Product Startup Podcast Episode 171: Choose and Validate Product Features

00:00:00 Kevin Mako: Hello, product innovators. Today we learn from two-time book author and Fortune 500 hardware product strategist on choosing which

00:00:05 Kevin Mako: product features you need to design and how to validate those designs in the market.

00:00:09 Narrator: You're listening to the Product Startup Podcast, a show to learn from top leaders in product development, prototyping, manufacturing, product selling, and everything in between.

00:00:18 Narrator: Hosted by Kevin Mako, the leading expert on product development for physical product startups, sponsored

00:00:22 Narrator: by PTC's two best-in-class 3D CAD product development software solutions, Onshape, and Creo, and produced by Mako Design + Invent, the original

00:00:30 Narrator: firm providing world-class consumer product development services tailored specifically to startups, small manufacturers, and inventors.

00:00:37 Kevin Mako: Welcome back, everyone. Today I'm very excited to introduce Tony Ulwick to the show. Tony is the CEO of Strategyn, a company that has been in business since 1991 doing

00:00:45 Kevin Mako: strategy consulting for high-growth innovative hardware companies. He is the author of two books and has had his articles published twice in the Harvard Business Review.

00:00:53 Kevin Mako: He started out in the early days of his career as a design for manufacturing engineer at IBM.

00:00:57 Kevin Mako: Today, Tony is going to share some valuable knowledge for inventors, startups, and small manufacturers

00:01:01 Kevin Mako: on how to create hardware products that people want, why people buy your consumer product, and how to validate your invention idea through additive manufacturing in the market.

00:01:09 Kevin Mako: Now, on to the episode.

00:01:12 Tony Ulwick: Hi, Tony. Welcome to the show.

00:01:14 Kevin Mako: Kevin, thanks for having me here. I appreciate it. Well, very excited today to talk to you about strategy, especially around features and figuring

00:01:20 Kevin Mako: out what features are actually critical to creating a great product with amazing product market

00:01:26 Kevin Mako: fit. Feature creep is obviously something that is a well-known industry pitfall, especially in the hardware world, especially as a hardware startup.

00:01:35 Kevin Mako: So what better person today than to talk to you, Tony, somebody who's worked with over 100 hardware brands as they emerge, as they strategize

00:01:43 Kevin Mako: the product features and requirements and everything that goes into that. But you've also had a couple of books that you've written.

00:01:48 Kevin Mako: You've had articles published in Harvard Business Review. Give us a bit of a background of how you got to where you are today with your 30 plus years of

00:01:55 Tony Ulwick: experience. Sure. I'll start right from the beginning because it was an interesting story. I was working for IBM back in the 1980s.

00:02:03 Tony Ulwick: I was a manufacturing engineer at the time doing design for manufacturing ability, in fact. And we worked on a product called the PC Jr., which was supposed to

00:02:11 Tony Ulwick: went over the home computing market and take it away from Apple. I poured my heart and soul into this for a number of months, about 18 months.

00:02:19 Tony Ulwick: We set up a manufacturing plant up in Lewisburg, Tennessee. We pumped out a whole inventory of products because we knew they'd jump off the shelf.

00:02:27 Tony Ulwick: The day after the product was introduced, the headlines in the Wall Street Journal read, the PC Jr. is a flop. And it was.

00:02:34 Tony Ulwick: We didn't want to admit it. Yeah. It turned out to be a billion dollar failure.

00:02:39 Tony Ulwick: And it got me wondering, you know, how could a company like IBM and all this vast resources invest in a hardware product such as that that failed

00:02:47 Tony Ulwick: miserably in the marketplace? So that took me down a path to try to figure out, well, how do we create products and features that people want, right?

00:02:56 Tony Ulwick: And what really occurred to me is that how did the folks at the Wall Street Journal know that the product was a flop? You know, they were using some set of metrics to decide

00:03:03 Tony Ulwick: this was a no-go. And the thought was, if we only knew well in advance what metrics people are going

00:03:08 Tony Ulwick: to use to measure the value of our product, we could just design the product to meet those metrics and then we'd have a whole different story.

00:03:14 Tony Ulwick: So my careers led me down this path to figure out, Well, what are those metrics? What inputs do we need from customers in order to make innovation more predictable?

00:03:23 Tony Ulwick: In order for us to know what features to add, in order to know when to not copy a competitor's feature.

00:03:31 Kevin Mako: All that comes into play, and I look forward to sharing that process with your audience.

00:03:35 Kevin Mako: Well, what an amazing history and experience and dealing with a billion dollar corporate failure, all because the process wasn't done in advance.

00:03:43 Kevin Mako: So what we want to do here today is make sure that the hardware startups and emerging, product brands that are listening, don't follow that same fate.

00:03:50 Kevin Mako: So we're thinking about developing

00:03:52 Tony Ulwick: the product or innovating on the existing product that we have. Where do we start? Well, we start by defining the market. And what I find interesting about this is that in many

00:04:02 Tony Ulwick: startups, in many large corporations, it's not clear exactly how to define a market, to find it around the product, a technology, a use case, a persona.

00:04:12 Tony Ulwick: And so this is where it all began. And I think most of your audience has probably heard this statement before, you know, people don't want the

00:04:18 Tony Ulwick: quarter inch drill, you know, they want the quarter inch hole, right? Yes. And now there's a hidden

00:04:23 Tony Ulwick: meaning behind that, which says that we can look at the world of product development through the

00:04:28 Tony Ulwick: lens of the drill maker, or we can look at it through the lens of the hole maker. And when we look

00:04:33 Tony Ulwick: at it through the lens of the whole maker, the first thing we see is the reason why people buy products to begin with, which is to get a job done.

00:04:39 Tony Ulwick: You know, they're trying to accomplish some goal or objective. They're trying to avoid something. They're trying to make something happen.

00:04:45 Tony Ulwick: and they're trying to make progress in their lives, right? So they're trying to get some job done.

00:04:49 Tony Ulwick: And what we learned is that if you focus on the job and make that the unit of analysis, you can start understanding customer needs at a very different level.

00:04:57 Tony Ulwick: So the first step is just let's define a market as a group of people and the job that they're trying to get done.

00:05:04 Tony Ulwick: Rather than to finding a market around something that's unstable, like a product or a technology, let's anchor on something that's stable over time.

00:05:12 Tony Ulwick: So we can build on this and scale it over time. without the threat of being disrupted by a different technology.

00:05:18 Tony Ulwick: So let's always stay focused on the group of people that we're trying to create value for and the job they're trying to get done.

00:05:24 Tony Ulwick: Like parents trying to pass on life lessons to children or a surgeon is trying to repair a rotator cuff.

00:05:30 Tony Ulwick: There's obviously thousands of different jobs that people are trying to get done, many of which require hardware solutions, some require software, some require service,

00:05:38 Tony Ulwick: some require all the above. So that's where we start. From there, what we'd like to do is then define needs. in a unique way.

00:05:45 Tony Ulwick: In my IBM story, I said, if we only knew what metrics people were going to use to judge value of our product, we could just design features to address those metrics.

00:05:53 Tony Ulwick: Well, those metrics turn out to be what we call desired outcome statements. So as people go about and try to get a job done, there's measurable outcomes they're trying to achieve.

00:06:03 Tony Ulwick: And I tie this back and I think you'll appreciate this from a manufacturing standpoint. In the manufacturing space,

00:06:08 Tony Ulwick: you're trying to figure out at all times, what can I measure and control to ensure a predictable output. Now let's take that same thinking and apply it to a customer who's trying

00:06:16 Tony Ulwick: to get a job done. A job is like a process. And so if I can understand the customer's thinking, how do they measure success as they go about and get a job done?

00:06:25 Tony Ulwick: And it occurred to me a number of years back that there's obviously you're trying to get the job done better. There's three dimensions along which we can measure better.

00:06:33 Tony Ulwick: The first is you can figure out how to get the job done faster. And that's why we like automating a lot of things. You can figure out how to get it done more

00:06:41 Tony Ulwick: predictably, so things happen the same way every time and there's no surprises. And of course,

00:06:46 Tony Ulwick: that's why we have statistical process control and manufacturing, right, to figure out, you know, where are those outliers, how do we control them?

00:06:52 Tony Ulwick: So there is no variability from instance to instance. And then lastly, how do we get a great result? That's why we focus on six-sigma thinking,

00:07:00 Tony Ulwick: right? Let's have zero defects. Everything coming out of the process is going to be perfect. And so what

00:07:05 Tony Ulwick: that means from a customer standpoint is we want to know from them what they're trying to achieve more

00:07:09 Tony Ulwick: quickly, what they're trying to avoid that makes the process unpredictable. And what are they trying to avoid that makes the process give them a poor result?

00:07:16 Tony Ulwick: So, quick example, you know, when preparing a meal, you may want to minimize the likelihood that the meal is overcooked, or you may want to

00:07:23 Tony Ulwick: minimize the likelihood of undercooking the meal, or minimize the time it takes to cook it evenly throughout, or minimize the time it takes to clean up after cooking or so on.

00:07:32 Tony Ulwick: And generally speaking, in any job that people are trying to execute, there are dozens of these metrics that they use to measure success.

00:07:41 Tony Ulwick: And again, they're all tying back to getting the job done better. Now, needs are knowable. Of course, if you're going to add a feature to a product, you want it to

00:07:48 Tony Ulwick: address one of these needs, but you want it to address the most unmet need. So when you start

00:07:53 Tony Ulwick: thinking about what feature should I add to my product in order to make it more attractive to customers, ideally what you do is you would add a feature that would address

00:08:02 Tony Ulwick: one of those outcomes that's highly underserved and highly underserved across the entire population. We call this the most efficient path to growth.

00:08:11 Tony Ulwick: So if there is a need that's highly unmet and it's highly unmet across 100% of the customer population, if you address, if you can create a feature that

00:08:19 Tony Ulwick: addresses that need, it's going to appeal to everybody. Now, in most markets, there isn't agreement as to what needs are unmeted.

00:08:27 Tony Ulwick: In other words, there's always groups of people that have different in their needs. In some cases, you know, you may only have, there may be a third of the market that's

00:08:33 Tony Ulwick: saying this need is important and not well satisfied. And of course, if that's where you're focusing your attention and you're only impacting the satisfaction of a

00:08:43 Tony Ulwick: need that's relevant across the third of the population, that's far less efficient than going after a need that's highly underserved across 100% of the population.

00:08:52 Tony Ulwick: And of course, then there's everything in between. So what we'd like to do for companies who are, whether your startup phase, first concept, second concept as you're

00:09:01 Tony Ulwick: trying to grow and scale, is understand what are all those metrics people use to measure success and which one's most undeserved and across what percent of the population.

00:09:10 Kevin Mako: And with those insights, you can then make the right decisions. You can invest in the right features. That's very powerful,

00:09:17 Kevin Mako: especially because if you look at a typical hardware startup, you have limited resources. It's the inevitable truth of a hardware startup no matter how well you're funded.

00:09:25 Kevin Mako: And the reality is most aren't well funded and are trying to both get a product to market and also get a business off the

00:09:32 Kevin Mako: ground. So the truth of the matter is you cannot be everything to everyone and you cannot have every feature.

00:09:39 Kevin Mako: So I love how you've addressed the fact of trying to prioritize features by understanding what your true customer needs are. The other reality of a hardware startup is it's usually

00:09:49 Kevin Mako: based around one primary innovation. Almost all hardware startups that we see at macro design, it's because

00:09:55 Kevin Mako: somebody has had that aha moment either in their work or family life or some other area of the world where they've identified an unmet need.

00:10:04 Kevin Mako: And that's what you talk about in terms of that gap in helping somebody get a job done faster, more efficiently, better quality, more reliably, whatever it might be.

00:10:12 Kevin Mako: It rarely is more than why. You've got one key differentiator that you've identified as a hardware startup.

00:10:19 Kevin Mako: It really enforces that concept of efficiency in your features, which then leads to the path of avoiding feature creep.

00:10:28 Kevin Mako: Now, you and I, Tony, talked about feature creep on the show. We're both well into the hardware space, many years into it. We understand the

00:10:34 Kevin Mako: pitfall of getting too aggressive with feature creep, especially as a hardware startup. But can you

00:10:39 Tony Ulwick: talk a bit about how feature creep weighs into the model that you're talking about in terms of efficient feature selection?

00:10:46 Tony Ulwick: Yeah, absolutely, because teams are presented with ideas from new features all the time. They come from everyone, right? They come from customers. They come from team members.

00:10:54 Tony Ulwick: they come from your management team, and somehow you have to have a mechanism for deciding, is this something we want to invest in or not?

00:11:02 Tony Ulwick: So the way we like handling this through the model is to look at the feature and say, if implemented, what outcome or outcomes would

00:11:10 Tony Ulwick: we be impacting from a customer standpoint? Like, would we be helping them minimize the time

00:11:15 Tony Ulwick: it takes to cook the meal, minimize the likelihood of overcooking the meal? Like, we're kind of reverse engineering this.

00:11:21 Tony Ulwick: You already have the feature and say, okay, what outcomes will it help people achieve. Then you can go out to customers and say, okay, we have these two or three outcomes.

00:11:30 Tony Ulwick: Tell us how important these outcomes are to you. And given the solutions you're using today, tell us how satisfied you are with your ability to address the outcome.

00:11:39 Tony Ulwick: Right. So how important is it that you minimize the likelihood of overcooking the meal versus how satisfied are you with

00:11:45 Tony Ulwick: your ability to minimize the likelihood of overcook the meal. Now, what we're looking for here is a need that is really important to the population that you surveyed.

00:11:54 Tony Ulwick: and not well satisfied. If there is no such need, like if the three outcomes statements that you put in

00:11:59 Tony Ulwick: the survey come back and they all say, you know what, this is not important and it's already well satisfied, well, then you don't want to pursue that feature.

00:12:07 Tony Ulwick: If it comes back and one of the outcomes is important and unsatisfied, then you know that that's the focal point of the feature,

00:12:14 Tony Ulwick: right? It's the other outcomes aren't that important. So why focus on those? Make sure it's going to address the needs that are truly unmet. Or if all three of those come back,

00:12:24 Tony Ulwick: and they're all underserved, then you want to ask the question, does this feature that I've conceptualized really address all these that well?

00:12:31 Kevin Mako: Or do I need to make improvements? Because I validated that these are opportunities for a really home run here from a feature addition perspective.

00:12:39 Kevin Mako: It's so powerful when it comes to hardware startups as well, because one of the key things that you mentioned there is customer feedback.

00:12:46 Kevin Mako: We are a big advocate on the show and at the design firm for short run manufacturing, test run production, that sort of stuff so that you get a few

00:12:54 Kevin Mako: units into real user's hands that they've paid for at a very base version. When I mean base, I don't mean low quality. In fact, I mean the opposite.

00:13:02 Kevin Mako: A very high quality, but feature-specific product, usually revolving around that one key innovation that the hardware startup came up with.

00:13:11 Kevin Mako: Get that out to market in a high-quality fashion because quality represents your brand and hardware and you can't fix it with software patches.

00:13:17 Kevin Mako: So you can never sacrifice quality, especially in 2023, there's just simply a minimum bar to what is required to even have a shot at a hardware product in the market.

00:13:27 Kevin Mako: But what we're trying to do from a secondary perspective is to learn from those customers. So A, you're going to save money in development because you've really focused on

00:13:35 Kevin Mako: that core feature, that core innovation. B, you're going to let the customers decide what they want to expand into. Maybe you hit it right out of the gate.

00:13:44 Kevin Mako: That very simple solution that you offered satisfies a huge percentage of the market. And as a startup, especially, it's going to take you a

00:13:50 Kevin Mako: long time to capture the entire world of total addressable market, even if it's just a piece of your overall planned addressable market with the eventual features of your product.

00:14:00 Kevin Mako: That's one. Maybe you hit it right out of the gate. Or maybe, as you've mentioned, Tony, there's certain things that they would

00:14:05 Kevin Mako: say, either you need more of this or less of that or if it did this, that would be great. And this is

00:14:09 Kevin Mako: where you start to get some real world feedback to help you decide which of those kind of core features will evolve your product from your first version, your initial

00:14:18 Kevin Mako: release, to subsequent

00:14:20 Tony Ulwick: additions down the road or potentially accessories or other brand line products, whatever it might be to actually build a world-class product brand over time via

00:14:29 Tony Ulwick: the feedback loop. Yeah. Well, that's exactly right. And what we love doing is, you know, I mentioned the metrics

00:14:35 Tony Ulwick: that you capture from customers, rather than just reverse engineering your features to see what outcomes they address.

00:14:41 Tony Ulwick: What we often do is go out to customers and say, tell us all the metrics you use to measure success in getting the job done from beginning to end. And there might be, you know,

00:14:49 Tony Ulwick: a few dozen of them. Now, once we know them, we can quantify them with the customer population. We ask the same question. How important are these outcomes?

00:14:57 Tony Ulwick: And given the current solutions, how satisfied are you with your ability to address them? And what we're looking for here are

00:15:03 Tony Ulwick: needs where the population goes, this is really important and it's not well satisfied. Now, if you can discover five or 10 needs that fit that criteria, that

00:15:12 Tony Ulwick: becomes your path to growth. So a couple of things can happen here. As you're scaling and trying to get the job done better,

00:15:18 Tony Ulwick: you can start adding features that address those needs. There's a threshold. It's somewhere around the 15% range where if you can help people get the job done

00:15:25 Tony Ulwick: 15% better or more or 15% cheaper or more, they're open, right? That's when you start gaining adoption, right?

00:15:33 Tony Ulwick: And so this is why it's so important at some point in your business cycle to go out to customers and understand all these metrics they're using to judge the success

00:15:42 Kevin Mako: of getting the job done. And, of course, you're trying to create a product that addresses those metrics. So they're getting the job than 15% better or more.

00:15:50 Kevin Mako: And now you're creating winning products.

00:15:52 Kevin Mako: It's amazing you mentioned that 15% mark because it's really not a lot. And that's what the world doesn't realize.

00:16:00 Kevin Mako: It's not often where somebody creates just an epic new technology, especially in this day and age. A lot of the technology has been created or is happening in the software space.

00:16:09 Kevin Mako: So when you look at hardware, very rarely does somebody say, okay, this is the new light bulb. You're using a candle before and you're using a light bulb now, right? major changes.

00:16:18 Kevin Mako: It's incremental, incremental improvements, you know, 15% according to your research and you've worked with a lot of companies.

00:16:24 Kevin Mako: Fifteen percent is what it takes to make truly a life-changing business. A big scaling product brand requires that

00:16:32 Kevin Mako: level. Now, getting to that level is not always easy, but the reality is especially if you have a core innovation, you're starting to listen

00:16:40 Kevin Mako: to your customers to address the precise way that the product had worked to best serve them,

00:16:44 Kevin Mako: especially as you scale over time, as you're trying to move from a first few units to test the market to a bigger opportunity to get more of the market into like a large scale

00:16:53 Kevin Mako: production run, you should be learning at each of those intervals to really start to amplify the product value and be able to address a larger

00:17:02 Kevin Mako: and larger percentage of your total addressable market. Yeah, that's exactly right, Kevin. And you're getting the job to significantly better each time.

00:17:09 Tony Ulwick: Tony, tell us a bit about what your organization does to help put together these feature lists and priorities. prioritize them for innovations in a hardware product as

00:17:19 Tony Ulwick: the product brand evolves. So we help. It's either we teach companies how to do this or we do it jointly with them or we do it for them completely.

00:17:27 Tony Ulwick: But we take them through this entire process where we define the market as a group of people and the job they're trying to get done. We uncover that set of outcomes.

00:17:35 Tony Ulwick: We put a survey into the field to prioritize them. We use that information to segment the market and find the most efficient path to growth.

00:17:42 Tony Ulwick: And what I mean by that is what needs are the most unmet across the biggest population. And then we work with companies to pick, well, of all those needs, which ones you go after,

00:17:51 Tony Ulwick: and then to help them conceptualize the feature set that will address those needs. That's amazing.

00:17:57 Kevin Mako: And where can they learn more about this? At our website, which is Strategyn.com. So S-T-R-A-T-E-G-Y-N dot com.

00:18:05 Kevin Mako: Tony, much appreciated for all your words of wisdom today. Look forward to talking to you again soon. Kevin, I appreciate it. Thank you. Thanks. Take care.

00:18:12 Narrator: for tuning in to this episode of the Product Startup Podcast. If you found some value in the show, please do us a huge favor and leave us a quick five-star review.

00:18:19 Narrator: If you have any questions, guest suggestions, or anything else, feel free to reach out to us anytime at our email, podcast at MakoDesign.com. That's podcast at MakoDesign.com.

00:18:29 Narrator: This show is hosted by Kevin Mako, North America's leading expert on product development for physical product startups.

00:18:34 Narrator: Huge thanks to our sponsors, PTC, and their two best-in-class 3D CAD product development software

00:18:39 Narrator: solutions Onshape and creo and Mako Design + Invent the original firm providing world class consumer

00:18:45 Narrator: product development services tailored specifically to startups small manufacturers and inventors thanks for joining and see you next time