Alexey Kulakov is Co-founder, CEO at JetStyle and Co-founder and Chief Product Officer of Rideró (est. 2014), a self-publishing platform.
Working as an expert and mentor in corporate accelerators, Alexey has collected a set of practices that help him and companies he works with to stay on track of their product development path. These are both specific tools you can implement in your work, and concepts that you need to have a clear understanding of. All of these ideas pertain to the philosophy of the product development approach. Gladly sharing 5 of them with you:
1. Critical Review of Business Ideas
Not every business idea is a good product idea. What are the criteria of a concept that can grow to become a digital product? First of all, it should be related to an already existing process. Ideally, your product is supposed to improve a process and make it more effective. In other words, you need to have specific knowledge about your customers and their motivation to purchase items or use services.
At this point, you’ll have to filter your idea through a set of questions, related to either your potential profits, marketing costs or customer value. If an entrepreneur finds answers to these questions listed below, it will be easier to confirm the idea that the product is worth getting involved.
- Do you have a clear understanding of what you’ll gain if you start this business?
If you decide to work in a stagnating niche, you are doomed to fail. If you want to open up a new niche, you will have to spend lots and lots of resources. If you don’t understand the growth factors, it will slow down the development process. So make sure you check out the following points:
- The market is not too crowded.
- You know its structure (aware of the client segments).
- You found a developing niche.
- You know what the growth drivers are.
- Do the sales pay off?
On this level, you’ll have to experiment and see that:
- You found the value that people want and cannot have (yet).
- You proved that you can deliver what you have promised.
- You found a sales channel.
- You confirmed that you scale profit rather than the losses. Here, you might find unit economics useful; read our blog to learn about this method of estimating business effectiveness and use our calculator).
- Do we deliver value to our customers?
This set of check-out points helps us keep track of why we started our product development process in the first place:
- There is proof that people change how they behave.
- They purchase again and bring their friends and family.
- They are happy about the change your product brings.
- Do we have a well-coordinated team that develops using their experience?
What does it mean?
- They ‘use’ each other to improve their thinking processes.
- They are quick to delegate and share responsibility.
- They help each other.
- They are predictable.
- Roles within the team are well balanced.
2. Time-travel For Your Benefit
We’re used to creating solutions and plans that move us forward, from the past into the future. This way makes sense, however, quite often it provides us with typical and common solutions, with practices that everybody has done for a thousand years. If you’re looking for something unexpectedly effective and brand new, do the opposite.
Hop on the time traveling train and get off on the final stop, at the very happy ending of your venture. Where you’ve already managed to find the perfect balance between your effort, costs and profits. What do you see there? What kind of experience have you managed to create? What do your customers feel while they use your product? What’s their motivation to come back to you? After you’ve found answers to these questions, take a look at the state of your business that drove you to this success. As a result, step by step you move to ‘today’ - and see what you need to achieve in order to reach the state where your product delivers value to customers and you get profit out of it.
On your journey to where you expect to achieve success you learn what kind of experience you want to create. Even if the experiment ideas you elicited during this exercise turn out to be a failure, don’t worry. With proper analysis, they give you valuable insights that will steer your product development journey forward.
3. ‘Black Box’ canvas
I use canvases a lot, though I’m not a big fan of them. It sounds controversial, but let me explain. They are a great way to enhance your entrepreneurial thinking. However, they seem to simplify your mental processes too much. People may think that all it takes to create a business model is simply fill in a relevant canvas; this activity, however, often turns out to be pretty useless.
Canvases can be a great way to customize your entrepreneurial thinking. I combined a few of my favorite tools and created my own one; it’s called the Black Box method. This term initially comes from cybernetics: a system is viewed in terms of its inputs and outputs without any information of how it works from inside. This idea applies well to product development.
The Black box method highlights the core factor of your business effectiveness: whether your business has a potential to change people’s behavior. If you stick to this idea, it will not let you steer away from your main goal: change people’s lives for the better. Otherwise, the whole process is just a waste of a canvas form. This idea is crucial because it makes your work meaningful. Also, because people are willing to pay money for something only if they truly believe it will change their lives. This goal is egoistic yet extremely rational.
Ideally, the Black box method works great to develop product hypotheses. The essence of this exercise is to imagine how you put your product with all of its features into a black box – and put the box away and forget about it, at least for a while. Then, again, there’s a lot of thinking processes that drive hypothesis development. I would divide the process into 4 steps:
1. Our job is to put down in words the actual benefits the product brings to customers. How does people’s behavior change if they start using our product? How is it going to make their lives better?
Your product development team should be able to foresee the results at the end of the process. If it can’t, then the whole thing might not even be worth the trouble.
2. Who are the people we interact with via our product?
Our next task is to figure out the context of future clients. Who are we aiming at? What happens in their lives that they might be unsatisfied with? Previously we assumed our product can make a positive difference to our clients’ lives. Now we need to understand what their current problem is. What process can we improve? In other words, we do our best to describe what problem our clients are currently dealing with.
3. How will our clients experience the change?
We know what problem we can solve with our product. We are aware of the positive value we want to deliver to our clients. If I put it in another way: we know how our clients’ behavior needs to change. Now — how exactly will they feel that something needs to be different? At this point, we need to find out what will motivate or trigger them to start doing something differently.
4. What will the clients compare their new experience with?
We mentioned it before: our potential clients have already developed their own patterns of behavior. We’re sure our product will introduce a positive change into their lives. However, people have already been solving their problems, without our invention.
So when you offer them your product, they are going to compare its features with their past experiences. Who is your competitor? What do they offer to your potential audience? What is unique about your offer? What holds your customers from switching to your product? At this stage, you also need to think about the impressions and feelings you want to leave in their memory.
Now — Let’s open the black box!
After you’ve found the answers to all the questions mentioned above, it’s high time to discuss the functions of the product you’re working on. It’s finally time to open the black box!
5. What is your solution?
What exactly do we do to solve the problem our customers are experiencing? Our solution should possess the following features:
- It should be the cheapest one,
- With everything else being equal, people will want to choose your product.
If you are confident that your product is going to deliver positive value to your clients’ lives, then you’re ready to think about what exactly your product is going to look like. You might need to develop a website, launch an ad campaign, create a design or a copy for a corporate card — and now is the perfect time to work on this.
The final result of the black box method looks approximately like this: people changed their behavior and enjoyed the change + we spent minimum effort to make it happen. The minimum effort in mind is exactly the essence of your first product development hypothesis. Voila — you’re good to go and start the experimenting process, during which you will have a chance to actually deliver value to your customers.
4. Most Critical Hypothesis First
This habit is based on risk analysis. For new enterprises, the biggest risk is failure leading to losing your business. Then, look at the list of your hypotheses – you’ve got plenty as a result of the previous technique – and choose the one that has a potential to be fatal. Which experiment are you counting on most?
You might find potential problematic spots in several areas. First, you may find out you’ve chosen the wrong market. Then, you’ll notice risks related to sales. Accordingly, the highest risks may lay in the area of value delivery, when there’s not enough operational power to ensure stable value delivery flow.
Even though it might feel compelling to start product development from the easiest steps, there’s a lot of logic in tackling risks first.
5. Eliminating Bottlenecks
This idea comes from the Theory of Constraints in Lean production. It implies that we view the business as a flow that goes through a system of pipes with different diameters. The system’s capability equals the amount of water flowing through the set of pipes.
Your system will be in either of the two states. In one of the states the pipe is too narrow, which creates a blockage; so the flow is limited by the pipe. In the other one, the flow is too small for the existing system: take any pipe of any size, and you’ll see that the capacity is higher than necessary.
What is the ‘flow’ in terms of your business? You could measure it in profits, number of sales, or product items. When you’ve settled your metrics, channel your effort to the most overloaded pipe, a.k.a element of your business. Take measures to unblock and eliminate it. However, your work does not finish here: you move on to the next element of your business system to improve and upgrade this specific ‘pipe’ to ensure it doesn’t block the flow. This process is continuous. Working on each element of your business flow helps to avoid so called local optimization. It happens when you channel your efforts to maximize something that is not the top priority at the moment.
This habit of flow management will eliminate bottlenecks along the way of your business development without local optimization.
If you want to talk about how any of these techniques applies to your business, we'd be happy to help. Sign up for a free demo call: https://calendly.com/js_project_interview/30min