Whenever we are working on building a new product business there is always risk. The two most common categories are technology risk and market risk. Technology risk refers to whether or not is it possible to build our solution. Market risk depends on whether or not anyone wants to buy what we’ve built.
I’ve said before that the majority of product businesses fail. What is even more important to know is that 9 out of 10 product businesses fail because of market risk and NOT technology risk. As long as what you are planning to build doesn’t rely on magic then you have much less to worry about when it comes to technology. However, whether or not someone will buy your product (market risk) is much harder to determine. So let’s talk about what we can do to reduce the market risk facing our product business.
You need data and lots of it.
This has to come from customers. There is no magic bullet here. You need to talk to people. So even though it may not happen immediately, we can ensure it happens efficiently by following the right process.
The answer you are looking for is in the patterns of your data.
Your process should start slow and build momentum from there. The first step is to identify the categories of problems your customers face. We refer to this as the qualitative data. Once you stop hearing about new categories, you’re ready to move on to survey a larger number of people and find out which categories are the most common. We refer to this as the quantitative data. The patterns will become obvious overtime, but you need the data first so you can analyze it.
Carefully listen for actionable information you can use.
The data you so desperately want and that will translate to success for your product will come from you customer, but not directly. You are the innovator. It is your job to identify what is a clue worth following and what is just a distraction. In the famous story around the Ford Motor Company, Henry Ford supposedly said that if he asked customers what they wanted, they would have said a faster horse. What’s important to note here is that people wanted to move faster. Not that they wanted to do it on a horse. The horse was not the valuable part of that feedback. Speed was the key and that’s exactly what they did by bringing the automobile to market.
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The best product management strategy to follow in reducing risk for your new product, is to focus on reducing market risk. Finding out whether or not people will buy your product matters more than anything. Learn all that you can by gathering data and organize it so that you can identify the patterns you can build your product around.
Want to know more about how to reduce market risk for your product business? Email me at sean@nxtstep.io or visit us on the web at NxtStep.
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