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The Ultimate Guide to Product Discovery in Software Development


12 min read

Product discovery is an initial phase that precedes the project’s development stage. During product discovery, the product team delves into the market, identifies potential problems, and explores their solutions. Failing to undertake thorough discovery puts the team at risk of creating a product that can’t function properly, disappointing clients, wasting time and resources, and overlooking valuable opportunities.

Unfortunately, many companies underestimate the importance of the discovery phase. They prioritize resource allocation for the delivery process instead. While they focus on refining their development practices through SCRUM or Kanban methodologies, they often neglect to enhance their research procedures.

What is Product Discovery?

Product discovery is the process of identifying, defining, and validating new product or feature ideas to meet business and end-users’ needs. It involves researching the market, understanding customer pain points and preferences, exploring technological solutions, and assessing the potential for technical implementation. Product discovery framework aims to ensure that the company’s developed products or features are aligned with customer demands and have a higher chance of success in the market. The goal is to collect insights and determine whether it is possible to implement it at all and how best to do it.

By analyzing user interviews and drawing conclusions, product managers can significantly increase the chances of creating a product that effectively addresses real user problems.

Illustration shows what the product discovery phase consists of.

In the early days of building websites and digital products, companies often focused more on convincing customers of the value of their offerings than actively listening to them. This approach resulted in numerous costly failures, as products were released without realizing there was no actual demand.

As time passed, the concept of customer-centricity emerged, prompting product teams to empathize with users, discover what could go wrong with the software or app, and discover how to prevent these issues. Product discovery helps identify usability, feasibility, desirability, and viability risks and focuses on the most critical ones to ensure your project goes smoothly.

Why is Product Discovery Important?

Product discovery plays a crucial role in designing and developing products. It enables designers, developers, and researchers to understand the target users deeply. It empowers business owners and individuals overseeing the product to confirm the idea’s viability and identify potential risks before embarking on the product development process, thus preventing unnecessary expenses.

Moreover, it allows for meticulous planning of tasks and allocation of resources while also providing a framework to mitigate risks effectively. This stage aids in better-comprehending user needs while ensuring a considered approach to avoiding feature accumulation.

It also assists in evaluating the feasibility of the proposed solutions, ensuring that they are both achievable and aligned with available resources and capabilities.

The Goals of Product Discovery

#1 Customer Understanding

Gain a deep understanding of the target audience’s needs, pain points, behaviors, and preferences. This involves conducting research, surveys, interviews, and market analysis to develop empathy for the user.

#2 Problem Validation

Confirm that the problem you aim to solve is a significant and pressing one for your target customers. Validate assumptions and avoid building a solution for a problem that doesn’t exist or isn’t substantial.

#3 Idea Generation

Generate a range of potential solutions to the identified problem. Encourage brainstorming and creative thinking to explore different ways of addressing customer needs.

#4 Hypothesis Testing

Develop hypotheses about how your product solutions might address the identified problem and meet customer needs. These hypotheses can then be tested through experiments and prototypes.

#5 Risk Mitigation

Identify potential risks associated with the proposed product ideas or features. By uncovering these risks early, you can develop strategies to mitigate them before they become more significant.

#6 Market Validation

Confirm that there’s a market demand for your product. Analyze the competitive landscape, market trends, and potential customer adoption to ensure your product has a viable market.

#7 Validation of Key Assumptions

Test critical assumptions about user behavior, market demand, and solution effectiveness. Adjust your approach based on the outcomes of these tests.

#8 Alignment and Communication

Ensure that all stakeholders, including product teams, designers, developers, and business stakeholders, are aligned on the product vision and goals. Clear communication throughout the process is essential.

#9 User Feedback

Collect feedback from users to understand their reactions, preferences, and pain points. This feedback helps refine your product concept before committing to complete development.

#10 User-Centered Design

Ensure your product’s user-centered design and features provide a positive user experience. Incorporate user feedback into the product design discovery phase process.

What are The Four Major Risks?

  1. Usability Risk: This relates to the uncertainty of whether your users can effectively comprehend how to utilize the solution. Do the navigation paths appear logical to the typical user? Do the prompts for action align with the intended user interactions? Developing a low-fidelity prototype through platforms such as Adobe XD or Figma and subjecting it to diverse testing and research methods is a reliable approach to assessing this.
  2. Feasibility Risk: This risk addresses whether your innovation can become a reality as planned. It examines the technological possibility of creating the suggested solution and outlines the necessary steps to make it happen. Additionally, it delves into the business feasibility by scrutinizing internal strengths like technology, finances, brand, customer service, partnerships, and other relevant factors.
  3. Viability Risk: This risk assesses the company’s ability to generate profits from the solution, ensuring that revenue exceeds cost and whether customers will purchase or users will opt to use the product.
  4. Desirability Risk: It checks if innovation effectively addresses the correct customer issue. If the solution effectively tackles its main challenges when attempting to complete the task, it fulfills the desirability criterion. Conversely, if there are unaddressed pain points, considering a pivot could lead you to a more promising direction.

In essence, discovery phase of product development aims to mitigate these inherent risks systematically, ensuring that the products being developed align not only with the specific needs and desires of users but also with the practical aspects of business feasibility, including the potential to generate revenue, the technical feasibility of implementation, and the overall viability of the solution within the market landscape.

It is also crucial for you to recognize that the goal of the product discovery phase is not solely centered around shipping features. Instead, it fosters a learning-oriented environment, supporting consistent product improvement.

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How to Mitigate the Risks During Product Discovery? 

During product discovery, consider the following constructive steps to ensure the success of your product development efforts:

  • Establish effective communication with stakeholders.
  • Gather input from various stakeholders, including both business representatives and end-users.
  • Amass relevant information to form a comprehensive understanding.
  • Analyze end-users, their requirements, and current methods of addressing the problem.
  • Validate assumptions guiding your product idea.
  • Utilize data-driven decision-making techniques.
  • Identify and analyze potential risks.
  • Conduct thorough market analysis.
  • Engage in in-depth competitor research.
  • Employ Lean Experiments for hypothesis validation (link to an article about this concept).
  • Maintain meticulous documentation of insights, decisions, and outcomes.
  • Foster cross-functional collaboration among teams.
  • Develop strategies to mitigate risks effectively.

Step-by-Step Guide for Conducting Product Discovery

Illustration about Product Discovery stages in product development process.

#1. Acquire Knowledge and Insights about the Idea

Product discovery initiates by focusing on “What do we do?”, “How do we do it?” and “What is the goal of it?”. It is crucial to address pressing user problems to ensure the success of a product. Therefore, the initial step involves comprehending the challenges and difficulties faced by potential customers. Through this understanding, we can clearly define the problem that needs to be solved.

During this early phase, it is essential to take a step back, challenge assumptions, and uncover the actual needs. Sometimes, you, the product owner, can rest on a single belief, which could prove false in the real market. This risk contributes to start-up failures, underscoring the importance of separating facts from assumptions.

The most common approach for acquiring this knowledge is by conducting user and market research, which involves customer interviews, focus groups, and validating user experience insights through product analytics data.

Within the team formation stage, extensive discussions are held to define both internal and external problem statements. The discovery phase entails gathering data to verify these assumptions’ accuracy, partial truth, or falsehood.

The product discovery process initiates with qualitative tools such as:

  • Existing qualitative inputs: Valuable insights can be obtained from support tickets, sales call transcripts, past user research, feature request forums, customer emails, and statistical data. These sources shed light on the challenges faced by prospects and customers daily.
  • Customer Interviews: Actively engaging with current users to grasp their day-to-day challenges is an essential practice underscored by the significance of asking the right questions. For insights into effective questioning strategies, refer to the book “The Mom Test” by Rob Fitzpatrick.
  • Competitive research: Reaching out to users of competing products to learn how those products fail to meet their needs or how competitor products are already addressing similar problems.
  • Market research: By diving into the market trends and dynamics world, the PM helps the client to get a clear picture of how the industry works and discover new chances for your product to shine. This step enables understanding what’s happening in the field and finding options to make your product stand out.
  • Observation: Utilizing screen-sharing tools to observe users during customer interviews and identify areas where they encounter difficulties.
  • Direct outreach: Engaging with customers in person, over the phone, or through customer communication tools to inquire about their reasons for performing specific actions within the system.
  • Journey mapping: Illustrating the steps individuals currently take to solve their problem, and their emotional experiences at various stages.
  • Focus groups: Conducting conversations with current or potential customers to gain insights into their attitudes regarding customer discovery.

Following these steps, it’s crucial to be ready to see the facts and not bend your observations to fit a specific idea. The success of each point dramatically depends on your ability to grasp reality as it is objectively.

Remember that even if the outcome isn’t positive, there’s much to learn from it at this stage, making it a result since this phase is the perfect time for a pivot – before you’ve invested money in development. This moment offers a valuable opportunity for change without financial commitment.

Workshops with Stakeholders for Goal Definition

The initial phase also encompasses workshops conducted in collaboration with key stakeholders such as the CEO, business owner, product owner, department leads, or potential users. These workshops serve as a platform to understand the product comprehensively, establish clear business objectives, and separate hypotheses from facts.

Additionally, these sessions help determine the potential scope of the project. As part of this step, interviews are conducted, relevant documentation is gathered, and other relevant information is collected to inform the subsequent stages of the product discovery process.

#2. Validate Hypothesis and Make Informed Decisions

After accumulating all the data and feedback needed, the team should pause and focus on prioritizing the most significant problems faced by your users. Over time, patterns will emerge from your research, highlighting recurring issues across user stories. Once you have identified these frequent problems, the next step is to refine them into hypotheses and validate them.

This hypothesis should be a straightforward sentence, often taking the form of a question. It should encompass the primary problem and its associated sub-problems, addressing the needs of your users.

Hypothesis: We believe Generation Z parents will subscribe to monthly educational lectures for their kids.

(Please remember that the specific hypothesis will depend on the context and the prioritized problems discovered during the product discovery phase.)

While this process may appear primitive or straightforward, hypothesis validation process through research and experimentation may require several iterations before reaching an optimal solution. Take the necessary time and care during this phase, as the accuracy of your hypothesis will determine the direction of your product’s development.

  • Important note

Understanding that this process is optional during the discovery phase is crucial. The potential cost can seem daunting, especially when the outcome isn’t immediately apparent.

However, this process has the potential to save you money by preventing investment in an unwanted solution. It aids in timely decision pivots and identifying risks before they undermine a product or business.

#3. Establish Goals

Once the ideas have been suggested, the team can evaluate their potential impact and feasibility. Prioritize the most promising ideas for prototyping and presenting to customers.

Set priorities: Determine which problems to tackle first. Evaluate the importance and urgency of each problem. Prioritization allows you to focus on the most significant issues, making the most impact and delivering value to your users.

By prioritizing the problems, you can focus on solving more important ones first and saving time on less important ones. Unimportant ones are often dropped after the validation of important ones.

#4. Generate Ideas

After understanding the problem, it’s time to shift to generating solutions in the product discovery process.

To filter and identify ideas worth pursuing, product managers usually use the following product discovery questions as a guide:

  • Does it align with your business goals? Assess whether an idea aligns with the metrics and company goals currently being prioritized by your team. If an idea doesn’t contribute to these objectives, it can be set aside for now.
  • Is it relevant to your target audience or potential users? Evaluate an idea’s relevance to your target audience or potential users. Draw on the research conducted in the earlier stages to answer this question.
  • Do the numbers add up? Conduct a quick evaluation to determine the specific metric an idea is expected to impact and estimate the extent of that impact. This enables the comparison of ideas that address the problem in different ways.
  • Are people asking for it? Consider any direct requests or demands for a similar idea from customers or stakeholders. This feedback can provide valuable insights.
  • Would it be a missed opportunity not to pursue it? Consider whether not pursuing an idea would be a significant oversight. By asking this question, you can uncover exciting answers and thought processes that may lead to promising ideas that warrant further research and eventual release.
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#5. Develop Prototypes and Conduct Testing

In this step, we develop a functional model of the product. The prototype can be simple or complex, but it should demonstrate the core features effectively. It doesn’t have to include all the needed backend technologies. It just has to function this way to potential users.

This stage is essential since it allows you to thoroughly test and improve your product before committing significant time and resources. The prototype created during this phase is valuable for engaging users and assessing the solution’s usability and clarity. You can gain essential insights to refine and enhance the product by involving users.

Illustration about the software development process and what place product discovery phase takes in it.

With the prototype in hand, it’s time to engage with users once again:

  • Conduct tests with real customers and carefully consider their feedback.
  • Adjust and refine your prototype based on this valuable input.

Your initial prototype may not be perfect, and genuine user feedback will guide you toward necessary improvements. If users’ responses validate your hypothesis and early iterations, you can proceed confidently with development. If not, continue refining your prototypes until you are confident that the proposed solution aligns with your users’ needs.

After the prototyping phase, the following steps involve production and ensuring the product’s reliability. However, these steps occur after the completion of the discovery phase.

Why Should You Not Skip the Discovery Phase?

  • Avoiding the trap of never-ending scope expansion. Skipping the discovery phase can result in unclear expectations, leading to continual project extensions that delay the eventual release.
  • Evading escalating costs. Undefined objectives and requirements can trigger shifts in project direction, driving up expenses in the process.
  • Steering clear of missed deadlines. Without well-defined project boundaries can stretch the development timeline, postponing the much-anticipated launch.
  • Ensuring your project meets your aspirations. Initial misunderstandings can cascade into ongoing confusion, squandering time and financial resources. This emphasizes the significance of incorporating a discovery phase into your product development journey.

Final Notes

Throughout my experience assisting start-ups and established companies with their product development endeavors, I have understood that achieving success goes beyond having a great idea. The key lies in the proper execution of that idea and its relevance in the market in general. Regardless of our client’s industry, scale, processes, or objectives, I have consistently witnessed the effectiveness of the product discovery phase in risk mitigation, precise planning, and predictably facilitating the development of products.

It is worthwhile to allocate time and resources to the product discovery phase, as it lays a strong foundation for sustainable business operations in the future.

Our team offers comprehensive discovery phase services for product development, delving deep into your product concept and context and delivering valuable consulting throughout the discovery process. Contact us for expert guidance and support during your product discovery journey.

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