Businesses make two common mistakes in product development.

They either create the product first and then find a market for it later, or they spend months, even years, perfecting the product before selling it.

The problem with the former is that, often, our assumptions about what people will buy are wrong. They may want something badly enough, but be unwilling to pay for it. That's not a good foundation for a sustainable business.

I made this mistake myself. I thought I knew what the market wanted, so I spent months putting together what I thought was a brilliant product. But when I launched it, nobody bought it.

So the product-first, market-second approach ends up being very costly. You invest so much time and energy and money developing the product, only to discover that nobody wants to buy.

Perfecting a product before launching it is also a problem. All your resources can get used up fast. Eventually, you'll run out of funding (as well as motivation) from testing and improving the product with no sales to show for it.

But what if you could (1) develop the product your market is asking for, and (2) get paid while you're at it?

A Better Approach to Product Development

There's another methodology you can use for product development that lets you avoid making those mistakes. It involves rapid testing and iteration.

Here are the steps at a high level:

1. Constantly mine your interactions with your audience, students, partners, and market for expressions of demand for things you can provide.

People leave plenty of clues about what they really want. They don't always say it explicitly, so you'll have to be alert and read between the lines. Listen to what they're saying in relevant forums, product reviews, comments, emails, and face-to-face interaction.

2. When you find things that are aligned with your big-picture strategy (this is important, or you'll have no direction as an organization), formulate a minimum viable version to validate that you can deliver and that people want to pay for it.

A minimum viable version is the simplest form of your product that will produce a meaningful result for your customers. It's a place to begin developing your product; it's not the ultimate result.

3. Without doing a lot of prep work, offer your audience a pilot or beta version of the product.

Launch the pilot or beta in the market, to test the waters. If people don't buy it, then stop here. You've learned that it isn't a viable product idea and you can move on to another one. Although this may be disappointing, it's a valuable lesson. And you've learned it before sinking all your money and time into your product idea.

But if they do buy it, then gather plenty of feedback and improve the product as you deliver it.

4. Evaluate the results on three dimensions: financial performance, results for students, and experience for you.

It's not about whether it was great on all three dimensions (it probably won't have been), but rather whether you have a good idea of what it will take to make it great on these dimensions, now that you've done it. If you're confident that you CAN'T make it work, abandon the idea.

If you have hypotheses that need to be validated, run another pilot. And if you're confident that you CAN make it work, then turn it into a full product.

When people ask about tests, they're usually thinking of A/B-style tests, looking for the low hanging fruit like "I changed the button color to a slightly lighter shade of blue and conversions increased 4,576,435%."

But the tests that I've found most fruitful are the qualitative ones, where we run a pilot based on a hypothesis about what people want. And then I talk to customers and discover insights in their words and feedback that I hadn't expected.

It would be great to hit it out of the ballpark with your first product idea, but that's rare. Usually, it takes a lot of listening to the market, testing, and iterating before you get an idea that becomes a sustainable business.

Published on: Apr 25, 2017