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| What is the new product development process in a startup company? |
9 Effective steps in the new product development process in a startup company
A valuable product is the life for a startup company. If you can create a product which is really useful for the people that product can be a game changer for your company. The process of new product development is not the same for a startup company and an established company.
Because the structure of a startup company and established company is different. An established company knows their customers and competitors. They have funds and everything to develop a new product. But for startups it's very challenging to develop a new product. In this article I only focus on startups to create and develop their product or service from idea to launch.
As per Failory statistics, 90% startups fail and from them 34% startups fail only for lack of product-market fit. Consumer goods and services like Juicero, Google Glass, and Amazon Spark 80% to 95% of products fail from the start. From these statistics it is clear that product development is a crucial part for any startup company.
There are some different names of product development processes in the business field. In the 1980s Dr. Robert G. Cooper developed a method of product development which is called Stage-Gate Process. The Stage-Gate process is also known as the New Product Development process or NPD process.
In 2008 entrepreneur Eric Ries introduced The Lean Startup Process. “Human Centered Design” is also a new product development strategy which is created by the design company IDEO. It is also known as the IDEO process.
BAH Model is another well-known name of the NPD process which was published in 1982. You can follow any of these models or combine it as per your business structure.
For your convenience I have merged all these processes and find out the important steps of a new product development process in a startup company.
📃 Table of content
1. Observation
4. Design Development - MVP / Prototyping
5. Idea Validation - Testing & User Feedback
7. Business Analytics - Marketing & Pricing
8. Beta Testing & Final Product Development
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| New Product development process in a startup company |
1. Observation
Observation is the first step and a very powerful tool in the product development process. A unique and profitable idea may come from observing your own needs or by observing the needs or wants of the people around you. Imagine your daily life and think about your daily life problems. Observe the other people and try to find out what problems they are facing in their daily life.
All perceiving is also thinking, all reasoning is also intuition, all observation is also invention. - Rudolf Arnheim, German author
Find opportunities in your own community and environment. You can use AEIOU Framework, an observation technique, to generate ideas.
AEIOU technique:
A - Activities: Observe yourself and other people activities. What are they doing?
E - Environments: Observe your own community and environment. How are people behaving in your environment and what are they using in the environment?
I - Interactions: Observe the interaction of people and objects in the environment. Do you see any special interactions between people or between people and objects?
O - Objects: Describe engagement with objects and people. What are the details you got from the environment? How do objects relate to people, activities and interactions in your point of view?
U - Users: Find out your users. Who are the people you are observing? What are their roles and personalities like?
Using observational power will help you to develop logical insights on how you can improve the world around you.
2. Concept / Idea Generation
After observation you need to make a concept or idea basis on your observation. Idea generation is the foundation stage for your startup. You should use different techniques to generate lots of ideas for your new product or service. The techniques are:
➥ Customer analysis: Learn what customers want and for what they are ready to pay for.
➥ Competitor analysis: Observe the competitor market and find out their shortcomings.
➥ Follow trends: Watch trends from different sources like- Social media, newspapers etc.
➥ Survey: Do a survey on customers, friends, relatives and suppliers to find out the idea.
Make sure you have answers of these questions:
▘Who is my customers and what are their needs?
▘Is my idea fulfill the particular need of customer?
▘Is customer ready to pay for my product or services?
Write down all of the ideas on a notebook gained from brainstorming. Find out the faults or shortcomings in existing products, services, or businesses. Make a team and assemble your team to make a SWOT (Strengths, Weaknesses, Opportunities, and Threats) analysis on your ideas. SWOT analysis is the effective way to avoid the wrong product for your target market.
Idea generation is the initial stage in product development. By research and analysis in this stage you have generated lots of ideas for new products. The next stage will help you to find your targeted idea.
3. Idea Screening & Define
Idea screening is the technique in the new product development (NPD) process of testing ideas (concepts) and eliminating defective ones which follows idea generation. With your list of potential new product ideas, you now need to decide which ideas to keep and which to reject based on your acquired information from experience and market research.
The motive of idea screening is to try to avoid mistakes early in the development process. In this process bad ideas are discarded to less investment risk. In the idea screening process, the company tries to judge the new offering by answering these questions:
➥ Does the offering product add value for the customer?
➥ Does it fill up a market need?
➥ Can we produce and sell the product within budget and still make profit?
➥ What will be selling units and selling price of the product?
➥ Is it need after-sales service?
➥ Do we have enough resources to give after-sales service?
➥ Does the product fit with the market and corporate environment?
➥ Is there scope to research and develop the product?
➥ What is the marketing potential of the product?
➥ Does the product fit your business image and objectives?
Based on the above questions and answers you can finalize your idea from various concepts. A SWOT analysis will help you to identify the strengths and weaknesses of your idea. A product that has passed the screening and business analysis stages is ready for prototyping and product development.
4. Design Development - MVP / Prototyping
A minimum viable product (MVP) is a concept from Lean Startup which allows a team to collect the maximum amount of validated learning about customers with the least effort. In the IDEO Process it is called prototyping. A prototype is an experimental model of a proposed solution used to test or validate ideas.
In this stage you have to build the simplest version of your idea to test it. Don’t spend hundreds of hours making it. You have to make a MPV or prototype of your product very quickly that is just good enough to get user feedback. Just ensure that you are making something that customers really require. Keep in mind that it is the initial stage before launching a final product.
The purpose to build an MVP is to launch a product quickly with a small budget based on your idea. You have to add less but important features in your product. The benefits of making an MPV are:
➥ You can focus only on your idea. You need not to think about other functions.
➥ You have the opportunity to test your product early before launching final product.
➥ It will help you to understand to find out your potential users’ opinion, and how they want to see your final product.
➥ By launching MVP you can realize whether your product is right for your target market.
➥ It will save your time because you have to make it in less development time.
➥ Building MVP is very budget friendly because minimum features can reduce the cost of MVP and taking less time also reduce your cost.
29% of startups fail due to running out of cash. So, building a Minimum Viable Product (MVP) or making a prototype of your product will help you from many aspects in the product development process.
5. Idea Validation - Testing & User Feedback
Testing and user feedback is one of the most important stages of the product development process. In this stage you bring that prototype or MPV to your target customers and ask them what they think of it. You know very well that your product is not fully structured in this stage and the purpose is to get information from users to integrate into your design and bring your product on to the next level. Testing & user feedback is also called the idea validation stage where you validate your idea on the basis of following 3 parameters. They are:
1. Desirability - Does the product desirable by customers to address their existing needs?
a) Problem-solution fit - Is the product idea solving the right need or problem?
b) Product-market fit - Does the product is targeting the right market?
2. Viability – Do customers be willing or can afford to give money to solve their needs or problems? Is there a significant market for business viability?
3. Feasibility – Is it technically feasible to build the new product to ideally trace customer needs or problems?
There are different modern tools to get customer feedback on your sample prototype. By which you can easily identify the customers needs-pain points, price range, features, and benefits. These are some of the common methods:
➥ Sending online surveys and polls for your MPV.
➥ Share in different group of social media to reach customers.
➥ Running product giveaways strategy.
➥ Create a landing page with your product features and share it in social media.
➥ Running paid advertisements to the target customers.
6. Iteration & Implementation
After getting customers feedback you know the weak points and deficiencies of your product. Now what should you do? Here comes the Iteration & Implementation process which is very useful in the product development process.
Iteration is the full development process such as planning, design, development, and testing steps. In every iteration process you will get a chance to add new features one-by-one and remove worthless features from your MVP product. Take all of that information you gathered from the previous five steps and implement it from the basis of customer feedback. By this process you can improve and develop your product gradually. Make sure that you are making a great product for the customers.
Advantages of the iterative development:
➥ Building the product step by step, which allows for the identification and correction of defects during the early stages.
➥ Using iterative process at the end of each stage you can get user feedback, such as how they see the product now and what they are expecting in the future. This helps you to make any necessary improvements.
➥ The iterative development approach will help you to save time and reduce risk.
7. Business Analytics - Marketing & Pricing
After passing all the above steps now you are ready for the pre-launch stage. This is the time to finalize marketing plans and pricing. Your product is ready. Now you have to work with all of the business strategies to launch your product.
The business analytics step is about determining and settling up your marketing, branding, competition, costs, profitability and pricing strategies. Here, product managers work intimately with the marketing department to define target customers and fundamental marketing channels. You have to set weekly and monthly marketing targets. Determine the number of customers you need to acquire and how much they should spend to acquire customers.
So, Business analysis will give you more specific results like target customers, areas to concentrate. Business Analytics will support you to take decision making.
8. Beta Testing & Final Product Development
Beta testing is also known as marketability tests. Beta testing is a powerful technique before launching a final product. Beside advertisement beta testing also tests the offering’s delivery mechanisms, service processes, and other aspects of marketing the product.
You have to launch your ready product for testing purposes and wait for the market to respond. If you get any fault in your product or any feature of the product then take immediate action for the final product development. Depending on the product, this step can be expensive. But you can reduce your cost by testing your final product in small, private groups in order to get feedback. Take the information from beta testing and develop your final product.
9. Funding & Launching
You have now successfully developed a new product to launch. But before launching and Commercialization of your final product you need sources of funding. With limited working capital it will be difficult to launch your product widely. So before launching secure the key strategic partners, vendors, and suppliers required for producing and marketing the product.
Make a perfect pricing and make sure your price is fit for the markets and customers. Check out how much it’s actually costing you to produce your product. If you need any adjustment of pricing then do it. When the products are manufactured and released to customers, you can talk about an official launch.
All the planning, testing, designing, marketing and funding have led to this stage. This stage is wrapped with tons of marketing efforts and executive action. Seminars, meetings, product launching parties, press conferences and media coverage are just part of the activities of product launching.
Finally, it’s definitely thrilling to see your product out there and people are using it, giving good reviews. Don’t be nervous. Final job is starting now. The newly-launched product becomes an official product for your startup company. Take proper steps continuously to upgrade and improve your product after launching. And these activities should not be stopped. Hope these steps will help you in the new product development process in your startup company.