PRODUCT DEVELOPMENT
Where can you find inspiration?
We have discussed starting with “Why” to understand your purpose based on Sinek’s model. As we move out from that core idea, we start to consider “How” you fulfil that purpose and then “What” you actually plan to do.
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The “How” – the processes and methodologies you employ – is, in many ways, more important than “What” you produce. If you have a good process that can react to customer requirements it will fix a bad product; the reverse is also true, a bad process can result in failure to execute a good product idea.
There is an interaction between the two though, the types of processes you deploy must be appropriate to the nature of the product, particularly in terms of how new or innovative it is.
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Does this mean that you should concentrate on building a process that will define your product or should you come up with a series of ideas for products then pick the most appropriate process afterwards?
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The answer is both – you can identify development opportunities as an activity outside of your implementation processes and you can use your processes and their execution to identify opportunities.
The most effective approach is to implement a system that ensures any ideas are captured, assessed and allocated to the most appropriate process.
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These processes must include a connection that feeds any new ideas back into the assessment system but must also have a review mechanism that ensures that progress is being made as expected. If expectations are not being met, this may not be a problem with what is being done you may need to review which process is being used.
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For this section we will focus on how to generate the ideas that will feed that assessment system.
There will always be a place for free-form brainstorming and out-of-the blue inspiration, but the most effective way to generate new ideas is to focus on problems to be solved; the more descriptive and specific the problem statement, the more effective the idea generation is likely to be. So before you jump into the inspiration, ideation sessions and the Triz workshops, you should start to break down where the opportunities are.
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We can define development opportunities across two dimensions: the product and the market. The product is what you do, the market is who you do it for.
Market Development looks for opportunities based on factors such as location, the types of customers, and how the product will be applied. Product Development explores opportunities in changing what you are offering to these markets.
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The first step in this exploration is to consider what we mean when we describe a product
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WHAT IS A PRODUCT?
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There are many definitions of what a product is, but lifting from Gartner’s version, a product is a named collection of business capabilities valuable to a defined customer segment.
We like this definition for how it describes the two key elements of a product – customer value and business capabilities: your product represents an interaction between the two and describes all aspects of your interaction with the customer including any services, software, data, or physical product.
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Your main product has the direct link to the problem that the customer is looking to solve, but there are second level elements to your product: packaging, delivery, subscriptions, or service support.
All are important to the customer and all represent product development opportunities.
HOW TO IDENTIFY PRODUCT OPPORTUNITIES
There are three key areas to consider for product development: customer, competition, and competency.
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The work you have already completed to understand your “Why” will feed into your competency. This then provides a reference point for how well you are aligned with the needs of your customers and where your strengths and weaknesses are relative to your competition.
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This is not a linear process. There is an interaction between competency, customer, and competitions and you will be moving between the three as you refine your understanding. You may find that for a certain customer your competition is better placed. You may find that changes to your product move you to a new customer assumption.
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Customer
The customer sets the value of the change you are considering: if what you are planning has no value to a customer, you should consider what it actually offers to your business. This does not mean that you should cancel all ideas that do not immediately offer customer value, but you should consider whether these represent progress to either a new customer or will contribute to product development in later iterations.
There are many ways to describe this, whether it is CCD – Customer-centric design, CX – Customer Experience (or of course UX – User Experience), or creating winning products. The common start point for determining customer value is to consider which problems the customer is trying to solve.
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The customer is trying to solve a problem and your product is the solution; to paraphrase Theodore Levitt, customers who buy drills don’t really want a drill, they want a hole. The drill is just the means to getting there. You should be able to describe your product in terms of the problem that it solves. The extension of this thought is that you should also be able to describe what the customer is looking to achieve in terms that inspire development of your products.
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This is linked to the necessity of the product – is this a nice to have, an essential? Is there a time factor to the customer value that will evolve your product or make it obsolete.
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What are the adjacent uses for customers that your product could be modified to fulfil.
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If you already have a product in the market what does your customer like about it, what would they change.
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Competition
Your competition can be a source of inspiration based both on what they do and what they don’t do.
Is there something they do that you can do better based on your competencies.
Is there something they don’t do that you believe you can. In this case, it important to consider whether the competition could do it. They could follow your progress, giving a time limit to your opportunity. There may also be a valid reason why they are not following an opportunity that you should factor into your own assessment.
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You should open your search out beyond those that are directly in competition: what are the adjacent products and competitors.
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Beyond providing inspiration for development ideas, the competition is also an important factor in defining the expected price point for these ideas. The customer defines the value, but the market that you operate in will influence the price you can charge. Your product may have differences that move your price point relative to the competition, but they will still provide a reference point.
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These product differences relative to your competition are a result of the impact that your competencies bring to what you can offer, including be able to add features, quality, or access to a lower cost of getting the product to the customer.
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Competency
Identifying your competencies is the next step from the work you have already completed to define your “Why” and your core values.
One of the primary definitions of core competency was made by Prahala and Hamel in HBR; these are not limited to technical ability, but includes factors such as the ability to innovate, communicate, and to react to customers' needs. It also includes the ability to integrate ideas from the market and from across the different units or functions of the business.
They are core competencies if they do not diminish with use but are instead enhanced; they are consistent over time and across the organisation.
It is not a short term condition or activity. For example, outspending your competition to achieve a goal is not a competency, but the availability of the funds to enable this would be.
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Schulz provides an excellent list of competencies that includes buying power, customer service, and specialization. This would be a good place to start when considering your own core competencies.
You should look externally at your customers and competition to understand your competency relative to theirs, but by looking internally you may find competencies that can drive new product offering. An example of this is Amazon developing its internal competency with computing services and the releasing it as AWS, one of its most successful subsidiaries.
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When you build this picture as a reference to the competition and your customers, you may find opportunities for growth that exceed your current competency; you may find opportunities that are possible either through buy, grow, or outsource activities.
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FACTORS TO CONSIDER FOR INSPIRATION
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We’ve covered the three areas of competency, customer, and competition to provide a context for idea generation. There are two types of product feature to consider against this context, the tangible and the intangible.
Tangible features are those that you can see and touch: colour, size, performance, and service response for example.
The intangible features that a product possesses that are a little harder to define: how the product makes you feel or what status can be inferred about and individual who uses the product for example.
Consider the benefits from being able to state that your product is sourced in a responsible, sustainable way; does this change the actual performance of the product or does it change how the customer feels about the product? You may have identified the importance of a fair trade qualification, but can you describe why it is important.
The factors that contribute to these features and how they are valued include pricing, design, quality, customization, and functionality.
Once you have generated a list of the most important product features, and the factors that contribute toward them, you can draw a comparison between your products, those of the competition, and the value that the customer attributes to them.
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This will then create a list of problems for you to solve as you discover gaps between where your product is now and where it could be. This list of problems can then be used as the basis for idea generation activities.
