As an angel investor, I get to see many pitches, product prototypes and startups. One of the most difficult things I see is startups who have spent enormous amounts of money on product development, only to find out that there is no demand for their product – or that their product misses the mark and major redevelopment is needed.
In medicine “minimum effective dose” is the lowest amount of a drug that produces a therapeutic response or desired effect in those taking it.
It’s used to ensure patients get the treatment they need without being overexposed to unnecessary side effects.
As an entrepreneur, it’s natural to want to create an outstanding product. Often we feel like artists working on a masterpiece and there can be a lot of emotions attached to what we’re producing. We want to present our best to the world.
While being passionate is most definitely part of the success equation, it can also be a major roadblock in the product development process.
Read on and I’ll share with you two things I’ve learned from expensive experience.
FAIL CHEAP, FAIL OFTEN
Nobody wants to be told their baby is ugly. However even more painful is when you’ve sunk huge amounts of time, money and effort into developing your product only to find out it’s a no go.
Here’s one of the major things I’ve learned when it comes to product development – the probability of creating a smash hit on the first go is astronomically low.
I’ve come to expect that I’ll need to course correct or even start over multiple times before I get my winner.
Surveys and marketing research can help you identify a winner quicker, but there’s nothing like actually trying to get someone to part with their money to determine if what you have is of value to the market or not.
This is why I’ve now learned to makes small “bets”. This lets you fail cheap and fail often as opposed to a “bet the farm” strategy.
By making small investments, you can cut the losers early and ride the winners.
REAL ARTISTS SHIP
Steve Jobs famously said, “real artists ship”.
I’ve taken that statement to mean two things.
First that it’s easy to have a theoretically “perfect” product sitting endlessly on your drawing board. However, it’s not until it’s in the hands of your end customer that you can really start judging it properly.
Secondly, real artists or entrepreneurs are prolific. They create multiple iterations of their product with continual improvement based on customer feedback.
It’s this valuable feedback loop we want to tap into early in the product development process.
By creating what’s known as a “minimum viable product”, you create a product that has just the core functionality of what you want to offer and you create this as quickly and cheaply as possible.
Rather than trying to pack in all the features you think your customers will want through an expensive and protracted product development cycle, you instead release a bare bones product and tap into the feedback your customers are giving you.
What do they like, what do they dislike? You let them define the features and future of the product.
Thanks to exponential advances in technology and the constant drop in price of these technologies, it’s never been easier and cheaper to do product development this way.
Social media, mobile devices and web technology can give you almost real-time, continual feedback directly from your customers.
Of course, certain industries lend themselves better to this type of product development than others. If you operate in a highly regulated industry like car manufacturing or pharmaceuticals this will not be possible.
But this is the exception rather than the rule. Most small businesses – from ordinary local businesses like cafes and restaurants to services businesses like legal firms, accountants and many others can create minimum viable products and experiment with features, price, terms etc.
Shipping quickly, tapping into a customer feedback loop and constantly improving your products is the best and most reliable way I know of consistently producing winners.