Product development fundamentals
Your product is the mechanism for transferring value from your company to your customer.
Just as you as an individual are a product of all the decisions that you have made, or that someone else has made for you, and the resources that have gone into your development, your businesses product is the result of all the decisions you have made or not made, and the resources that have done into creating it.
The success of your business is driven by the perceived value of your product multiplied by the number of people who it's valuable for.
If your customer thinks your product is valuable, they will pay you money for it. The more valuable they think it is, the more they’ll pay for it.
As a company, your role is to use information and resources to build a product that is more valuable to your customer than what it costs to create. This will mean that your business will be profitable in the long run, as money in will be greater than money out. The process quite simple in theory but difficult to get right in practice.
The key to building a good product is the processes used to collect information and make decisions about how to maximise the value for your customers, and how you execute these decisions. This is assuming that you've got the other fundamental right, including 'playing in the right playground'. More details on the fundamentals here.
We can’t make decisions for you, but we can help you to think in a way that increases your chances of getting it right, and provide you with processes to help.
The product development process
Understanding the trajectory for building something people value.
You have an idea
- At this point, you have nothing physical to show anyone to gauge the value you of your idea.
- Your mission is to find out if your idea has the potential to evolve into a valuable product, and if so where the value lies.
- This means figuring out the problem you should focus on solving, who’s most likely to pay for a solution, what the first version of the valuable solution is.
There are two pathways to consider:
- Build something that you can use to test the value.This requires time and resources. If you have the capabilities to build the very first version of the product yourself (see MVP) and it won’t take very long or require many resources, then this might be a viable idea.The risk here though is that once you’ve put time and effort into something, you're likely to become more fixated on the concept and not as open to feedback as you should be.People generally need to have a fair amount of startup acumen and experience to do this justice. It’s never as easy as building it and letting people come.
If this is your first time starting a business, then our strong advice is to start validating your idea by talking to people before you invest any time and money into building the product.
- Validate the idea without an MVP, to get a better idea of the starting place and where the value lies.This means customer interviews, which are hugely valuable for collecting rich information. You are running a big risk of getting something wrong if you're not doing a significant amount of customer interviews. It's arguably one of the best things you can do. See the market validation resources for more information on how to get started with customer interviews.
Building your minimal viable product
This is the bare bones product that gives you the ability to test the product with your customers and get an idea of the value.
Your objective here is to spend the minimal time and money to create something that your target market can start using.
Your MVP should be good enough that people can understand the value of the product, and become engaged enough to do the things you need to validate whether the idea is viable enough.
Use your 'early adopters' to find out more about how to maximise the value of your product before you invest more money into it.
The requirements for a minimal viable product will be different for every company. To help you determine what your MPV might be, see our 'Deciding on your MVP' resource which includes examples of MVP's.
Ongoing product development
The process of continuously collecting more information from your users, making decisions and allocating resources to continue to optimise the value of the product.
Optimising value means making it more valuable to the customer and/or reducing the cost of production. Your decisions around value optimisation will be made better or worse depending on how well you know your customers, and the fundamental drivers that impact core value of your product (e.g. technology is it’s a tech company, health trends if it’s a health company).
It's important to develop processes for you and your team to collect information and make decisions about ongoing product development.
Fundamentals principles to develop
- Initial and ongoing processes for understanding your customers - resource here.
- Ongoing processes for making good decisions and resource allocation - see company DNA.
- Building your MVP - resource here.
- Ongoing processes for team communication, workflow management and productivity (execution processes) - resources here.
Additional Resources:
How to Build a Product I, Michael Seibel, Steve Huffman, Emmett Shear