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Product Development Strategy 101: Which Ideas Should Become Reality?

Executive Summary

When it comes to creating new products, it’s easy to get lost in a sea of possibilities. But which ideas are a good fit for your company? Isaac Sacolick answers this question as he examines what steps a company can take to identify the products that are worthy of development and the steps they’ll need to take next.  

  • Having a clear process in place to both identify and execute the production of products that align with its objectives will enable a company to remain competitive and drive innovation forward.
  • In order to productively move ideas from concept development, there must be a clearly defined product development strategy in place.
  • To conserve internal resources and financial investment, initiatives proposed must be considered feasible, show revenue potential, and align with the company’s digital strategy.

The art of product development is to move product ideas through the pipeline. Initially, the portfolio should have lots of ideas in the “defined” or “ideation” stage, but we want to narrow them down to the most promising ones before we get to the “planning” and “development” stages that will require more effort from internal resources and investment. We can use our digital strategy and framework to help gauge whether a product is worthy of going to the next stage and to define the governance in each stage.

To do this, the product leadership team should take on several responsibilities:

  • Define governance by stage.
  • Judge or vote on whether product ideas can move to their next stages.
  • Define and review constraints that limit the number of simultaneous products active in the pipeline.
  • Manage funding aligned to product development.
  • Propose and measure KPIs associated with the health of the product pipeline.

Since the portfolio should be holistic containing revenue ideas (products) and other types of initiatives (operational excellence, new capabilities, risk/compliance), the executive team should determine whether the portfolio is governed by a single steering group or there are different groups reviewing and judging initiatives depending on their initiative type. It’s certainly easier to manage the entire portfolio if the steering group is skilled in reviewing initiatives of all types and has a holistic mindset to balance what is moved forward.

How to Manage the Product Pipeline

PLANNING A PRODUCT DEVELOPMENT STRATEGY

 [The images above show] the product planning process from defined, to ideation, to planning. When a product is a concept, or an idea, it should be listed and put into the “defined” stage. The founder of the idea should be listed, and the instructions to him should be to answer some questions like the ones used to define the digital strategy. Specifically, here is the initial product charter and what the founder should be able to answer when proposing a product for ideation:

  • Target customer—What customer segment or segments are targeted? Who are some example customers from the existing client base and some new customers?
  • Value proposition—What is the core value proposition and convenience being addressed for these customers?
  • Initial product vision—What is the product vision expressing how the solution will address the core value proposition?
  • Competitive landscape—What is known about competitive offerings, price points, and size of the potential market?
  • Revenue potential—Forecast the first year’s revenue potential, and identify the underlying assumptions.
  • Feasibility—What are some of the inputs needed to enable the product offering such as components, capabilities, and processes? Of these, which ones are assets of the company, others that can easily be acquired or developed, and others that require upfront R&D?

The ideation questions are designed to be relatively easy to answer, and what the product leadership team should be doing is determining its alignment to the digital strategy, validating revenue potential, and considering feasibility.

The founder should then be asked if he has his manager’s commitment to work on this idea and whether he is “signing up” to take steps to bring it to a planning. If the answer is yes, then a target date should be selected to have this completed, and the founder should be armed with materials that outline the digital strategy.

From there, the product can be moved to the “ideation” stage and the founder enabled to go and capture the information requested.

The product leadership team should establish some guidelines on products that are in ideation. What’s the maximum amount of time for this stage? What resources do they get access to during this stage? What kind of help can they get from sales, marketing, finance, and technology when their products are in ideation? If you enable a large part of your organization to promote product ideas, do they need additional levels of sponsorship or product management mentorship when a product is in this stage? They should also set expectations on the level of detail required.

Product visions at this stage should be intentionally vague to enable customer, competitive, and other forms of research to better align it to market needs. A founder may be able to give only high-level information on the competitive landscape and feasibility depending on his skills and access to resources.

WHAT GOES INTO PLANNING PRODUCTS?

During ideation, the founder’s job is to follow up on any questions on the product charter, then take steps to define a backlog of what needs to be done and delivered in the planning stage. This to-do list should be in the form of a list of questions, and the goal of planning is to get answers, ask more follow-up questions, and develop a business plan for high-potential product ideas. When drafted, the founder should prepare a readout for the product leadership team with a formal request to move the product into the planning stage.

This founder should come prepared to answer the following:

  • What key questions need to be answered during the planning stage? These questions are typically product specific, and the founder needs an extended team of experts to answer them.
  • Whom does the founder want on his planning team, and what are their responsibilities?
  • What is the timeline for completing planning?
  • What other resources are needed to complete planning? This could include funding requests for market research, prototypes, and other external expertise.
  • What are the technical, data, and operational considerations for the product?

These last few questions force the founder to think a few steps ahead and propose what needs to happen in planning, who he wants on the team, and for how long. This information also gives the product leadership team some context to evaluate the initiative on its merits but also gives them a sense of cost and potential resource bottlenecks.

Three founders on different initiatives can’t easily work with the same technologist to plan their initiatives. Initiatives that require longer planning durations, larger teams, and more resources to complete planning should have to demonstrate more revenue potential or strategic value.

What are some example planning stage questions and materials the founder should count on answering during the planning phase?

  • A completed product vision indicating inputs (what raw materials are needed to make the product) and outputs (what is produced and consumed by customers).
  • Completed research on the target market with more details on the organization’s reach into this market and what steps, if any, are needed to expand this reach.
  • The target user personas of the product. Who are the buyers, the users, and other key players having a role in the customer journey?
  • An overall design of the user experience highlighting key flows, screens, transactions, events, forms, dashboards, and other interactions that make up the product
  • A proposed business model, price points, and how the product will be packaged and sold
  • Identified competitors and alternatives and how the product’s value proposition will win over customers
  • Identified regulations, constraints, and other risks that need to be considered
  • A proposed minimally viable product (MVP) and the product roadmap beyond the MVP detailing the agile backlog for its development and proposed release plan
  • A technology plan identifying the architecture, computing needs, usage assumptions, and operational requirements
  • A data strategy identifying what data assets will be utilized, what new data needs to be procured, and what data will be collected with the product
  • A proposed P/L
  • The beginnings of a go-to-market strategy for the product

The founder should account sufficient time and resources to be able to answer these questions. In addition, the product leadership team should clearly identify the list of questions and any presentation formats so that the founders have a clear idea of what’s expected of them when presenting a product idea for planning. The product leadership team should be trying to determine whether there is alignment to strategy and if the product idea is worth investing more time and energy.

My recommendation is to implement a voting mechanism to capture steering members’ feedback. Scoring the initiative provides detail beyond just yes/no and gives a business value that can be compared to other initiatives in the pipeline. Since initiatives will consume resources, these scores should be transparent and are indicators to individuals, teams, and departments on prioritizing their resources. Scoring also helps to audit individual product leadership team members to ensure they balance business needs and don’t give priority only to initiatives that benefit them.

Scoring by itself may not be sufficient to move a product into planning. First, the leader of the product steering team should indicate whether it does meet the criteria to move forward. Second, any constraints such as funding, lack of availability of requested planning resources, or departmental constraints should be identified and resolved before clearing a product for planning. But once the product is moved into planning, the intention should be that, if the key assumptions on market, customer need, competitive landscape, revenue, level of investment feasibility, and regulatory considerations check out, the organization plans to invest in its development.

It’s worth noting that in my experience, every organization is culturally different in terms of how many questions need to be addressed, what level of planning is required, and what degree of assumptions or unknowns is reasonable before making a concrete investment in either planning or development. I’ve tried to present a balanced approach between what can be planned up front versus other activities that can likely occur during the development phase.

It’s good to set some guidelines. For example, for digital products that don’t have many legacy dependencies, integrations with the physical world, upfront R&D for new inventions, regulatory considerations, safety, or significant internal workflow changes, my rule of thumb is that I like three-to seven-month MVPs that require one to two months of planning. Anything longer, and you may miss the market or overinvest, and it can be shorter if you have an experienced team working with known practices and platforms.

Excerpted with permission from Driving Digital: The Leader’s Guide to Business Transformation Through Technology by Isaac Sacolick, copyright Isaac Sacolick

Bring It Home

Imagine attempting to bring a product to market without actually knowing if it would benefit your company or your customers. You wouldn’t do that! Before allowing you to jump headfirst into the development process, your leadership would likely want to ensure that your idea aligned with the company’s objectives, that it had sufficient revenue potential, and that you’d thoroughly done your homework. They’d also want to make sure that they had the buy-in they needed to secure funding. In short, with the right leadership in place, there’d be no shortcuts.

Have you seen the right product get stuck in the pipeline, while the wrong product got pushed through thanks to a lack of checks and balances? Comment below to share one way Isaac’s recommended steps might have changed the outcome. ~ HarperCollins Leadership Essentials

Isaac Sacolick

Isaac Sacolick is a successful CIO who has led digital transformation, innovation, agile, and data science programs in multiple organizations. He has transformed underperforming businesses by delivering new digital products, investing in strategic technologies, enabling agile practices, outsourcing commodity services and establishing performance metrics.

Want to read more? Get the book!

Every organization makes plans for updating products, technologies, and business processes. But that’s not enough anymore for the twenty-first-century company. The race is now on for everyone to become a digital enterprise. For those individuals who have been charged with leading their company’s technology-driven change, the pressure is intense while the correct path forward unclear.Help has arrived! In Driving Digital, author Isaac Sacolick shares the lessons he’s learned over the years as he has successfully spearheaded multiple transformations and helped shape digital-business best practices.

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