No, that isn't a spelling mistake. It stands for Nothing Important Happens in the Office and is a part of the Pragmatic Marketing course. I'll spend this post talking about the principles of getting out of the office in more detail, as it is of fundamental importance when trying to launch your painkilling solution to the market. More importantly, it outlines an important principle of our product development cycle as we continue to mature our value proposition. What the principle of NOHITO means is very simple...absolutely nothing important is going to happen in the office, especially when you are trying to develop your next great solution for customers. Whether it is a first generation eureka concept or a follow on product to a previous generation, I cannot stress enough the importance of getting out into the wild and actually talking to customers. However, there are some fundamental things to consider as part of this data gathering effort for your product development. The ultimate goal is to make this a valuable use of your time.
First, you need to take what your customers tell you as data points not as gospel. You want to ensure that you are looking for trends and patterns to the feedback vs. simply taking what one customer says is their particular pain killing solution as the answer. You hear all the time, especially in the tech industry, that you are suppose to lead and tell the market what it wants vs. listening to customers and that is not what I'm saying at all. What you want to do is make sure you are asking the right questions, gathering patterns and developing a solution that fits the problem the customer is trying to solve. The best quote that epitomizes this idea comes from Henry Ford.
If I had asked customers what they wanted, they would have said "faster horses" - Henry Ford
Second, you need to organize your customers into the buckets that align with your value proposition. There is no point getting feedback from customers on your idea when, in reality, these people wouldn't be customers at all anyway. You can easily make changes to try and appeal to everyone under the sun instead of staying laser focused on your true target market. I am not saying that you should ignore feedback and if you have put the effort into the customer discovery work early in the value proposition development, than you have a very good understanding of what your customer looks like. There are many new opportunities to create products for other types of customers. Stay on task to ensure you have the right solution for your defined target market for this particular product. There is nothing stopping you from jotting the information down for the next product idea.
The last, but not final, point to make on this topic today is to ensure that you have respected your customer’s time through this process. This means coming into the interview prepared with questions, spending more time listening, so you are getting feedback instead of leading the witness, and ensuring you are following up on actions taken during the process. Remember, you do not need to take everything each customer says as gospel, however, you do need to show respect for other opinions as part of the process and be thankful for the time they are spending to share their perspectives.
There are a lot of different branches we will cover in the future in relation to getting out into the wild and enjoying a strong NOHITO. Feel free to share your best stories of getting out into the wild and talking with actual customers in the comments section or directly to me!
It's been a crazy product development cycle. You've poured your heart and soul into your offering, suffered through all the ups and downs along the critical path and the day has finally arrived.
If you are like most, you immediately begin wondering if all the hard work you have put into the solution will resonate with customers. Will they understand why you did what you did? Will they get it? Most importantly, will they part with their hard earned money and buy it? The good news is if you followed the steps we discussed in our other posts you are well on your way to being successful with this new offering.
Finishing the product is really only part of the story. The other things we need to consider as we prepare to go out into the market are Pricing, Placement and Promotion strategy. Let’s use the rest of this post to touch on these elements of a full product strategy.
Pricing strategy is more than just how much you charge a customer for your product or service. As you come up with your pricing, you need to consider things like the channel margin structure. For a physical product, it’s looking at your retailer and distributor margin; for software it would be how much you being charged by the app store and if it’s a service, it would be how much your service provider needs to make as part of the deal for this to be interesting. Ultimately, the most important thing as part of a pricing strategy is to ensure everyone in the mix is making MORE money with your product than with the competitions. This one tip alone will help demystify why some products win and others lose in the marketplace.
Most commonly, people think of this as how often they put their product on sale and that is just a small part of the equation. When you are thinking about product promotion, you need to consider various elements of promotion through your channel. How much are you going to allocate from your revenue model for things like pricing reductions for customers, online ad placement, physical flyers, point of sale marketing material and cruise packages for the top sales person…yes, those do exist… The key tip to remember as part of any promotion strategy for your product is that promotion dollars are NOT just used to cut the price. Ultimately, promotion dollars are about increasing the sales rate during the promotion period and after as well. If you think of this as an investment in the ongoing and future success of the product line, you will be further ahead than most. Remember, it is not always about cutting the price…
Placement is exactly what it sounds like. You want to be where people are going to find your product. Better yet, you want them to find your product when they are ready to spend money for your solution. This could be an investment in an end cap within a traditional storefront or getting placement on the first page of Amazon.com. One thing to remember, as part of this placement process, is that the company who is going to sell your product for you is typically measured on how much money they can generate on a monthly basis from placement fees. It is in their best interest to maximize your placement budget, regardless of how many units you will actually sell through this investment. Realizing that the other person is actually a sales person, and is therefore measured by gathering promotion dollars, will give you more leverage in the negotiation. It is easy to be overwhelmed by the myriad of opportunities to place your products in front of your customers, just make sure you keep an eye on the business equation. The units you sell in these high traffic areas are going to build your brand, help you get your product to your customers and ultimately lead to further sales down the road. No matter what sales people tell you; if you sell each unit for a net loss you can never make it profitable no matter what the volume…
In summary, we’ve touched on the 3 of the 4P’s of product management aka Product, Pricing, Promotion and Placement. The product piece is one that most SME’s consider the most important and we’ve touched on that in the last posts. Remember that it represents only ¼ of the overall equation. Keep in mind that the most world changing product that is mispriced, can’t be found or is not profitable for everyone in the value chain is going to fail.
In our last post, we talked at a high level about the four phases of a product lifecycle; from concept, to development, thru launch and out to end of life. We deconstructed the concept phase a bit in order to stress the importance of creating the customer value proposition for your product early in the lifecycle. The ultimate goal here is to not over invest before having a good understanding of why someone would want to pay you for your solution. Whether you are delivering a complex piece of software, hardware product, solution offering or even cupcakes there is a tried and true cadence to how we develop the “product” even if some of the names look or sound a little different in your particular industry.
Market Requirements – This phase includes things like the value proposition, customer demographics, addressable market sizing, high level go to market planning and financials with enough details to determine if this is a good investment. We’ll continue to mature these items during the development of the customer offering as we learn more, refine the product and tweak the market plan. However, without a full view of the product from concept to customer, you risk repeating the product development all over again as you will miss a feature, mis-price or simply estimate the market incorrectly.
“If I had 8hrs to cut down a tree, I’d spend 6hrs sharpening the axe” – Abraham Lincoln
Engineering Validation – This phase is all about whether what was outlined in the market requirements document is actually deliverable in the time required, at the cost needed and to the quality level expected by the customer. Other than maturing the product concept in this phase, we need to be reviewing whether there is any new information from the market that needs to be incorporated while we still haven’t spent too much money. The goal of this phase is a contract of sorts between the development team and the business showing an aligned product strategy with agreed upon delivery expectations for our customers. Focus on ensuring you have a well-defined customer identified, and can deliver a product that they want to the specifications previously outlined.
Design Verification – The fundamental importance of this phase is to determine whether you can deliver on your commitments as outlined in the specification. It is here that we perform specific and comprehensive product verification tests to ensure we can create a shippable product. Whether this is validating our physical product specifications, verifying the interface specifications or ensuring you are compliant with all regulatory requirements for the system, this can be the longest part of your overall product development. There will be many ups and downs you go through as it feels like you just figure out one part and something else now needs to be fixed. Slow down and plan each step through this phase or you can easily see yourself going off the rails.
Production Validation – We now have a product, produced in reasonable quantities to an acceptable feature set in compliance with any regulatory requirements. Now, what happens when we scale for production? When we make 1,000 units instead of 100 does our yield drop precipitously? When we install on multiple platforms and corner case test longer than a night, does the smoke get out? And, when I try to make more than 10 cupcakes, does the recipe scale in line with my measuring instruments? This is the phase where we answer all these very important questions. As an SME business owner, you can easily get caught up in your success of the DVT phase you just exited and get moving to customers and you’d be well justified in wanted to do so. You’ve been through the ups and downs of the product development phases and want to get your game changing solution out to customers. You’ve spent money; you’ve lost sleep and desperately want to get your pain killer solution out to the market. Take a step back and ensure you’ve covered the bases of validating your steady state product through this phase. Remember, you don’t get a second chance to make a first impression!
So, now you’ve defined a pain killing solution, you’ve documented your value proposition and now you’ve developed it for the market. Now, we just need to launch it! We’ll cover that section of the ride in a future post.
I had an interesting discussion with a technology startup owner last week that I feel can be useful for others as it is not a unique issue and there are elements of these challenges with every idea big or small. You may recognize the symptoms:
What’s occurred here is we have a product that hasn’t been thought through from the concept to development to launch and out to end of life. We have a product that is following a strategy of if I build it they will come. Solving a pain point only means you’ve identified a problem that may have customers since you’ve found value in the product. What hasn’t been thought through are things like pricing or how to drive eye-balls to the solution nor have we considered what an effective promotional campaign could look like to maintain interest through its inevitable lifecycle. For this post, we’ll cover the early concept definition phase of the product development as it is one that passionate entrepreneurs tend to breeze through as they are more excited about delivering than planning.
As mentioned above, a lot of entrepreneurial ideas start out as something that will solve a problem for an army of one…you. What we need to consider now is whether there is really value here for anyone else, how much those customers would potentially pay for this product/solution and whether you have the ability to get out to these customers with the world changing solution. All of these roll together to form important aspects of the value proposition for your customers. Said differently, the value proposition is something that boils down all the elements of your solution into a customer facing pain relieving “product” in which customers would be willing to part with their hard earned money to solve.
“The most important output from the concept phase of your product definition is the Value Proposition”
Many start-ups and small businesses fall down in this early stage by simply not spending enough time up front truly understanding what value they are going to provide to their customers and whether the tradeoff they are asking for in return will be worth the investment by you in developing it for the market. As entrepreneurs, it is hard to slow down and step back out of the weeds to truly see if the market will accept this wonderful solution. Spending twice as much time in this phase than you think you need too is a great use of your resources. As tough as it may be to slow down and think a little bit more before jumping into developing the world changing idea it’s an important use of your time.
We’ll cover the Development, Launch and End of Life phases in future posts.