About Risk in Product Development
The further you’re into the product development cycle, the less you can affect its outcome.
Making product ideas a reality takes a lot of resources and effort.
You don’t have control over many of the variables.
Will people like it? Will they be willing to pay for it? Will they recommend it to their friends? Will it stay ahead of the copycats?
It’s a gamble, really.
Risk always goes up
Every dollar you invest in an idea is a dollar you don’t get to spend on something else.
If your idea fails, you won’t get that money back.
The more resources you pour into the project, the greater the risk. This is an idea many companies fail to grasp.
The further you’re into the product development cycle, the less you can affect its outcome
Yet I’ve seen countless projects that try to build a super app before even launching into the market.
Flattening the curve
Do you remember how everyone was talking about flattening the curve when COVID hit?
The idea was to reduce the number of cases per day so that hospitals could keep up.
The same approach can be used for risk in product development.
Reducing the amount of uncertainty at each step of the product development process will increase your chances of achieving product-market fit before running out of cash.
And the way you do that is by focusing on reducing risk at each step of your product development process.
A risk-mitigating, product development process
The goal of a product development process is to achieve product-market fit before you go bankrupt.
Let’s talk about how you can reduce risk at each step.
Product development has four stages:
- Strategy & planning
Each subsequent step is harder and more expensive to influence than the one before.
The hack is to reduce as much uncertainty as possible during the early stages when you have the most leverage. That’s what the Strategy, Planning, and Design phases are for.
Strategy & Planning — Do your research
Identify a niche problem and learn as much as possible about it.
Why is it a problem? What are the workarounds? When and where is it a problem? Who suffers the most from it?
[…] people do not just buy products and services for their features or other attributes, they hire them to get a job done. Once a job occurs in their lives, customers will look for the most convenient, attractive and least price-intensive solution to get it done. — Jobs to be Done
Don’t make the mistake of creating a solution no one asked for and then trying to push it down people’s throats —It doesn’t work that way.
Instead, work on clearly defining a problem people care about and then think about a great way of solving it.
“You’ve got to start with the customer experience and work backwards to the technology. You can’t start with the technology and try to figure out where you’re going to try to sell it” — Steve Jobs
The vision for your project will come from a deep understanding of the problem you’re trying to solve. And your strategy is your approach on how to solve it.
DESIGN — Follow a thorough design process
Design tools are truly amazing these days.
They allow you to very quickly produce hyper-realistic prototypes of your idea and show them to people to get their feedback.
I can’t overstate the importance of early feedback.
A few small rounds of iteration is better than a single big round. It allows you to further refine the concept.
Five is the magic number. After five customer interviews, big patterns will emerge. Do all five interviews in one day. — GV Library
Don’t limit your feedback sessions to potential customers. Get feedback from developers. Ideally, the ones who will work on the project.
Modify your designs as many times as you need until you feel confident you’re on the right track.
Make sure you work out all the big questions before moving forward.
You don’t want to reach launch day and have people asking “what does this product do?”
By the end of the design phase, you want to have a very specific design file of your entire product that’s been reviewed by developers and vetted by potential customers.
DEVELOPMENT–Involve engineers as early as possible
Another huge issue I’ve seen way too many times is developers getting “handed-off” a half-baked design that they need to build “asap”.
Is tragically comic to sit in a meeting with devs, trying to quote a poorly fleshed-out project.
Devs be like “ What happens if X?, Wouldn’t it make more sense if Y, That’s not how Z technology works”
Just by asking questions to understand the problem, they’ll start poking holes at your idea. That’s a great thing. Better them than your customers.
Know the limits of the technology and be aware of the costs and timeframes.
LAUNCH & MARKETING — Getting it in front of people who care
If you did your homework, you already know that your idea has a chance of success because people want it and, more importantly, are ready to pay for it.
Now it’s a matter of putting it in front of the right eyes.
From your initial research, you should know where and when your problem happens and for whom it is a problem. Find out those intersections and promote your idea there.
In most cases, your buyer has a completely different approach to information consumption than you, your mission is to find what it is, and not assume is the same as yours.
The more you can reduce uncertainty and risk in the early stages of a project, the higher its chances to be successful when it launches.
While success is never guaranteed, reducing your risk as much as possible will help you survive if your project doesn’t get any traction.
Odds are against you. But if you fail cheaply, you can continue to iterate until you — hopefully — make it.