The ultimate guide to product development
This ultimate guide to product development will teach all you need to go from idea to product. Check out the process and strategies to make it a success.
Not many people know it, however product development is one of the strategies you can use in business development. As often the first point of contact with customers, business developers are regularly in the know when it comes to customer needs. Therefore, including product development in your business development strategy should always be an option.
Writing an ultimate guide on product development is a mammoth task. There is so much to it, that one article will not be enough. However, I go ahead anyhow and I’ll share with you my view on product development, tapping from my 20-years’ experience in the field.
The first big truth I learned working with products in many fields, is that Product Development is always key to the growth of any company.
That includes companies dealing with durable goods like a car, FMCG (Fast-Moving Consumer Goods) like deodorant, or services and digital products.
In a healthy business, a product or service never stays the same. It always needs improving or replacing to better fit the ever-changing customers’ needs and reflect the growth of the company itself.
Therefore, If your business is here to stay, you are not immune to continuously dealing with Product Development.
For simplicity, in this article, I will refer to the term “product” whether it is a physical object or a service. Let’s move on and get started with this ultimate guide to product development.
Below you will read:
- What is product development
- Product development in different business models
- Things to consider before starting with product development
- The step-by-step product development process
What is product development?
By Product Development we mean the whole set of activities that brings an initial idea to the market. The main ones are:
- The definition of the idea
- The framing of it so that it can be easily shareable with as many people as possible
- The description of the human needs that such idea is meant to meet
- The identification and planning of all steps that need doing in order to bring such an idea to the market
You have got it right: every single step. Are you a bit overwhelmed? As business developers, you won’t be involved in all the steps, but if you’re the founder of your company, you better be prepared!
Use range development to grow your customer base
Talking about product development inevitably involves also range development. Range development basically means having different versions of the same product, or more products within the same line.
The reason why it’s so important to have a wide range is that in this way you will be able to meet more customer needs.
A single product is hardly ever successful on its own, out in the worldwide market.
This is because you most likely need an extra color or a lower-priced version, to reach for a broader customer base. By having more products, or versions of the same products, you can easily appeal to more customers. Therefore increasing your revenue!
Of course, when thinking about a range of products, you need to keep in mind that each of them will require some developing attention. Which also means resources and a budget.
Before embarking on product development, always try to clearly define how many products you are in fact aiming at bringing to the market. Then choose the hardest one – maybe for price reason or for its technological challenge – and try to complete that one successfully.
By developing and successfully commercializing the most difficult one, it will be much easier to transform it into its cheaper, dearer, more colorful version. Moreover, you can use synergies in the process making it easier to work on the other products in the range.
Product Development in different business models
It is worth mentioning that Product Development means different things depending on the very business context where it operates. One of the factors that determine the way product development is made, is the type of company.
– Product development in big corporates
For example, in big corporates product development is usually performed by a team of engineers working with other departments such as marketing, sales, business development or R&D.
If you think of a cooling company (fridges and freezers), usually, product development is run by a team of engineers. They usually get instructions to develop a certain product for a number of reasons.
It can be to keep up with a competitor who is already selling a better product or to be the first one with a new product. Usually, the idea originates somewhere else. It can be the business development team, or maybe sales and marketing.
In most cases, it starts with teams who are much more customer-facing as they can easily spot new trends or new opportunities in the market.
However, it can also be that the engineers come up with new technology to make the products better. In this case, they are the innovation drivers and they can again, collaborate with the other stakeholders to get the ball rolling.
One issue with product development in big companies is that the processes itself can actually hinder innovation. Because too many separate departments work hand in hand, without a clear process, sometimes it’s hard to actually get things done.
An attempts to fix this problem is the SCRUM framework, however, this still doesn’t solve the core problem.
– Product development in start-ups
In the case of younger companies, the process is much leaner as the structure is not too compartmentalized nor hierarchical. This is gold when it comes to decision making. and decision making thrives.
In a lean and healthy organization or in an innovation-driven company product development is overlapping with range management and ultimately with growth creation.
In such companies, product development is not merely a set of activities to launch a new product or an improved one.
It is the set of activities to develop the business throughout products and create long term growth by merging customer needs, the customer expected experience and external opportunities.
So, to sum up, here we are looking at Product development not as engineering but as the core of the growth of a company.
You might also want to read: Business Development guide
Things to consider before starting with product development
This wouldn’t be the ultimate guide to product development without some practical ideas, so you can make your process extra effective. Having just a product idea is not enough, you need to keep a lot of things in mind to be sure you’re on the right path.
Based on my experience, these “rules” always work when creating something new.
1. Put the human at the center of your strategy
Everyone likes to think they have the best idea in the world. However, it doesn’t matter how good an idea sounds or how established and powerful a company behind the idea is.
If the idea does not meet a real human need, chances are is not such a good business after all.
To make it more practical, I once worked with white goods. One of our suppliers routinely presented their premium products. Once, he presented an oven with 30+ functions.
That was the dream oven that everyone would want to have.
My view was quite different and I asked to make changes. Who needs so many functions roasting a chicken? Who has the time to read the instructions?
That idea was not the result of an accurate market research, but rather the company needs to maximize the ROI of the time spent on developing one function.
In my humble opinion, it is better to have a few, very well made functions – for example, to clean the oven – rather than 30 no one needs. Luckily, my stakeholders took the advice and the turnover of that range doubled in three years!
When you put at the center the customer needs, you can be sure your product will actually be used.
Sometimes it can be difficult to convince your stakeholders. Make sure you always put the focus back to the customer needs and explain why it is so important. Remember, you can not product develop alone, it doesn’t matter how good you are. You need people going in the same direction.
You can’t explain to every single professional involved how to sail an uncharted territory but you can hold them focus on the task: meet specific human needs.
2. Build processes and set milestones
It’s key to understand that process development is a team effort task. Therefore, it’s very important to have processes in place which can make everything easier.
If you are an established company, you most likely have some processes in place. This is great, but keep innovating the process as well, so you don’t get stuck in old methodologies.
On the contrary, if you are starting from scratch, you need to build your own process before even thinking of building a product. Start jotting down what the future product needs in order to be sold and who needs to do what.
Try to visualize the process using schemes. Put down every single step, every function and when there isn’t a function yet, appoint someone. Agree on milestones and of course, a deadline.
If you are totally new to the field ask someone seasoned, look for courses, tutorial, read books. Or maybe ask your chamber of commerce for material or a mentor.
But make sure you have at least a basic process in place and people agreeing to that.
Below an example of a simple process, I developed to enter partnerships.
3. Be cruel with your products
When starting with product development is important to be very pragmatic. It doesn’t matter how long and hard you work on something: if the initial idea is lacking definition or, worse, substance you will be slapped around by reality.
Make sure to be very cruel when it comes to evaluating your progress. Once you define the idea and have a draft of your action plan you need to ask for feedback.
Ask as many people as possible to look at it and give feedback. Make use of diversity, ask technical people as well as uneducated ones, different ages, and walks of life. Ask the ones you think have no clue.
When I was Marketing Communications Manager in a huge store – 700 people working 24/7! – one of my areas of responsibility was signs and directions to facilitate the flow of customers.
Whom was I asking for feedback all the time? The cleaners and the caretakers of course! They knew nothing about retailing, they never studied Marketing and Communications. However, they knew very well which areas were overused and which not.
They had the answers that my team could not find, from their office.
To ask feedback from different people is an exceedingly good exercise to develop your critical skills. Map everything. Incorporate, change, review.
When I developed an innovation of a process for impregnating wood some 20 years ago I made this a routine activity during over 4 years of development.
It was excruciating, also because I kept hearing the solution to my quest was not possible. But it was. I adjusted continuously along the way, though, and I am forever grateful for all those awkward feedbacks, yuck!
4. Run a lot of home testing
Time for home testing should be made along the way. Whether your product is a service like the “eco-mmerce” Perpetual Products or a unique piece of fabrics like in Smorgasbord, home test as soon as possible. Even when you have just a cardboard mock-up.
Performing this activity helps an awful lot to cut corners during developing time. Moreover, it minimizes the risk of disappointing your clients and having to contact you to return their goods or services.
5. Identify your bottlenecks and act on them
This wouldn’t be a guide to product development without talking about bottlenecks. Obviously, you will have many of them. Sometimes they are technical. Other times they are related to a time restriction. And of course, they can be linked to the budget.
One way to address bottlenecks is to identify the ones that unlock most of the problems in a domino effect. Basically, you go to the root of the problem and by fixing that, you fix many more.
Identifying and tackling bottlenecks is an activity that needs addressing well before the actual problem presents itself and shows its destructive nature. Often this means ongoing work. To make this process easier, have someone accountable for results and allow this person the focus required.
6. Analyze your cost drivers
It wouldn’t be an ultimate guide to product development without talking about costs. A very important aspect to consider in product development is cost drivers. Keep track of the monetary aspect of your activities and try to find ways to keep cost reasonable.
If you can ́t get around solving your cost drivers be frank with yourself and review your budget and the product itself. How much the cost driver will affect the final price? How much less margin are you able to take in order to go ahead?
Make sure you are aware of all this information and consider alternative ways if something is too expensive to develop. For example, you could consider strategic partnerships with complementary companies.
In the past I worked with many apps ventures and soon in the process, we found out they were not economically viable.
It’s ok to kill a darling, one makes head-space for healthier options.
7. Perform a risk analysis
While in business is good to take risks once in a while, it’s definitely wiser to analyze them before starting developing any product.
Think of what could potentially endanger the success of your development. Ask yourself how probable the risk is and how much it would affect the whole product development process.
Differently from bottlenecks and cost drivers, where you have no excuse but try and solve them, risks are risks. You will have to go ahead and take them as they are.
However, running a risk analysis allows you to take conscious decisions. In this way, you will feel grounded and reach for your mitigation plan when Murphy’s law will surely hit you.
Like asking for feedback, also risk analysis is an ongoing exercise, one just gets used to it.
8. The competitive advantage
There is nothing better than having a competitive advantage with your product. Whether you are the only one selling that product or you are able to offer extra features through partnerships, it’s always good.
Often a competitive advantage is already embedded in the initial idea. But that doesn’t mean that’s all. On the contrary, I would recommend to scout for more during the developing process.
For example, by thinking whether you can partner with another business, use their production leftovers (either time or material or both). Or maybe using production platforms that are not used anymore, and finally, incorporate other businesses’ innovative materials or ways of working.
Back in the days when I was a product developer in Italy, I received the task of developing a limited edition of crystalware to celebrate the 50 years jubilee of a fine Florentine company.
We had to present this line during an important fair, therefore we had limited time. I only had 4 weeks which barely allowed enough time for design, but almost no production time.
Creativity at work
I had to get creative so I decided to develop a line made out of their most iconic pieces of the past decades, with some small adjustments. By proposing again their best products from the past, I had a great advantage as nothing needed to be designed and produced from scratch.
To make this even more efficient, I partnered with a producer of extremely high-quality leather in the region. Since I worked with them before, I knew that they had a lot of leftover trimmings.
So I reached to them and with those trimmings, I designed a “dress” for each piece of crystal inspired by the fashion of each decade. The Fair was a success. We got press coverage and we sold out all the crystalware…with and without “dresses”.
On top of it, the leather company got a payment for a big stock of trimmings, even saving on their disposal.
After all these years of working with product development, I came to a conclusion: if you reach a competitive advantage at the expense of a partner is not compatible with long term growth.
Usually, win-win partnerships and solutions are the ones who deliver a true competitive advantage.
A step-by-step product development process
Next in this ultimate guide to product development, a step-by-step process. Obviously, it is almost impossible to guide you through all the steps involved in successful product development. The main reason is that every product and company can have very different steps.
To make it easier, I broke it down selecting the most important steps which apply to most products.
First and foremost, the overall rule I suggest to keep in mind is to always put your customer needs and experience at the center. By customer experience, I mean everything from the initial contact of your potential – online or physically – to the after-sale.
It seems easy. However, while developing you will come across a lot of unforeseen factors and you will have to make tough decisions to stay customer-centric.
1. Briefing to designers
After the initial idea is laid down you will have to get designers on board. When briefing your designers, make sure you make your idea very visual using some draws or pictures.
Whether it is to highlight the lifestyle of the customers or simply the feeling the product should reflect, give them something practical to start with. Of course, make sure you are very clear about the customer needs.
A smart way to avoid miscommunication is to add a mood board with everything you want to take a distance from.
2. Competitors analysis
A very important step in the product development process is competitor analysis. Get all the information you can about features, prices, target audiences, etc.
And of course, make sure you continuously monitor them. Use a tool to help you keep track of it.
3. Cost vs Price
By now you have your cost drivers and, through the competitors ́analysis, an idea of the final price. This will help you build different scenarios based on whether or not you can knock down those cost drivers.
Once you have different scenarios, obviously, go for one and decide how long to stick to it. You need to take a decision, there.
Remember, in business particularly, even a non-decision is a decision and you can’t avoid consequences.
Budgeting requires a roadmap and vice versa, they are interconnected.
You can embark on a journey without having the financial resources to get to the end. However, if that’s the case, make sure that by the time you run out of money runs you achieved a big milestone. This way it will be simpler to proceed and gain more financial support as you proved that you can meet deadlines and reach targets.
A special note for all the start-ups out there: the best way is self-financing as long as possible and run as far as you can without debts. That’s what I did when I opened my first start-up 20 years ago working double jobs for 4 years until my company became independent.
You may need investors. A good tip is to take a step back and try and have as many letters of intent signed by future clients as possible.
A projection of a stream of income is better than nothing and it is a powerful tool to have people investing in your idea.
5. Engineering team
This is a world of its own and absolutely core to the success of any development. It helps to have a technical background to deal with professionals in this sector but, generally speaking, these are my main words of advice.
First of all, you might encounter some “resistance”. What helps in these cases is to listen to the nay-sayers as they usually are pointing at something relevant. They may just not have the flair to say it in a socially competent way.
Don’t get intimidated if they are more knowledgeable than you, that’s precisely their job to know more than you. Your job is to keep everything else together and drive forward.
These days, this is often a male-dominated environment. If you can control or influence diversity, try to have as much in the team as possible. Men, women, LGBT, different ages, culture of origin, differently bodily abled people, you name it. In this way you can maximize the chances that the team solves problems for you faster.
Whether they supply services or materials, work hard to have a big base of them so you are not cornered by a single one on prices or time of delivery. Check that rules and regulations as well as a fair treatment is in place, no one needs to be told along the line that your products cost lives.
Be aware that sometimes it is better to produce locally at a higher price than far away without control over the operations. Ideally, partner with businesses that share the same values and when negotiating always put yourself in their shoes and think win-win solutions.
Don’t try to rip anyone off, that doesn’t bring long term growth.
7. Forecast vs prices
This topic would require an article of its own so I limit myself to this piece of advice.
Build solid relationships with a number of suppliers so you can make your calculations accordingly. One reason more to have a real relationship with them based on transparency and aiming at common growth.
8. Internal communication
This is possibly the most overlooked and underestimated tool for a good development process, but it directly affects results
Internal communication is a mix of right forums, tools, and processes. The availability and visibility of appropriate forums – e.g. for complaints, common information, troubleshooting – helps to avoid repetition and increase efficiency.
Clarity on what certain tools are there for – emails, signs, boards, meetings, digital platforms – helps with a smooth flow of communications and reduces friction.
Knowing that there are some processes in place brings people together.
Your co-workers and partners have the need and right to know what is going on to keep focused and motivated. In addition, they will become the natural ambassadors of the future product by being recognized as the most important people and the first to be in the know.
Last but not least, a solid internal communication system is the key to efficiency. Many studies show that one can dramatically increase sales simply by implementing a strong internal communication plan and routines.
9. External communications
Launching new products requires a different plan of action than the replacement of a previous line. An app requires different media than a handcrafted marble table.
My main reflection is that, compared to only 10 years ago, nowadays one needs to be digital, immediately. You can’t wait to have a finished product to communicate it, you need to create your narrative from the beginning, so that is traceable too.
Then, do not improvise. Have a SWOT professionally-led on the product and make sure everyone is on board on what strengths and opportunities you want to communicate. Poor content equals poor results, it doesn’t matter how many micro-influencers you pay to spread it.
Also, remember that humans are animals after all and behave accordingly to seasonality. Get acquainted when it is the best time of the year to launch something to sleep or something outdoors. Christmas/Winter festivities and Summer holidays are special periods too.
Another tip, have a refresh on all media at the same time when you communicate something new and make sure the content is coherent all over. Simple, you may say, but to consistently implement the basics is not so simple after all.
Last, of course always put the customer needs and experience at the center. You may be saying that your company is very reliable, but is much better to show testimonials. You may want to say your product is the result of years and years of research, but what’s in there for the customer? What is the benefit for me to buy it? How much better my life would be if I buy your product? That’s what I want to hear or read from you as a potential client.
10. Patent strategy
When I developed an innovation of a process to impregnate the wood, I had the honor to work with a world-renowned legal company specialized in patents.
Even if it was possible to patent the innovation and copyright the applications we decided to go for neither. My budget was not big enough to enforce any consequence in case of infringement. Therefore, we decided that the best protection was to be first in the market and let everyone else be a copy. I could always say my product was the first and the only original.
All this to say, that there is no solution that fits all especially because patenting is not necessarily the best way for any products. Moreover, patents are not always a key factor for investment banks to loan you money.
Luckily one get a grip by accessing a wealth of knowledge available online, I usually recommend the European IP desk.
They are very, very few. Only 35 in tech in the whole USA and, only 1 out of 10 start-ups, actually succeeds according to the Start Up Genome Project. The numbers are clear. Therefore, if you are for a challenge welcome to the club, but if your aim is becoming rich at thirty, you’d be better off playing with FIRE.
This ultimate guide to product development is an effort to show you that if you’re here to stay, you must get this right. My conclusions are successful product development is not for the fainthearted but it is possible.
It is the quintessence of continuously taking risks and decisions. At the same time, it is something no business can do without. You can calculate risks and you’ll become better at decision making becomes with time and training.
“It’s all to do with the training: you can do a lot if you’re properly trained”
If you are working with innovation, the prize is to be able to touch many people’s lives and make a difference, even a little one.
If you embrace product development to improve what you have already on offer, you are on the right path. There is a Chinese saying that goes, “love is like the moon either it grows, or it shrinks”. To me, so is a business.
Founder at Arrigucci of Sweden AB
What drives me the most is to find win-win solutions at every single deal. My job is to lead the development of solutions and products that makes sustainability the new normal.
Are you ready to grow in business development?
Subscribe to our newsletter and get the latest industry tips, tricks, insights, and more.
Already subscribed? Read our blog
©2018 The BD School. All rights reserved