2/36 - Pre-discovery Phase
"Never guess your customers' needs again."
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What is product discovery?
Product discovery is an iterative and incremental process of defining and understanding your customers and their needs in order to develop product or service solutions that perfectly suit their needs. It’s an increasingly critical part of the product design process in order to avoid the costly investment into building a product that customers don’t need.
The product discovery process consists of two interconnecting loops of exploration and validation where your team explores assumptions about your customers and then validates those assumptions.
This process is a shift away from the traditional upfront product design process fueled by unverified assumptions about customer needs and wishful thinking, which often results in products that don’t solve anyone’s needs.
The exploration and validation process of product discovery is rather simple and can be broken down into the following two-step structure.
Solving big problems for customers creates big value for businesses - Melissa Perri
Pre-discovery phase
In the pre-discovery phase, the primary goals are to: The pre-discovery phase is about creating a strong foundation and preparing for the work to come. It involves ensuring everyone involved in the project has a common understanding of the desired outcomes and the approach the team plans to take.
In the pre-discovery phase, the primary goals are to:
Understand the problem space
Ensure funding supports agile delivery of product/service, not an output
Align the team's desired outcomes, assumptions and expectations
Plan how to approach the research in the discovery phase
Set clear expectations with executives and stakeholders
Understand the problem space
It's important to understand the existing product landscape before creating a research plan. The best place to start is by absorbing as much information as possible about the problem space that needs to be solved and (if there is one) the existing product/service.
Learn about the landscape from:
Supporting users and domain
User feedback and complaints
Quantitative metrics related to the product/service
Reports or briefing notes
Experiencing the product/service for yourself
Find time to speak to the program area or executive sponsor who initiated the work. Find out why this work was initiated now, if they have any apprehensions or expectations and who should be included or consulted throughout the process.
Teams are often asked to work on a particular solution instead of exploring a known problem space. Activities like the 5 whys can help uncover the underlying issues that led to this work and better focus the research during the discovery phase.
If your product/service aligns to a stertegy or over all company’s objective or commitment you should document how it contributes to that target.
Ensure the funding supports agile delivery of a outcomes, not an output
It's important to frame the work you are setting out to do as designing a product/service - not as iterating towards a predetermined output. Research is key.
Plan to track the value of the work from the outset, so you can build a case for further funding or stop work if value is not proven. This is even more important if funding only covers early phases of delivery.
Stopping part way through discovery will make it much harder for you to demonstrate value.
During pre-discovery you also need to plan, source and budget for a sustainable cross funtional team that can design, build and continuously improve the product. Consider how your team roles and funding needs will change across the phases of delivery.
Align the team
Before work begins, it's important that the team has a shared understanding of the current problem and a vision for what it needs to achieve.
Research and identify the relevant outcome, policy intent or purpose of the product/service and what success might look like.
A foundational workshop or collaborative kick-off session is a great way to initiate a project and create team alignment. It might include:
Building a stakeholder map
Creating an empathy map
Constructing a “how might we” or problem statement
Conducting a pre-mortem exercise
Set expectations
Setting clear expectations with key executives and project stakeholders before moving to the discovery phase will help future phases run more smoothly.
Take time at the outset to:
Ensure your stakeholders understand how the agile delivery phases will work to solve an outcome
Explain how evidence and user research will form the basis of design decisions
Ensure that stopping at discovery is seen as an acceptable outcome
Be clear that the team's exact outputs can and should change as part of the delivery process
Product Discovery is a new approach for building products, so come prepared to answer a lot of questions. It's OK if you don't have all of the answers at this stage – you won't know how the work will unfold after the discovery phase until later on.
Once everyone has agreed on team roles, ways-of-working and project expectations, write them down in a project charter or project plan.
Completing pre-discovery
All products are different, but most projects need 2-3 weeks to complete pre-discovery.
By the end of pre-discovery, expect to have:
Gained an understanding of the existing problem space and desired outcomes
Co-created a shared problem statement for the team to research
Identified key user groups to include in research
Have funding to explore the design problem
Aligned team members and stakeholders on the agile delivery approach and set clear expectations
Don’t proceed until you validate your most critical assumptions
How big of a market are we talking? Do you want to spend the next 2-3 years building your product only to realize that you reached the ceiling with no more room for growth? You need to have your world domination plan ready for the next 3-5-10 years and scale your opportunity accordingly.
What is your (unfair) advantage? Who are your competitors? What are their strengths and weaknesses? How will you beat them in the long term (think 5-10 years from now)? Explore your opportunities in-depth with extensive market/user research. Next, validate your assumptions by prototyping and testing with your target audience and measuring their excitement level.
What are the costs to build and launch? Run tech discovery in parallel and explore different stacks to get a sense of how expensive your product will be to build and maintain. What is the minimum viable product (MVP) that you can launch and get the most real-life user data as soon as possible?
What are the user acquisition costs in 2022? User acquisition costs are where startups fail today. It used to be that 90% of your budget went into technology, but today it’s user acquisition costs that burn the budget most. Figure out these costs, and, as an additional reward, you will most likely increase your total return on investment (ROI).
The top three challenges in Product
In 2007, Marc Andressen wrote a famous piece called The only thing that matters, which talked about the importance of product/market fit. Marc’s words became the mantra for thousands of product managers, startups, and incubators worldwide. His theory was that if you build the right product for the right market at the right time, you’ll see adoption. Nowadays, I ‘m not so sure. In the last five years, getting to the product/market fit stage is not enough to guarantee success. Here is what I think today’s priorities are:
1. How will your product raise above the noise?
The online industry doubled in the last ten years, internet penetration jumped from 20% to 60%, and software already ate the world. And every person who might be your target user or customer is inundated by new products, ads, cold calls, and more. Even in the best-case scenario, where your product is a perfect fit for your target audience, penetrating through existing market noise is neither easy nor cheap.
Finding the right opportunity before moving forward with the next steps is harder than you might think. How big is the user pain point? Are you generating enough value for the user so that it’s worth the time and attention investment? What is your (unfair) advantage that will allow you to beat the competition? These are just some of the questions that you need to think about or your product will not get the adoption that you hope for.
2. Is your team ready to handle failures?
Steve Blank famously claimed that to win in an existing market, you need to have products that are 10x better than your competitors’. But guess what? In the last ten years, everyone figured out how to build solid products — because of this, creating a 10x better product is almost impossible. Historically, the most common winner in this field has been the product that survived the longest, was the most efficient in using available resources, and improved continuously. There is no silver bullet here; it’s a multi-year, ongoing grind, with hundreds of iterations and small improvements where you learn to choose your battles wisely based on data and user feedback. In order to win you will have to try hundreds of things and be ready to fail quickly and at low costs.
3. Can you acquire users without going broke?
User acquisition cost is a single metric that on its own can single-handedly decide your company’s fate. Customer Acquisition Costs increased 10x from 2015 to 2020. On Facebook, for example, you will pay on average $1.86, while in other verticals you might be looking at $5/click. If you have a 5% conversion rate into an engaged user, it turns out that you’re paying $40 per active user on average. This means in verticals with higher CPCs, you could be paying a few hundred dollars per user. Facebook and Google pretty much own 90% of online internet advertising at the moment, so there is no way around paying a fortune for user acquisition on those channels. Having the right growth strategy will pretty much make or break your product strategy.
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