Asking a product development firm whether you should hire a product development firm or build out your internal team can feel a bit like asking a barber if you should get a haircut, or asking the waiter if you should get dessert.
But here’s a plot twist: most of the time, it may be the wrong time to hire a product development firm.
It’s not in MistyWest’s interest to work with a client if we’re not their best chance for success. If a product we work on fails to gain commercial traction then not only are we likely to lose this client in the future, but we also have less satisfied Westies.
To help maximize the chances of success for both our team and our clients, we’ve looked back through the hundreds of projects we’ve worked on at various stages of development to create the following guide on when you should (and shouldn’t) hire an external product development firm.
For a TL;DR, you can scroll to Figure 1 with a handy flow chart featuring a young Keanu Reeves.
When to not hire a Product Development Firm
While businesses like MistyWest offer services all the way from ideation to productization, specific conditions must be met to ensure you, the client, will get excellent value from the relatively high hourly rates external product development firms charge.
The following scenarios are clear signs you should focus on building out your internal team, rather than pulling in an external firm.
Scenario 1: Understanding your product market fit is your largest risk factor (larger than technical risk)
No external product development firm can fully act as your product manager.
Truly understanding the customers you seek to serve requires someone who’s deeply engaged with your customers, thinking about their needs every minute of every day. They should be capable of communicating all of the product needs to the engineering team (be they internal employees or an external firm).
An external firm can be useful for conducting less biased user research, which informs your product management decisions. However, you need to build up a team that is sufficiently embedded in your product space to mitigate product-market fit risks before hiring an external firm. Otherwise, you might be spending a lot of money going down the wrong path.
Scenario 2: The work to be done is the core intellectual property that your company’s value is based on
Understanding your core superpower and building out an internal team that can cultivate a culture around delivering on that superpower are the most important characteristics of companies that routinely deliver exceptional results.
Our client Ideon Technologies, who develops tools to enable more precise mining exploration, comes to mind here as a company that has built a strong internal team for the geophysics, data engineering, and AI side of their solution, but also pulled in MistyWest to advance the development of their data acquisition hardware. While the hardware we’re building enables Ideon to generate the data they need to serve its customers, it’s the insights that Ideon is able to extract from that data that make the company a valuable, investment-worthy business to its customers.
Scenario 3: You need continual, consistent engineering effort to support previously-released products
Needing to support and scale production for a product that has been launched, and proven to be both technically and commercially successful, is the goal of every new product introduction process. It’s also the time to reconsider working with your product development firm.
One of MistyWest’s longest-standing clients, TZOA (now HAVEN), addressed this stage incredibly well. After the product we helped them create began gaining traction, we supported their efforts in building out an internal team that was able to efficiently execute the iterative and continual engineering efforts that their product required as they scaled production and supported customers. Seeing our client and our design work succeed was immensely satisfying to MistyWest.
When you should hire a product development firm
You have a need for SPEED (i.e. time-to-market is a major driver of long-term success)
Nothing replaces time-to-market. While the first-mover advantage may be considered overrated, first-scaler advantage is undeniable in most industries. Quickly delivering a product with a design that contains a clear path to scalable manufacturing requires an experienced hardware team that has a track record of working well together.
…And your product market fit has been validated
You’ve done the market and user research and you’re confident there is a need (or even demand) for the product you’re developing. Now it’s time to deliver in a timely manner to get that sweet, sweet market share pie!
…And at least one of the following:
1. You have a project which is essential to product success, but many of the skills required are outside of your core focus.
Outsourcing aspects of your product that are outside of your core focus enables the agility needed to create and capture markets – MistyWest’s work with Ideon illustrates this principle very well. Keeping your team laser-focused on the work that is core to your business’s value generation enables you to move faster and deliver value to the end customer more reliably.
2. You’re working under a market-driven deadline.
This point is admittedly a bit redundant considering the need for speed listed above – however, if the deadline pressure is strong enough, that alone can be sufficient justification to work with an external firm. The time to find, hire, and ramp up a well-integrated internal team is quite significant; an external firm can save you critical time to keep the product roadmaps intact.
3. Your engineering workload is inconsistent.
Routinely cycling between mass hiring and mass layoffs will destroy your employer brand and company culture, making hiring key technical positions in the future far more challenging. Outsourcing aspects of your engineering and R&D work which is inconsistent can help preserve a stronger internal team culture through cyclical workloads.
4. You want some fresh perspectives on a stagnant problem.
Sometimes a problem has been stagnant for a while and it’s not only hurting timelines, but also team morale. An outside group can sometimes unstick things by bringing in fresh perspectives and not being beholden to the same set of assumptions your internal team has.
(Don’t) work with us.
This guide is not exhaustive. While we intend it to be comprehensive, there are additional scenarios and options—such as when to hire an Original Design Manufacturer (ODM)—that should be considered when building your new hardware product.
Still unclear on which path to take? Our team is always excited to connect and discuss your product’s roadmap, so reach out to us at firstname.lastname@example.org. MistyWest wants your product development journey to be successful – even if we don’t think we’re the ones to get the job done.