The New Rules Of Early Stage Product Development

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These slides were given as part of a talk I gave, called "The New Rules of Early Stage Product Development", in conjunction with the MassChallenge business plan competition. The goal is to provide a lens by which to understand the forces driving changes to how early stage products are designed, developed, and delivered and how to apply those techniques to one's own product development process.

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The New Rules Of Early Stage Product Development

  1. 1. Rishi Dean rishi@rishidean.com www.rishidean.com [ The Quest for Product / Market Fit ] MassChallenge June 3, 2010
  2. 2. Founding  member  of:   Other  experiences:   Formal  &  informal  start-­‐up  advisor  (EIR  @MIT)   Hundreds  of  product  cycles…with  scars  to  prove  it   Rishi  Dean  –  www.rishidean.com   2  
  3. 3. 6  out  of    1,000  funded   60%  fail  30%  flounder   , <10%  +  returns <1%  get  big   ,   Source:   .01%  ”major  success”   http://bit.ly/ startupfailurerates   Rishi  Dean  –  www.rishidean.com   3  
  4. 4. Rishi  Dean  –  www.rishidean.com   4  
  5. 5. 1)  Why  did  you  fail?     2)  Why  did  you  run  out  of  money?     3)  Why  do  you  have  no  customers?     4)  Why  did  they  have  unfilled  needs?   5)  Why  did  you  not  achieve  product  /  market  fit?   Unchecked  false  assumptions  kill  companies   Rishi  Dean  –  www.rishidean.com   5  
  6. 6. *     Start  with  a  firm  vision     Design  &  develop  specifications   FAIL   Follow  a  “waterfall”  development  model     Converge  to  a  massive  “launch”   Source:       Let  the  sales  roll  in   Steve  Blank,  The  4  Steps   to  Epiphany   Rishi  Dean  –  www.rishidean.com   6  
  7. 7.   Globalization  increases  competition       Lower  technical  barriers  to  entry       Increased  capital  efficiency     Cost  of  acquisition  is  near  zero     Markets  evolve  faster   ‘Revolutionary’  innovation  is  harder   Rishi  Dean  –  www.rishidean.com   7  
  8. 8. Rishi  Dean  –  www.rishidean.com   8  
  9. 9. Rishi  Dean  –  www.rishidean.com   9  
  10. 10. &   vs.   Rishi  Dean  –  www.rishidean.com   10  
  11. 11. Rishi  Dean  –  www.rishidean.com   11  
  12. 12. Rishi  Dean  –  www.rishidean.com   12  
  13. 13. BEFORE   AFTER   Product  /  Market  Fit   Product  /  Market  Fit     Customer  discovery  &     Build  the  sales,   validation   marketing,  and  delivery     Measure,  iterate,  pivot   machine     Burn  as  little  as  possible     Build  the  company     to  survive     Get  big,  fast   But,  how  do  you  find  Product  /  Market  fit?   See:     http://bit.ly/8YwPIn     Rishi  Dean  –  www.rishidean.com   13  
  14. 14. Rishi  Dean  –  www.rishidean.com   14  
  15. 15. Market  Hypothesis     Figure  out  where  you  really   are   Different  resources  and   Validated   “Technology  in   “Build  it  and  they  will     search  of  a  problem”   come”   inputs  will  determine  your   Product  Hypothesis   (MIT)   (Apple  /  37Signals)   starting  point     Where  you  are  should   dictate  milestones,   revenue  projections,   funding  requirements,  etc.   Untested   “Good  hypothesis,  no   “Many  right  answers”   conclusions”   (McKinsey)     Assume  you  know  less   (Google)   than  you  do,  until  revenue   proves  otherwise   Untested   Validated   Rishi  Dean  –  www.rishidean.com   15  
  16. 16. Market  Hypothesis     Locate  key  markets  with   compelling  dynamics     “Where  else  would  it   Why  Not?   work?”   Validated   Rigorous  market  exploration   “Build  it  and  they  will   Product  Hypothesis   “Technology  w/o  a  problem”   come”     Pick  a  few  applications  /   (MIT)   markets  and  identify  a   hypothesis  to  solve  for     Look  for  markets  primed   for  speed  of  innovation   diffusion   Untested   “Good  hypothesis,  no   “Many  right  answers”     Understand  the  flow  of  $   conclusions”   and  inject  into  an  existing   pattern   Untested   Validated   Rishi  Dean  –  www.rishidean.com   16  
  17. 17. How  much  better  is  your  innovation  than  the   1)   Relative  Advantage   incumbent  solution?   How  easily  can  your  innovation  fit  with  the   2)   Compatibility   existing  infrastructure  and  ecosystem?   Is  your  innovation  easy  to  adopt  and  use,   3)   Complexity   relative  to  the  current  method?   How  easily  can  customers  see  the   4)   Observability   differentiation  and  benefits  of  your  product?   How  easy  can  customers  pilot  or  test  your   5)   Trialability   product?   Does  your  product  impact  current  social   6)   Social  Acceptability   norms?   Are  there  legal  or  bureaucratic  issues  related  to   7)   Regulatory   your  innovation?   Source:  http://bit.ly/diffusionofinnovations   Rishi  Dean  –  www.rishidean.com   17  
  18. 18. Market  Hypothesis     Lead  users    are  easiest   path:  transform  an  ad-­‐hoc   solution  to  something   mainstream   Validated   “Technology  in   “Build  it  and  they  will   “Imaginary  assistant”   Product  Hypothesis   search  of  a  problem”   come”     notion   Design  Thinking   Untested   “Good  hypothesis,  no   Design  Thinking  +  Agile   conclusions”   “Many  right  answers”   (McKinsey)   Untested   Validated   See:    http://bit.ly/webdesignthinking     Rishi  Dean  –  www.rishidean.com   18  
  19. 19. Source:  IDEO   Also  see:  http://bit.ly/webdesignthinking     Rishi  Dean  –  www.rishidean.com   19  
  20. 20. Market  Hypothesis     Fundamental  feedback   loop  powers  all  startups:   Validated   IDEAS   “Technology  in   “Build  it  and  they  will   Product  Hypothesis   search  of  a  problem”   come”   LEARN   BUILD   DATA   CODE   MEASURE   Lean  Startup   Untested   Customer  +  Agile  Dev’t   “Many  right  answers”     Minimizes  total  time   “Fail  small,  fail  fast”   (Google)   through  this  loop  until  you   figure  “it”  out   Untested   Validated   See:    http://startuplessonslearned.com   Rishi  Dean  –  www.rishidean.com   20  
  21. 21. Source:  Steve  Blank,  4  Steps  to  Epiphany   Rishi  Dean  –  www.rishidean.com   21  
  22. 22. Market  Hypothesis     Works  in  incremental  or   evolutionary  innovation   (slicker,  quicker,  better,   Organic  Startup   cheaper)   Validated   “Technology  in   Agile  grounded  in  clear  goals   Product  Hypothesis   search  of  a  problem”   “Build  it  and  they  will  come”     Technology-­‐driven   (Apple  /  37Signals)   problems  (e.g.  cure  cancer)   where  “invention  risk”  is   the  key     Organic  startups  (be  the   Untested   “Good  hypothesis,  no   customer)  with  a  firm   “Many  right  answers”   vision  +  iterative  releases   conclusions”   (e.g.  37Signals)   Untested   Validated   See:    http://http://bit.ly/pgorganic     Rishi  Dean  –  www.rishidean.com   22  
  23. 23. Rishi  Dean  –  www.rishidean.com   23  
  24. 24. Market  Hypothesis     Data-­‐driven  feedback   matters  more  to  help  find  a   market   Validated   “Technology  in   “Build  it  and  they  will   search  of  a  problem”   come”     With  a  strong  sense  of  the   Product  Hypothesis   (MIT)   (Apple  /  37Signals)   market,  experience,   “intuition”  and  the   synthesis  of  qualitative   feedback  drive  the  process   Untested   “Good  hypothesis,  no   “Many  right  answers”   conclusions”   (McKinsey)   (Google)   Untested   Validated   Rishi  Dean  –  www.rishidean.com   24  
  25. 25. Market  Hypothesis     Disruptive  companies  with   an  unproven  market  have   inherent  uncertainty   Validated   “Technology  in   “Build  it  and  they  will   Starting  point  differs   Product  Hypothesis   search  of  a  problem”   come”     depending  on  available   resources  –  goal  is  the   same     Not  mutually  exclusive   models  –  overlapping   Untested   “Good  hypothesis,  no   “Many  right  answers”   principles:   conclusions”     Prototyping     Customer  development     MVP   Untested   Validated   Rishi  Dean  –  www.rishidean.com   25  
  26. 26. 1)  Rapid  Prototyping:  gain  feedback  fast   2)  Cut  to  the  core:  it’s  hard  to  take  away     Subjective   Value   (Utility)   LOSSES   GAINS   See:    http://bit.ly/prototyping   See:    http://bit.ly/prospecttheory   3)  Measure  Everything:  understand  what   works,  and  more  importantly  -­‐  what  doesn’t   Source  (Dave  McClure):     http://www.500hats.com   Rishi  Dean  –  www.rishidean.com   26  
  27. 27. Market  Hypothesis     You  will  move  between   blocks  as  business  /  market   Validated   “Technology  in   “Build  it  and  they  will   evolve,  or    diversity  across   Product  Hypothesis   search  of  a  problem”   come”   product  lines     You  can  remove   uncertainty  over  time,  but   uncover  others  as  you  dig   deeper   Untested   “Good  hypothesis,  no   “Many  right  answers”   conclusions”   Untested   Validated   Rishi  Dean  –  www.rishidean.com   27  
  28. 28. Rishi  Dean  –  www.rishidean.com   28  
  29. 29.   Engineers  want  to  build  for  mass  adoption  by  providing  a  high   performance  and  responsive  system  that  will  “satisfy”  customers     Fear  that  releasing  “junk”  too  early  will  tick  off  customers  and  kill  the   company     But  you  don’t  know  what  customers  want,  nor  their  access   patterns,  until  you  release  a  “suboptimal”  product     If  you  release  a  “fully  operational”  system  too  late,  it  may  not   conform  to  what  user’s  want  and  you’ve  optimized  for  the  wrong   thing    don’t  build  the  elegant  thing  no  one  will  use     Get  feedback.  Learn  fast.  Move  fast…after  all,  you’re  a  startup,   right?   Source:  http://bit.ly/engineersparadox   Rishi  Dean  –  www.rishidean.com   29  
  30. 30.   Embrace  ignorance     Characterize  your  situation     Pick  the  right  starting  point  and  employ  the   requisite  approaches  to  find  PMF     Set  the  business  goals  accordingly     Common  themes:  prototype,  listen,  measure,   learn,  iterate     Traverse  the  matrix     THEN  scale  up  the  business   Rishi  Dean  –  www.rishidean.com   30  
  31. 31. Blogs     Lean  Startup:  http://startuplessonslearned.com       Customer  Dev’t:  http://steveblank.com     Lots  more  like  Dave  McClure,  Sean  Ellis,  Brant  Cooper,  Andrew  Chen,  Diego  Rodriguez   Books   Customer  Dev’t   Design   Design  for   Tech  in  search   Organic   Bible   Thinking   techies   of  a  problem   startup  case   Rishi  Dean  –  www.rishidean.com   31  
  32. 32.   E-­‐mail:  rishi@rishidean.com     Blog:  rishidean.com     Twitter:  @rishidean   Rishi  Dean  –  www.rishidean.com   32  

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