Product Development Strategy: How Founders Can Build One
Every business founder, CTO, CEO, or product owner has to find the right product development strategy to suit their company’s business goals.
There are lots of different product development strategies out there and no real one size fits all rule when it comes to product management and development.
One definite thing is that the complete product development strategy is crucial for any business if it wants to get out ahead of the competition by building a better product.
In this article, we will answer the question, what is a product development strategy? We will also outline the best guide for startup founders skeptical about adopting a product development strategy.
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First, What is a Product Development Strategy?
A product development strategy structures your product development process. It includes everything from product ideas, relevant market research, product offerings, actual development method, marketing strategy, gauging customer feedback, and assessing product profitability.
A product development strategy is also a core part of any business strategy. It focuses on helping to achieve fundamental business goals like growth by proposing the best roadmap to get there.
New Product Development Process:
Your company may be looking to expand its current product line, tap into new distribution channels and customers online, revamp your existing product line or introduce some new features to make things fresh and exciting for your customers.
The process of finding a new market for an existing product is called a new product development strategy. NPD explores growth strategies for the existing product.
Whether it is NPD or a product development strategy for existing products, all approaches generally encompass the same product development stages but differ in terms of the overall process roadmap.
Why adopt a Product Development Strategy?
Every product owner has one goal in mind – to expand their existing market and to increase product sales. Any product will fail to accomplish this goal if brought to market without the right plan and strategy.
A product concept that seems appealing to you might not score well when used by actual customers. This is why the right product development strategy that is based on sound market research of your target customers is so essential. This will ensure that you do not waste your time, money, and hard work.
The product development process involves two key personnel: the product owner and the product manager. Startup founders often wear both hats and so take full responsibility for planning out a product development strategy. The product owner is like a compass that aligns the business model with the end customers’ needs.
The product manager maps out different possible solutions based on the directions given by the product owner and feedback communicated by market research, and ultimately, the customers.
Closely following this compass and refining the map, where relevant, saves companies from the many pitfalls that the fast-paced tech development world holds.
From 2000 onwards, product development strategies changed incredibly in terms of product research and development.
Just consider software development methodologies such as Agile, which was specifically created to break down the process to create easily manageable, bite-sized development sprints that allow for maximum flexibility and development speeds.
Agile was a game-changer for software development management and was quickly adopted into most new product development strategies.
Product Development Strategy Guide – Some points to follow:
The first step is to nail your niche and think about the product idea that best suits it. For example, if you want to work on a software product related to health, you can develop a health monitoring app, an app assisting in a healthy lifestyle, an online pharmacy, an app showing hospital locations and availability of doctors, etc.
Different techniques like brainstorming, SWOT analysis, etc. help in idea generation and validation.
Find the right Founder-Market Fit
Another important point to keep in mind when selecting your business idea is ‘Founder-market fit’. Founder market fit indicates if the founder and the market will get along or not.
Consider these questions: Why is your idea a better fit than the competition for its market needs? What is wrong with the existing players in the market?
The key is to start from the domain about which you have the most knowledge. It gives you a competitive advantage in the market.
Work on understanding the market completely and finding a unique problem that you can solve. For example, people who want to open a restaurant love the food they will be serving and believe they have something unique to offer.
A good example of founder-market fit is DigitalOcean. It is the second-largest hosting service. It was founded by a team working in the hosting business for nearly ten years.
Because of this experience, they understood the market and succeeded in it. Industry experience mitigates the failure risks and enhances the chances that your finished product will excel.
Conduct a Thorough Market Research:
Some product ideas will have more potential than others. Extensive market research will help in filtering out the best idea.
Try to set criteria and compare each of your competitor’s ideas as well as your own. The availability of resources in terms of budget, innovation, market share, demographics, etc. will also heavily influence the final product so keep this in mind.
Once you have finalized your product niche and main idea, look deeply into the types of products and the features that they offer in the target market related to your idea.
So, for example, for a company with a new social media idea, what unique selling points can it offer that will make it stand out? Can it compete with existing ones, what overlap, if any, will it have that might make it uncompetitive, etc.?
Choosing the Suitable Product Development Strategy
You can use a combination of the following strategies to enhance your product development phases and final product.
Alpha or Beta Releases
Whatever product development strategy you adopt, make sure to thoroughly test the product. Alpha testing and beta testing strategies are used by some of the biggest companies to enhance their software development processes.
Alpha testing is conducted by the Quality Assurance engineers. They ensure the software product is bug-free before the final deployment. Hence, this is also called user acceptance testing.
Beta testing is the marketability testing phase that allows a product preview for customers and allow you to develop the app in the way they prefer.
Examples of companies using this include big brands like Apple and Google, which use this approach to allow selected users a sneak peek at their latest products. Google Android apps also allow users to install ‘under-development apps’ on the App Store for testing purposes. Users can provide feedback to the app developers directly.
We recommend using TestRail, UberTesters, and Rainforest, which are a few examples of the best beta test management software applications to help you to detect any bugs in your beta product before the final release.
Take a look at our guide on how to avoid producing bugs in your software product for more information.
Product Launch Strategy – Make Use of Online Platforms:
The goal of this stage is to commercialize the developed business product.
There are many digital channels available online to target your potential market. Audiences of every age use technology. Try to reach them through online content marketing. The revenue of online content marketing is expected to reach 269.24 billion US dollars by 2024.
Some of the ways to market your product to the right audience are:
Create an online presence for your product by creating a website and landing pages. Try to partner with a good software development team to ensure your website stands out.
You can hire an in-house team of developers for this purpose or outsource your software project to an experienced software development company.
Your software development partner should have the required expertise to tackle all the technical aspects of product development. Read our guide on how to find the best software development company for your software projects.
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Make use of social media and run creative ads on all the available channels like Instagram, Youtube, Google display ads, etc. Invest further in the channel that gives the maximum conversion rate.
Reach out to online news websites like PR Newswire. Submit articles explaining your product at length. You can also partner with a PR agency like Golin. A PR agency can give you the right direction if you are unsure how to start publishing your product press releases.
We have touched on a few points to follow with your product development strategy. Let us look at some of the most used product development strategies in detail. This will help any startup founder or enterprise company looking to develop a new product to build a business around it.
Some Common Product Development Strategies to Choose from:
Stage-gate or Waterfall Product Development Strategy
Developed by Dr. Robert G. Cooper in the 1980s, the stage-gate or ‘Waterfall’ process aligns the product development phases sequentially.
The key component to the waterfall model is that it maintains that development should only move on to the subsequent phase, once a phase has been completed and reviewed.
The Waterfall model follows these stages:
- Creation of system requirements in the form of a product specification;
- Analysis of market and various models, etc;
- Software design;
- Creation of product;
- Launch and maintenance.
The main drawback of this approach is that it leaves the participants of the successive phases in the dark, i.e designers are not aware of potential problems in coding a particular feature, etc.
Lean Startup Product Development Strategy
The Lean Startup process developed in 2008 by the entrepreneur Eric Ries is considered more appropriate for applications with larger user bases.
The Lean Startup looks for a business idea worth investing in and then builds a business around it. It is mostly adopted by startup owners and entrepreneurs still looking for ideas to gauge consumer interest.
A typical lean startup process starts from a hypothesis. It adopts a quick iterative development process to validate this hypothesis, reducing resource waste and also striving to continuously improve the solution.
For example, you have an idea of selling paperback books through a software application. Your research tells you readers are more interested in Kindle these days. You would not likely go forward with your idea.
The Lean startup strategy also introduces the idea of a minimum viable product. With an MVP, you can easily adjust to market changes and user needs. Read our blog on creating and executing an MVP for minimizing failure risks.
The Lean Startup is incremental. There are multiple development cycles, and we get a working product at the end of each cycle. The first cycle gives a product with basic features. In subsequent cycles, further features are added, thus the product is refined incrementally.
For example, for an online library solution, you can start with selected genres.
You can then improvise and expand the software product according to the readers’ interests. Or you can add a feature, for example, to recommend a book.
Analyze how users react to it, and then develop further according to user suggestions like users may want to share on social media feature or an option to leave a review, etc.
The Lean Canvas is the top example of lean startup tool for project managers to brainstorm ideas, create hypotheses, and visualize possible solutions within available resources.
Agile Product Development Strategy
The Agile development strategy is based on the idea of make and scale. Software products are greatly prone to user trends. Your product development must be adaptable, particularly if you have a product with a massive user base.
Being able to adapt your product quickly and efficiently without inconveniencing your users is vital.
Take the example of a social media app. You will have to keep up with the latest trends on social media and incorporate them in the form of new features. A waterfall approach does not fit this product development model.
Also, complex software products with many functionalities are better developed incrementally and iteratively.
The agile strategy highlights the most important features and starts the development process from them. It breaks the development process into multiple phases called sprints.
Agile success is determined by the working software or features at the end of each sprint. The iterative product development approach helps to analyze what is working for the user-end and if there is any need for improvement.
The agile strategy brings the product team and the end-users closer. The product development team does not spend much time finalizing the product on their own but on collecting and understanding the user feedback.
Agile product development is common in the digital and software industry. These industries have a rapidly changing user market. The requirements, the tools, the techniques, the demand, etc. progress very fast. Agile product development strategy helps to keep up with the pace of the market needs.
Today, Agile is used in many other industries, including transportation and manufacturing. 91 percent of companies participating in one research had already adopted agile development practices as of early 2018. Back in 2016, the agile life cycle implementation and management tools were worth 800 million US dollars.
The iterative product life cycle approach focuses more on collaborative teams and rapid response to customers’ needs. The strategy has given birth to product development frameworks like Scrum and Feature-Driven Programming and product development practices like pair programming, sprints, and standups.
Human-Centric or Design Thinking Product Development Strategy:
As the name indicates, this product development strategy is a design process carried out by placing the end-user at the center of the development goals. The design thinking process understands the user’s challenges, proposes new solutions, and redefines the existing ones. It is often referred to as the IDEO process.
IDEO is a design company that takes pride in its human-centric design process. It has created some incredible projects across many industries. These include the Apple mouse in 1980, a school system in Peru, animations in the movies like Free Willy, etc.
David Kenny, the founder of the award-winning company, states that rather than being any particular industry expert, they are process experts for designing products.
Design thinking has proven successful for businesses like IBM and PepsiCo. According to a report by McKinsey, companies adopting a design thinking process see higher returns and revenues than 56 percent of the companies not using design thinking practices.
Many businesses are adopting the innovative IDEO process with a focus on the end-user. A business can gauge what a user base wants by:
- Observing the user using the particular product. How does the user use it?
- Putting oneself in the user’s situation to better understand and feel the user experience i.e. How does a user feel about it?
The users’ behavior and actions fuel the IDEO design and product development strategy. David Kenny outlines the benefits saying that:
“If you want to improve a piece of software, all you have to do is watch people using it and see when they grimace, and then you can fix that.” (CBS NEWS)
Use a Combination of Product Development Strategies:
There is no hard and fast rule for adopting development strategies, especially for software products. Many innovative companies use design thinking, lean startup, and agile for single product development.
Design thinking is used to identify and empathize with the user’s needs. The Lean Startup approach is used to build a minimum viable product to measure customer response. If the customer is satisfied and the consumer market develops, the Agile approach is used for rapid product scale-up through incremental development.
Examples of Product Development Approaches adopted by Industry Pioneers:
Here are some examples of the prominent businesses with product development strategies that have successfully reached their business goals:
Amazon utilizes the backward approach. They believe in putting consumer needs at the forefront of their model. Amazon involves customers in product design and overall development by gauging their reaction to a new product or a feature.
Their prototype, an advanced MVP, is brought to the market before finalizing an actual product. This approach saves resources and leads to a successful new product by direct business analysis of its customers rather than traditional focus groups, broad market surveys, etc.
The Think Big and Different motto of Apple does not involve consumer participation. Apple believes in anticipating what consumers will need (before they even know what they want) and molding the customer needs to their products.
Henry Ford had a viewpoint similar to Steve Jobs of Apple. He believed in the requirement to create the demand by creating revolutionary products, in his case, an affordable automobile.
Toyota works on the Lean approach product development roadmap. Lean product development includes making products by reducing waste, speeding up delivery, and increasing profit.
The five main principles of Lean methodology are value, value stream, flow, pull, and perfection. The principles work towards efficient product development through workflow management by eliminating anything not contributing to the end goal.
Final thoughts on a successful product development strategy
It is crucial to adopt a product development strategy aligned with your business goals. The market dynamics for a specific product niche call for a unique product development roadmap from idea conception to product launch.
Target audience satisfaction is, however, the ultimate goal of every product development strategy.
The importance of a reliable software development partner is of the utmost in the process.
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FAQs on Product Development Strategy Guide for Founders:
Compare these metrics of your products with products already in use by your potential customers. In the case of a completely new product, you can explore metrics that guide you towards your sustainability journey.
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