5 Steps to Validate New High Tech Product Planning

July 2, 2021
Contributor: Brian Michelotti

Technology product managers should follow these five steps to make high tech product planning decisions in the face of uncertainty.

High tech product planning is a high-stakes effort that requires decisions to be made in the face of uncertainty — it’s important to know if customers will embrace the new offering or not.

Learn more: Power Your Product Strategy with Gartner Product Decisions

In high tech product planning, once an idea stands up to extended internal scrutiny, momentum builds

All companies across the global marketplace offer different types of products. Some new product ideas are formed through discussions over a period of months. Others materialize as an inspiration overnight.

Regardless of the origin, soon after an interesting idea is formed, there is a self-administered checkpoint: Do we think there will be a big enough market? Is this something we could be successful at selling? In most cases, the answer is “no,” and the product team goes back to the ideation phase.

To start the validation process, a new product idea should be defined with enough clarity to know the following:

  • Who is the target customer?
  • What is the customer’s need that will be addressed by the new product?
  • What is the product; what does it do?
  • What is the #1 key benefit that will be provided to the customer?

The hypothesis for each of these elements will be tested and may be refined through the validation process. If the product idea survives the validation of the high tech product planning process, stakeholders can have confidence in its probability of market success.

Step 1: Share the concept

The first and simplest step in high tech product planning is to share the concept inside and outside your organization. This type of validation need not be time-consuming or expensive.

To start, you should pitch the idea to five or more people within your professional network. To supplement your own network, you can attend Meetups or other events that provide an opportunity to interact with other technology professionals.

Listen for critical feedback

It is not important, or expected, for the feedback to be overwhelmingly positive. The primary goal of this step is to refine the idea through repeated discussion. The biggest challenge in this step is listening for critical feedback. It may be subtle or buried deep within words of encouragement.

Product managers may have confidentiality concerns and may hesitate to seek outside feedback, particularly when working on an innovative idea. But except where patent filings, mergers or acquisitions are involved, strict confidentiality in order to gain a time-to-market advantage is overrated. For most technology product ideas, there are not many other companies (if any) with the skills, resources and motivation to copy the idea and release it first.

Step 2: Examine the market

After a product idea is refined through sharing the concept, the next step in high tech product planning is to evaluate the competitive environment that the new product will enter. In this step, focus now on confirming things such as – what category the product will be a part of, what alternative solutions are available, how is the product idea different from these solutions? Knowing the shortcomings of the alternative solutions is important because it can inform the decision of if and how you will aim to disrupt them.

When initiating high tech product planning, find alternative products close to your offering that are already in the market

The biggest challenge in this step is avoiding the temptation to quickly declare that there are no alternative products, and that the new product will establish a new category. If a customer might consider another product as a potential solution to the same business problem, then it should be thought of as an alternative, even if the new idea uses dissimilar technology or has significantly different capabilities.

If no alternatives can be found, it is critical at this stage to understand or develop a hypothesis about why none exist. Knowing why no alternatives exist can provide more confidence in the idea, or to the contrary, it could trigger a serious reconsideration of whether to move forward.

Step 3: Assess the value to customers

If no significant concerns are raised by the market search performed in Step 2, the next step in validation is to begin to estimate the business value that the new product can provide to customers.

Financial value is always a consideration in B2B technology purchase decisions, and it is likely that in every customer opportunity at least some buying team members will be intently focused on the numbers. This validation step is needed as an early checkpoint to ensure that the product will be compelling when viewed through a financial lens. It’s also needed to confirm which roles within a customer organization will benefit most (and therefore will be likely to pay for it).

Attempting to build a rough customer business case will help crystalize the questions that remain to be answered

With many unknowns at this stage, it will be difficult to build an exact customer business case. But making an attempt will help crystalize the questions that remain to be answered. It should not be a long process — the time required for this step should be measured in hours or days, not weeks or months.

The two biggest challenges in this step are:

  • Determining the specific financial benefits that the product will provide; for example, “dollars saved on contract labor” (contrasted with a more generic benefit like “reduced cost”)
  • Accounting for the customer’s total cost, which could include many factors beyond the product itself

If the product is planned for an established category with direct competitors, there is likely a sound financial proposition possible. But if you are not able to estimate the benefits, it should be viewed as a red flag indicating that more research of customers’ uses for the product and business drivers is needed.

If the customer financial impact cannot be estimated and the product is envisioned as creating a new category, the technology may be overshadowing the customer need in driving the product idea. Proceed with caution.

Step 4: Validate high tech product planning hypotheses with target buyers

The next step is to validate these hypotheses with target buyers. The purpose of speaking with target buyers is not to presell the product, but to confirm and expand your understanding of buyer needs and their willingness to buy.

The biggest challenge in this step is speaking with the right target buyers. A product manager for an established provider may rely on existing customers, potentially utilizing a customer advisory board. Depending on the product idea, these customers may or may not be a good proxy for the target customers for the new product. Another mistake is to interview an employee of a target customer organization who is in a role that would not be responsible for championing the purchase of your product. At this stage, validation should come from real buyers.

Positive comments are encouraging but be careful about building confidence from feedback such as “We would be interested” or “Please keep us updated as you get further along.” You need more than to hear that potential buyers think the product is a good idea.

In this stage of high tech product planning, you need validation that target buyers are willing and able to pay your targeted price

The level of validation you are seeking is for three or more potential buyers of the product to say “Yes, I have that need and I would pay that amount for the product you described.”

To get further validation, the questions intended for potential customers can also be asked to technology analysts or others who have a deep understanding of the customer perspective. These interviews should supplement but not replace conversations directly with potential customers.

Step 5: Release a minimum viable product

If you have progressed to this step of high tech product planning, your product idea has been validated on paper — the problem exists, and customers appreciate your envisioned solution. But words can go only so far in validating a product idea. The purpose of this step is to prove before fully committing to the idea that customers are willing and able to pay, and that they will buy from you as a provider.

Up to this step, validation could have been performed with very little expense. But building an MVP generally requires a meaningful investment from the engineering team and cross-functional involvement to introduce the MVP to market. A business case to justify the investment will typically be developed before starting to build an MVP. Providers should determine for their organization the appropriate levels of due diligence, financial modeling and approval required before initiating Step 5.

To ensure that the MVP is meaningful and valuable to the target customers, plan the scope of the MVP around one or more business moments

The MVP does not need to address all the use cases and capabilities planned for the product. But it must provide a high-quality and differentiated customer experience for the business moment(s) that it addresses.

The two biggest challenges in this step are first creating an MVP that is a viable product, not simply an incomplete version of the final product, and second, not letting momentum alone carry the idea forward.

The MVP step may be approached incrementally if necessary, building from a manually delivered service to a productized offering, until there is demonstrable demand and customer enthusiasm for the new product. If you reach that point, you will be ready to commit to the new product idea.

High tech product planning can be risky, but pays off if done the right way

Developing and launching a new product is risky. The high rate of product failure makes it clear that every new product idea should be validated to ensure the market timing is right before significant resources are committed.

Simple steps can be followed to validate an idea, helping to refine and improve the product vision early in the development cycle and potentially avoiding wasted investment in ideas that do not stand up to real-world feedback.

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