transferred from the product and engineering teams to the marketing and support teams.

Conclusion

SMEs often face significant challenges in scaling their product development and innovation processes, particularly as they grow in size and revenue. These challenges can impact their competitiveness and long-term sustainability. To build a robust and scalable product development process, start by framing your reality with the 5 Situational Realities Framework and use this to inform both your Strategic Rationalized Roadmap and Project Execution Model.

• https://www.weforum.org/press/2022/12/small-business-big-problem-new-report-says-67-of-smes-worldwide-are-fighting-for-survival/
• https://www.mckinsey.com/mgi/our-research/a-microscope-on-small-businesses-spotting-opportunities-to-boost-productivity