A Manifesto for a Better Way to Create B2B SaaS Products
Conventional approaches to B2B SaaS development keep producing software that struggles. A systematic alternative grounded in customer problems offers a more direct path to better B2B solutions.
Markus, the CPO of a promising B2B SaaS company1, stared at the board presentation on his screen. Their new flagship enterprise product was in trouble. After two years of development and millions in investment, it was struggling to gain traction.
It had all started well. The team had conducted discovery work and secured pilot customers. They had ideated and iterated the product with customers. They had even pivoted once, rebuilding almost from scratch. Confident they could serve their enterprise customers in a large market, they had pushed for a productised solution.
The last 6 months had been brutal. No new deals closed, two pilot customers pulled out, and others hesitated to commit.
Despite burning over half the company’s R&D resources, Markus was facing the dreaded Product-Market Fit problem. And it was not a sales problem. It was a problem with the product itself.
“We followed all the best practices,” Markus thought. “Discovery, MVP, agile development, iteration, collaboration with customers. Where did we go wrong?”
Markus’s experience is common. Many B2B SaaS product leaders have found themselves in the same position: they followed the standard playbook, did the work, and still ended up with a product that doesn’t sell. Some find their way out eventually. Many don’t.
The overlooked opportunity in B2B and enterprise software
Since the late 1990s, I have been drawn to the potential of software to change how organisations work. Consumer software has improved significantly since then. B2B and enterprise software has lagged behind, with high failure rates and products that often frustrate the people who use them.
This gap is a large business opportunity. Scalable B2B products could replace thousands of cumbersome, expensive, custom-built systems across industries worldwide. The question is whether we know how to create such products consistently and economically. I believe we can do much better than we currently do.
Questioning conventional wisdom
To realise this opportunity, we need approaches that outperform current practices in B2B and enterprise software development.
That requires questioning established best practices and commonly held beliefs. Conventional methods have not been enough to fulfil the potential of B2B software. What is needed is an approach that can simultaneously:
Maximise value creation for customers
Minimise complexity for both users and product developers
Produce superior software products consistently and systematically
For over 20 years, my focus has been on finding the best way to create great software products for complex domains. I have an almost obsessive need to understand fundamental causes of how things work, and I was convinced that there must be objectively better processes that produce objectively better results.
That conviction has driven me to develop a systematic alternative to conventional approaches.
10 unconventional principles
The approach I have developed rests on the following principles. Most of them challenge widely held assumptions about software product development.
Depth of understanding customer needs is the primary measure of progress in creating successful software products for complex domains.
Customers know their needs, and those needs can be described explicitly, provided we understand what customer needs actually are, in principle.
Customers are able to articulate their needs, even for entirely new kinds of technology.
Customer needs, properly understood, change only slowly compared to solutions.
Customer needs are therefore a solid and objective basis for a stable long-term product vision and strategy for large B2B and Enterprise SaaS products.
Common customer needs can be distinguished from customer-specific ones upfront, ensuring we build a scalable product rather than custom software.
It is possible to measure and compare alternative product ideas objectively.
This can be done without first building the solution and without engaging customers in a testing and iteration process.
Since alternative solutions can be compared objectively, an optimal solution exists that fulfils the customer needs and maximises customer value, and it can be found in practice.
The value creation potential of an optimal solution can be estimated before designing or developing it, which reduces risk and improves return on product development investment.
From iteration to a systematic approach
With this approach, we can define a superior software product without guesswork, opinions, feature requests, creative ideation, brainstorming, divergent thinking, iteration, pivoting, failing fast, trial and error, or copying competitors.
Some of those methods (like implementing feature requests and copying competitors) help create some solution, but they won’t produce a substantially better one.
Others (like ideation and iteration) can be useful when solving entirely new kinds of problems.
Customer needs for B2B and enterprise software, however, have many repetitive patterns across industries. They are rarely entirely new. A solution that addresses those needs can therefore be found in a direct and consistent way, without extensive iteration.
Three questions that determine product success
Whether a B2B SaaS product succeeds or fails depends on the answers to three questions. A sound approach to product development should help answer all of them with confidence.
What is the right problem to solve?
What are customer problems (or customer needs), in principle?
How can customer problems be discovered systematically, reliably and effectively?
What customer problems are worth solving, and how much value could be created by solving them?
Which customer problems are common enough for a scalable software product?
What is the right solution to the problem?
What is an optimal solution to the overall customer problem, from the customer’s perspective, given existing software technology?
What is the optimal scope, given that solving some parts of the overall problem is more valuable than solving others?
What is the most direct way to find this optimal solution?
Can we make money solving the problem?
How to predict how much of the customer value we create we can capture as revenue?
How can we be confident, in advance, that our solution will win against competitors?
What is the best path to the optimal solution that maximises business value?
Product leaders who can answer these questions with evidence rather than intuition make better investment decisions and can defend those decisions to their boards.
Deductive Innovation: a systematic alternative
I call this approach Deductive Innovation. Its purpose is to find an optimal software solution for large, complex customer problems as directly as possible.
The term “deductive” means that B2B and enterprise software products can be systematically deduced from discoverable facts about customers, their problems and circumstances, and from an understanding of what software technology can do.
With Deductive Innovation, defining and designing a product becomes primarily a process of inferring an optimal solution from the customers’ viewpoint, rather than a gradual process of ideation, iteration, or imitation. The role of iteration is limited to fine-tuning details.
In my experience, this approach surfaces new value for customers that they would not have asked for or imagined. It tends to produce solutions that improve customers’ productivity by 5x to 10x and deliver substantially better business outcomes.
Why this is about customers, not technology
Deductive Innovation is not a new software technology or engineering process. It does not help in inventing new technologies.
It addresses the customer-facing and business risks of B2B product development, which are almost always more critical than feasibility risks. Even technically excellent software will fail commercially if it doesn’t create enough value for customers.
Technology changes quickly. Properly understood customer needs stay largely the same, whether the technology is cloud computing, smartphones, analytics, big data, microservices architecture, AR/VR, blockchain, IoT, metaverse, or today, generative AI. Discovering, analysing and understanding customer problems in a way that consistently produces superior solutions is the core of this approach.
Who this newsletter is for, and what comes next
This newsletter is for B2B SaaS leaders, founders, and product managers who suspect that conventional approaches to product development are not enough, and who are willing to consider alternatives.
I write about:
Customer problem discovery: how to find and understand the problems worth solving
Product strategy and opportunity selection for B2B SaaS
Systematic product design for scalable products
How and why conventional approaches (agile, lean startup, design thinking) fall short in complex B2B domains
Deductive Innovation: how it works, its real-world applications, and its limitations
Case studies and practical examples
I believe the ideas explored here will, over time, change how B2B software products get built. I am not the only one arriving at these conclusions. Others are developing similar or compatible approaches from different starting points. This newsletter is where I develop this thinking, test it against real-world experience, and share what I learn.
If you subscribe, you will receive a free copy of “How to Build a Lasting Competitive Advantage in B2B SaaS,” a report packed with insights from 31 B2B SaaS product executives and founders I interviewed.
The opening story is based on my interview with a B2B SaaS CPO. Names and specific details have been modified to protect confidentiality while preserving the essential aspects.