Product discovery is one of the more nebulous areas of Product Management. Most Product Managers know you are supposed to do “discovery” for a new product, but what that actually means can be a bit vague. It is just about getting some validation before you start building a new product?
How you get that feedback can also be a bit hazy. Can you just walk clients through a deck that explains the concept or do you need to build a working prototype? How much feedback is enough? What if you talk to one of your elephants and they say “I love the product, when can I start using it.” Is that enough validation to start building?
There are plenty of articles and books written about validating B2C and B2B SMB ideas, but what about enterprise software/SAAS? If you work in a company selling enterprise solutions, many of those business validation best practices may not be applicable.
Over the past few years, I have developed an iterative process for product discovery that helps validate and hone an idea. It is optimized for enterprise solutions but could be used for the B2B SMB market as well.
So let’s start at the beginning. First, you have to recognize a good idea whose time has come. I say that because some people think “product discovery” is about coming up with a truly unique idea. Don’t fall into that trap. If you can’t come up with something you feel passionate about, review the list of ideas submitted by clients or team members. There are tons of good ideas floating around that just need to be recognized and worked on.
You may think “if they were so good, someone would have built them by now,” but a big component of launching a successful product is having the right market timing. As the waves of technological advancement happen, ideas that were not right a couple of years ago could now be ready for primetime. It could even be that your company’s products have evolved such that concepts that were not viable or too expensive to execute previously, are now possible. So before you discard an older idea out of hand, take another look.
Once you have an idea, what’s next? The first step in the discovery process is to ensure the concept fits with your company’s strategy and will generate enough revenue to be meaningful.
Using the Ansoff Matrix, determine whether the concept is a new product for your company’s existing market or an existing product for a new market? If this a new product for a new market then you’ll want to ensure it is something your company is willing to pursue. There is no reason to execute discovery on a product idea that will never see the light of day. There is only so much investment opportunity at most companies, so ensure you understand what fits within their strategy.
In terms of meaningful revenue, that can vary by company. A good rule of thumb though is the product will contribute at least 5% of the overall business unit’s revenue after 4 years. If your company is below $100M in revenue then the idea should generate at least $5M in revenue. Below that number, your costs to develop and maintain your product will most likely make the ROI unattractive for your company.
Assuming it is within the bounds of corporate strategy and revenue, the best way to start is to create a simple deck and start meeting with clients. The deck should describe the business problem and why you think clients have this issue. Add a couple of slides about the solution, but keep it simple. The focus should be on the business problem, not the solution.
Your objective for this first round of client meetings is to validate the business problem. Is this a problem they really have, and if so does it need a painkiller or a vitamin, i.e. is it a nice have? There is no reason to go build a working prototype only to find out the problem is not worth solving.
During these initial round meetings, confirmation bias can be really strong. When you have what you believe is a good idea, it is all too easy to fall into the trap of hearing what you want to hear. Why is that?
- Many clients want to be nice and so they won’t shoot down your idea. You’ll hear things like “That is interesting,” which gets interpreted as “they like my idea.”
- On discovery calls, we focus on the positive. A client says “this business problem is not a priority right now, but talk to us again in six months.” We hear “wow they like the idea and just need six months to work through their current priorities.”
- Many discovery calls are done by simply talking through an idea or maybe using a deck. While these are a good start, they can’t cover the entire feature set so clients naturally fill in the gaps with their own assumptions. Of course, this product will have email auto-responders…
- The focus of the client conversation is on the proposed solution instead of the business problem. This allows clients to assume the solution could potentially solve a completely different business problem. They end up loving the concept, but for the wrong reasons.
One way to try and avoid this is by having another person attend the discovery meetings as well. While you are pitching, this person’s responsibility is to ask questions and dig into whether this is truly a problem for the client. In my experience, it is really challenging to be the presenter and to ask critical questions at the same time. Focus on your pitch and let someone else layer those in. It doesn’t mean you can’t prepare the questions beforehand, though.
When you start the presentation, ensure you are clear that this is not an actual product you are selling today or have even committed to building. This is just a product concept you are looking to get feedback about. Without the disclaimer, some clients may think you are trying to sell them a product and will be less likely to want to give you good feedback.
Try and include at least three different business problems and solutions in your overall presentation. You are more likely to get better feedback by allowing clients to compare different business problems/product concepts against each other. If there is just one concept, they may not want to hurt your feelings and will just tell you to want to hear. Most Product Managers have a few product ideas they have been kicking around so this is a great time to bundle and pitch them.
When you are presenting multiple concepts, ensure you have clients compare them against each other. My favorite technique is to ask “if given $10, what would you spend on each concept.” I am consistently surprised by how different the weighting is from the general feedback they provide. In one discovery call, the client stack ranked the features 1, 2, and 3 then gave a weight of 7, 2, and 1 respectively.
Getting everyone’s opinion separately is also important. In my experience, individual feedback can vary substantially from the general collective opinion. Each person’s feedback gives you more data points. If for example the head of engineering gives a concept a 1 out of 10, but the business person gives it a 9, you have some follow-up questions.
For the first round of meetings, I would approach a couple of your “friendly” clients. They are more likely to tell you right away whether any of the ideas are any good and are usually more willing to spend time reviewing the concepts. If you are getting positive feedback, then approach a couple of additional clients that are outside the “friend zone.” I usually try and get feedback from 3 to 5 clients in total for each round if possible. If on the other hand the concepts are falling flat, I would stop and step back. There is no reason to waste additional client’s time on concepts that are not going anywhere.
As you go through the first round of meetings, try and hone the ideas a bit. If there are points in your deck that were clearly off-base, address them. You don’t want to suck up valuable client time with the same negative feedback you got in a previous client meeting. The objective for the additional meetings is to see whether you are getting consistently positive feedback and to ferret out any additional points that the first couple of clients did not provide.
If a client leans in during the first round, ensure to ask them whether you can follow up as you further refine the concept. While it is always good to get new client feedback in the additional rounds, these initial clients will tell you whether you are heading the right way directionally.
After the first round, review the feedback and see whether one product concept stands out. It is important to pick only one concept to take further. For new product development, the focus is critical. You are not going to be successful juggling 2+ concepts from ideation through to launch. The other ideas can be shelved to come back to later.
So what’s next? Are you done and ready to go get the greenlight and start building? That is a solid NO. It is time for the next iteration.
The first round should have been focused on the business problem and ensuring there was a real market need. The presented solution as they say should not have been much meat on the bone.
For the second round, you are now ready to validate the solution. It is time to get into the details. Your objective in this round is to find out whether if you build it, they would buy and use it. To that end, you are looking for a pilot client at this stage. If a client is not willing to invest their own time to pilot the concept then that is a clear sign the idea either needs to be reworked or put on the shelf.
The solution details are critically important this round. You are trying to ascertain what features need to be in the product for a client to use it. What does the MVP need to have? This is the round where ideas can quickly die because concepts sound good in theory, but the reality of what is needed hits a wall.
For this round, I would strongly recommend using a high-fidelity prototype. A deck is not going to have the right level of detail to get the feedback you need. Also, you want to go back to the initial round of clients that were excited by your concept and get their feedback. The prototype shows progress and allows for a deeper conversation.
While you can’t prototype everything, focus on the areas that are complex or most ambiguous. As you walk through your prototype, remember clients will fill in any white space with their own feature assumptions. At this stage, it is really important for a client to understand what features will be in the pilot and just as importantly what will not. If there are features that are simply off the table, it is best to be upfront about those. Glossing over ambiguity can come back to bite you later in the pilot.
In some instances, you may need a couple of rounds to flesh out the details of the product depending on the complexity involved. The idea is to keep filling in the details and ensure the clients continue to be excited by the product concept. There is obviously a balance as you don’t want to wear out your welcome either. Keep in mind it is much cheaper to learn you have a problem at this stage than after you built the product.
Another critical milestone is getting at least one client to commit to piloting your product concept. As I mentioned previously, if you can’t get that you need to either keep iterating or put the idea on the shelf. Pushing forward to build the product without at least one client on board will substantially increase your chances of failure. Remember, these pilot clients will become your reference clients when you launch and the source of invaluable feedback as you build and launch the product.
Finally, once you are confident you have gotten the needed client feedback and have lined up a pilot client(s), you are now ready to get leadership approval to start building the pilot product. While getting this may not be that simple, it will be much easier with a honed product concept that fits the corporate strategy, hits the minimum revenue target, and has pilot clients signed on.
Stay tuned for the next article that will delve into the pilot phase.