New Product Development Best Practices By 8 Leading Product Executives
Digital products are fundamentally reshaping the behaviors of businesses and consumers. From media to finance to healthcare, there are opportunities in almost every industry, and innovation is happening at a faster pace. Netflix, Betterment, and Lemonade are just a few of the many startups innovating and growing rapidly in these industries.
New product development helps companies stay ahead of the curve, deliver better experiences to their customers and ultimately, achieve meaningful and sustainable business results.
However, digital product development is still a new discipline. The traditional rules of business don’t always apply, and there aren’t many great resources for learning the latest best practices.
Fortunately, after interviewing over 130 product leaders on This is Product Management, I’ve learned the most effective strategies and tactics. Our guests have covered how to make critical product decisions, build teams, manage stakeholder relationships, and conduct user research for new product development efforts.
This article covers the eight best lessons on new product development from guests including Eric Ries, Melissa Perry, and Jeff Gothelf.
1. Melissa Perri: Learn what your users want before shipping
Melissa Perri, Product Consultant and Author of Escaping the Build Trap, has identified a common pitfall of modern product teams. They get married to their ideas, and focus too much on shipping those products and features, without testing to see if customers actually want them.
Melissa tells listeners to make learning a priority before launching or shipping a new product:
“It’s not about shipping as fast as possible, it’s about learning.”
Melissa recommends product teams set goals around key performance indicators (KPIs), such as acquisition, retention, or revenue, instead of release dates, so that they’re focused on releasing products and features that solve a meaningful problem for customers – and deploy numerous research strategies to learn the best ways to do so.
2. Marc Rubner: Deliver a tangible impact for your customers
Marc Rubner, has experience leading new product development for financial institutions, at American Express, and schools, at Blackboard. Those are two of the most risk-averse and slow-moving markets. To motivate his customers to buy, he strives to develop products that meet three key criteria:
- Value: Customers achieve a positive ROI from using the product
- Capacity: The product allows customers to accomplish more in less time and with less money
- Workflow: The customers’ overall workflow is better after adopting the product than it was before adopting the product
Meeting these criteria allows Mark to paint a clear before and after picture showing how much more effective his customers will become when using his products.
3. Christophe Gillet: Assess market viability
Market and technology trend reports can help you identify opportunities for new product development. Marketing and positioning can accelerate the adoption of a product that customers want. In between market research and go-to-market sits the critical function of product management. Product teams must identify customer segments, and develop the most effective products and features.
Christophe Gillet, VP of Product Management at Vimeo, shares the “swiss army knife” of product research strategies that he deploys. He advises listeners to first make sure there is a large market for your product, and then make sure that your product is viable in that market. Just because a small segment of users want your product, doesn’t mean there’s a market big enough to fit your business goals.
To conduct this research, he deploys a combination of traditional market research, competitive product analysis, rapid prototyping, and user interviews. These tools allow him to make data-driven decisions about product development and what products and features to build.
4. Brian Tubergen: Prioritize the best opportunities
Brian Tubergen, former Director of Product at AngelList, shares his thought process for prioritizing new product development opportunities. Given the development of blockchain technology and token sales as a method for funding startups, AngelList CEO, Naval Ravikant, asked Brian to decide if they should build a product for that market.
While Brian certainly believed there was a significant market opportunity, he had to consider other opportunities the company had been looking into and make a hard decision. He considered the infrastructure AngelList had already built, to facilitate complaint equity fundraising for startups, and what resources would be required to facilitate token sale fundraising. He determined that adding to the company’s existing assets wouldn’t require a significant investment and that token sales could be a major growth opportunity for AngelList in the future.
After getting feedback from multiple stakeholders at the organization, he decided that the company should pursue the opportunity. AngelList later spun a team out as a separate company called CoinList for the new product development of token sales where Brian is Head of Product. CoinList’s product helped Filecoin raise over $200 million.
5. Andrea Schneider and Lauren Gilchrist: Educate stakeholders on modern best practices
Andrea Schneider, Acting Director of Product Management at the United States Internal Revenue Service (IRS), and Lauren Gilchrist, Director at Pivotal Labs, transformed the IRS away from using a waterfall product development process into an agile one, and as a result, reduced time to release from two years to nine weeks. This was a critical achievement because oftentimes, teams waste significant amounts of time and resources developing products before getting feedback from customers.
To get buy-in changing the product development process using a new, agile methodology, Andrea went on a roadshow showcasing prototypes and user stories to educate stakeholders about modern product development best practices and built trust in the new approach.
Lauren then provided transparency throughout the product lifecycle. She demonstrated the product, shared a status deck each week, that included photos of the team in action, and included videos of user research sessions, so that stakeholders could see what they were learning. The meetings Lauren ran generated so much buzz throughout the IRS that attendance to these meetings grew from 5 to over 45 people.
Andrea also worked to make sure executives felt their ideas were being heard, while at the same time, developing the product that their research showed users really wanted. Educating stakeholders about their methodology for prioritizing ideas and describing how their ideas could eventually be incorporated helped her keep everyone aligned, and ultimately build a successful product that has processed over $445 million in payments.
6. Jeff Gothelf: Define objectives in terms of business problems
Jeff Gothelf, Author of Lean UX and Sense and Respond, advises listeners on how to empower their teams to achieve more meaningful results from their new product development process. Jeff begins by establishing that 1) every business is a software business and 2) managing a software business is fundamentally different than managing a hardware or services business.
When developing physical products or delivering services, it’s common to define objectives in terms of outputs or work delivered. However, Jeff provides a different guideline for developing digital products:
“Instead of framing work as a set of features to build and deploy, it frames the work as a business problem to solve.”
Jeff recommends shifting from the traditional waterfall approach to continuous deployment so that product managers can get feedback from customers throughout the product lifecycle and improve the impact of the product they’re developing.
“The faster that you can learn, the faster you can improve the user experience and the net result of the product you’re deploying,” he says.
7. Jeetu Patel: Build teams that are motivated to execute
Jeetu Patel, Chief Product Officer of Box, is responsible for maintaining and growing the company’s market leadership. A significant part of his role is to manage a $100M research and development budget.
Jeetu emphasized the importance putting the right teams together and empowering them to build great products. He shares his four key criteria for building a new product development team:
- Diverse opinions and backgrounds
- Focused on solving one important problem
- Clearly defined product metrics to evaluate progress
- Small enough for two pizzas to feed the team
The focus and autonomy of Jeetu’s teams contributed to the successful launch of Box Skills, the company’s new artificial intelligence and machine learning product.
8. Eric Ries: Prioritize experimentation
Eric Ries, Author of The Lean Startup and The Startup Way and a consultant for General Electric, says new product development teams should prioritize learning instead of features. In other words, teams shouldn’t be evaluated based on how much code they shipped or even the performance metrics they achieved. Rather, they should be evaluated based on what they’ve learned about what customers want.
Eric provides two questions that managers should ask their teams when discussing progress: “what did you learn?” and “how do you know?” The first question provides insight on what customers want and how to improve the product. The second question provides the evidence that the insight is valid.
Eric also encourages large companies to allocate budget for new products the same way venture capitalists invest in startups: in rounds. More specifically, he says new product development teams should be given funding based on learning milestones, rather than being given a large budget upfront to spend years building a product before testing critical risks and assumptions. For example, a new product development team might be given a small initial budget of $100,000 in order to start gaining feedback from potential users over a period of three months. If the team learns something about what customers want, they get more funding for the next stage of product development.