Is it better for Milestone Systems to focus on improving existing products or developing new ones?

Introduction

The trade-off question at hand is whether Milestone Systems should focus on improving existing products or developing new ones. This scenario involves balancing resource allocation, market positioning, and long-term growth strategies. I'll analyze this trade-off by examining the current product portfolio, market demands, and potential impacts on Milestone Systems' business objectives.

Step 1

Clarifying Questions (3 minutes)

• Context: I'm thinking about Milestone's current market position. Could you provide an overview of our market share and main competitors in the video management software space?

Why it matters: Helps assess the urgency of innovation vs. optimization Expected answer: Strong market leader with 60-70% share, facing increasing competition Impact: High market share might favor improving existing products, while strong competition could push for new development

• Business Context: Based on our revenue model, I assume most income comes from software licenses and support. Is this correct, and are there any significant shifts in our revenue streams?

Why it matters: Aligns product strategy with financial goals Expected answer: Primarily license-based, with growing subscription and cloud services revenue Impact: Shift towards subscriptions might favor continuous improvement of existing products

• User Impact: I'm considering our user segments. Can you tell me which segment has shown the highest growth recently, and what their specific needs are?

Why it matters: Ensures product decisions address key user needs Expected answer: Enterprise segment growing fastest, demanding more advanced analytics and cloud integration Impact: Could influence whether to enhance existing products or develop new ones tailored to this segment

• Technical: Regarding our current architecture, how modular and scalable is it for adding new features or products?

Why it matters: Assesses feasibility and effort required for different approaches Expected answer: Fairly modular, but some legacy components limit flexibility Impact: Less modular architecture might favor improving existing products over developing entirely new ones

• Resource: Can you give me an idea of our current R&D capacity and any planned changes in the near future?

Why it matters: Determines realistic scope for product initiatives Expected answer: Stable team size, with plans to increase by 20% next year Impact: Growing capacity could support both improvement and new development, influencing the balance of our approach