Understanding the Product Discovery Phase, The Blueprint of Product Development

Imagine building a house. Would you start laying bricks and wiring around without a plan? That’s exactly like jumping into product development without a product discovery phase. (I know people still do that). Product discovery is the blueprinting stage, where you lay the groundwork for what you're going to build.

It's about understanding the ‘why,’ ‘what,’ and ‘for whom’ before the ‘how.’

Analogy: Building a House with a Plan

• Electricity Network (Understanding User Needs): Just as the electrician needs a plan to know where to lay the wires and plugs in your lovely house, product discovery involves mapping out user needs and pain points. Skipping this leads to inefficiencies or, worse, hazards.

• Water System (Market Fit and Viability): In house construction, you wouldn’t lay pipes randomly. You would plan based on the layout and functionality needs. Similarly, product discovery ensures that your product isn’t just well-designed but also fits into the market 'ecosystem.' It's about ensuring there's a 'flow' of value — from the product to the market and back — just as there's a flow of water through pipes.

• Resistance to Elements (Adaptability and Longevity): A well-planned house can withstand strong winds, heavy rain, or snow. Similarly, the product discovery phase helps in building products that are not only relevant for today but adaptable to future changes and challenges. It's about foreseeing potential ‘weather changes’ in the market and user preferences and building a product robust enough to endure these.

Components of such Blueprint

1. Market Research (Surveying the Land)

Before building a house, you survey the land. Is it stable? Is it prone to flooding? Similarly, in product discovery, market research is about understanding the 'terrain' where your product will exist. It involves analyzing competitor strategies, market trends, and potential gaps in the market.

Just as the right location is crucial for a house, identifying the right market segment and opportunity is essential for a product's success. It helps in making informed decisions about product positioning and differentiation, the North Star of all your future development and communication.

2. User Interviews (Consulting Future Residents)

Imagine designing a house without knowing who will live in it. Will they need a big kitchen, or are they more likely to need a home office? User interviews in product discovery serve a similar purpose. They involve talking to potential users to understand their needs, preferences, and frustrations.

This component is similar to customizing the house to suit the residents' needs. It ensures the product is user-centric, addressing real problems and offering tangible benefits. It’s about creating a product that people not only need but also want.

3. Prototyping (Building a Model Home)

Before the final construction, architects create a model. This allows them to visualize the house in the context and make necessary adjustments. Prototyping in product discovery is about creating a preliminary version of the product – a 'model' that represents how the final product might look and function.

Just as a model home helps in visualizing the final outcome and gathering feedback for improvements, prototypes in product discovery enable teams to test ideas quickly and inexpensively. It allows for iteration based on user feedback, reducing the risk of costly changes later in the development process.

Goals of the Product Discovery Phase

The product discovery phase aims to lay a solid foundation for successful product development. This phase is critical for aligning the product vision with real user needs, market demands, and technical possibilities. The primary goals include:

• Understanding User Needs and Preferences: Through activities like user interviews and feedback analysis, this phase focuses on deeply understanding the target audience's needs, preferences, and pain points. It’s about creating user stories that guide the development process towards addressing real user problems.

• Validating Market Fit: This involves analyzing the market to identify gaps and opportunities, ensuring that the product concept aligns with market demands. Tools like Impact Maps help in decision-making about the features that should be built, and how they will affect the users and the market.

• Assessing Technical Feasibility: Technical aspects are thoroughly explored to determine whether the proposed solution is viable with current technologies. This includes creating detailed software architecture documents, architecture diagrams, and assessing the system's performance against quality attribute scenarios.

• Feature Breakdown and Estimation: A comprehensive feature breakdown list is created, detailing each component of the product. This list forms the basis for rough estimations of development time and resources needed, ensuring a clear understanding of the project scope.

• Designing Solution Architecture and Planning: The phase encompasses developing a solution architecture that outlines the system's structure and the relationships between its components. A project plan is formulated, specifying tasks, resources, budgets, and timelines.

• Conceptualizing Design and Information Hierarchy: The design team creates concepts for different platforms, focusing on a user-centric interface. Mind Maps and other visual tools are used to organize information hierarchically, facilitating effective brainstorming and creative solutions.

In essence, the product discovery phase is about minimizing risks and maximizing efficiency by ensuring that what is built is not only technically feasible and within budget but also desirable to users and suitable for the market. This careful planning and analysis serve as the blueprint for a successful development.

The Cost of Skipping Product Discovery

Until your face is pictured on a dollar bill, please consider the statement 'If you fail to plan, you are planning to fail' to be true. Skipping the product discovery phase is like attempting to build not a house, but a residential complex without any blueprint. The consequences can be extreme, leading not just to structural flaws but to complete failures on so many dimensions.

My journey in product development wasn't smooth at all. In my early days, of course I have jumped myself on creating a product without a clear blueprint, duh. I didn't even have the idea that it was called a blueprint. This cost me about 50,000 euros out of my own pocket, more than a decade ago. The loss is not just in direct expenses but also in missed opportunities. Had that money been invested in whatever bitcoin, stocks, or real estate, the returns could have been substantial. (DON’T DO THE BITCOIN MATH).

This experience taught me the invaluable lesson that skipping the discovery phase is a gamble that rarely pays off.

The financial impact of building the wrong product is huge. My personal rule of thumb suggests that a shady project planning can lead to as much as a 70% increase in project cost and duration.

The opportunity cost is equally significant. Funds allocated to failed projects could have been invested in more viable products or other profitable ventures. The potential gains from these alternative investments make the cost of failure even higher. (Have you done the bitcoin math?)

There is a commonly cited statistic regarding the failure rate of early-stage startups. It's often stated that about 90% of startups fail. This high failure rate is attributed to factors such as lack of market need, running out of cash, not having the right team, getting outcompeted, pricing/cost issues, poor product offering, lack of business model, poor marketing, and ignoring customers.

Indeed, despite this high failure rate, the learning experience from attempting a startup is often invaluable for entrepreneurs. BUT!

I Have Learned from My Mistakes So You Won't Have To

The product discovery phase is not just a preliminary step; it's a critical investment in your product's future. By conducting thorough market research, understanding user needs, and validating your ideas, you can avoid the pitfalls of wasted resources, time, and lost market opportunities.

So I confirm the 3 most Common Product Discovery Mistakes

1. Enthusiastic founders jumping to Solutions Before Understanding Real User Problems

One of the most frequent missteps that I am witnessing in product discovery is rushing of either enthusiastic founders or willing-to-prove-themselves leaders to develop solutions without fully understanding the underlying user problems. This often leads to products that are technically sound but fail to address the actual needs or pain points of the target audience.

The result is a product that may look good on dreams but lacks practical value for the users. It can lead to wasted resources on features that aren't necessary or desired, and ultimately, a product that fails to resonate with its market. A price tag for that can go up to a few good hundreds of thousand of euros.

How to Avoid:

• Spend time on user research and interviews. Spend time on user research and interviews. Spend time on user research and interviews.

• Focus on empathizing with users, understanding their challenges, help them cut costs (of any kind, not only financial)

• Prioritize problem identification over solution generation in the early stages of product discovery.

2. Underestimating the Importance of Working with present or future Stakeholders

Most of the early stage founders and product teams I met, neglect the importance of stakeholders throughout the discovery process. Stakeholders here include not just the end-users but also business partners, potential investors, and anyone who has a vested interest in the product.

Failing to involve stakeholders can lead to a disconnect between the product vision and the business objectives or user expectations. It might also result in missed opportunities to leverage insights from different perspectives, leading to a less informed product strategy. A bulletproof blueprint can sell the house before digging the first hole in the ground.

How to Avoid:

• Regularly engage and have dialogues with all groups of stakeholders.

• Create channels for continuous information, feedback and collaboration.

• Ensure alignment between business goals, user needs, funding needs, and the product roadmap.

3. Not Involving Engineers Early Enough

Have you heard about M.A.C.H.? (most of the enthusiastic-first-timer-founders don't) Delaying the involvement of experienced engineering teams until the later stages of product discovery is a common oversight. This separation can create a divide between what is envisioned and what is technically feasible in a given budget of money and time. What if too long development time? Can I use ready made micro-services? What if success? Can I scale it fast?

This often results in unrealistic or unfeasible product designs, leading to costly reworks and delays. Engineers can provide valuable insights into the technical possibilities and constraints that can significantly influence the product's direction.

How to Avoid:

• Include engineers from the onset of the discovery process.

• Foster a collaborative environment where technical and non-technical teams work together in shaping the product.

• Use as early as possible the technical expertise of engineers to validate ideas and ensure feasibility.

In conclusion

The blueprint is designed to lay a robust foundation for a successful product that resonates with both users and business stakeholders.

From market research to technical infrastructure and future maintenance and support plans, every phase plays a crucial role. Skipping or overlooking any of these steps can lead to significantly more expensive corrections or missteps in the future.

For a comprehensive blueprint pricing can range significantly based on factors such as complexity, expertise, and market standards. Nevertheless, a basic range might be:

• Lower End: $5,000 - $20,000. Suitable for simpler apps with fewer features or in markets with lower costs.

• Mid-Range: $20,000 - $50,000. For apps of moderate complexity, requiring detailed research and technical planning.

• Higher End: $50,000 or more. For highly complex projects with extensive feature sets, demanding market analysis, and detailed technical specifications.

These are indicative ranges and can vary based on specific project requirements and regional differences.

There isn't a one-size-fits-all rule for the cost of product discovery as a percentage of the total cost of launching a product, as this can vary greatly depending on the industry, product complexity, and specific company circumstances. However, my rule of thumb is that the product discovery phase should account for approximately 10-15% of the total project budget. And this can save much higher costs in the long run by preventing the development of features that don't meet market needs or user expectations. (sometimes, in case of total failure, the entire rest of 90%)