In the Product Discovery dimension, we assess how effectively your organization identifies and understands customer needs and market opportunities. This includes evaluating your processes for market research, user feedback, and idea generation. A strong discovery capability ensures that your product development is driven by real customer insights and market demands, leading to more successful and innovative outcomes.
No company survives for very long without making a profit. That statement may seem blindingly obvious, but it is still very common for companies to churn through large sums of cash while never turning a profit. This can be true as much for newly minted startups as for innovation efforts at sprawling enterprises. If there is enough belief and fiscal backing behind an idea, it can be propelled for a very long time without ever emerging as a viable, scalable business.
Many tech company founders still start out with a technical solution, some new app, widget, or gizmo, and then start searching for a target market that might be willing to pay for such a solution. But that is backwards! It was the typical approach of R&D departments of big firms during the 20th century. But this approach has a very limited success record. A few big examples happened to be world changing, and so their stories persist in the mythology of entrepreneurship. But overall, most startups will not succeed by starting a given solution and then looking for a customer to buy it.
This was the big lesson in the aftermath of the dot com boom of the early 2000s. Here is what we now know.
First, you must identify a painful problem that customers are willing to pay to have solved for them. Then, you must develop a solution to address this problem that is cost effective. If the solution satisfies the customer, even temporarily, there's a higher chance of retaining them as a customer through repeated use or purchases. Additionally, satisfied customers are more likely to refer others through word-of-mouth and other methods.
The target customer segment must be clearly differentiated. It must be possible to identify target customers easily, so that you can find them in the market and sell the product or service to them. Start with as narrow a niche market as possible. If your target customer is "everyone", you are unlikely to make much progress. If your target customer is extremely specific, there are likely to be very specific problems they have that not many products or services are already addressing.
It is easier to build something quickly to address those problems, even if the initial niche is small. Once you have established a beachhead in this niche, you can then invest in expanding to neighboring niches.
It's a lot harder to start with a broad and undifferentiated market for two reasons. If your product is trying to solve too many problems for too many people buyers are less likely to be convinced of its quality. And there will be a lot more competition in a broader market. That will make it more difficult to differentiate your product or service from myriad alternatives.
Most entrepreneurs start validating their idea by sharing it with people they know because they are nervous about getting brutally honest feedback from strangers. There are many people who do not suffer the pain that the product or service addresses. These often include your parents, as well as other friends and family. Your mom is only ever going to say nice things about your product or service, and is therefore not a very reliable source of market data.
For real validation, the product must be tested with people who actually have the problem it claims to solve, and who have no emotional constraints around giving clear and direct feedback on how well it does the job it claims to do.
Finally, the target market must be big enough to enable long term growth, and it must be accessible to our company's sales and marketing efforts. This statement seems to contradict the above advice of starting with a small niche. But that apparent contradiction is an illusion.
You should start testing your idea with a tightly narrowed focus on a specific niche in the market. But you must also have a long term vision for a broader offering. If you are successful in a small initial niche, you will ultimately run out of customers. So you do need to be thinking about broader applications of your product or service even as you limit your initial testing to a smaller segment. This balance between long-term and short-term planning is one of the toughest aspects of building a business.
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