A healthy portfolio should always keep a balance with the product lifecycle of its products. Inside a portfolio, some products are mature, others that are declining, and some that should replace those that are declining. There is a certain procedure whenever we need to create new products and according to Optimal Product Management from AIPMM, this should start with the conceive phase.
According to AIPMM, the definition of conceive is: “A low investment process to identify and conduct an initial evaluation on potential market opportunities to determine if greater resources should be committed to building a business case in the planning phase”
Conceive is based on lean philosophy which is based on 2 principles – respect for people and continuous improvement. This is connected clearly with your customers because as you interact with them, you should create a hypothesis and go and check if it works. You will discover needs, test your assumptions, rapid interaction, and fail, and then learn fast. No waste as we don’t create a complete product.
In the spirit of no waste, you should take into account all the below variables before you create the new product after you think that your idea is worth pursuing.
- Is the market problem worth solving? -do we have a large enough market? company strategic alignment? Are people willing to pay?
- Can we solve the problem? Regarding feasibility cost and risk.
- We finally need to make money – is it a whole product? Is it profitable? Sustainable?
How do we know when we have a product-market fit?
It all depends on the degree to which we have a defined problem and a defined solution. For that use the below table:
From the table, we can see 4 types of market – product fit.
- On quadrant one there is a well-defined problem and solution. This is the case of Revolut – the founders knew exactly what was the problem which was the high commissions from money exchanges and they knew very well what was the size of the market having the same issue, that’s why today 4 years after the launch of Revolut app they have more than 12 million users.
- The second is mostly market-driven when we have an undefined solution but a defined problem. This is more creative and why we need product management to uncover these people’s needs. An example is the longevity issue – there are vitamin companies and pharmaceutical ones that promise more years to our life but nothing can be proven.
- In the 3 quadrant we have a technology and the ways to solve a problem but the problem itself is not well defined. An example is the 5G technology which is well established, but do the customers really need this technology? Or it is only there to compete with the other telecommunication companies?
- It is when the problem and the solution are undefined. An example is Instagram – how clearly do you defining what Instagram solves?
To have successful products in your portfolio, try to move towards the type 1 quadrant where the market problem is defined and you have the technology to support the solution.