In the last post we looked into the question of how to estimate the time needed for a product to reach the market. Yet another relevant question that product leaders often encounter at the beginning of a new product development effort is about product definition timing: “how early should a new product be defined”? In the end, it is all about balancing commitment and learning.
The risk of (too) early product definition
Products come from market analysis, customers feedback, pure “hot-shower” ideas, new technology push, and so on. However, once the idea is ready, we tend to run into defining the nitty gritty of the product . Although having clear ideas from the beginning is a great advantage, there is also the side effect that defining a product too early may be risky of missing some important considerations behind. In fact, the best way to nail a product is to find what Marc Andreessen first defined as product-market fit. It is the pivot moment when you know you are in a good market with a product that satisfies the market. The truth is that product-market fit rarely comes from the first product idea. It is often the result of two or more iterations where you get unbiased feedback from your target market.
When waiting is not an option
So, what product definition timing works best? Should we always wait for the customer to try the product before committing to product specifications? The answer is no. Because some products may not afford the luxury of reaching the market before having complete specifications. This is especially true for products that take much time and money to build. Take for example a typical product in the aerospace or one in the medical domain. They require many regulatory and safety checks that need a clear scope from the outset and cannot afford too many reworks. Or take a new tech product that needs intellectual property protection before the public gets to know the technology. In such cases, defining the product in detail early on is almost mandatory.
Does this mean that for these products we cannot advocate for early and frequent customer feedback in order to reach product market fit? Are Steve Blank’s customer development framework, Eric Ries’ lean startup approach and the agile methodology not applicable in such cases?
I don’t think so. Every product, depending on its characteristics, its target market and other contextual factors, can have different strategies. However, to choose a proper strategy it is important to know what factors influence the decision between committing early to product specifications and learning before locking them.
6 key factors for product definition timing
To decide if we need to rigorously define the product upfront or we can progressively define the product through customer discovery, several contextual factors matter. The following are my preferred ones when it comes to product definition timing. They impact how much uncertainty a team can tolerate and how costly it is to be wrong with early product specifications.
Market readiness
In new markets, including emerging and immature markets, customers generally don’t have clear expectations about a product. They only have an unsatisfied need. The ways a product can target that need can be more than one, some better than others. In such cases, defining the final product too early, before getting customer feedback, can be a mistake. So, if we took market readiness as the only factor to decide when to lock specs, it is a no-brainer. The sooner the idea goes to the market, the more effectively the product can earn its shape through iterations.
Hence, for new and immature markets, iterative product definition is the best way to go. Instead, for mature and established markets, product differentiation is mainly about improving performance with respect to existing needs. In this case, the product can afford more detailed specifications early. Nevertheless, for products where other factors such as intellectual property, regulation, product complexity, capital requirements do not play a major role, waiting a few iterations before locking product specifications is a good practice. Many software products belong to this category.
Competition
Market readiness answers “How well does the market understands and explains a certain need?”. Competition, on the other hand, answers “How many alternatives exist to satisfy that need?”. Even when customer needs are clear, how to make a product win against competition is often discovered only through real usage. In this case it is relevant to go to market early and be open to change the product according to market needs. In fact, when the market is already aware of all the possible solutions to its needs, letting it try the new solution as soon as possible would uncover aspects that otherwise would be hard to find out. Of course, unique selling points should be clear before reaching the market. But the real moment of truth for the product is when customers start using it and comparing to competitors. That is when actionable feedback comes along.
Intellectual property
While some products derive from a clear market need, some other products develop from strong innovation. For example, a new technology spins off from a research effort and becomes a commercial product. These types of products are highly sensitive to intellectual property considerations. In this case, it is wise to look into patentability for two reasons. First, it helps to prevent others to copy the technology. Second, it prevents the risk of infringing others’ patents. But patentability requires clarity regarding what is new, useful, and non-obvious.
Depending on the patent landscape it might be wise to define the invention and protect it as soon as possible. In other words, the more the patent landscape is crowded with strong inventions, the earlier a product must be defined. This would not be the end of the world if the invention has many potential applications. A product team can still validate problem–solution fit, market needs, and economic viability while still protecting sensitive implementation details. What matters is to distinguish between the invention, mandatory early, and the overall product experience, that can evolve.
Product complexity
Product complexity broadly derives by the number of components needed to build and deliver the product. It usually translates into the number of suppliers and integration points. If a product is too complex (medical devices, aircrafts, semiconductors, energy infrastructure, and so on), it is usually expensive to produce. In this case, loosely defined requirements create downstream risk of rework.
So, should the product be completely defined upfront before customer value and viability are clear? This is also a risk. Hitting the market soon still ensures the value proposition is validated with real interest early. To do so, we need to define a minimum viable product, or MVP, a simplified version of the actual product that allows to test the fundamental need and price hypotheses behind the market interest. If we can define an MVP, we can iterate quickly and efficiently. On the other hand, if this is not possible, we are bound to define the product and freeze specs early on.
Applicable regulation
Regulatory constraints are very important when it comes to product definition timing. They mostly impact industries such as med-tech, financial services, aerospace and automotive. So, making sure the product, before hitting the market, satisfies any applicable regulation is a big plus (if not a must). This ensures compliance, traceability, and risk management. But then again, how to make sure that the product targets customer needs? Again, defining an MVP for the right market segment should take place early in the project. After all, regulation restricts late changes at the build stage, not early conceptual exploration.
Capital expenditures requirement
In industries like pharmaceutical, semiconductor, energy, aerospace and medical equipment, products often require heavy upfront capital expenditures, such as manufacturing lines, specialized hardware, clinical trials. To provide with funding, investors may require a solid business plan and a stable set of product specifications.
Robert Cooper and Scott Edgett, leading authorities on innovation management and creators of the Stage-Gate framework advocate that such capital intensive products should go through staged funding and progressively refined product scope. This ensures that investors allocate just enough funding to go to the next gate, where a go/no-go decision is made upon new evidence. In this way, stakeholders can reduce technical, market, and financial risks in a controlled way. As the product advances through successive funding stages, its definition becomes more detailed, but drastic strategic shifts such as changes of customer segments, application domain, product vision, key performance requirements, safety-critical features, manufacturing process, key suppliers, are rarely accepted once major capital has been committed.
Putting it all together
There is no single variable that governs product definition timing, or how early product teams should freeze product specifications. Still, by examining the key factors discussed in this post, teams can better assess what to define in advance. In many cases, pursuing a minimum viable product (MVP) offers a safer path, even if it extends the timeline slightly. In the end, the ability to determine early whether a product merits further development or not is priceless and should be pursued whenever possible.