How to tell if your product idea is really a good one
I originally wrote this post for bytestart.co.uk
So you have a great product idea, it’s exciting, you see the value and believe it could change your companies future or launch your next new business. This idea may be a brand new product solving a new problem, or a better way to address a market need than the competitors out there today. Knowing that not all ideas make it, jumping into your new product idea can be a significant risk, committing substantial resources. However, it doesn’t have to be, and there are a few questions to focus on early to test your product ideas potential.
This common challenge exists for almost all startups as much as enterprises with new ideas. Most if not all great business today started with a small spark; a simple product idea. The key to many of these successes was knowing what to do next, knowing when and how to pivot, navigate and nurture that idea into a viable business.
Addressing this challenge and the need to systematically manage and grow new ideas we developed a product innovation and growth framework, The Lean Product Lifecycle. By breaking an idea into six distinct lifecycle phases, you can manage your product idea contextually, knowing how to ask the right questions at the right time. We explain simply how to grow businesses from simple ideas utilising lean, agile and adaptive principles and practices. In the scenario of validating your product idea, we have a distinct phase called ‘Explore’. Here you focus on understanding your potential customer’s needs, how your product addresses this need and how to explore and define the market size while searching for the early stages sustainable business model as quickly, cheaply and effectively as possible.
Exploring Your Product Idea
Before you jump into developing a product, you can test the potential of your idea using some simple practices to help you learn what you need to know. You don’t need to build anything to test your product idea, and this is an expensive mistake best avoided.
The first thing you will need to learn is whether the potential customers who you have identified with the need for your product will be interested in buying your product because it solves their problem. Don’t be fooled by gushing praise and support from those around you that want the best for you. Friends and family who support your idea are not your customers and despite best intentions and are not right signals on sensing idea potential. You need to get out of the building and engage potential customers within their environments.
As a first practical step, identify your potential early adopters or ‘Earlyvangelists’ who exhibit the problem you have identified. Earlyvangelists are so keen for a solution that they would happily provide feedback on early versions, pitches or experiments. This knowledge is vital and could help you build your future business. They will likely give you time and feedback as your product idea speaks to their need.
When you identified these potential customers, you should look to explore and learn answers to the following key questions. These questions will start to reveal the potential viability of your product idea and how it resonates:
- Do customers have this problem/need? (Avoid looking for confirmation, but try to understand the problem from the customers perspective)
- How are these customers currently solving these problems today?
- Have they been seeking a solution to this problem?
- How much time are they investing as a result of the problem?
- How much money will they be prepared to spend or already spend on alternative solutions? (Consider this is not just product spend, but all costs which relate to the problem such as transport, resources and other peripheral areas)
- If they currently use a solution, what would it take for them to switch?(Consider cost, time and effort — especially important when considering platforms behind products. Where the cost of switching is higher than the benefit, you will struggle to get traction.)
- Do they have the budget to invest in a solution?(In B2B especially, it’s common for people with the problem to solve, not having available funds to do so).
If during your research you are learning that the problem you identified isn’t being served well by alternative products, the customers are investing into solutions and are actively seeking to resolve this issue your idea has potential.
In our experience, we find that usually, 10–15 participants should be sufficient, but this can vary depending on the complexity of your product and domain. To support these learnings, it’s essential to construct lightweight experiments and engage in well structured, non-biased interviews. Refrain from fishing for compliments, pitching and asking questions about the future. You don’t want to obtain false positives or learnings that lead you down the garden path. There are various techniques you could call upon including, but not limited to silent observations, customer interview, a day in the life of shadowing and a range of participation practices.
Note that it’s not uncommon and sometimes very beneficial to pivot during research as you encounter new learnings. If when researching customer needs, you discover an alternative product idea or that your product idea better addresses a different customer cohort, it would be strongly advised to explore this further.
If through your research you have learned that these potential customers recognise the problem you identified, and they are investing considerable time or money in solutions to solve this problem and able to switch with little constraint, then you may have the basis of an exciting new product idea!
The next step is to explore the market opportunity for you to create a viable business. Using the customer profile you have identified, you will need to learn the total size of the market for your business model. Putting it another way how many customers will invest in your product that you can you reach. Don’t make the mistake of assuming everyone is your customer; this is a signal that you may not really know your customer and you should, revisit this question immediately as this abstraction will likely result in it much waste and cost.
When capturing the total market size, the most straightforward points to focus on are Volume and Value:
- Volume: The potential number of customers you can reach (matching your customer profile)
- Value: The number of £ available in the market that could be potentially accessed
Familiar sources to support you obtaining this information is often available from Marker research reports, Government statistics, Industry experts and leading bodies, Your company data, Marketing tools such as Google keyword research tools.
Validating Your Business Model
Bringing your customer and market data together with the insights you learned from engagements, you should have a sense of the value of the problem which your basic product set of hypotheses to test. These should not only look to prove the value proposition of your product idea but look to discover and test your business model and growth engines through the development of a Minimal Viable Product.
If your product idea is that revolutionary, you might need to consider and weight experimentation in a stronger light. Sometimes customers don’t know they have a problem or have developed habits which are believed to be acceptable, preventing them from searching for better alternatives. In such cases, experimentation is encouraged to test whether they would change behaviours and switch. Consider how long people ordered Taxi’s before Uber launched and whether they could have even conceived Uber before being presented with it. A simple experiment could be constructed to test intend without a single car in service.
Conclusion
A real test of your product idea must stretch beyond the actual product itself. A lot of great ideas die because people focus on the product and not the business model overall. Conversely, you shouldn’t focus only on generating revenue too early, and it’s worth noting that revenue is a by-product of value. In the second phase of The Lean Product Lifecycle ‘Validate’ we explicitly focus on validation and Discovery of your business model to help you prepare for growth and scaling your product idea.
