How will UX and Design thinking influence how executives fund product development in the future?
Design thinking has been around for a long while, and UX or User Experience considerations have grown in popularity over the years too. A lot of human-centric design and product development focusing on user experience has proven itself a great model for many organizations.
In the past, a team of experts or executives would make a decision about what they felt was going to be the right product for a specific market. Ideas, concepts, and recommendations for product development were fuelled by senior leaders without validating whether these ideas had merit.
Today, we are seeing more investments being dedicated to discovery.
- Is this the most valuable product we can build?
- Is this a product that customers find valuable?
- Is this a product that customers are willing to pay for?
- Is there a viable market for this product or service?
- Is there a minimum viable product we can build and evolve / iterate from there?
And so forth.
A commitment to discovering what might be our next best step, and whether that direction of travel holds any value for customers and the organization.
Customers might love the feature but not be willing to pay for it. They might think something is a very cool idea but don’t have any application for that innovation.
So, discovery is as much about learning what you shouldn’t build or dedicate time and resources to as it is about learning what you should invest in and persevere with.
One of the patterns within User Experience is LEAN UX, developed by Joshua Seiden and Jeff Gothelf, that shares the same ethos as design thinking models developed by Stanford University and IDEO, which is to think about how to fill the product development funnel with work if we are unsure about whether we can extract value or revenue from those efforts.
Flaws of product development without LEAN UX
Many organizations will have a strong business case presented for a product or concept based on the opinions of people within the organization, ranging from product managers to marketing directors, which project success in targeted markets.
These presentations and predictions are based on opinions, market sizing, and shallow research of competitors and customers. In many cases, a textbook example of confirmation bias in motion.
The organization have a great idea, the experts all agree it is a great idea, and the research confirms that the potential product has a sizeable market to exploit with minimal competition in the arena.
The idea or product concept hasn’t been validated. It hasn’t been tested. There is no hard evidence or relevant data to inform the decision to invest significantly in the product development, yet the organization will move forward based on assumptions.
A smart executive or leadership team will invest more time, effort, and money into testing hypotheses and validating assumptions before committing to product development.
The LEAN Startup concept – developed approximately a decade ago – encouraged people to understand who the customer is, what jobs they are trying to get done, and what pain points they are trying to eliminate before building a product.
Organizations tended to focus on the product or idea first, and then attempt to create a customer segment based on what they had built, rather than starting with the customer first and building a product that served all those customer needs, created the gains customers cared about, and eliminated the pains that plagued customers.
So, the LEAN UX and LEAN Startup ethos is to start with a customer, validate assumptions about that customer, test whether the product creates value for the customer, and whether that customer segment is willing to pay for the product or service before developing a product at all.
Minimum Viable Product.
A minimum viable product, also known as MVP, is a minimum standard we need to produce for the organization to capture revenue from a customer segment. What is the least amount of product development investment required before we can capture positive returns on that investment?
In the LEAN UX and design-thinking world, this isn’t an attempt to build the least valuable product in exchange for the most revenue or profitability. It is instead based on the understanding that we don’t know what we don’t know, and we can’t know until such time as we learn more from the customer about what they do and don’t value.
We can make X assumptions, validate those assumptions, confirm that customers are willing to buy the product, and then we can build exactly that. The minimum viable product.
Once that product is in the market, acquiring customers, and growing revenue, we can then start to work on the next most valuable feature. The augmentation of the product that delights customers and increases customer satisfaction, customer acquisition, and customer retention.
- Develop a hypothesis.
- Validate the hypothesis.
- Build the minimum viable product or feature.
- Gather feedback, reviews, and data.
- Evaluate the data and use it to inform what the next most valuable step might be.
Rinse and repeat.
Learning is the key element to the success of this approach. We build, we learn, we adapt and then repeat the process over and again, each time creating value for customers and competitive advantage for the organization.
No assumptions. No ego-driven decisions. No wasted time, effort, and money.
Agile Product Development.
Since its inception in 2001, Agile has come a long way in helping organizations solve complex problems and build complex solutions.
A great deal of effort and emphasis has been placed on how we build those products, and how effective we are at delivering continuous value to customers. In many cases, however, how effectively we continuously deliver a product or feature to customers.
LEAN UX, LEAN Startup, and UX / Design-Thinking brings the focus back to value.
If all we are doing is effectively churning features out the door, we end up with clutter and it can be hard for customers to understand why they are paying X amount for a product when they only use 10% of the features.
In some cases, we may lose customers because a competitor builds a product that has fewer features than ours, but captures 90% of the value customers are looking for, at a lower price point than our swollen, obese product offering.
In my own experience, and in alignment with research from multiple organizations in the product development space, somewhere between 60% and 90% of the features and products that are developed should never have been built in the first place.
They don’t create or capture value for the customer or the organization.
So, executive and leadership teams are now beginning to grasp that there is little value in having a team working flat out, yet failing to deliver any value. If they are measured on velocity and productivity, they will produce stuff fast, but fail to create anything of value.
So, our focus needs to shift to value creation and customer needs, and away from productivity.
Our goal is effectiveness and flow efficiency rather than speed and volume.
That is how Scrum UX and Design Thinking is influencing how executives fund product development in the future. If you are interested in learning how, explore our PSU course (Professional Scrum with UX) developed by Scrum.Org
About John Coleman
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