What do Startup Founders Need to Know About the Product Development Process?

How do you develop a new product? Here's everything you need to know about the product development process.

August 27th, 2019   |    By: The Startups Team

Every startup founder has to go through a new product development process, whether it’s formalized or not. Broadly speaking, the new product development process is the entire process of bringing a product to market, starting with recognizing a marketing opportunity and ending with product launch. For some founders, that process may look like a haphazard “drunken walk,” but others prefer a more structured approach.

For those founders, here are three new product development processes that can help guide you as you work to take your startup from idea to actual product. And considering the fact that research suggests that following a clear, structured new product development process, it’s probably not a bad idea to pick one of these — or a combination of a couple — that works best for you.

We’ll go over the stages in the new product development process and talk a little bit about how to launch a new product.

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1. Stage-Gate Process

The Stage-Gate process is also called the New Product Development (NPD) process. It was developed by one of the pioneers of the new product development process, Dr. Robert G. Cooper, in the 1980s. It’s described more thoroughly in his book, Robert’s Rules of Innovation.

1. Idea generation

The first step of the Stage-Gate Process is idea generation. And it’s just what it sounds like: You need to come up with an idea for your business before you can do anything else. You can use a range of strategies for idea generation, from brainstorming with your team to SWOT analysis to market research.

2. Idea screening

If there are “no bad ideas” in brainstorming, there certainly are in idea screening. This is where you separate the great ideas from the ones that will have your family giving you side eye when you tell them about it. Come up with a set of criteria by which you can judge each idea and then go through them systematically to determine what’s a go — and what’s a no-go.

3. Development and testing

This step starts with concept development. A concept is an idea that’s been fully fleshed out into all of its elements. Once you’ve figured out your concept, you can test it by bringing it your target market. (This stage is also called “alpha testing.”)

You don’t have an actual product at this phase, so instead of you give the target market customers information about what your concept. The goal is to get them to visualize the final product. Once they have a clear understanding, you can test the concept by asking them questions about it. What do they think of the idea? Would the pay money for it? Does it fulfill a need in their life?

4. Business Analytics

Once the first three steps have resulted in a solid concept that’s been tested and is ready to develop, it’s time to dig into the nitty-gritty. The business analytics steps is about determining marketing, branding, profitability, competition, costs, pricing strategies — basically all of the things that make a business a business and not just a concept. You also need to come up with a set of metrics to judge each part of your product launch.

5. Marketability Tests

Marketability tests are also known as “beta testing.” This is where you test your product in small, private groups in order to get feedback about where your company is at so far. Take the information learned in this phase and let it guide you through the development of the final product.

6. Product Development

Product development is about — you guessed it! — actually developing this product you’ve been researching and testing this whole time. Start with a prototype, test it, and make changes as needed. You should also plan on testing your branding and any other strategies you came up with in the business analytics stage at this point.

7. Commercialization

Commercialization is when you’re actually on the market! This stage is about selling your product and everything it takes to keep that process going: technical support, proper distribution, advertisements, etc.

8. Post Launch Review and Perfect Pricing

This stage is largely about making sure the price point you set when you launched your product still works for your company. Take a look at how much it’s actually costing you to produce your product and provide your service and determine whether or not you need to adjust the amount you’re charging. If you launched with an introductory price, this is also a good time to adjust to your long term price.

Finally, keep reassessing. How are things going? Do you need to make adjustments? Don’t be scared to continuously make improvements, even after you’ve completed the new product development process.

2. Lean Startup Process

The Lean Startup Process was introduced by entrepreneur Eric Ries in 2008 and then outlined in his 2011 book The Lean Startup: How Today’s Entrepreneurs Use Continuous Innovation to Create Radically Successful Business. It shakes up the traditional product development process considerably by suggesting a whole new way to approach getting your product to market. Some argue that Ries’ process is more suitable for the digital age than Cooper’s 1980s-built approach, but we’ll let you be the judge.

The Lean Startup Process is built around a cycle of “Build-Measure-Learn.” The goal of Build-Measure-Learn is not to build a final product to ship or even to build a prototype of a product, but to maximize learning through incremental and iterative engineering.

Planning

But before you even get to the meat of the Lean Startup new product development process, you have to do some planning. First, figure out the problem you’re trying to solve. This will help guide you into the Build stage.

Build

The “build” step refers to building a minimal viable product (an MVP). It’s critical to understand that an MVP is not the product with fewer features. Rather it is the simplest thing that you can show to customers to get the most learning at that point in time.

Measure

The “measure” step involves running tests on your MVP and tracking what happens. How does the product change when you add this feature? What happens if you take out that step? Measure about “failing fast” and testing ideas quickly.

You’ll also analyze the results of your experiments during this phase. How does the reality compare to what you expected to happen? Does it seem like enough people are interested in what you’re doing? Can you create a business around this idea?

Learn

“Learn” is about analyzing the data you collected in the previous steps and deciding what to do with it. Do you continue on the track you’re on? Do you pivot to a new idea, based on your learnings?

A unique aspect of the Lean Startup Process of new product development is that it’s not linear. Instead, founders usually go through several to many iterations of the cycle in their quest for ideal product-market fit.

3. IDEO Process

The design company IDEO is also famous for their new product development process, which focuses on “human centered design.” Human centered design is about centering people and their needs in every step of your new product development process.

1. Observation

The very first step in the IDEO process is observation. You’re going to literally observe your user in order to more fully understand them. In addition to demographic information, you also want to observe behavior patterns. What task in their life is difficult? What are their pain points? When you can see what they see and feel what they feel, you’re better able to design a product that will closely match their needs.

2. Ideation/Brainstorming

Now it’s time to take those observation and turn them into product ideas. Get together with your team and come up with as many ideas that fit your customers’ needs as you can.

3. Prototyping

For the prototyping phase, you want to build something quickly that is just good enough to get user feedback. This is not the time for hundreds of hours of coding and design — what’s the simplest version of your idea you can possibly make? For example, IDEO is well known for creating cardboard prototypes for this phase.

4. User Feedback

User feedback is one of the most important stages of the IDEO process. This is where you bring that prototype — cardboard or otherwise — to your potential customers and ask them what they think of it. Know that your product won’t be perfect and your idea won’t be fully fleshed out at this stage. The goal is to get information early on so that you can integrate into your design and bring your product on to the next stage.

5. Iteration

For the iteration stage, take your user feedback and use it to make changes to your prototype. Bring each iteration back to the users for more feedback in a short but essential loop of prototyping and user feedback. You’ll probably have to go through the loop a few times before you land on the best version of your product.

6. Implementation

The final stage is about launch! Take all of that information you gathered from the previous five steps and create your product. You can also repeat the stages outlined here for each new feature you add on to your product, in order to ensure that you consistently have a great product/market fit.

A deeper dive.

So there you have three approaches to new product development. You may have noticed that there are a couple elements that are common between all three: idea generation, testing/validation, and actually launching the product. Let’s take a more general look at those three in order to gain more insight into the new product development process.

Idea generation

How do you even know whether an idea is worth pursuing in the first place? The fact is, if you start with that question, you’ll never know the answer – because you’ll kill every idea before it’s even really an idea.

1. Capture it

Before you can start the process of evaluating an idea, you have to give it a chance to get out in the world, judgment-free. Jot it down. Keep a notebook or a Google Doc file with all of your ideas and revisit it from time to time whenever you have some downtime or need some inspiration. Notice the ideas that jump out at you, that rise to the top – the ideas that won’t leave you alone until you do something with them. Those are the ones you want to take to the next step.

2. Flesh it out

We tend to think of “great ideas” as these ephemeral things, where you just have to open your scalp to the gods and wait for a great idea to plop in. And it’s true that inspiration will always be a factor. But the real test of the quality of your ideas is where you take them. Once the idea is captured, that’s when you start pulling and pushing at it, seeing how it stretches. And for that, a little process goes a long way.

3. Make sure you care

A simple but easily overlooked test to run early in the idea development process: how much do you care about this idea?

Too often, entrepreneurs will ask every other question under the sun about an idea before they ask themselves whether they are passionate about the idea, and as our CEO Wil Schroter can attest from experience, that’s not a good situation.

“I’ve worked on multiple projects where it was a good idea that had zero passion from me,” Wil says. “The downside to that is when things go south – and they always will for some period – it’s hard to press on. Whereas when you have a genuine passion for something, you’re more willing to overlook the crap because you’re so pumped about what you’re trying to create.”

Testing/Validation

How do you know if an idea you have is an actual viable business? How do you go about learning about your idea from the people whose opinions matter most – customers?

There’s only so far you can take an idea in the echo chamber of your own mind. At a certain point, you have to offer it up to the firing squad and see how well it deflects the bullets. So once you’ve clarified your idea as much as you can for yourself, it’s time to shop it around and see what others think.

This doesn’t have to be some formal ritual. It can be as casual as chatting with your buddies next time you’re out for drinks. Take your ideas to people whose opinions you value, who you know won’t be “nice” because they’re afraid to hurt your feelings. Ask them to use your idea for target practice. Don’t be afraid to beat it up a little. Kick the tires, see if it’s road-worthy. If it fails the test, then guess what? You’ve saved yourself a lot of wasted time and energy.

Your own passion and the support of friends and mentors are all great, but if a business could live off warm feelings alone, then maybe Pets.com would still be around.

At the end of the day, sales and profits are going to be what keeps your business alive. And the only way to know if sales and profits are in your idea’s future is to talk to the people who will ultimately offer it: customers. Yes, we’re talking good, old-fashioned customer validation.

Launch

Your product launch is the inflection point. It’s the point to which everything before it leads up, and everything that comes after comes out of. And a successful product launch starts with a successful product launch strategy.

1. Make sure you have a pre-launch mailing list. It’s every founder’s worst nightmare: You spend months validating an idea, and then more months building it, and then you push the “launch” button… and get absolute crickets in response.

We’d like to be able to say that, as long as you’ve done a good job validating, this definitely won’t happen to you. But that wouldn’t exactly be the truth. Because all the surveying and smoke-site building and traffic driving in the world won’t amount to much if you don’t have a way to re-harness all that energy when you need it come launch time.

And that’s where an email list comes in.

Email capture is at the absolute heart of the launch process. It’s the “small ask” that kicks off the user relationship. It’s the juice that makes the light go on when you flip the switch. A robust pre-launch email list is the best way to ensure that, when the time comes to launch your product, you’ve got a built-in audience of customers ready and waiting to click “buy.”

In the startup world, there’s no “if you build it, they will come.” There’s no bringing the mountain to Mohammed. The only audiences you get are the audiences you go get yourself. Capturing user emails is how you build that audience, brick by brick.

2. That very minimal MVP. We’re all familiar with the concept of the MVP, or minimum viable product. It’s the idea that you should launch with the absolute leanest, simplest, most bare-bones version of your product you need to make it in the marketplace.

But it turns out the minimum viable product you need to launch is a lot more minimal than you might think.

Stuart Brent, co-founder of MapPlug, is a big fan of what he calls a “Wizard of Oz” MVP. What’s that, you ask? “Wizard of Oz MVP means there is no backend. This doesn’t work for all services, but if you can, try to not build out any automation, and just ACT like it’s automated, with you and your team manually doing everything behind the curtain, like the Wizard of Oz.”

Perhaps the most famous example of a Wizard of Oz MVP comes from ecommerce company Zappos. Founder Tony Hsieh and his team spent weeks running out to shoe stores and buying shoes that users ordered on their website in person in order to validate that users really would buy shoes online before taking the costly step of investing a ton of time and money into building the infrastructure to support it.

“It’s awesome because you can validate and try to earn money without investing a lot,” says Stuart. “You can also tweak the site and service before you hire a dev, which will save money. You find problems before having to pay someone to fix them. Plus, if you do a Wizard of Oz long enough, you could boostrap development.”

Stuart is quick to note that a Wizard of Oz approach to an MVP won’t work for every product or service. But whatever the version of your product that you launch with turns out looking like, remember this: don’t wait for your product to be perfect before launching. Like anything made by humans, it never will be. And don’t forget the old truism of developing: the longer it takes to code, the less likely it is to launch.

3. Just launch already! Once you’re done validating, your product’s built and you’ve got your email list together, it’s time to do the damn thing. It’s time to launch. And don’t expect launch day to be a walk in the park either.

“On launch day, get up at midnight California time, get on Product Hunt and work it all day!” Stuart advises. “For a startup audience, that’s it. you can’t do a bigger boom than that.”

Stuart’s not all talk either: he practices what he preaches. “I’m in Nashville so I set my alarm for 2AM when I do a Product Hunt launch,” he shares. “It’s a REALLY LONG DAY, but it can give you a lot of traffic and interest and feedback.”

Once you push that “launch” button, you’re in full-on hustle mode (not that you weren’t before). It’s all about pounding the pavement. It’s about getting your product in front of the early-adopter audiences that can get you where you need to go. Launching a company is like starting a fire. You have to keep blowing on the flame until, finally, it grows strong enough to burn on its own.

About the Author

The Startups Team

Startups is the world's largest startup platform, helping over 1 million startup companies find customers, funding, mentors, and world-class education.

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