Ever since I got here at Order N I’ve been wanting to develop our own product. It’s been on the back burner for quite a while (I’ve been with the company for over a year and a half now), slowly percolating. We’ve managed to generate a few ideas (127, to be exact) as far as products go, but we haven’t done anything with them.
At this point, I think we’ve got enough ideas, and we just need to pick one and move forward with it. The question is: which one?
I wrote up a process document on how to pick any idea (which is below), but I’m wondering if its the right way to do things. So I have a question to those of you have built your own product(s) (or are in the process of doing so): How did you decide what to build?
Did you simply build what you wanted to? Did you do research and find a product gap and fill it? Did you try to find the idea that you thought would generate the most money or the most users? Did an idea just hit you one day and you decided you had to make it?
My “process” for creating and picking an idea follows:
The purpose of this document is the establish a simple, lightweight process for coming up with and evaluating product ideas. The process should result in at least one idea that we can turn into a viable (read: profitable) product. The process is flexible and can be changed as circumstances change or as better ideas are introduced. The process evaluates ideas based on business factors, not engineering factors.
1. The first step in the product idea process is generating ideas (i.e. brainstorming). At this point in the process the ideas are vague and not well defined. The purpose of this stage is to generate as many ideas as possible, without evaluating them. The hope is that enough ideas are generated that a few of them are viable both engineering and business-wise.
Ideally, at the end of this step, we should have at least a few hundred ideas to choose from.
2. Second, after generating all those ideas, the next step is to whittle them down to a manageable number so we can do research on them. This will probably be between 10 and 20 ideas. By applying some simple criteria, we should be able to arrive at the top ideas we might be able to pursue. Ideally these criteria do not require research, but can be answered easily and quickly.
- What user problem/pain does this solve? If it doesn’t solve a problem, no one will buy it.
- How is the user going to pay for it? Or how does the product generate money? If a cool idea can’t generate money, its not worth it. A lot of Web 2.0 apps fall into this (like digg, YouTube, etc). They solve problems, but they don’t make money.
- What is the potential customer base? i.e. Is it consumer, professional, or developer level product? This will help rate the ideas –a consumer product is usually more valuable than a developer product since there’s potentially a larger customer base.
- Without architecting or engineering the product, is the product even technically feasible? If we’re trying to make cold fusion work, we should probably pass on that for now.
These criteria probably will not eliminate all but 10 or 20 ideas, but they should help us rank them and pick out the best 10 or 20 ideas. Some ideas might have to be fleshed out a bit more, but hopefully even vague ideas can be evaluated at this step in the process.
3. Next we need to research the top 10 or 20 ideas. This means fleshing them out a bit more so we can make more critical decisions about them. The research is targeted at finding out how much money the product might bring in, how likely we are to attract customers, and what building the product might cost.
What we need to know:
- How big is the potential customer base? This is an extension of what kind of product is it: consumer, professional or developer. Do a lot of people have the problem this idea is trying to solve, or is it a niche problem?
- What can we charge for the product? What is the competition charging? Not trying to determine final pricing here, but what is the range we could expect.
- How will we sustain income with the product? Upgrades, subscriptions, ads?
- Is there any competition? If so, who is the leader? What makes the leader, the leader? Can another product be sustained in this environment?
- What are the core/basic features in the product? We don’t need or want a feature spec here, just a general idea of what we’re providing. This should help with cost of building as well as what we can charge.
- What will set us apart from the competition? i.e. Do we think we can actually capture part of the market?
- What are the engineering costs in regards to time? i.e. how many engineers for how long? We don’t need a real number, just general estimates so we can compare it against the other ideas.
- What is the required infrastructure to make this work? This would obviously be bigger for web apps which need a large number of servers. Don’t forget about add ins to do try-before-you-buy or other demo schemes.
- What kind of marketing might we need to make the product a success? Mainly we want to know how expensive it will be to market the product.
- Are there legal or other expenses (like facilities or sales people or development software) that are required?
4. Finally, we need to evaluate the product ideas based on our research. Knowing how big our customer base is and how much we can charge will give us a ballpark of how much money the product could potentially bring in. The competitive analysis and feature ideas will give us an idea of how much of that money we might be able to get. The engineering cost estimates and required infrastructure costs will give us an estimate of the total cost to build the product.
So the basic “value” of the product idea is:
(Potential money in the market) * (Part of the market we get) –(Total costs of building product) = Profit
That’s real scientific stuff. Please don’t take it too seriously.
We’re not going to get hard and fast numbers out of this step, but it should give us a vague idea which idea is more valuable, business-wise, than the others. At the end of this step we should have at least one (if not more) idea that we can then take on to the product development process.
Once again, this is a light weight process that can (and probably will) change as we learn things. If you have ideas, suggestions, or comments about how to make this better, please let me know.
As you can tell, my process focuses on what product will bring in the most money. While money is good, I don’t want to build a product that I won’t enjoy working on.
What are your thoughts?