A Six Step Process for Product Ideation
There are a lot of different?ways to brainstorm new ideas and there is no right or wrong method. In what follows, I will share a particular six step process that can be used by Product Managers and Entrepreneurs across any industry.?As you work through this process, don't worry too much about choosing the perfect answer in each step or developing the?perfect idea. Instead, think of each run through the exercise as a scenario and plan on creating a number of different scenarios that each result in a collection of ideas for further exploration.?
The first four steps are designed to establish constraints to narrow the universe of possibilities. Although it may be counterintuitive, narrowing the scope of possibilities can be a helpful?tool for unlocking creativity. With boundary conditions in place, the fifth step is a collection of prompts to generate candidate problems and solutions. The sixth, and most important step, is to get out of the building to listen to people in the proposed target market that may be experiencing those problems. The entire process can be iterative and the insights gathered in the sixth step can then inform another run through the exercise.?
Step 1) Choose a level of risk?
Whether you are working inside an organization or thinking of starting your own company, it's important to look for ideas that are consistent with the level of risk you want to take on. There is no right answer to this question because it is a matter of the preferences and capacity of the individual or organization. Some people may aspire to have the independence of offering their?services?through their own consulting company instead of working for a salary. Other people may aspire to build a large company that transforms an industry and is listed on a public stock exchange. Some companies may be looking for an opportunity to add incremental revenue within the coming year. Other companies may wish to invest in a portfolio of moonshot ideas that could provide growth in the future. These are all valid objectives but they will require ideas that fall on very different parts of the risk spectrum.?Although there is no single correct answer, it is possible to choose an incorrect answer if the expectations about the level of commitment, time, risk, and reward are inconsistent and unreasonable.?
Key questions to consider:
- How much investment are you willing and able to make up front?
- What skills, experience, and network do you bring to the table that may help to reduce the level of risk?
- How long are you willing to pursue the idea before gaining confidence that it will succeed??
- Are you interested and willing to take on external investment?
- How much control are you willing to cede? Would you rather own a big piece of a small pie or a small piece of a big pie?
- How do you define financial success?
- How confident do you need to be before committing? What is your risk tolerance?
- If you are inside of an organization, is there already a set budget or approval criteria based on payback period or internal rate of return?
Step 2) What "materials" do you want to build with?
What is the basic?building block that you are most interested,?skilled, and passionate?about building with? What will your?product be made of? Will you be working with bits and bytes or wood and concrete??
Your answer to this question should be compatible with your answers about the level of risk that you would like to take on.?If you have a three year timeframe and a low appetite for risk and investment then it would be inconsistent to choose biology as your building material (e.g. using synthetic biology to?create new treatments for diseases). If you have a high level of risk and are willing to take on significant investment, then you will probably not choose an hourly service as the building block for your solution.
You may be interested in choosing multiple building materials.?For example, many companies like Twitter, Uber or AirBnB are built using software and networks/marketplaces. For these companies, software is arguably the less important building material.?
If you are working inside of an organization, you may be tasked with leveraging a core competency that the organization has in working with a certain type of material. If that is the case, then you will want to specify that constraint at this stage.
Common examples of building materials include:
Software:
Physical materials:
Intangible:
3) What domain do you want to focus on?
In what domain, do you want to become an expert??Do you have existing expertise that you want to leverage?
This is easily confused with the next question about the target market or the prior question about materials but it is different and there is value in thinking about the three questions independently. Think of the domain as the narrow area of knowledge in which you and/or your company will develop world-leading expertise.?
At the end of the project, whether it is successful or not, you will gain general experience in working with your chosen material and you will have absorbed a lot of context about your target market. At the same time, you will become one of the world's leading experts in your domain. As an example, your idea might be to develop software to optimize heating and cooling systems in farm buildings. Software is your material. You will be skilled in the craft of working with software to solve problems but you won't be pushing the boundaries of computer science. Agriculture is your market. You will develop a deep understanding of what makes that industry work but you won't be able to actually run a farm. The optimization of heating and cooling systems is your domain. You should be developing new intellectual property in that field.
Similar to the choice of target market, the choice of domain can have a meaningful?impact on the?trajectory of your startup or product. Ideally, you will choose a domain where there will be disruption, change, and growth in the years ahead. Think about fields of expertise that will leverage your personal or organizational strengths and that will become increasingly important in the years ahead.?In 2023, machine learning is an example of a domain that a technology oriented company or individual may wish to focus on. Spend time talking to thought leaders in your company or field of expertise to get a pulse for where the industry is headed and try to separate the durable trends from the fads.
4) Target market
There are a handful of ways that the term "market" is used in the context of defining a new product initiative. For the purpose of this exercise, think about your target market as the people or organizations who will use and pay for your solution. For a Business to Consumer (B2C) company, your market may be defined as a demographic (e.g. students at US universities.) For a Business to Business (B2B) company, your market would generally be defined as one or more verticals (e.g. hospitality and tourism businesses.) In some cases, you may need to work with multiple target markets. For example, a marketplace solution might bring together a specific demographic of consumers (new homeowners) and a specific vertical of businesses (roofing companies.)?
As with all of the constraints, try to be as specific as possible.?Rather than specifying a very broad target market and running through the exercise a single time, run a handful of unique scenarios with narrowly defined target markets. For example, instead of just choosing "Hotels" as a target market, break that into three scenarios; one where the target market is boutique owner-operated hotels, one where the target market is regional hotel/motel chains, and one where the target market is global hotel operators. You may be hesitant to be too specific because you are concerned that the target market will not be large enough. It's important to remember that you are not trying to build a business plan with this exercise. This is a brainstorming exercise to look for seeds of ideas. Once you have narrowed in on a handful of very specific seeds, you will start working in the opposite direction to see what those seeds could grow into and if they will lead you to a viable business opportunity.
Some markets are better than others. Generally speaking, it is much easier to succeed in a market that is growing and even easier if the market is also going through a lot of change. Markets also have different purchasing patterns and different levels of willingness to work with start-ups. Stretch yourself to consider non-obvious markets that you may not be as familiar with.?Try to connect with people from different industries on an ongoing basis to reduce your blind spots when you need to select an ideal target market.
You will be spending a lot of time working with the people in your target market. If you are successful, you will be speaking with people from your target market almost everyday for many years. It's a good idea to choose a market that you will be passionate about. If you aren't legitimately interested in building relationships with the people that you set out to serve, you are going to have a hard time.
If you are working in a company, you are likely going to be in one of two situations.?In the first situation, the company will already have an established customer base within a set of target markets and they will want to bring new products to those markets. In the second situation, the company will be interested in bringing established products (with appropriate modifications) to new, often adjacent, markets. It is possible that you will be tasked with developing an entirely new product for a new target market but that is rare. It's important that all of the stakeholders are on the same page about what situation you are in and that may require a number of conversations with senior leadership.?
5) Ideation
This is the core of the exercise.?With four constraints in place, the?overwhelming universe of possibilities has been narrowed down significantly to a small sandbox that is much easier to work in. It's now time to engage in an open-ended exercise to brainstorm ideas. For the purpose of this exercise, an idea is a rough combination of a problem and a potential solution.
Here is a collection of prompts that you can use to start brainstorming ideas.
A) New problems
What has changed recently that may have introduced new problems that did not exist before?
As one example, let's assume that you have selected the following constraints:
One answer to this prompt may be that the rapid movement to work-from-home as a result of the COVID-19 pandemic created a new security challenge because employees?are now working outside of the secure office network. As a result of that new problem, a potential solution may be easy to use VPN network software.
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B) Old problems with new solutions
Is there a problem that is so old that people don't even question it anymore? Is there a new technology that may allow you to address that problem?
The best ideas often don't require the development of new technologies or the identification of new problems. Instead, the role of an entrepreneur may be to connect the dots across multiple domains and industries before anyone else.
C) Business model innovation
Is there an existing problem and an existing solution that could be delivered more effectively through a different business model??
The last two decades have seen significant disruption in business models in industries ranging from media to insurance to automobiles.
Those three prompts will scratch the surface and may generate a number of ideas. However, I highly recommend going deeper by leveraging a number of resources that provide additional prompts:
Peter Drucker's Seven Sources of Innovation
The first resource is Peter Drucker's Innovation and Entrepreneurship.?In this book he identifies seven sources of innovation. This list has stood the test of time and it should be a go-to resource any time you engage in an ideation exercise. I have provided the list below and I would recommend picking up the book to work through each source as a brainstorming exercise.
The Seven Sources of Innovation:
Hype Cycle
The critical finding of the Gartner Hype Cycle is that there is a predictable pattern of the level of excitement when new technologies are brought to market. As a part of this predictable pattern, technologies are often overhyped in the early days which leads to a great deal of perceived failure and disappointment?against the?backdrop of the elevated expectations. Many of the pioneers will not survive this stage. At the time when enthusiasm for a new technology is at its lowest, it may be a great opportunity to enter the field. Entrepreneurs are often too quick to write off an idea if someone else has already tried and failed.?
As a prompt for?ideation, it is valuable to review ideas that were attempted but failed to understand if they suffered from a fatal flaw or were just the victim of being too early.??
More can be read about the Hype Cycle here and they?publish reports on many industries:
Understanding Michael Porter
Understanding Michael Porter provides an excellent summary of the extensive works and ideas of Michael Porter. The Five Forces Framework, Activity System Map, and Value Chain Analysis can all be used as prompts in the ideation process.?
Blue Ocean Strategy
This book does an excellent job at reframing competition to create entirely new opportunities. The Four Actions Framework asks four key questions to create a plot of a differentiated value curve.
"- Which of the factors that the industry takes for granted should be eliminated?
- Which factors should be reduced well below the industry's standard?
- Which factors should be raised well above the industry's standard?
- Which factors should be created that the industry has never offered?"
6) Testing your assumptions and gathering additional input
This is listed as the last step but the process is a?continuous cycle and so it also could have been the first. Without a doubt, customer and prospect conversations are the most important part of the larger process of discovering, iterating, and expanding on ideas. The phrase "getting out of the building" was coined by Steve Blank and his book "The Startup Owner's Manual" is an excellent resource.?I would also recommend "The Lean Startup " by Eric Ries
With the prior steps completed, you will have a clear vision for who you wish to speak to and you will have a hypothesis or two about the problems they may face.??
Four tips to running effective discovery conversations are:
1) Do it consistently and connect with as many people as time allows. Don't overthink it or wait for the ideal prospect or timing.
2) Listen more than you speak.
3) Although you may already have an idea, approach the conversations with an open mind and focus on discovering problems that you may not be aware of.
4) Towards the end of the interview, don't be afraid to ask specific questions about problems or proposed solutions. It takes willpower to bite your tongue during the earlier part of the conversation but there is no reason to avoid this topic entirely.?
With those six steps, I am confident you can go from a blank page to a number of ideas that have potential. If you do try out any part of this exercise, please let me know how it goes and if the framework is helpful.
Cheers,
Steve
MBA Candidate at Kellogg, Northwestern
1 年Great article Steve I'd like to add that for ideation, probably the most important step after recognising a problem is to frame it correctly and in more than one ways. I've found it very useful to look at it in different ways and come up with not-so-linear solutions. What do you think?