Recently, I was invited to a strategy call with the executive team of a small software company. The topic of concern was the timing of an upcoming product launch. The leadership felt unprepared as they had overlooked a crucial aspect of the product development process—conducting foundational diligence to understand the business viability of the product. Unfortunately, this is a common pitfall for many product professionals and resulted in a precarious position for the team. They had an imminent product launch but were uncertain about the amount of resources they should commit to it due to the lack of a concrete business understanding of the product.
The scenario above underscores the importance of strategic planning and conducting due diligence before launching a product. To avoid such predicaments and to expedite the go-to-market process, companies must perform a comprehensive analysis, encompassing market analysis, financial planning, business planning, and product planning. These efforts serve to validate the business viability of the product and ensure that resources are allocated optimally.
Market analysis is fundamental to the success of a product. It involves identifying the target audience, understanding their needs, and assessing the competition. Without it, a company may build a product that doesn't satisfy any existing market need or that is already over-served. A well-conducted market analysis can provide invaluable insights into potential opportunities, thus allowing the company to build a product that satisfies market needs and stands out from competitors.
Financial planning is equally critical, as it helps to forecast the potential profitability of the product. It involves assessing the costs of development, marketing, sales, support, and other related expenses. Understanding these costs helps determine the pricing strategy and revenue expectations. By performing this diligence, a company can ensure that it is allocating resources to a product that has the potential to provide a healthy return on investment.
Business planning merges the insights from market analysis and financial planning to create a robust roadmap. It outlines the strategic objectives, defines the value proposition, and sets the key performance indicators (KPIs) that will measure the success of the product. Business planning provides direction and a sense of purpose, ensuring the team is working towards a common goal.
Product planning, the final piece of the puzzle, is about detailing the product's features, design, and usability based on the insights from market analysis. It aligns the product with the target audience's needs and ensures that the product delivers on the value proposition outlined in the business plan.
In conclusion, performing due diligence through market analysis, financial planning, business planning, and product planning is not just a prerequisite for understanding a product's business viability. It is a strategic move that allows businesses to go to market faster by ensuring resources are allocated wisely and product development efforts align with market needs and business objectives. A thorough understanding of these areas minimizes risk and sets the stage for a successful product launch.