A whopping 9 out of 10 startups worldwide will fail ↗. But why exactly is breaking into a new market so tough?
The #1 reason has to do with product offerings. 42% of startups go out of business ↗ because they don’t meet a market need.
Of course, your startup isn’t doomed to become another story of failure. You can reduce the risk of building a misaligned product by undergoing a robust product discovery process.
Product discovery can unlock a wealth of insights and opportunities, especially for startups with limited resources. Here we’ll go through why product discovery for startups is valuable to early-stage companies, as well as best practices for a value-rich process.
Why Product Discovery for Startups?
Startups are ideally suited to reap the benefits of product discovery. That’s because the discovery process is designed to quickly lay a strong foundation with a lean initial budget.
Given the nature of startups, discovery can be even more critical to success. Startups tend to face challenges that established companies don’t, such as the following.
1. Short Financial Runways
Startups don’t have the same financial stability as other companies. Limited resources for short periods means they get more out of the quick, iterative process of discovery.
In addition, discovery helps startups create a more precise timeline and budget, so that development is highly effective. In this case, startups can maximize their resources and define top priorities early.
2. No Existing User Base
Startups have to start from scratch for their customers. For this reason, they may have less experience with and fewer insights about their target users. Product discovery is paramount to getting a deep understanding of the user problem and avoiding going on instinct alone.
3. Need to Woo Investors
Product discovery entails creating a prototype that startups can present in investor meetings to define their value proposition and make a stronger business case. It’s common for the prototype to “make or break” startups, as it’s the centerpiece of getting essential funding.
4. Increased Stakes for Product Launch
Startups are under huge pressure and competition to achieve a successful product launch. Sometimes this even involves being the first mover of a new product. Discovery enables startups to leverage latest practices and technologies. In turn, this can lead to creating products that are novel and appealing to users.
5. Scalability for Long-Term Success
Startups are also known for starting small and building into household names over time. Just consider that Google, Apple, Amazon and even the Walt Disney Co. ↗ had humble beginnings in basements.
All in all, scalability is a key element for startups. Product discovery empowers scalability, as it allows you to prioritize features and plan milestones over time. You’ll also be able to create a roadmap of project stages that fits your budget and timeline.
6. Product as Startup
Startups are often synonymous with their first product. Product discovery can ensure that your big idea is actually a good one. Essentially, you’ll gain insights during this process that will prevent you from wasting resources on a failed product.
After all, startups don’t have the luxury of launching products that don’t pay off with customers. A product flop can cause startups to lose their reputation and close their doors.
Overall, product discovery is particularly well-suited to startups. Early-stage companies who undertake discovery will find themselves with a higher quality product that meets their user needs. As a result, this can help you win over more customers and sales.
Stages of Product Discovery for Startups
As the name suggests, product discovery is all about exploring the user problem before committing to a solution. During this stage, you’ll have the opportunity to reimagine, refine and/or adapt your vision to fit with real user requirements and your business goals.
While product discovery is unique to every startup and IT partner, you can expect five steps before kicking off development.
Learning
This initial stage aims to get a deep-dive into your target users, market and business goals. Sessions with your stakeholders will center on information-gathering and research. Standard learning tasks include: user interviews and surveys, market research, competitor analysis, etc.
Defining
Once you have a strong foundation of research, it’s time to pinpoint the customer journey. By discussing your OKRs, user personas and more, you will map the ideal flow for your target customers and business objectives.
Refining
Next, you will explore innovative solutions and opportunities according to your findings. You will brainstorm designs and features through tasks such as storyboarding, UI mock-ups, visual mapping and so on. From here, you will start forming the basis of your prototype.
Prototyping
In this phase, you will iterate a high-potential prototype. Here’s where the details start to come together. You will complete design mock-ups and define the technical architecture so that your teams are ready to ramp up development. In addition to the prototype, you may create wireframes, tech stack analysis, and product demos.
Testing & Iterating
Last but not least, you will test your prototype with your target audience. Often, usability testing and A/B tests are undertaken with real user groups. This feedback is critical to listen to your users and plan improvements for a successful launch. At the same time, you will plan your product roadmap into the future, including features for each development stage.
Best Practices for Product Discovery for Startups
To maximize product discovery for startups, you should keep in mind these best practices. These tips from our experts at OrangeLoops ↗ are especially useful if you’ve never undergone discovery before and want to make the process as effective as possible.
1. Personalize the Process to Your Startup Mindset
Product discovery should be unique to every startup’s mission and goals. Fortunately, startups are already well-aligned with discovery, as they tend to share a focus on innovation and continuous learning.
Harness your startup culture and mindset during discovery. Make the process specific to your teams and lean into sessions with your company’s same innovative spirit.
2. Prioritize Your Target User’s Problem
The user problem should be central to the product discovery process. By starting with user pain points, you’ll get a better understanding of how to resolve them. In this way, your startup will avoid making assumptions about the ideal solution.
Keep in mind that 80% of product features go unused by customers ↗. Delve into the problem with user research, market analysis, etc., so you can make fully informed decisions about your product.
3. Trust Data Over Your Instincts
Going with your gut isn’t bad advice. In fact, most big ideas are born from an instinct for business. Yet it’s vital to explore and verify your idea in quantifiable ways.
Don’t get carried away by an exciting idea without first doing due diligence. Your product discovery partner will aid you in collecting the user data, market reports and business insights to validate your concept.
4. Focus on Quality Insights
Sometimes, startups get caught up in generating a wealth of insights during product discovery. While that can be positive, try to focus on getting high-quality information. One in-depth user survey can be more valuable than five surveys that didn’t yield rich data. As a general rule of thumb, choose quality over quantity.
5. Look at User Actions and Words
As you get feedback from real users, keep an eye on what they do as well as what they say. You’ll likely get insights from both, but often, user actions reveal potentially hidden information.
For example, users may say that it’s easy to get around your product’s navigation bar. But click analysis might show users clicking on the wrong section for their needs, requiring your team to rethink how it’s set up.
6. Ask the Right Questions
The product discovery process is all about digging into your user problem and finding the ideal solution. Asking questions is key to getting a 360-degree vision into your business scenario. Prepare questions in advance so that you can make the most of discovery sessions with your software partner. (If you need inspiration, here’s our hand-crafted list of questions to get you started ↗!)
7. Don’t Skip Discovery Tools
During product discovery for startups, your teams will go through several rounds of information-sharing, brainstorming, prototyping and more.
Having the right tools at your fingertips can help streamline this multi-layered process and make certain all your team members have access to discovery documentation. Specifically, it’s useful to leverage tools for analysis, prototyping, feedback, etc. (For example, Figma is a leading tool for creating easy-to-share design files.)
8. Prepare for Continuous Discovery
Product discovery typically lasts between 4-6 weeks. At the end of this process, you’ll likely have a prototype and a clearer sense of your product roadmap.
Yet, discovery shouldn’t end here. Inculcate a mindset of continuous discovery by integrating agile methods that allow for iteration of features over time. Doing so will aid you in achieving a higher quality product that’s constantly verified with user feedback.
Reducing Risks With Product Discovery for Startups
17% of unsuccessful IT projects ↗ threaten the company’s existence. For startups, the stakes are even higher, as their market position is typically more unstable.
Product discovery is a tried-and-true method to reduce the risks of a major technology investment. While this process comes at a cost – usually 5%-10% of your product development budget – it can save you the headache of building a failed product.
Overall, product discovery for startups addresses expensive risks, such as:
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Creating a product that your target users don’t need or want
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Going over-budget to correct product errors
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Receiving poor customer reviews, leading to a loss of business reputation
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Restarting the development process after building an under-performing product
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Going out of business due to the financial burden of a failed product
Product Discovery is a Startup’s Strongest Ally
Overall, product discovery is the strongest ally for startups or early-stage companies. Undertaking this process enables you to look at the full picture and define a product that actually fits with your target base. In turn, you’ll avoid pouring resources into the wrong product.
Our hope is that these discovery best practices can help set up your product for success. Now that you have an in-depth understanding of product discovery for startups, you’ll be able to kick off your next project with confidence.
Image by tonodiaz on Freepik.
