Product Development [Explainer] Definition and Examples | 2024

What is Product Development?

Product Development is the capability that allows a company to realize product concepts and present them to customers – reliably and predictably.

It includes the entire set of activities through which a company conceptualizes, develops, and launches a concept to the market.

If you want to improve your development, check out our material on product development consulting.

A typical product development cycle includes:

Ideation

Product development begins with an idea in close collaboration with customers, whether brainstorming new product ideas, a suggestion from customer feedback, or an edict from a senior manager.  

Market research and commercialization activities

To determine a market strategy, conducting thorough research and analysis is essential. A comprehensive business assessment helps evaluate the market feasibility of the product, ensuring that the product concept possesses the appropriate functionality and pricing to gain a competitive edge in the target market and support an effective go-to-market strategy.

Product design activity

This is often iterative and in collaboration with customers. In some industries, the “prototype” might be a set of manufacturing processes, a recipe for the new product.

Validation

Product designs then go through further validation, for example, to improve a user interface.

Finally, there’s the product launch and the ongoing product life cycle management activity. Product life cycle management includes the support of existing products as well as new-to-the-company products.

Product Development Examples

Apple

Apple protects new product concepts by separating the product design team from all other parts of the business. The team is shielded from bureaucracy and the usual hierarchy. They might even be discouraged from communicating with other employees. 

The team then follows an articulated Apple New Product Process (ANPP) where the team thoroughly answers the what, who, why, how, and when questions related to the product. Apple’s methodology depends on iteration. They will continue to test and revise new products even after moving to the manufacturing phase.

Design teams report directly to the executive team. On Mondays, the executive team meets to review the products currently in development. When products move from design into production, an engineering program manager and a global supply manager take over the manufacturing cycle.

Each product has an elaborate product launch plan held strictly in secrecy. This action plan is called “Rules of the Road” and contains everything required for the commercialization and launch of the final product. 

 Google

The tech giant uses a Design Sprint approach for new products. Each brief sprint conducts an experiment that the team hands over to the next sprint to move the product to the finish line. 

This approach uses five development stages led by a Sprint Master.

1. Understand: The first phase is to comprehend the challenge. Teams brainstorm and conduct short, fast meetings to generate insights that define the end-user’s problem. The critical acronym is HMW (How Might We).
2. Sketch: Sketching is one approach to ideation. Each team member is left alone to sketch their solution to the user’s problem. The team then meets, and members share their ideas. The team votes on the ideas and eliminates some.   
3. Decide: The team then attempts to decide which idea is the best solution for end-users. If the team does not agree, they might use a Decision Matrix to rate solutions against many requirements. They also rate the risk vs. value proposition of the proposed solutions.
4. Prototype: Proposed solutions are built out to get real-time feedback from testing. This stage involves getting rapid feedback to see what will and won’t constitute a viable product.
5. Validate: The team then shows the prototype to real users, its target audience. The team may observe customers using the solution. The team then reviews and absorbs their findings together. The team leaves a trail of learnings for the next sprint, furthering the new product development project.  

Kellogg

Nigel Hughes, Kellogg’s senior vice president of global research and development, summarized his company’s product development strategy in early 2021:

“We’ve revamped our whole end-to-end innovation capability to focus on our core food design skills: investing in culinary to get closer to the real food experience; sensory, to equitably learn with the consumer; a design studio and rapid process lab to speed up our prototyping; a scaled-up pilot, which is now certified to make salable food; and finally, our Menuvation Center at The Hatchery in Chicago to showcase our foods with partners and customers.”

“These changes give us a real leg up on the competition because they allow us to hit trends, influence new trends, and grow our business. They’ve transformed our ability to innovate.”

New Product Development Process (Including Agile)

Most companies follow a product development process, often divided into stages, phases, or steps. The most common product development processes have six such phases. A traditional new product development system has more checkpoints, typically towards the end of development, to ensure the product is ready for mass production and the marketplace.

For those starting or smaller organizations, we advocate reducing the steps to three: 

• Concept Fit
• Product/Market Fit
• Development

This three-step approach is a Minimum Viable Process: enough process but not too much. This three-step process enables executive oversight at the inflection points where they must make investment decisions. It then guides the product team toward reducing risks. Agile organizations, or those that develop software primarily, may want to consider Agile Product Development to get the best of both Agile and Waterfall methods.

Product Development Strategy

Another aspect of product development is product development strategy. Product development strategy connects product development to corporate strategy in every possible way: from the technology hub of your company to the core, augmented, and transformational products you offer to distribution channels, geographic segmentation, etc. This is often called product development life cycle management.

A viable product development strategy begins with the following:

• A vision: a broad statement of where you’d like your company to be (3-5-year horizon)
• A strategic plan for product development: steps and initiatives you intend to take to achieve that vision (2-3-year horizon)
• Product and technology roadmaps, project priority lists, and budgets connected to specific programs that realize the strategy

Early Stage Product Development, including Ideation

At the beginning of the product life cycle, before a formal product team (or agile scrum) is started, product management leads the initial stages, with increased emphasis on business analysis, market research, and target market definition. The product strategy and market strategies are refined from this work, and the product roadmap is updated. The increasing role of AI in products and the use of social media for markets should be considered in the early stages.

In this early stage, for both agile and waterfall development, some typical elements are often done in sequence and often led by product management or, in some cases, project management. These actions, including identifying and analyzing use cases, may also be defined in more detail in a product management process if you have one.

Idea screening (Ideation)

The first stage is to come up with an idea for the product. This can come from a variety of sources, including user feedback, market research, brainstorming, or from the engineering team.

Concept development

Once an idea has been generated, the next step is developing a product concept. This involves creating a high-level product description, including its key features, benefits, and value proposition.

Market research

This can involve analyzing customer needs and preferences, studying the competitive landscape, and identifying potential sales channels. This work helps to align the product strategy to serve the market strategy.

Business analysis

Once the concept and market have been defined, conducting a business analysis is essential to determine whether the product is technically and economically feasible to launch.

Product roadmap

Lastly, the product manager should update the product roadmap to lay down the major releases, features, and timelines for your product development.

New Product Development (NPD)

New product development, adequately understood, is the design, development, and launch of new-to-the-world products. It involves three capabilities:

• Having the proper governance to protect, fund, and nurture novel product concepts 
• Sufficient funding to allow these ideas to grow
• A process for vetting and prioritizing them to select and launch only the best ideas 

Product Development Life Cycle (PDLC)

The Product Development Life Cycle (PDLC) Stages describe the many activities that occur from the initial conception of the product to when the product is in market.

• Introduction: Where the product concept is created and launched
• Growth: Where the product marketing team takes over and maximizes penetration and sales
• Maturity: Here, the product marketing team tries to maximize profits, and the product management team tries to continue to evolve the product
• Decline: At some point, all products retire and are replaced by higher capability/newer technology versions

Product Management for Product Development

Product management is often the leading role in product development. To a large degree, product managers lead because there is often so much market risk that they are needed to guide the concept development and concept testing early in the process – even before test marketing.

Besides playing an important role early in the product development cycle, they also guide the formulation of a so-called Minimum Viable Product (MVP) to wring out any product-market fit early in development. MVPs are often used for software development to ensure the market values the new features.

Product management for product development includes such tools as: 

• Product management roadmaps that show how new and existing products will evolve about one another
• Tools for tracking milestones and keeping new products on schedule
• Templates for keeping roles and responsibilities straight & stakeholders involved
• Product development metrics that measure the behaviors that improve your process
• Business plans to model the projected sales and profit to justify investment

Organizing Product Development

Cross-functional teams often come together to develop a new product and then disband, with their resources assigned to other projects. The leader of the development team is usually a Product Manager or Product Owner. At the same time, the senior management in question might include the CEO, CMO, CTO/CIO at a startup, or Directors at a larger company.

The best way to organize projects is to have an empowered development team with broad decision-making authority within pre-established parameters. This exception management approach includes a clear and straightforward escalation process when projects drift away from predefined quantitative targets. 

Agile product development teams are one way to get an empowered team with a straightforward customer focus through relentless interaction with customers in tandem with product development activities.

In this approach, at the beginning of a project, the dev team and senior management agree on the key dimensions that will make a successful product. These agreed-upon dimensions of the project might include certain must-have features, a target dev cost, measures of quality insurance, a desired velocity, and a timeframe for the project (see figure below). It is worth acknowledging that there are good and bad ways to control a project.

Companies that succeed with product development also have a strong culture of senior management sponsorship of new ideas. These firms have senior managers aware of early-stage products and create a protected space to nurture them. They champion the best ideas from the beginning, giving them the funding and resources they need to succeed.

Tips for Improving Product Development

Have a long-term vision

Product development requires patience. Past the startup stage, a “quick win” mentality won’t get the startup stage done. Creating a stream of new products over a long period necessitates a vision, a strategy that defines how your company will get there, and the budgets and governance structure to support and execute the strategy.

Integrate technical and customer perspectives into the executive team leading product development

Tech companies tend to be tech-driven. However, the right executive team to serve as a board for approving product development investments should include technical and customer (Product Management) skill sets. Ensure customer and market needs are present when leaders decide on product development, especially product selection.

Support product development with appropriate funding

Sure, it’s essential, but how many companies nurture early-stage product development to get the best return from their product portfolio? Teams require seed funding on the front end for idea generation, and the prototyping and iterations needed to envision a final product. Remember to fund the first stages, where new product concepts grow into fully-fledged offerings in the marketplace.

Create a product portfolio strategy

Companies that create a stream of new products allocate their investments strategically within a portfolio of offerings. Divided between their core business, products in adjacent markets, and innovative new products. Companies determine these investments strategically, often based on the company’s risk profile.  

Make sure the organization is right-sized for the task

Effective product development depends upon sufficient resources. In larger companies, too many resources are often committed to maintaining existing products, and the skills needed for tomorrow’s products are limited. Also, too many vital resources, like a coder with specialized skills, are overloaded. The right mix for product development is to have these critical contributors on at least two projects at a time.    

Have a method for capturing the Voice of the Customer

Whether it’s Design Thinking or some other methodology for capturing the customer experience, it is essential to have a lifeline for potential customers. It is also important to translate the customer’s voice into the design process with the features most valued by the target audience.

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