Product Discovery Phase: What It Is & Why It Matters in Software Development

Imagine investing months of effort and thousands of dollars into developing a software product, only to find out that nobody wants it.

This scenario is more common than you’d think.

According to CB Insights, 42% of startups fail because there’s no market need for their product.

So, how do you discover your product is actually useful?

Enter the product discovery phase.

This is a crucial step in software development that can make or break your project.

In fact, many top companies out there started off focusing on understanding user needs and market demands.

Slack and Dropbox have turned initial insights into billion-dollar businesses.

In this article, we uncover why mastering this phase is essential for your software’s success and how it can save you from costly missteps.

Product Discovery Overview

The story of Slack provides a great example of how product discovery works.

Slack, a messaging app for teams, launched in August 2013.

In a market already crowded with communication tools like email, Skype, and HipChat, Slack differentiated itself by focusing on a seamless, user-friendly experience that integrated with other tools teams were already using.

Slack’s origin traces back to a gaming company called Tiny Speck, founded by Stewart Butterfield.

During the development of their game, Glitch, the development team needed a better way to communicate and collaborate. The existing tools were inadequate, so they created their own internal messaging system.

When Glitch failed, Butterfield noticed that the messaging tool they had built was incredibly effective and had potential as a standalone product. This led to the idea of Slack.

Before launching, the Slack team did extensive user research and tested the product with various companies.

They gathered feedback to understand how people used communication tools and what features were most valuable. This deep understanding of user stories, needs, and behavior was crucial.

Slack used popular product discovery methods, including identifying the pain points of existing tools, such as poor integration, clunky interfaces, and fragmented communication.

With a deep focus on these issues, they developed a solution that was not just another messaging app but a tool that streamlined communication and improved productivity.

The product discovery phase helped Slack create a product that resonated with users from day one.

They knew what people wanted and how they used communication tools, ensuring Slack effectively met those needs. As a result, Slack grew rapidly. It is now a go-to tool for team communication and collaboration in many organizations.

So, what is product discovery? Let’s unwrap.

What is Product Discovery?

A product discovery process involves identifying customer needs and developing products that satisfy them.

It involves identifying user problems and developing products that address them.

At this stage, we aim to discover problems that potential customers are willing to pay for but that aren’t solved by other products on the market.

The Importance of Product Discovery for Product Teams

A product management process is incomplete without product discovery.

This stage helps mitigate the risk involved in developing the product.

Furthermore, it lowers the risk of customers not needing the product, known as value risk. It also addresses usability risks by ensuring the product is easy to use. Additionally, it minimizes business viability risk by aligning the product with your business goals. Finally, it reduces feasibility risk by ensuring you have the resources to build it.

The Benefits of Product Discovery

Imagine launching a product that not only meets but exceeds customer expectations, delivering real solutions to their problems.

This is the power of product discovery. Investing time and effort in understanding your market and validating ideas early can set the stage for a successful product launch and sustained growth.

Here’s how product discovery can transform your development process:

Understanding Customer Needs

Product discovery helps teams gain a deep understanding of what customers want and need.

When engaging directly with users through interviews, surveys, and observations, teams can identify real pain points and tailor their products to address these issues effectively.

Reducing Risks

Investing time in product discovery reduces the risk of building something that doesn’t meet market demands.

Using prototyping and testing early in the product development process can help teams avoid costly mistakes and ensure their efforts meet the needs of users and the market.

Aligning Team and Stakeholders

Product discovery fosters alignment among team members and stakeholders.

Clear communication and a shared understanding of the product vision and goals help ensure everyone is on the same page, which is crucial for successful product development.

Optimizing Resource Allocation

The process of product discovery helps allocate resources efficiently as it focuses on ideas that have been validated.

Product teams can prioritize features and developments that have the highest potential impact, ensuring that time, money, and effort are spent on the most promising aspects of the product.

Enhancing Innovation

The product discovery phase encourages creative thinking and innovation.

Iterating on prototypes can help teams come up with new approaches and breakthrough ideas that differentiate their product.

Building Better Products

Ultimately, product discovery leads to the creation of products that better meet customer needs and expectations.

This process ensures that the final product is user-centered, solving real problems and delivering genuine value to its users.

Increasing Market Success

A well-executed product discovery phase increases the likelihood of market success.

Products developed based on thorough research and validated ideas are more likely to resonate with users, achieve higher adoption rates, and generate better business outcomes.

Let’s see what this process involves.

Understanding the Product Discovery Process

The product discovery phase involves research, ideation, and validation to ensure that the product concept is viable and valuable.

Here’s our own step-by-step product discovery process.

Step 1: Understanding the Problem

First, we interview our client. At this point, we discover their business idea, why they think it is important, what features they want to implement, etc.

We also ask about the audience they want to target, the monetization model, and the desired outcome.

Step 2: Market Research

Next, we conduct market research to uncover the problem your product will solve. Using Lean Startup and Design Thinking, we first analyze current solutions. Then, we research users and competitors to shape the product’s features.

We use customer feedback surveys, interviews, and product usage analysis techniques. We must gather and analyze customer feedback to improve our products and provide a better user experience.

Step 3: Ideation and Prototyping

In this phase, we design prototypes and wireframes to build the user experience. This process helps us craft a concept that users will love and clearly demonstrates the product’s value.

The client’s feedback is crucial in this stage, so we iterate on these designs and incorporate feedback. Then, we create a clickable prototype that is ready for testing.

This prototype allows us to visualize the product’s function and gather initial user reactions.

Step 4: Validation and Refinement Based on Customer Feedback

We then move to testing our business hypotheses, ensuring that the product aligns with user needs and market demands.

We gather customer feedback through rigorous testing to refine and enhance the product. This process helps us shape solid requirements based on your product’s core values.

The technical specifications will outline roles, use cases, and system needs, defining the scope of work necessary for development.

This step ensures that the final product is well-defined and ready for successful implementation.

When the client approves the idea, we move on to product roadmap creation.

After that, we can start developing a minimum-viable product.

The Product Discovery Process: Initial vs. Continuous Discovery

Product discovery can be divided into two main phases: initial discovery and continuous discovery.

Initial Product Discovery is the starting point of the product development journey.

During this phase, the focus is on identifying potential ideas for new products or significant enhancements to existing ones.

This involves a deep dive into understanding market needs, user pain points, and opportunities that the product can address.

Techniques such as market analysis, competitive research, user interviews, and brainstorming sessions are commonly used.

Continuous Product Discovery is an ongoing process that takes place throughout the product’s lifecycle.

Unlike the initial discovery, which is more about ideation and concept validation, continuous discovery involves regularly gathering feedback, insights, and data from customers, users, and stakeholders to continually improve and innovate the product.

A great example of continuous discovery can be seen with Airbnb. After launching, Airbnb didn’t stop at their initial success. They continuously gather feedback from both hosts and guests, which has led to numerous improvements and new features.

For instance, they introduced experiences and adventure bookings based on user demand for more than just accommodation.

This continuous feedback loop ensures the product evolves in line with user needs and market trends.

Key Differences

• Focus: Initial discovery is about finding the right product idea, while continuous discovery is about refining and evolving the product based on ongoing user feedback.
• Methods: Initial discovery involves broader research methods like market analysis and user personas, whereas continuous discovery utilizes ongoing methods such as user feedback surveys, A/B testing, and usage analytics.
• Outcome: The initial discovery aims to create a validated product concept, while continuous discovery aims to keep the product relevant, user-friendly, and competitive over time.

Both phases are crucial for long-term success.

Initial discovery ensures you start with a solid foundation by addressing a real market need.

Continuous discovery ensures that the product remains valuable and up-to-date, adapting to changing user requirements and market conditions.

Defining Direction and Priorities: Setting OKRs and Product Vision

As a product manager, it’s crucial to recognize that not all user problems can or should be solved.

Some issues may fall outside the scope of your product vision or strategic goals.

To effectively prioritize and align efforts, tools like OKRs (Objectives and Key Results) and the Opportunity Solution Tree (OST) are invaluable.

Let’s explore them all.

Setting OKRs

OKRs are a framework used to define and track objectives and their outcomes.

They help in setting clear, measurable goals that align with the overall product vision and business strategy.

For example, a product manager at Spotify might set an OKR to improve user engagement by 20% in the next quarter.

The key results to achieve this objective could include increasing daily active users, enhancing playlist personalization, and reducing app load time.

Defining Product Vision

In essence, the product vision explains what the product aims to accomplish over the long run.

It guides all product development activities, ensuring that the team stays focused on the important things.

A well-defined product vision helps in making strategic decisions and prioritizing tasks that align with the ultimate goal.

For instance, Tesla’s product vision of accelerating the world’s transition to sustainable energy drives its innovations in electric vehicles and renewable energy solutions.

Using the Opportunity Solution Tree (OST)

An OST is a strategic tool that helps map out user pain points and opportunities, aligning them with business objectives.

It starts with identifying user problems and then exploring various solutions that can address these issues. The tree visually breaks down the opportunities into smaller, actionable steps, showing how each aligns with broader business goals.

For example, if a product manager at a fitness app identifies that users struggle with staying motivated, the OST might outline opportunities like introducing gamification features, offering personalized workout plans, and creating a community forum.

These opportunities can then be evaluated against the product vision and business objectives to determine which ones should be prioritized.

Why are these tools efficient in the product solution space?

When setting OKRs and using tools like the OST, product managers can ensure that their efforts are focused on solving the most impactful problems in line with the product vision.

This approach helps maintain strategic alignment and effectively utilize resources to deliver maximum value to users.

Effective Collaboration with a Product Team During the Discovery Phase

After over 10 years of experience in the product development process, we have refined both our development routine and our communication strategy to achieve the best outcomes for our clients.

Here’s how we ensure actual team effort through effective collaboration.

Effective communication is crucial during product discovery. It helps build strong connections with both customers and business stakeholders.

We maintain regular updates and feedback sessions to keep everyone informed and involved. This allows us to identify potential issues early and make necessary adjustments.

Transparency in decision-making is key.

From our side, we always clearly explain the reasons behind our choices, build trust, and ensure everyone understands the direction of the project.

We use collaborative tools like Slack and Jira to facilitate seamless communication and documentation.

These tools help us stay connected, share updates, and track progress in real-time. This is particularly useful when coordinating across multiple time zones.

Customer interviews, surveys, and workshops provide invaluable insights into customers and stakeholders.

This engagement helped us refine features based on real user feedback in a travel app project, leading to higher user satisfaction.

In summary, our approach to product discovery emphasizes effective communication and collaboration.

Through alignment of stakeholders, transparency in decision-making, collaborative tools, and active customer engagement, we create a cohesive environment that drives innovation.

Product Discovery Phase Deliverables

So, what can you expect as deliverables from our product discovery efforts? Here’s what our clients receive after we conduct user research, propose solutions, and analyze the product.

UX Design

Our team develops a high-quality and functional prototype to demonstrate how the app will work. Along with this, we provide a detailed project vision that outlines the main objectives and the proposed solution.

This helps you clearly understand the product’s potential and future prospects, offering a tangible preview of what to expect.

For example, if we’re designing a new e-commerce platform, you’ll see interactive mockups showing user navigation, product pages, and checkout processes.

Project Documentation

You will receive comprehensive project documentation and spreadsheets. This includes a conceptual description of the future minimum viable product (MVP) business model and a detailed description of all product-related business processes.

This documentation covers requirements, functionality, team structure, market strategy, and financial aspects.

Imagine having a complete guide that explains every facet of your product, from the initial concept to the market launch strategy.

Solution Definition

You will be able to understand the entire app development process from start to finish. This includes detailed information on the technology stack, wireframes, architecture, databases, and programming languages that will be used.

For instance, you’ll know whether we’re using React for the front end and Node.js for the back end, as well as how data will be stored and managed.

This clarity ensures you’re fully informed about the technical aspects of the development journey.

With these deliverables, you’ll have a clear and actionable blueprint for your product’s success.

Common Pitfalls in Product Discovery and How to Overcome Them

Now that we’ve covered the deliverables let’s dive into potential pitfalls we might encounter during the product discovery stage and learn how we can navigate them effectively.

Knowing how to avoid these can lead to successful product delivery.

One major pitfall is not understanding customer needs.

Many teams start with assumptions rather than facts, which can result in a product that doesn’t solve real problems.

To avoid this, it’s crucial to engage directly with potential users through interviews and surveys to gather genuine insights. For example, Slack invested significant time in understanding team communication needs before developing their app, ensuring it addressed real issues.

Another issue is skipping thorough market research.

Without it, teams might enter a saturated market or miss important competitive and valuable insights.

Comprehensive market analysis can identify gaps and opportunities, as Dropbox did when they realized there was a need for simple, reliable cloud storage amidst more complex competitors.

Ignoring user feedback is another common mistake.

Products can miss the mark if teams don’t incorporate user input.

Implementing iterative testing and feedback loops is key. Airbnb, for instance, continuously refined its platform based on user feedback, improving usability and satisfaction.

An overemphasis on features can also be problematic.

Focusing too much on adding features rather than solving core problems can lead to a bloated product. Prioritizing features based on user needs and the value they deliver can prevent unnecessary complexity.

Poor problem definition is another pitfall.

Without a clear understanding of the problem, product teams can lose direction. Clearly articulating the problem statement and ensuring it aligns with user needs is essential. Trello, for example, identified the need for a flexible, visual project management tool and focused on that core problem.

Sebastien Phlix, Product Manager at N26, suggests using five key filters to determine which ideas are worth pursuing:

1. Does it align with business goals? If an idea doesn’t support the metrics or company goals your team is focusing on, set it aside for now.
2. Is it relevant to your target audience? Use your research from earlier stages to see if the idea meets the needs of your potential users.
3. Do the numbers add up? Quickly calculate which metric the idea will impact and by how much. This helps in comparing different solutions to a problem.
4. Are people asking for it? Consider feedback from customers or stakeholders who have requested similar ideas.
5. Would it be a mistake not to pursue it? Ask your team this question to surface interesting insights and promising ideas that might otherwise be overlooked.

Once you have a shortlist of ideas, use a prioritization framework to score them based on predicted value and feasibility, assessing the viability of each idea.

Inadequate prototyping can lead to costly mistakes later.

Investing time in creating and testing prototypes early can save resources. Instagram started with a simple prototype and refined it based on user interactions, which contributed to its success.

Finally, misalignment with business goals can result in wasted resources.

Ensuring that the product discovery phase aligns with the company’s strategic objectives is crucial. Microsoft Teams was developed in line with Microsoft’s strategy to enhance productivity tools, complementing other Office products.

Wrapping up

A deep understanding of customers helps product teams create products that people truly want and need. This process moves teams beyond “nice to have” features to build solutions that solve real problems and become essential for customers.

Successful product discovery benefits the product team, the company, and the customers.

It ensures that resources aren’t wasted on developing unwanted products and instead focuses on delivering something customers may consider vital.

Are you ready to embark on a product discovery journey with us?

We utilize the best product discovery techniques to ensure the proposed solutions meet your needs and business objectives.

Tell us about what you want to build, and we will conduct in-depth market and customer research to validate your business idea.