How to execute a successful Product Strategy in 2020 and beyond

Welcome to the series

  • Part 1: How to execute a successful Product Discovery in 2020 (this article)
  • Part 2: Design and Development in 2020 — Leave room for mistakes and rapid iterations
  • Part 3: Growth marketing — Figure out your user acquisition strategy or go out of the business

Who should read this?

Our approach is designed for product managers and startup founders that want to be as efficient as possible with their resources.

You will need more than Product/Market Fit to make it in the next decade

The top three challenges in Product Design

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.

In Part 1 of this series, How to execute successful Product Discovery in 2020, we’ll focus mostly on the problem of detecting the right opportunity and coming up with the right go-to-market strategy.

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.

In Part 2 of this series, Design and Development in 2020 — Leave room for mistakes and rapid iterations, we’ll focus on how to make sure your execution is cost-efficient, fast, and does not leave you in huge technical debt after a couple of years.

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.

In Part 3, Growth marketing — Figure out your user acquisition strategy or go out of business), ll elaborate on why User Acquisition, Engagement, and Growth should be your mantra from day one.

Sounds good? Keep on reading and move on to Part 1: Product Discovery.

Part 1: Product Discovery

Don’t proceed until you validate your most critical assumptions

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 2020?
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).

Run these processes to discover bigger opportunities

Running extensive Product Discovery phases will help you minimize your risks and have the additional benefit of allowing you to realize more significant insights. When you dig deep into your market, talk to dozens of target users, and do extensive research on your competition, you might discover more opportunities than you anticipated. When you spend extra time on discovery and do extensive research, you’ll make sure you’re not leaving any gold at the table.

Our approach: a hybrid of waterfall and agile

Yeah, waterfall is a dirty word today, and agile is the way to go, but honestly, how many product managers do you know that will or can sign a blank check and let you iterate endlessly? Usually, we’re dealing with fixed budgets, deadlines, and expectations that we need to meet. What we do for our clients is to work with them within given constraints. We get them to a point where they have their product in the market with some initial traction. This way, our clients can then go to their bosses and CFOs, show them early results, and get bigger budgets approved to allow us to shift into a fully agile model and run an iterative process based on real-life data and feedback from the market.

Our product discovery is a combination of waterfall and agile processes. We ensure we have enough room to try new ideas, fail, and reiterate. But we also limit the number of iterations so we can deliver the product within budget and on time.

Here’s what 12 weeks of Product Discovery looks like

Research — Prep work and getting domain knowledge

Key activities in the research phase are:

  • Stakeholder interviews
    We talk to all of the people who have a stake in the project: product managers, sponsors, sales representatives, and more. We want to understand everyone’s idea of what the ultimate project goal is. We then synthesize these findings in the Alignment phase to get everyone on the same page.
  • User research and market analysis
    We execute user interviews with a sample of the target audience; we browse through existing online user groups to validate pain points; we estimate the total addressable market size for MVP and future versions of the product.
  • Competitive analysis
    We systematically evaluate and analyze all of a client’s existing competitors. Doing so results in a matrix that helps us understand the strengths and weaknesses of each competitor.

Alignment/Ideation — Onsite workshop

In the third week of Product Discovery, we typically organize an in-person workshop with the client at their offices. We require all stakeholders to be present and actively participate in the process. The main questions we want to answer are:

  • How we will measure success?
  • What is high-level direction of the product that will give us the best possible ROI?
  • What are the most critical assumptions that we to test in the Validation phase?

Here are the tools and methodologies we use during these workshops:

  • User Persona and User Journey Maps: Align on our target user and the problem we are solving.
  • Impact Uncertainty Matrix: What are the most critical assumptions that we need to validate by prototyping and user testing?
  • Impact Mapping: Which features have the most impact on the project’s KPIs?
  • Project OKRs: Defining a clear and measurable project goal in the form of an OKR. We use OKRs because most of our clients are familiar with them and we don’t need to explain their value

Sometimes we’ll blend Alignment and Ideation phases and organize brainstorming sessions with clients when we’re trying to extract the best product ideas together. Here are some of the exercises we use that our clients love:

  • Crazy-8 — Idea generation and sketching exercise
  • How Might We — Detecting problem hypothesis exercise

Validation — Testing with real users

The two most popular validation methods are:

  • Prototyping and User Testing
    Here we build an interactive prototype, conduct a series of user tests, measure the UX/usability, and gauge the excitement level or the problem-solving value of the proposed solution. This is when we learn the likelihood of the user replacing their existing solution with our solution while understanding what drives the users’ decision-making processes. We later use this information to focus our resources and time during the design and development phase for a specific feature.
  • Fake front door test

Fake Door Testing is a robust methodology to test market size, price points, distribution channel costs, and target audiences. For obvious reasons, we use it on a tiny scale with lots of care not to damage a brand’s reputation.

Definition — Setting the course

  1. Summarize research and user-test findings in a single presentation.
  2. Our product/MVP recommendation.
  3. High-level prototype and visual direction of the product.

Wrap up

  • PIMCO: the largest bond trader and wealth management company in the world
  • Penguin Random House: the largest book publisher in the world
  • Wiley: the largest educational publisher in the world
  • Rosetta Stone: leading language learning company in the world
  • SuperMajority: largest Women of Color network in the world
  • Stark Carpet: famous, exclusive, 100+ year-old Brooklyn based family business
  • Marriot: largest hotel chain in the world

So far, our clients and we are super happy with our processes. Read our client testimonials on Clutch and see our average score of 4.9+ stars. Clutch also announced us as one of the Top 3 agencies in NYC in May 2020.

Part 2, Design and Development in 2020 and Part 3, Growth Marketing are comping up soon. Stay tuned…

Originally published at https://five.agency on July 31, 2020.

Five is a mobile design and development agency with offices in Croatia and NYC.

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store