It is crucial as an entrepreneur to have a new product development process in place to ensure a constant cycle of innovation. A new product development process is about identifying, understanding, and solving problems that exist in the marketplace. As a startup or early-stage venture, you must have a way to validate, create, and test your products early and often. The number of startups who fail due to lack of product-market fit can often be traced back to their new product development process.
What is a new product development process?
A new product development process is a systematic way to ensure the highest likelihood of success for your product. There are many methodologies from the lean-startup idea of an MVP (minimum viable product – not most valuable player), blue ocean strategy for creating new markets, and $100 startup for small lifestyle businesses. At the core, a new product development process is your formula for identifying, validating, and solving problems with your business.
Your new product development process is the step-by-step method of how you as an entrepreneur and business create your product. It doesn’t matter if your product is physical, software, a service, or an experience, you need to have a method of innovation in place.
Why does it matter if I have a new product development process or not?
As referenced earlier, most startups fail. Even established companies lose their edge and falter if they don’t constantly adapt their products. Blockbuster and Sears were established companies who failed to innovate their product and services over time ultimately leading to their demise.
Beyond failure is that you want to be spending your time and money wisely to ensure the highest likelihood of success. If you are going to fail you want to do it cheaply and quickly so you can move on to the next item. If you are going to create an awesome product and company you also want to do it fast.
Additionally, as your company scales, you want to have a process that everyone follows to ensure your product team is aligned. You don’t want to have an unclear process and build or adapt your product without a clear roadmap and vision as to why. Having a new product development process in place ensures the team is aligned.
How do I create a new product development process?
To answer this question, I attended a new product development panel hosted by Stacklist in NYC. The event was held at Alley Chelsea and featured four product leaders with experience in successfully creating products. The panel consisted of Melody Koh, a former product leader who now is a partner at Nextview Ventures a seed stage investor; Nick Gavronsky, a former product lead at Betterment and co-founder/head of product at Trade Coffee; Lina Dorkhman, a senior product manager at The Wing, a co-working community for women; and David Miller, a former product lead at Gick and senior director of product management at New Classrooms, a non-profit EdTech company.
The panel highlighted 4 keys to creating a new product development process that will enable your business.
Create a new product development process early-on
Create a product development process early-on. Even if your company is just you. Document your new product development process and ensure that it is written down. Having a process early-on doesn’t mean you won’t change it as you learn and grow, but it does ensure that there is a thoughtful approach to development.
Vision of falling in love with the problem vs. the solution
Before developing your new product development process and solution be sure you care about the problem you are attempting to solve. When first coming up with an idea this typically isn’t too difficult. The challenge comes when your initial idea of the solution just isn’t feasible or won’t be a viable business. That is when you have to be willing to explore other possible solutions.
If you fall in love with the problem, then you won’t get caught in the trap of trying to make your initial idea or solution fit no matter what. If your customers don’t want it or it doesn’t actually solve the problem, then you need to refocus your attention on the problem.
Refocusing on the problem allows you to pivot and develop solutions that solve the problem. The first step is falling in love with the problem.
A lot of science with a dash of art
Now that you are creating a process and have fallen in love with the problem, the next step is the tactical piece. A new product development process is much like middle school science where you have your question or problem – you make a hypothesis (your business idea) on how to solve it.
Identify the key assumptions that must be true in order for your hypothesis to be viable. List all of those assumptions out and then rank them based on most important. An example is building a house. You can design and architect your dream home, but if the ground is not level then you won’t be able to lay the foundation. Uber’s business model wasn’t possible before the advent and proliferation of smartphones in people’s pockets. Even before that there must be wireless internet that can connect those phones. Ensure you understand those key assumptions first and foremost.
The next phase is to conduct research. You need to get out and speak with the people whose problem you want to solve with your business. You can go face-to-face conducting interviews, focus groups, surveys, or attending industry events. The questions you ask must help you prove or disprove your assumptions. Based on this exercise you will refine your assumptions and ultimately prove or disprove your hypothesis.
Once you have reworked your assumptions and perhaps tested a different hypothesis to land on one that is proven, you can start testing! Test your business idea if it is a sketch, conversation, or mockup to your potential customers. See how they interact with your prototype or concept.
Finally, after you have validated your product you can start building!
After validation get your product out
You want to build a great product, but the first iteration will almost certainly not be perfect. You have to create the core functionality of your product when you launch. The panel suggested that you should launch at 50%-60%. You must ensure the core value proposition is fulfilled, but you shouldn’t worry about having every possible bell and whistle. Facebook launched essentially as a database of people’s pictures with basic information about them. There wasn’t a timeline, messaging, live video recording. All of those bells and whistles came later.
Go back to your tested assumptions and release when you have the core functionality that satisfies those assumptions. Think from your user if the product solves the main problem you have and if you’d enjoy the experience as a customer.
Fundraising is a process of building conviction
The last piece of advice is around what do investors need to see from my new product development process to fund me. The answer is that it depends. 🙂 There are 3 main things that investors look to understand.
1. Opportunity – Do I believe in the opportunity?
2. Team – What have you and your team done in the past that will give me confidence? Why you?
3. What have you done already? What product progress have you made?
Your prototypes and strength of your product become more important if the other areas are not as strong. The ultimate goal is to build conviction into why you are the team to solve this problem.
What if I implement a killer new product development process?
If you are an early stage startup, you can drive a competitive advantage through your new product development process. Being able to quickly come up with a hypothesis, understand assumptions, and validate before spending resources are crucial on a lean budget. As you scale your company, a simple defined product development process will allow you to build great features and additions to your business. You will be more customer-centric and ultimately please your customers.