by Nick Frandsen, co-founder and managing partner at Dovetail
So you’ve just had a lightbulb moment and stumbled across the perfect business idea, one that is going to revolutionise the world and disrupt the market. “It’s genius! It’s the next thing!” you say.
You envision your business as the next Uber or Spotify, yourself as the next Steve Jobs or Elon Musk, reaching that prestigious ‘unicorn’ startup status in record time.
Like most entrepreneurs, you’ve probably mapped out the business plan, dreamed up the layout and you’re already snapping up domains and emailing developers with your plan.
Wait a minute… Stop right there!
We get it, you have passion, vision, a dream and heightened energy levels thriving off the buzz of your discovery, and while we promise we’re not here to be a buzzkill, we do want to tether you a bit from flying off into the clouds and get you a little more grounded with reality, purely for the purpose of helping you cover all your bases so you can deliver a truly exceptional, well researched and consumer-ready product.
Before rushing to build your concept to push out to consumers, it’s important to first undertake product discovery.
Product discovery is the purpose of identifying the smallest amount of software needed to determine market value. Notably, this occurs prior to building the Minimum Viable Product, or ‘MVP’.
If you’re familiar with common startup terms, you would recognise the term MVP and know that this is considered the best solution for validating your idea, by creating a working prototype of your product to deliver to users. However, there is a wealth of information and knowledge that should be gained ahead of developing the MVP, which is known as product discovery.
Why is product discovery important?
Although you believe your idea is amazing, it’s easy to get distracted by your own vision. First and foremost, it is crucial to identify that there is a market need for consumers other than yourself, your best mate and your family and extended circle who all agree that you’re on to a winning idea.
Just because an idea is relevant for you, you may discover it is a super niche market and therefore will either require a dedicated marketing and promotion channel very specific to that audience or may not live up to the ‘unicorn’ expectations you were dreaming of.
Much like Homer Simpson and his electric hammer, you may have a product that sounds good in theory but isn’t fit for the needs of the general population.
This is why product discovery is important.
It not only validates your idea, but it helps to identify features, options and adjustments to your idea received from advice from third parties, including potential customers, that you may not have initially considered.
In doing so, it then ensures you will deliver an MVP that not only captures your market but saves you time and money in the long run by not building features that don’t appeal to your target customer or are not necessary for early-stage launch.
How is it done?
Undertaking product discovery involves an in-depth understanding of your intended customers, competitors, market behaviour, market needs and consumer expectations, as well as seeking advice from subject matter experts. To conduct your own product discovery research, you should consider the following steps:
Understand your audience and market segment.
Possibly the most important part of product discovery is understanding who your customers are, what they need and how you can reach them. This includes identifying age, gender, location, interests, and user behaviour.
For example, if you’re targeting Gen Z, you might be best to focus your efforts capturing your audience’s attention on platforms such as TikTok. However if your idea offers something to homeowners, you will need to attract a different audience. Once you identify who your product is suited to, you also need to recognise how many people would be interested in your idea – also known as market segment. For a B2B product, this means figuring out what kinds of businesses are suited for your product. What is their size, industry and location?
This further drills down to help you approach the right audience for feedback of your idea even prior to building anything. For example, if your app is health-related and monitors blood pressure, you will need to seek individuals in the health industry for feedback or consumers who have blood pressure issues and identify where the volume of these people can be found. This is your market segment.
Ask questions to identify what people want.
Once you have identified your market, you need to get in contact with the relevant audience, also known as ‘beta customers’ for feedback. Ask them what their needs are, the problems they encounter and need to overcome and recognise how they would best access your problem. Using a visual representation of your product (detailed below) will also gather important user feedback, known as ‘user experience’ that can identify usability issues. In the above example using a market of people with high blood pressure, you may need to consider font size and visibility, and simplified instruction based on the correlation between age and blood pressure issues. The way in which a consumer engages with your product is the ‘user experience’. Most importantly, listen to their feedback and adopt their suggestions.
Create a visual representation of your product.
When developing a product such as an app, there’s a lot of functions and features to consider. By creating a wireframe of the app, which is a basic screen-by-screen design of how you imagine your app to function, it will help you to understand the connections between the opening page and all the clicks required within the app for it to perform as expected. This will not only help you to understand your idea, but it can create a visual representation to show beta customers and identify any user experience hurdles. For example, too many steps to deliver a result could deter users. There are a number of great wireframe and prototyping tools available that are also free such as Balsamiq.
Conduct a thorough competitor analysis.
If your idea is a unique approach to an existing problem, ie “Uber for XXX” you can look to competitors to identify any features you feel are missing or are successful, to adopt these to your market and improve upon. Some features may not be important to the user, so this is where feedback from beta customers is important. Doing a thorough competitor analysis and recognising their weaknesses will give you a competitive advantage in the market if you take the time to ensure you can deliver a better result.
The best feedback you can receive is from subject matter experts with domain knowledge or industry mentors. These advisors will help you to identify important requirements and opportunities you can leverage with your idea. They will be direct about any issues they can see which may arise with your product, and provide invaluable advice and wisdom. Additionally, seeking advice from professionals such as marketers will give you insight into current trends such as social advertising, expectations and consumer behaviours. They will recognise what processes and activities drive traffic and which marketing trends are dying. Be open to their advice, rather than stubborn with your direction, as this will allow your idea to fully evolve and increase its viable chance of success. You might also consider speaking to a product development studio such as Dovetail to help with your product discovery process.
By now you will have extensive knowledge and an in-depth understanding of your market and its needs, obtained directly from your potential customers and advisors. This is your product discovery process. You can now make an educated and informed decision on how to proceed with your idea by adopting the feedback you have gained to develop your minimum viable product. Having followed these steps you will have identified the best way to proceed in order to meet your customers’ needs without spending time and money developing features your audience can’t, won’t or don’t use.
Nick Frandsen is a co-founder and managing partner at Dovetail. Dovetail designs, builds and invests into fast-growing technology companies. As an example, Dovetail leads consumer product development at Afterpay and has helped them grow to a $10B international payments leader. Prior to founding Dovetail, Nick was co-founder and CTO of 1-Night, a VC-backed ticketing and payments company, and led the engineering team that grew the platform to handle millions of transactions.