Secrets to Successful Product Innovation

June 19, 2015
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In today’s world, small startups can successfully compete with established heavyweights by being smart about how they derive, design and test their products and strategies to find product-market-fit fast.

As part of our ongoing “Birds of a Feather” event series, General Catalyst (GC) recently hosted an exclusive workshop in our offices in Cambridge, Mass. highlighting product innovation. The interactive session was designed to help companies make immediate, tangible changes to their product discovery and development processes.

Marty Cagan, Silicon Valley Product Group

The event was hosted by General Catalyst’s David Orfao and Larry Bohn, and we were delighted to have Marty Cagan lead our workshop. Marty has spent 30 years defining and building products for some of the world’s most successful companies, including Hewlett-Packard, Netscape, AOL and eBay. He now runs the Silicon Valley Product Group, a consultancy that helps high-tech companies create innovative technology products.

One enduring motif in Cagan’s thinking is product discovery. This is the process of rapidly testing out ideas to determine what actually works with customers and what doesn’t.

Another key to successful product innovation highlighted during the workshop are cross-functional teams. When engineers, UX designers and product managers work together, it increases personal investment and gives them shared ownership, empowerment and accountability.

The source of ideas

Cagan believes one of the biggest problems startups face is over reliance on the customer for ideas. If you’re deriving ideas for products from your customers, you are relying on a source that largely does not know what’s technically possible. It is your job to show them what is possible.

Below are other common reasons for product failure, as well as the main sources of product success.

Common reasons for product failure: business cases and product roadmaps

Writing business cases gives us something tangible to do, but it does not often produce something useful. Cagan believes that product roadmaps are the biggest reason why startups fail. Most roadmaps are prioritized lists of products and features, but you have no way of knowing if they will work.

Here is some of his uncommon wisdom about roadmaps.

  1. Half to three quarters of your roadmap won’t work. Even if customers are excited about the idea of a product you’ve proposed, they will bail if the product is too hard to use.
  2. The one-quarter of products that might pan out typically take three to five iterations before they deliver value. Often, startups don’t have the time or money to do that much development.

Summed up, the product roadmap is the antithesis of the lean, agile company today’s economy demands.

Achieving success: the headwaters of product development

Cagan strongly believes that an under-utilized source for product ideas is the one group that rarely seems to get invited to the party: engineers. Engineers will provide you with ideas based on what is just now possible. They will tell you what is possible, how it is best done, and how long it will actually take.

Once you have delved deep into conversation with engineers and decided on some desirable and possible products, what then? Cagan encourages teams to implement a style of development that uses the minimum viable product test, product/market fit, and product vision. Some of his observations are below:

  1. Do not try to please the whole world with a product. Instead, break it down into segments and audiences where you can quickly separate the good ideas from the bad. Create small product teams and use the team model, not the pool model.
  2. When it comes to creating those teams, advocate for small ones. Small is good. Small is collaborative. Teams should be created to solve real problems, not as a function of a spreadsheet or an org chart. Provide them with business outcomes to arrive at, not a roadmap to obey.

In practical terms, he recommends putting together a team that has, say, two to three engineers, one product owner, one designer, and one testing engineer. Locate them so that they are in close physical proximity to one another so they can feel those exciting moments where chatting and brainstorming produce solutions.

UX y’all

Cagan strongly encourages teams to strive for balance by adding a designer and product owner, which can help increase your throughput.

Don’t try to cut corners by outsourcing. It takes two or three months for an interaction designer to get up to speed, so agencies rarely work. Think about investing in an in-house UX designer.

Also be sure you understand the type of UX help you need — interaction design, visual design or industrial design. For that reason, he encourages teams to be clear about what you are looking for when hiring for UX.

Release the hounds!

When it comes to product updating, Cagan is a big fan of moving away from on-premise releases, as well as big bang (once a quarter or once-a-year) releases, which are bad for us and bad for our customers.

He advises instead that you issue frequent small releases on an ongoing basis.

Action without vision

There is a Japanese proverb that says, “Vision without action is a daydream. Action with without vision is a nightmare.”

“Your product vision is not an indulgence, it is a guide,” said Larry Bohn, managing director at General Catalyst. “It helps you to avoid getting lost in the details for their own sake. It makes sure your overall development is in harmony. You need it.”

In order to communicate what inspires you, consider storyboarding it, in the same way that filmmakers do to communicate to the cinematographer, actors, and set designers how they see the film as a final product.

Strategy and the progressional path

“One of the keys to a successful product strategy is to move in an orderly fashion,” says David Orfao of General Catalyst. In this era of “multitasking” that may seem counterintuitive. But test out the process yourself. Focus on one market at a time and nail your product/market fit before you proceed to the next market.

What’s next?

This recent workshop is part of a series of events we’re hosting in Boston, NYC, and Silicon Valley. Our events are designed to share practical lessons with startup companies and combine them with a deep knowledge of best practices.

“Both Marty’s insights and the discussion with other GC companies were valuable and engaging. The day highlighted some things we’re doing right at Demandware, called out many areas we could do better, and prompted a number of ideas for how we could improve the way we drive product efforts.” — Brian Collins, VP of Product Management at Demandware.

“The workshop was very helpful in challenging our thinking regarding driving product innovation and development.” — Clay Ritchey, Chief Marketing Officer at healthcare IT security company Imprivata

“I’ve been a follower of Marty Cagan’s since reading his book several years ago, so it was a pleasure to engage with him directly and with such a great group of technical leaders. The workshop challenged several things we do today and I’ve already started implementing changes and educating our own team on these approaches.” — David Block, VP of SaaS Backup Engineering at Datto.

For further info on the Silicon Valley Product Group, contact Marty Cagan.