Unpacking Business Viability for Building Better Products
March 17, 2020
Do people want this product? How will this make money? Will this be profitable?
I have heard these three questions time and time again from stakeholders when evaluating new product opportunities or considering changes to existing products. These are the core questions that define Business Viability for building better products.
It shouldn’t come as a surprise that organizations need assurances that they will gain a positive return on their investment. However, at the Discovery stage, determining Business Viability can be tricky, considering the fact that completely new product ideas may not have existing market proxies or financial evidence for determining future success in the market.
When Viability is not a straight answer, it’s my job as a Product Strategist to understand the broader product and business landscape (competition and trends), user behavior (adoption and use), and organizational needs (business model). By bringing together a variety of data points (qualitative and quantitative), we can answer stakeholder questions to instill product confidence.
Having done innovation work with a diverse pool of clients—those that want to extend and those that want to disrupt—at different stages of the product development process, I believe there to be three distinct moments where we can de-risk for viability, so that our stakeholders can have confidence in making product decisions.
Identifying new opportunities
When looking for the ‘next’ product or new use cases for existing products, we can anticipate consumer, technology, and market changes from competitive and comparative industry research. By looking at major market trends, key players, types of products/services, and business models, we can potentially identify the ‘missing’ or in other words, the gap in the market for new products/services to satisfy untapped customer demand. Even if we’re able to identify a market gap, executives need to know that the solution is not just right for the customer, but also for the business, i.e. determining if the business has the right brand position, capabilities, or partnerships in place to play in the space.
When there are multiple promising opportunities on the table, assessing business viability can help us prioritize which path will yield the greatest product and business impact. One way to do this is to compare which opportunity presents the greatest commercial upside. In other words, which concept meets the needs of customers but does so in a way that is better than other existing alternatives. We can further work with stakeholders to identify additional KPIs for the business (covering desirability, feasibility, and usability) to evaluate the opportunities relative to each other.
Validating or Invalidating opportunities
As product concepts move closer to execution, we need market validation before making significant investments toward development. While qualitative testing is compelling, we also need to incorporate quantitative data into our validation process, e.g. conducting a customer validation survey to determine not only if the product is desirable, but if users will pay for it and how much and how often. There are many cases where the idea that had seemed to fill an unmet user needs, turns out to not be important enough for users to pay for. Uncovering these viability risks early on is the most inexpensive way to learn that an idea is or is not worth pursuing.
There is no magic formula for de-risking business viability when building products. I view it more as a mindset, where I’m always seeking data to interrogate the product to benefit our customers and the business. Ultimately, answering for viability can provide much-needed direction and arm product teams with the tools to make progress.
Finally, we should not lose sight of the fact that business viability is just one of the four product risks. By pulling one lever too hard and forgetting the rest, we risk falling into the viability trap. Product owners, who are generally being evaluated on their ability to place the right bets, end up backing products/features for which the market seems assured or there is foreseeable short-term return, foregoing riskier bets which could have more impactful long-term returns.
Viability gives us a way into a problem, by showcasing that there is a market for our solution; however, without proving desirability, usability, and feasibility, business viability doesn’t translate into real-world impact. It is the dovetailing of all four that opens up the opportunities for businesses to explore and execute on disruptive, industry-defining products.
Tue Jun 7
Behind the Grind: Lessons from a Product Leader, Episode 5 – Does the Product Even Matter?
Great product companies don’t start with a revolutionary idea for a new experience or value proposition that will change the world. In fact, great product companies don’t have much to start with. Most are still searching for the elusive Product-Market Fit (PMF), and while doing so, they have little at their disposal. So, how much does the product even matter in the pre-PMF phase of a startup? Great question, and Manish, our Product Leader in Residence, answers in this edition of Behind the Grind: Lessons from a Product Leader.
Thu Jun 2
Mass resignations, democratized content creation, scalable education…
Corey Wu, our Sr. Product Strategist, explores how corporations are forced to respond to market signals including mass resignations, democratized content creation, and scalable education. As a result, companies will need to evolve to stay relevant in the changing market.