E74: Get A Better ROI From Your Product Development Process

Most product development processes don’t consider ROI, but it’s probably the best way to improve the effectiveness of this process for your product company.

Let’s talk about how to find your customer’s bottleneck and what that means for providing them and your company with more value.

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Episode Transcript
Hey, folks, Sean here.

And today what I want to talk to you

about is my favorite way to get more of

an ROI out of your product development process.

And it starts with finding what

I refer to as the bottleneck.

So if you’re unfamiliar with this as a concept, you

can think of a bottleneck almost if you’re like, going

over a bridge and you have to go through a

toll, usually it goes from many lanes down to a

few lanes as you go over said bridge.

Now, that is kind of visually how you can

think of of what is a bottleneck, right?

It goes from high traffic area to a low traffic

area or vice versa, as in slowing the process down

considerably because you are funneling what was moving much more

quickly or in higher volume into what’s ultimately going to

move a lot more slowly or much lower volume.

Now, that is a good visual kind

of understanding of what a bottleneck is.

But to understand what it means from a process

perspective, the same thing happens when your customer may

be trying to do something much more quickly, but

something in that process, any given step, like going

through a toll of a bridge, for example, is

slowing that process down.

They may want to get from A

to B much faster, but they can’t

because something’s preventing them from doing that.

And that thing that’s preventing them

from doing that is the bottleneck.

So if you’re trying to level up your product

development process, a great way to be able to

do that would be to, through research with your

customer, better understand and find these bottlenecks in their

process that are slowing them down.

Now, in order to be able to do that,

as I mentioned, you need to do the research.

So you need to speak with them and you

need to talk to them about not what they

want necessarily in the future, but what’s preventing them

from getting what they want right now.

Focus on historically what they’ve tried to

do, what’s worked and what hasn’t worked.

That’ll give you a much better idea for where

they need the most help and what may be

the biggest bottleneck in their process to date.

So if you start with that approach, it’s going to

enable you to find areas of opportunity to turn.

What I refer to is problems

worth solving into solutions worth building.

So let’s talk more detail about what happens

when you help them make this transformation.

Now, to me, by far the most exciting part about

following a process like this is it enables you to

calculate the return on investment built into the process.

And that’s something that doesn’t happen a whole lot.

In terms of the clients that I work with trying

to help them level up their product development processes, what

gets built is often not based on ROI or customer

value or even value for the business, which sounds weird,

but it happens a whole lot.

So what I love about this process is it’s

straightforward in going from the customer’s problem, looking for

the best area of opportunity to try to improve

their situation and quantify it along the way.

That’s going to be important as

we figure out how much value.

Ultimately, building that solution to eliminate said

bottleneck is going to provide for them.

Because if that number is high enough, that’s going to

enable your product or your company or both to be

able to generate more value as well too.

In terms of if your customer is getting a

high enough return on investment, in terms of that

new solution that you’re providing for them in the

form of your product by eliminating this bottleneck, that

may give you the ability to generate more revenue

through your product, which is going to increase the

value of the product and the company as well.

So that’s the most exciting aspect of

this and that’s essentially how it happens.

So if you go from understanding what the bottleneck

is, which again, just to summarize, is figuring out

the type of progress your customer is trying to

make, understanding what is specifically slowing them down and

trying to make that progress, as in they want

to move faster, but they can’t. Why can’t they?

You need to figure out what that is

and that’s where you’re going to laser focus.

But you also at the same time need to understand what

the impact of them not being able to move faster is.

This is where you start to get

into the ability to quantify it.

So if they tell you, well, we could move ten

times faster if we eliminated this step or solved something

related to this step, that’s great, but what outcome is

that going to enable them to achieve?

If you can ultimately figure out what that outcome

is going to enable them to be able to

achieve, like, are they going to reduce how much

time gets invested into this process across an entire

team or the organization by 90%?

If so, that leads to a huge number.

As you start to quantify how much we’re talking about in

terms of what you would need to pay that team in

order to do and how much time they’re going to get

back, or maybe it enables them to charge more, right?

Whatever it is you want to drive towards

the successful outcome, eliminating that bottleneck is going

to enable them to be able to achieve.

So if you’ve found one, that’s

great, but don’t stop there.

You have to keep going until you get greater context

for understanding what eliminating that bottleneck is going to mean

for them, as in what transformation are you going to

help them be able to make once you know that

you have a better understanding for the value that they

will get if you prioritize building this solution.

So, like I said before, if you move from

what we’ve uncovered in eliminating this bottleneck is a

problem worth solving into a solution worth building.

You want to understand what type of outcome

that’s going to enable them to achieve and

what type of return on investment they’re going

to get as part of this process.

And if you understand that, you understand how to quantify

the value the customer is going to receive if you

provide them with that solution through your product.

And if you do that as well too, and that

number is high enough, that may give you an opportunity

to generate more revenue through your product because of how

much value you’re providing them, which makes your product more

value and your company more valuable.

So this is one strategy that I use on a

regular basis which can provide pretty immediate results in terms

of how to level up your product development process and

build return on investment into the process itself.