In 2010, Microsoft launched the Kin phones, targeting a younger demographic and aiming to capitalize on the popularity of social media. However, the product failed spectacularly and was discontinued after just 48 days on the market.
The failure of the Kin phones was attributed to a lack of effective "product discovery". Microsoft did not invest enough time in understanding the target market's needs and preferences. The company assumed that the younger audience would be interested in a device heavily focused on social media integration and sharing. However, they neglected to include access to other popular gaming, productivity, and planning apps that the users wanted. The end result was a disaster (Cheedalla, 2020).
What is product discovery?
Steve Jobs mentioned in an interview published in the 2012 documentary "The Lost Interviews":
"As you evolve that great idea, it changes and grows. It never comes out like it starts because you learn a lot more as you get into the subtleties of it. You also find tremendous trade-offs that you have to make... Every day you discover something new that is a new problem or a new opportunity to fit these things together" (Cooper and Vlaskovits, 2013).
The keyword here is "discover". As much as the journey of a product is about building the product, it is also about discovering the problem it intends to solve. In this blog, we will try to put together a formal process of "product discovery" - the process of identifying and understanding customer needs, market opportunities, and potential solutions for creating new products or improving existing ones.
Discovery is a three-step iterative process until the validation questions start giving promising results. In the process, it is possible that customer segments change, and the hypothesis itself changes, but the process still remains the same. Once we have tried a few customer segments, we will be able to narrow down to a specific consumer segment and a specific hypothesis to start with.
If you are seeking a starting customer segment, consider targeting a segment that may be dissatisfied with the value propositions of a popular product in your domain. Take, for example, In 2021, I was consulting a second generation entrepreneur, with a background in real estate, in identifying opportunities in the construction sector. We were looking for customers to interview about the usage of document management systems in the construction sector. Therefore, We decided to focus on customers who were unlikely to be satisfied with a standard document management system.
These individuals often dealt with a large number of varied drawings, making them the ideal candidates for our interviews. Our choice ultimately fell on facility maintenance personnel at large "old" campuses such as colleges, old office buildings, and Special Economic Zones (SEZs). These individuals presented a unique set of circumstances:
First, they handled various types of drawings, including electrical, mechanical, and civil.
Second, they managed drawings in both paper and digital formats.
Lastly, the constant construction or repairs on these sites meant that the drawings needed frequent updates, revealing potential shortcomings of standard document management systems.
Step 1: Identify the customer/ consumer:
Which consumer is encountering this issue? It is important to note here that customers and consumers are two key roles in the business world, although they refer to different aspects of the buyer-seller relationship.
A customer is an individual or organization that purchases goods or services from a business. Customers play a crucial role in driving revenue and sustaining the success of businesses. They have the power to choose where they spend their money and are directly involved in the transactional process. Customers typically seek products or services that fulfill their specific needs or solve their problems.
On the other hand, a consumer is the end user or the person who actually uses or consumes a product or service. The consumer is the individual who derives value and benefits from the purchase. While customers and consumers can often be the same person, in some cases, they may be distinct. For example, a parent may be the customer who purchases toys for their children, while the children themselves are the consumers who play with the toys.
Understanding the needs, preferences, and behaviours of both customers and consumers is essential for businesses. It allows them to tailor their offerings, marketing strategies, and customer experiences to effectively meet the demands and expectations of their target audience.
For example, during my tenure at a leading restaurant chain, I developed a remarkable tool capable of visualizing every single delivery order on a map. This tool was well-received by users, who found it insightful for understanding the trade areas of each store in greater detail. It empowered them to deepen their knowledge of the specific trade areas.
However, when I presented this tool to the management, they questioned its practical value, asking, "So what? While it's nice to have visualization, how does it help us save money or increase sales?" Some might argue that such visualization facilitates a better understanding of customer profiles, allowing for geographically tailored offers. But from an empirical standpoint, this doesn't hold much merit, especially for an established brand with a wealth of data at its disposal. Historically, the small customer base of this type hasn't justified the economies of scale required for a discount offer.
In conclusion, although the tool was appreciated by individual users for its visual insights, it didn't demonstrate a clear value addition to the broader customer base, failing to convince the management of its utility.
Successful products strive to build strong relationships with their customers by delivering value to the end consumers. By recognizing and fulfilling the desires and requirements of customers and consumers alike, products can drive customer satisfaction, loyalty, and ultimately, business growth. For simplicity purposes, we will assume the consumer as the customer in this blog.
Once we have identified the initial list of customers, we need to approach them to schedule interviews. One advice I would give based on my previous experiences: Do not talk to people you know, such as your friends, family, teachers, mentors, well-wishers, or relatives. In fact, avoid anyone who knows you by name prior to the exercise. This is to eliminate any element of personal trust from the conversation and make the conversation as realistic as possible.
There’s no silver bullet on what tool works best to approach. It depends on the customer who you are targeting.
Step 2: Frame the hypothesis:
We need to identify the task/ process/ outcome that is of concern and the constraint because of which we believe the concern exists. There can be multiple concerns, so make sure to validate each of them during the validation process.
To streamline the process, we can use the following template to frame the hypothesis:
"I believe that <insert customer segments> experience a problem in <doing this task> due to <the constraint>."
For example, if you are building a document management system for the facility maintenance folks, the template would be like: I believe that facility managers for old campuses experience a problem in arranging drawings/ documents for upcoming construction work due to the documents being in different formats and measurement systems and the need to evaluate a long history of changes/ repairs at the old building.
As you can see here, there are two concerns: a) the documents being in different formats and b) the need to evaluate a long history of changes/ repairs at the old building.
Framing the hypothesis well in product discovery is crucial for several reasons:
· Clarity of Focus: A well-framed hypothesis provides a clear and specific statement about the problem or opportunity being addressed. It helps define the scope and boundaries of the product discovery process, ensuring that efforts are concentrated on relevant areas. By clearly articulating the problem or opportunity, teams can align their efforts and avoid wasting time on unrelated or vague ideas.
· Testable and Measurable: A well-framed hypothesis is structured in a way that allows it to be tested and measured. It sets clear expectations and provides a basis for evaluating the success or failure of the hypothesis. By establishing specific metrics or success criteria, teams can objectively assess whether the hypothesis holds true and whether the desired outcome is achieved.
· Focus on Learning: Product discovery is an iterative process that aims to gain insights and learn from user feedback. A well-framed hypothesis encourages a learning mindset by posing a specific question or assumption that needs validation. It guides teams to gather relevant data, conduct experiments, and seek feedback to test the hypothesis, enabling them to gain valuable insights and adjust their product strategy accordingly.
· Risk Mitigation: Framing a hypothesis well allows product teams to identify and address potential risks early on. By stating assumptions explicitly, teams can identify the most critical uncertainties and focus on validating them. This helps mitigate risks associated with product development by testing assumptions and reducing uncertainty before committing significant resources to building the product.
· Collaboration and Alignment: A well-framed hypothesis serves as a communication tool that fosters collaboration and alignment among team members and stakeholders. It provides a shared understanding of the problem or opportunity being explored, guiding discussions and decision-making throughout the product discovery process. A clear hypothesis ensures that everyone is on the same page, reducing misunderstandings and promoting effective collaboration.
By framing the hypothesis well in product discovery, teams can maintain focus, establish testable goals, foster a learning culture, mitigate risks, and promote collaboration. It provides a solid foundation for conducting meaningful experiments, gathering insights, and making informed product decisions.
Step 3: Validation:
Validation is by far the most important part of the process and sits at the crux of it all. The purpose is to understand if the hypothesis is:
· Genuinely true: The customers agree that it is a problem that they face.
· If the customer wants to solve the problem: A great example of it would be when lets say a business buys from a supplier at 1% extra price than the market. Ideally, the business would want to replace the supplier to reduce cost but in reality the purchasing manager wouldn’t want that. This is because he has built a relationship and trust with the other person over a long period. There is a tactical understanding between the purchasing manager and the supplier that an extra 1% is not worth the hassle of changing the supplier. So, there is a problem but the customer doesn’t want to solve it.
· If the customer has tried to solve the problem in the past with time, money, or resources: This shall help identify the competing products and the shortfalls in the existing product.
· If the problem is large enough to solve: The problem lies among top 5-6 issues the customer faces or that the customer sees significant value trapped in the problem.
· If there are no major barriers to solving or adopting it, such as regulatory or compliance-related issues: Often some problems are regulatory in nature and might not be worth pursuing. This is generally the case in highly mature industries. For example, In 2020, I was consulting a battery manufacturing company in India, I noticed that some geographies had a nail pierce test as part of regulatory certification. Under these tests a nail is pierced through to check if the battery leaks or reacts. There’s nothing one can do to change this apart from lobbying the regulatory bodies. I am sure the incumbents, the biggest contributor of members to the regulator’s advisory body, don’t want it changed as it reduces the entry barrier.
(PS: These five points above are also referred to as the “The five purpose statements”)
Next, We need to identify a set of willing customers whom we can interview to understand the problem in real depth. Do not reveal the hypothesis to the customer at the start of the process. In case the person insists on knowing the hypothesis before the interview, deny the interview. The interview can be divided into four parts:
· The first part is to understand the customer. Explore who they are in terms of demographic parameters, their needs, their daily life, how long they have been performing the task, and their top priorities, etc.
· The second part is to understand the workflow. How is the work usually performed by the customer? Go into the details of individual tasks and focus on handovers.
· The third part is to understand their challenges. This is where we need to uncover information and delve into the core issues using the "5 Whys" technique. We need to validate all the constraints identified in the hypothesis. For those unaware of the 5 whys technique, Please follow this link.
· The fourth and final part is where we reveal the hypothesis to the person. Take their opinion on the expected solution, where they would be able to find something like this, any additional reading material they can recommend, or if they can recommend other customers who would be willing to talk.
At the end of the exercise, we need to summarize the interviews and rate them against the five purpose statements. If we are able to validate the hypothesis, we can proceed to the Minimum Viable Product (MVP) process. If not, we can enter into another iteration of the process. Generally, it so happens that after a certain saturation point, you start to see trends in the interviews themselves. You are able to predict well in advance about what the other person would say. This is the time when you would have diminishing returns and would have to stop those interviews. This point of diminishing returns may be different for different industries and interviewing styles. In our case of the document management system, we had it around interview number 15 to 17 but I sincerely believe that this number would differ for different people. Someone who is new to the process may need more interviews than someone who has been doing these interviews for long.
There is one last thing I want to point out: Product discovery is not a one-time event but rather an iterative and continuous process that evolves throughout the product life cycle. You need to get at it over and over again.
In conclusion, the product discovery process plays a pivotal role in the success of any product development endeavour. By investing time and effort into understanding customer needs, market dynamics, and potential solutions, product managers can create products that truly resonate with users and effectively address their pain points.
Azhar Hasan is a seasoned program manager with extensive experience of leading complex scale-ups and performance improvement programs in a variety of industries.
At the centre of his approach to scale is the use of BI and technology products to enable smooth operations at scale and to create business value. This is what attracted him to the field of product management and customer centricity. He has helped several businesses, both small and large, discover the right problems to solve and create business value through scale.
He started his career in analytics consulting for a large North American Pharma Giant. He then joined the chairman's office launch team for the world's largest 4G deployment. Post that, He led strategic scale-up projects for a leading restaurant chain in the middle east. In his last assignment, he was leading supply side sales operations and performance improvement for a sequoia and tiger global backed health tech unicorn.
In addition to this, He also consults start-ups and first time entrepreneurs conduct discovery studies. Azhar did his undergrad at Indian Institute Of Technology Kanpur and is an MBA from Schulich School Of Business.