What to consider before the product development process

Product development is the process of bringing a new or existing product from concept to having it available in market. Product development can be a large and risky investment for businesses. In all the excitement to introduce something new to the marketplace, a lot of time and money can be wasted. But this can be avoided when companies are aware of some of the most common mistakes that can happen in the product development life cycle.

1. Be realistic when developing a new product.

There are three things that should not be attempted at the same time: great, fast and cheap. Be realistic—new product development takes time and money. Trying to get a great product made fast and cheap can lead to a compromised product that is ineffective at solving any customer's problem in the marketplace. Set realistic development timelines.

2. Consider creating a minimum viable product first.

Starting small can be a smart solution before going all in on product development. A minimum viable product (MVP) can showcase an idea without the significant financial investment of a full-scale product. Once you start generating sales with the MVP, there’s a greater company incentive to invest time and resources into developing additional features.

3. Create a budget and stick to it.

Unfortunately, throwing more resources at a problem or project doesn't always mean quicker or more effective results. When creating a budget, analyse the expected return from the product and how much the company can invest over a set period. Try to avoid further funding of “almost completed products" that won't show a significant return based on the additional resources that are needed.

Watch out for expensive taste on a low budget. Most companies want to develop the best product in the marketplace, but every company needs to be realistic and work within their budget.

Decide what your company can invest in during the upcoming product development cycle based on the cash and skilled resources that are available.

4. Hire the right person for the product development process.

Even the most effective tools and processes can fail when they're being executed by the wrong person. Try not to ask a person to lead a project when they have no experience or few resources to accomplish the task. Most successful product development is done by experts in their fields and a team with complementary skills.

5. Develop a marketing plan.

Building the best product doesn't guarantee that customers will buy it. But many companies still seek perfection. By being so focused on innovative design and features, can delay the important work of getting it ready to market until it is too late.

Develop the marketing plan up front with the product development process. It helps to have a product with a primary feature focused on a known problem for customers. Start with your users in mind and think about what they want the product to deliver.

Marketing can then focus on how they will hear about your product as a solution.

6. Get customer feedback early on.

Many companies fear that negative feedback early in the product development process will derail a carefully planned product development effort. In the event this happens, it may turn out to be a good thing.

Too often, the only comments on a product come from inside the company. This counts for little since those working on the product won't be major purchasers. That's why it's important to get feedback from the kind of people who would be using the product as soon as possible.

7. Make room for mistakes.

Some product development strategy efforts fail because the company is not ready to meet the demand of what they created. An influx of new customers can stress nearly everyone within the organisation, including customer support. This can cause additional costs, without yet having the revenue from those new customers.

A product development strategy needs to have built-in flexibility to weather unanticipated delays. To allow for inevitable hiccups, consider developing timelines that build in a cushion of at least 20% more time and financial investment than you think necessary.

But remember too that the unexpected can be beneficial. It brings challenges that force the company to look at the problem and its solutions from a totally new point of view. Many times, this can have a positive impact on the desired outcome.

Uber

Today Uber is known as the world’s largest ride-share service, but they began by identifying a gap in the market and developing a product strategy. Their aim was to make it easier to get a ride and simplify the payment process. They continued to develop the product with the introduction of different ride tiers.

Airbnb

Airbnb is now a household name, but it began by testing the product concept – peer-to-peer rental housing – before progressing further. The founder did this by posting details of their own apartment and offering it as a short-term rental. When people signed up, they knew the idea had potential.

This article contains general information and is not intended to provide information that is specific to American Express, or its products and services. Similar products and services offered by different companies will have different features and you should always read about product details before acquiring any financial product.

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