It is likely that, after focusing on the problem and understanding the job to be done, as described on the previous chapter, you will find not only one but a few opportunities to develop a new product or new features for your software product.
I’ve never seen in any organization a situation in which there was an abundance of resources and scarcity of opportunities. Usually, there are always a lot of opportunities ahead, and we don’t know which ones to pursue, because we can’t go after all of them since we don’t hold the necessary resources (time, money and people) available.
In these situations, I like using the opportunity assessment model, proposed by Marty Cagan in his book Inspired: how to create products customers love. Cagan is ex-VP of product management at eBay and currently, he works as a product management consultant.
By answering these 10-questions set, we can gather more information to decide if it’s worth pursuing a given opportunity or if it’s best to re-evaluate it in the future. The questions are very simple:
- Which problem will it solve? — value proposition;
- To whom this problem will be solved? — target market;
- What is the size of this opportunity? — market size;
- What are the alternatives? — competition scenario;
- Why are we better qualified to pursue this opportunity? — our uniqueness;
- Why now? — window of opportunity;
- How are we going to take this opportunity to the market? — launching strategy;
- How are we going to measure success and make money with this product? — metrics and revenue;
- What are the critical factors for success? — essential requirements;
- After answering the above, what is the recommendation? — go or no-go.
Questions 1 to 4 will help to understand the opportunity.
Questions 5 and 6 are very interesting because it is not enough to understand the opportunity and find it a good one. It is necessary to be sure that this is the right moment and that we have more expertise to pursue it.
From 7 to 9, there are what-if questions, that is, considering that the decision is to pursue this opportunity, how is it going to be presented to the market, how the success will be measured and what are the critical factors for success.
Answering these questions is good not only to decide if it’s worth developing a given product, but it also helps the partnership opportunities, opportunities to develop new features, and opportunity to attend a special client that needs changes in the product. Ultimately, every opportunity will require your or your team’s effort and should be analyzed to see if the revenue compensates for the required investment.
How many opportunities to pursue at the same time?
Another important tip is not pursuing many opportunities at the same time; otherwise, you and your team will lose focus and end up not getting return in any of the pursued opportunities.
In an ideal world, the recommended is to pursue one opportunity at a time. However, knowing that this is utopic, we will end up pursuing more than one opportunity simultaneously. Try to limit this amount to a few units (2, 3 or 4, maximum) reminding that, at any time, you and your team can only concentrate in one thing at a time.
In other words, if you are working on more than one opportunity simultaneously, every time you want to work in one of them you’ll not be working in the other ones momentarily. Therefore, stick yourself to pursue a few opportunities, preferably one at a time.
New opportunities vs. existing product improvements
This is a very common question. Should I pursue new opportunities? And what do I do with the pains of current customers? Should I develop a new product or new feature? Or should I solve current customer pain by developing improvements to my product? How to balance between pursuing new opportunities and implementing improvements to an existing product?
Here the solution is simple, at least in theory. Current product is current product, new opportunities are new opportunities. Each has to be treated separately. Ideally, they should be treated even by different teams. The thing is that is not always possible.
In such cases, if we want to pursue new opportunities, this team needs to be able to clearly separate work on existing products versus work on new opportunities. For example, two weeks for the existing product and one week for the new opportunity, until it is justified to create a new team for the new opportunity.
Warning: It’s not a bug team
This is an important point. The idea is not to separate teams to have one team doing new things and the other fixing bugs in the existing product. This does not work as it will create a very large separation between the two teams.
Anyone who does new things will eventually believe that they can do anything without worrying so much about quality, as there is a bug-focused team. On the other hand, the “bug team” will find it doing janitorial work, cleaning up the mess that other people do.
Opportunities vs. improvements
Before investing in a new opportunity, it is very important to understand why you are investing in it. A great tool for this is the opportunity assessment, described earlier. Without a clear understanding and the right engagement of everyone involved, one can put the opportunity to waste without even starting to explore it.
An important point that everyone involved should understand is that a new opportunity is a new opportunity, that is, it should generate results that aggregate to the current ones. These results should be sufficient to justify the creation of a new team to pursue this new opportunity. At least two software engineers.
Ideally, besides two engineers, it would be good to have a product manager, a UX designer, and a product marketer dedicated to this new opportunity. It will be a new product or a new feature. When this new product or new feature is ready and launched, those who worked on its development will take care of its bugs and enhancements.
Meanwhile, the other team takes care of the current product, that is, improving the current product so that it continues to achieve its goals. Improving the current product means fixing bugs, but it also means doing new things on the existing product. Improvements to make the product better, more useful and more usable.
If it is not possible to create a new team, you can share the time of the same team. Something like a week or two for bugs and enhancements to the current product, and a week for the new opportunity, until it is justified to create a new team for the new opportunity.
How to tell if it’s an improvement or a new opportunity?
It is the responsibility of the product manager, along with the team, to understand if this new thing that came up to be done is an opportunity or an improvement. But how to discern between improvement and opportunity? Especially when the new thing to do is a new feature of the existing product, should we look at it as a new opportunity or an enhancement of the existing product?
It depends on the effort and return involved. A new opportunity must have a high return to make sense of pursuing it. Remember that a new opportunity will eventually have a team just to take care of it, so the return must be sufficient to justify this new team. If the return is uncertain, it is best not to draw energy from the existing product to pursue it.
On the other hand, if there is the prospect of a good return, what is the effort to create something to exploit this opportunity? And what will be the effort to maintain this something? These two questions should guide the way you look. If the effort is low, this new thing can be treated as an improvement and developed by the current team. If the effort is high, it is recommended to treat it as a new opportunity and consider having a separate team to do the development.
After analyzing opportunities, the next step is to validate them, that is, to see if there are people interested in this product of yours that will solve the problem you researched. There are some ways of doing that. The first one is going back to the street and talking to possible clients. This will be an exploratory conversation in which you expose the problem to people who probably deal with it. Later, you tell about the solution that will be developed and evaluate the reaction. Just like that. The problem of telling about a solution is that, as better as it is the description, it is still not a ready product, and forces the person to imagine something that can be quite different from what you are conceiving.
In 2011, I decided to perform a little more realistic validation. At that time, I’ve conducted a startup experiment, did my initial research and ended up with 3 product ideas to develop. Having a hard time choosing in which of the 3 ideas to invest my money, my energy, and my time, I decided to take a simple test. I chose a name and a domain for each one of the ideas and registered them. Later, I created a webpage for each of the ideas of web products I’ve had. As I’m not a designer, nor have any skills to build beautiful pages, I used a site called unbounce, which enables us to create simple pages and even A/B tests in a very easy way. Using unbounce, I created the following page:
Note that this page only has 3 points that describe the product: one to talk about the problem; another one to talk about the solution; and a third one to inform the price.
The email form was useful to gather the amount of people interested. I’ve made a Google Adwords campaign of $ 10.00 per day per product that I wanted to text, during a month.
Below is a partial result of this validation:
This image is a screen of unbounce. After 30 days of tests, I ended up with 216 email addresses interested on ContaCal — the product I launched in 2011 that is running until today — and 1,043 pageviews, giving me 20.7% in conversion rate.
The other two ideas also kept the same trend of this partial result. But I preferred to let them unreadable in order not to influence anyone to bet in any of them without further validation.
For those who don’t know, ContaCal is a nutrition journal in which users record their eating and the system informs the total amount of calories, with a twist. Aside the total amount of calories, it also informs the quality of calories through a color system. The colors indicate how healthy that food is. If the calories are red, it is best to avoid them. Yellow calories can be ingested moderately. And the green calories have no restriction.
The total cost of this test was R$ 990.00:
- AdWords campaign: $900.00.
- Domains: $90.00.
- Unbounce site: free for 30 days; after this period, $ 85.00 per month for up to 5 different domains that I would want to test at the same time.
Each new idea costs $ 30.00 by domain .br, and other $ 300.00 per month with a Google Adwords campaign if we make an investment of $ 10.00 per day.
A very important point to notice is that ContaCal was not necessarily the best of opportunities, but the best one for me to communicate. Therefore, this validation is interesting, for it helps not only to test the idea of a product but its capacity to communicate as well.
Digital Product Management Books
Do you work with digital products? Do you want to know more about how to manage a digital product to increase its chances of success, solve its user’s problems and achieve the company objectives? Check out my Digital Product Management bundle with my 3 books where I share what I learned during my 30+ years of experience in creating and managing digital products:
- Startup Guide: How startups and established companies can create profitable digital products
- Product Management: How to increase the chances of success of your digital product
- Leading Product Development: The art and science of managing product teams
You can also acquire the books individually, by clicking on their titles above.