Launching a new product? Before you do anything, check out these steps to perfecting the development process.
If you run a start-up, you know that it’s really hard to get people to try your product.
After all, potential customers don’t know whether you will be around three months from now. So it would be much safer for them to freeze you out than to spend time learning to use your product.
And yet we are all familiar with start-ups that introduced new products and got millions of people to use them. These odds-defying start-ups picked customers and products that satisfied two essential tests:
Target customer pain. If you want to survive, your start-up must work to relieve customer pain that no other company is solving. Consider Evernote, the storage service that let scatterbrained people keep track of all the interesting things they found online every day. Its founder, Phil Libin, was looking for a way to protect himself from his weak ability to organize, and did not find any service that met his need. So he started a company to solve the problem.
Outperform the competition. If your start-up has any hope of making money by relieving customer pain, it must solve the problem better than the competition. Of course, if you’re lucky and smart, you may get a head start. But success will attract imitators, and customers will switch to those imitators if they do a better job than you at solving their problem.
But how do you handle the nuts and bolts of going from a general idea of a product to something tangible that customers will use--and eventually buy?
If you run a technology venture, then you’re probably tempted to keep perfecting the product before giving customers a chance to use it. The problem with that is you could run out of money before you discover that you’ve missed the mark when it comes to solving the customer’s unmet need.
You only have so much time to make mistakes and develop a product that customers are eager to use. To develop the right product, you must charge a team with building a series of prototype products that customers can try and then critique.
Here are six critical steps to start-up survival:
1. Discover details of your customers' unmet needs. You should develop a set of interview questions, meet with these suffering customers in the environment where they’re suffering, and listen to what they say when you ask them the questions. Through this listening, you must discover more details about the nature of their pain--and try to assess what kind of product would encourage them to become customers.
2. Develop hypotheses. Using the observations of customer needs and your vision of the technology, you should make educated guesses about the most important product features likely to lead to wide customer adoption. Moreover, you should make a numeric estimate of the number of customers you thinks will use a prototype with those features.
3. Build a prototype solution. The next step is to develop a quick and inexpensive prototype with those features. The first version is not likely to meet the customer’s unmet need but it should help you get a better understanding of what you need to do to close the gap between what the prototype can do, and what the ultimate product will need to be able to do in order to get the customer to buy it.
4. Test with customers. You must then give the prototype to customers and observe how they use it. You should keep track of how many customers actually use the product, and ask them what they like and don’t like about the product. The general objective of this step is to learn and collect data that will either confirm or disconfirm the hypotheses developed earlier.
5. Analyze variance. You should compare the expected outcome with the observed results. This comparison will generate insights that shape your strategic positioning.
6. Pick strategy. Better-than-expected results are likely to confirm that you will gain market share if you turn the current version of the prototype into a product and market it aggressively. If the results are worse than expected, you must learn from what did not work and develop another prototype. And you should iterate and test until observed results exceed expectations, or until it becomes clear that it’s time to shut down the business.
In the battle for customers your venture has one big advantage over big companies - it can learn faster. Use these six steps to learn fast and gain share before your venture runs out of cash.
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