Have you ever stopped to consider whether your intention is feasible? We're not referring to that romanticized feasibility in terms of Neuro-Linguistic Programming (NLP) or Positive Psychology, like "where there's a will, there's a way." The question is whether the market, consumers, or the company in which you intend to implement the desired solution support the proposed innovation. Will there be enough adoption to overcome the initial barriers of habit and inertia? Or even if the product or solution will be sustainable over time.

Far from criticizing any philosophy, psychology, or NLP, investing in rationality and planning before allocating a significant portion of your income or capital to develop a product can be extremely beneficial. Even if you discover that the plan is not feasible, losing a small fraction of what you would have invested if you went all-in on the project based solely on intuition means that planning has succeeded in preserving your core capital.

In the art of strategy, two mental models are necessary: the artistic and the scientific, or intuition and reason. Nowadays, it's common to observe the isolated use of intuition, belief, or simple desire. Often, this is nothing more than a mere guess disguised as intuition, operating without the support of reason or rationality, which is known in the financial market as the "rationale of operation." This leads to an alarming mortality rate for both software and companies, as well as high levels of default and financial losses in Brazil. In the commercial sector, for example, this rate can reach 30.2% in the first five years of existence. I believe, although I don't have concrete data to cite, except for over 30 years of experience in the market, that the mortality rate of launched products and software is even higher.

In essence, we're discussing two factors that can affect the longevity of a business or product. The first is human behavior, which tends to maintain the status quo, driven by the law of least effort and energy conservation, making habit change costly in terms of marketing investments or training. The other factor is operational and the necessary evolution to keep a product functioning and relevant over time.

It's not our aim to delve into macroeconomics, but for context, whatever the product - be it a car, a bicycle, software, or clothing - even paper clips deteriorate or become obsolete over time if they don't receive proper maintenance or updates. While a digital product doesn't suffer from rust caused by oxygen or other natural elements, time and people have the full power to render it obsolete.

Yes, time has the power to select the survivors and those that fade away, and this requires investments. While the term "investment" usually makes us automatically think of financial resources, we'll expand this meaning to also include the investment of time, personal effort, energy, networking, intelligence, creativity, structure, and, of course, financial resources.

Digital products generally serve various purposes, such as:
- Reducing operational costs;
- Improving processes;
- Generating financial results.

Whether for profit, cost reduction, or offering market solutions with your digital product, the ongoing consumption required to keep the product functioning and evolving often isn't factored into the calculations of enthusiasts looking to develop a product or application. Therefore, we'll enumerate the main causes we've identified over time in order to reflect on and prevent potential issues.

Key Causes:
- Insufficient knowledge of business and management when attempting to launch a digital product in the market;
- Failure to consider costs for cloud services, APIs, or outsourced companies;
- Neglecting to involve professionals to understand customers and tailor their needs into solutions for the product;
- Believing that an MVP (Minimum Viable Product) is the definitive solution for the market and will continue to be effective when fully functional, based on the number of logged-in users;
- Assuming that the total cost of a digital product will only be the value of its development;
- Not taking into account that, while we may think our idea is amazing, it might only be relevant to us and not ready for the market;
- Not knowing how long the investment in the product will turn into profit or cost reduction. An important tip: intelligent investors, except for those heavily invested in infrastructure, avoid investing in businesses with a payback period exceeding 3 years;
- Lack of understanding of the expected profit margin and planned revenue expectations. Again, smart investors generally avoid businesses with a net profit margin below about 35%, except for large investors in the infrastructure sector;
- Failing to know the product's target audience and verify if there's a high likelihood of adoption through preliminary research;
- Failing to understand that, after product launch, financial resources are needed to keep it operational;
- Not realizing that, after product launch, financial resources are needed for ongoing development and updates;
- Lack of a monthly financial plan, starting from the project's conception phase and extending at least 36 months after launch, including all possible revenues and financial expenses, as well as specific objectives;
- Failure to regularly monitor the differences between planned and actual outcomes (whether financial or operational), through indicators or surveys, to detect problems as early as possible and make necessary corrections;
- Not establishing a "Stop Loss" or a "maximum loss" in the plan to decide whether the project should be terminated or the investment should continue. This might seem pessimistic and fatalistic, but consciously losing what was planned, within your capabilities, is always better than losing a lot, believe me.

Key Consequences:
- Frustration regarding the product's longevity;
- High financial losses or even personal or corporate bankruptcy;
- Discovering that it was a mistake to invest only after reaching the "point of no return," requiring additional resources without sufficient means;
- Feeling like you're navigating in the dark, unaware of weak points for corrections along the way, such as Revenue, Variable Costs, Results, Reinvestments, etc.;
- Failing to understand when the project will require specific resources, leading to unexpected investments or excessively burdensome or even unfeasible capital calls.

Possible Solutions and Best Practices:
- Request a "Product Discovery" from the developer partner responsible for building the software, or conduct a detailed brainstorming session to jointly visualize all necessary features and their implementation timeline;
- If creating an MVP or conducting a market test, it's advisable to have various sources of funding, such as banks or partners, so that in the case of high adoption of your product, you can start building the robust final product as quickly as possible, with adequate capacity;
- It may be necessary to hire professionals at specific moments in the project, such as Product Owners or Project Managers, who may be needed but might not yet be known to you;
- Based on all available information, strive to create a Product Income Statement that includes at least the following information:

>Sales projection in quantity and unit value;



>Variable costs including:
- Taxes and fees;
- Payment methods (cards, etc.);
- Direct labor;
- Sales commissions.

>Fixed costs including:
- Support professionals;
- Fixed expenses like water, electricity, and others, if applicable;
- Accountants, consultants, or other outsourced services.

>Result:
- The difference between total revenues and all costs.

Initially, all these records can be done on a cash basis, where the focus is solely on financial inflows and outflows. However, over time, it's advisable to transition to the accrual basis, where the issuance of invoices is also considered.

It's also important to observe the Vertical Percentage Analysis, which shows how much an expense represents in relation to revenues, and the Horizontal Percentage Analysis, which reveals how much revenue or expenses have changed over time. I venture to say that with these three tools (Income Statement, Vertical Analysis, and Horizontal Analysis), making well-founded decisions in any enterprise, whether personal or corporate, is entirely possible at any time.

In conclusion, a basic rule of excellent strategists, from Confucius to modern models, connects the concepts of planning and execution with their potential results:

- Great Plan + Great Execution = Great Result ✓
- Great Plan + Poor Execution = Possibly Poor Result ✓X
- Poor Plan + Poor Execution = Probably Poor Result X
- Poor Plan + Great Execution = Certainly Poor Result X

At Plathanus, we're ready to turn your ideas into reality. Contact us today to make your vision come true with strategy and confidence.