Research: An Overview of Different Types

If there is one thing entrepreneurs have plenty of, it is novel ideas. In this sense, entrepreneurs often feel like they're ahead of the game, but it would be a mistake to bypass the beginning of the typical design phase, which involves user research to identify product opportunities and other types of research to hone in on your product concept.

User research (Figure 9.1) entails talking with users and customers to understand what they are looking for and determine whether a product suits their needs. Less formal user research can take a few days. Other times, companies spend two years trying to develop an understanding of what users need from their products (e.g., Gillette spent over 3,000 hours studying consumers to create its latest razor for India).

Competitive research might identify and assess business rivalry (e.g., Porter's Five Forces, SWOT [strengths, weaknesses, opportunities, and threats], or 5Cs Analysis), pull from their best practices, learn from the competition's mistakes, and determine how to position and brand the new product in the target market. Background research should study the problem or need being met by the new product as well as the history of products in the target market.

Market research helps entrepreneurs understand the markets their products are entering. Entrepreneurs should do their homework and understand the market, its history, competitors, and business models that have and have not worked. If all the similar products on the market are priced at $20, why will a new product sell at $40? If two companies manufacture all of the products in a given market, entrepreneurs trying to break into those markets should know the companies and spend time gaining an understanding about them.

None of this entails big expenses—it's more about doing your homework by using what's out there to understand the landscape of the marketplace. Talk to customers, probe pricing dynamics, and get a good sense of whether what you're working on is unique and what's unique about it. The Internet is one source, but interviewing and talking to customers is critical. Conjoint analysis is a great tool to help understand the features and cost trade-offs from the customer perspective.

Defining and Refining the Product

The more a start-up can hone in on exactly what they are looking for, the more time and money they will save. Invariably, there will be open questions that require user research and testing, but there will be logical times to answer these questions during development.

Once the product concept is selected and some boundaries to work within are set, the first task is to expand the product vision and to consider the ideal user experience and product form, envision how the product will function, and consider how it will be produced. This vision, along with physical prototypes, should allow investors to “see” what they are investing in.

Intellectual Property to Protect and Drive Innovation

Start-ups cannot afford to cut corners in background research on intellectual property (IP). Generally there are existing IP patents that need to be maneuvered around, and trying to patent new ideas can be tricky. It is extremely beneficial for entrepreneurs—if they are able—to work with patent attorneys. If hiring an attorney is not an option, online research may suffice. Google Patents and the U.S. Patent and Trademark Office (PTO) are both good search tools. (See Chapter 24 in this book.)

Getting a trademark and the rights to name a new product are another piece of the puzzle. It is best to secure trademarks and naming rights as soon as possible. What an entrepreneur does not want is to have to change the name of a product after it has already hit the market, built brand identity, attracted customers, and potentially even cut the name into tools and hardware. Entrepreneurs should view product development holistically and think of designing the branding (both physical logo and communication approach) and packaging at the same time they consider designing the product itself. Done correctly, the brand, packaging, and product design language all reinforce one another.

Loop de Loop: The Winding Path from Idea to Product

One of the most common questions entrepreneurs ask is, how long it will take to develop an idea into a real product? Of course, the answer varies greatly depending on the complexity of each product, but development typically flows through a three-part design cycle that includes definition and design, engineering, and production “loops.” The goal is to move gracefully from one loop to the next, but more often than not, a product has to run through a loop more than once.

In the definition and design loop, the product is refined through an iterative process of creative thinking, sketching, building 3D models on a computer, and making prototypes. Entrepreneurs who have little experience with the definition phase might want to check out the iDea Fan Deck, a tool meant to direct brainstorming and concept generation. It's well worth spending time on this formulation of the raw idea, whose quality is a reliable predictor of the product's ultimate success.¹

The engineering loop is about taking the product designs and turning them into parts that can be manufactured. Engineers try to make the product light, sustainable, or cost-effective, depending on the clients' priorities. At the end of this loop, engineers build prototypes that look and work like the product. These are tested and improved. Finally, engineers create refined preproduction prototypes that offer a last gate for them and the product's design team to assess design, function, and user acceptance before production.

The third and final loop, production, often takes longer than entrepreneurs expect. Generally speaking, it is hard to develop a new product in less than 6 months. Nine to 15 months is more common, and many products take longer—medical devices in particular. Production separates a good idea from a great product. There is a huge amount of work that goes into getting the right product back from a manufacturer, and entrepreneurs need to diligently monitor quality.

Prototyping: Increasing Fidelities for Different Benefits

Smart start-ups invest in prototypes. Different levels offer different benefits along the process journey. Their level of fidelity, or quality, increases as the product evolves. The prototyping process is a physical manifestation of the growth mind-set that informs design thinking: the information gleaned from testing each prototype—and each prototype's particular weaknesses—informs the next evolution. What follows is an accounting of the process journey via the prototypes an entrepreneur would do well to develop along the way.

Testing, Testing: Assess Your Product Early and Often

Too many start-ups decide they can't afford research, which adds a tremendous amount of risk and reduces variable inputs for making improvements. Initial testing should help answer questions such as: Is it durable enough? Is it easy to use? Is it well designed? Do people like how it looks? How much are people willing to pay?

Some testing truths:

1. Don't wait until the product is “perfect.”

   Early testing helps determine if the product is ready and leads to the most promising sales channels, but many times entrepreneurs don't want to hear criticism. This is a fear start-ups need to face head-on. It is both easier and cheaper to correct problems early in development rather than later on during production, so it is important to be open to early criticism.

   Initial feedback can come from existing networks of people such as friends, family, and even online social networks. Entrepreneurs and start-ups should consider offering these first guinea pigs a range of possibilities, such as different styles and colors, and asking their opinions about how the product could work better and what features could be added. Most importantly, entrepreneurs need to remain open-minded about the feedback they receive and careful not to get locked into a product concept too early.

2. Practice excessive abuse.

   Entrepreneurs need to realize their product will be used in ways and contexts that might terrify them. If it is possible to insert something upside down, people will insert it upside down. Laptops tested in the tight confines of a commuter flight, freezing temperatures, and abusive conditions imposed by kid use can reveal weaknesses as well as opportunities. At a certain point, entrepreneurs must determine if the product is robust enough for the real world.

   For entrepreneurs testing the limits of their products, the question becomes, what abuse is common, standard, and excessive? Does the device need to be waterproof, or would dunking it in water be considered excessive abuse? Ultimately, entrepreneurs need to decide how much risk to assume versus how much risk is the users' responsibility. (And no matter what, accept that there will always be a couple of Amazon reviewers stating, “I ran this over, and it broke. This thing sucks.”)

3. Find the testing sweet spot.

   While learning during product development is safer, it is common for companies to not really “get it” until they do performance testing in the actual marketplace. Entrepreneurs need to work toward that sweet spot between development learning and product launch learning. Ultimately, this is a balance of time and money and how much a start-up can afford to figure things out postlaunch versus prelaunch.

   For better or worse, public support and feedback can help determine when a product is ready to launch. Kickstarter, other crowdfunding platforms, and social networks are making it easier for entrepreneurs to stay in touch with customers, who can help demonstrate that a market is ready for a product to be introduced. If the product is to be tested by a very specific market or industry, start establishing connections early. It will take a lot of time to build this kind of network.

Production and Supply Chain: Solving for Complex Equations

Once a product is defined, iteratively prototyped, and tested, it is time to move on to production. Each product requires its own unique manufacturing strategy and entrepreneurs must consider how something will be made. Will it be a do-it-yourself (DIY) process, or will a contract manufacturer lead production? Will production be local, domestic, or offshore? Deciding which method to use is a complicated equation influenced by the product complexity, the production volume, how refined the design is, how hard it is to assemble, whether the product is made using established processes or new processes, and the materials used. There is no cookie-cutter approach.

DIY production means the entrepreneur or start-up will be the last point in the production chain. Often in DIY production, entrepreneurs will source parts and assemble the product themselves. In some cases, they might outsource assembly as well. This works best for products that will be made in low volumes, and it gives the entrepreneur or start-up a chance to look over each product before it ships. Sometimes DIY production is used as a starting point that gives way to another strategy.

With contract manufacturing, an independent manufacturer oversees sourcing and assembly. Using contract manufacturers does not mean entrepreneurs can kick back and relax, though. It just means the entrepreneurs have a production partner. Contract manufacturers can be especially efficient when a product is being produced with a tried-and-true manufacturing method, when the production volume is large, or when the design is refined and clear.

Regardless of the production method, costs are going to add up. To generalize, entrepreneurs and start-ups generally spend more on tooling, production, and building sales momentum than they do on defining, prototyping, and testing a product. Entrepreneurs should be optimistic yet conservative about production volume numbers and tooling costs. Tooling can add up really quickly, so it is important to be smart about budgeting and strategizing for tooling.

It is often difficult for entrepreneurs to be patient, but this is exactly what they need to do during the production phase. The time required for production typically surprises entrepreneurs. Finding vendors, documenting the design, waiting for tools, debugging the parts, and any required regulatory compliance always takes longer than they would like. There is a huge amount of work that goes into getting the right result back from a manufacturer, and entrepreneurs have to diligently monitor quality no matter where or how something is made.

Product Launch and Everything Else: Branding, Packaging, Certifications

Sometimes entrepreneurs get so caught up in product design that they don't think about all of the other essential business and design elements, like branding, packaging, certifications, and so on. If product branding and naming happen too late in the process, entrepreneurs risk missing out on opportunities to generate support and potential customers. Entrepreneurs must be able to articulate what their brand is about and lock down logos and product names before they think about releasing the final product. Unique packaging solidifies the brand identity—but for that to happen, the brand must have an identity.

Certifications are another key component. There are a lot of different agencies that need to stamp new products and give their approval. Final product (or in some cases prototypes) may need to be tested to any one of a number of UL, CE (European conformity), and Federal Communications Commission (FCC) standards. Those tests can be expensive and time consuming, but often the challenge is figuring out which standards are applicable.

It is best to identify which certifications will be necessary early in the process because the specifications of the various certifications do sometimes shape design, and sometimes adding a feature will add a new certification requirement. Ideally, a project manager will be available to oversee all of these “extra” but essential considerations. More often than not, that project manager is the entrepreneur/CEO/product manager who is running the show.

Simplifying the Product and Vision

Wanting to build everything from scratch and innovate around all aspects of the product are common missteps. Entrepreneurs need to consider how to reduce risk and maximize their chances of success by zoning in on what is critical. Following are a few key takeaways that can help entrepreneurs do just that.

Repurpose

While making everything yourself can be very satisfying, it is often smarter to find other products or companies and build on their devices or components. Doing so can save both time and money—limited resources in the new product development world.

For instance, a start-up wanted to build a custom tablet for use in the hospitality industry, but the start-up didn't have a lot of product development experience. They walked through the pluses and minuses of customizing a tablet for their application, and after laying out the development costs and risks, they decided to make a custom case rather than a custom tablet (Figure 9.4). The custom case fit around commercially available tablets and required a much simpler development process that saved considerable resources.

Often, solutions for a product in one industry can be pulled from a completely different industry. For instance, there is a commercially available garden sprayer that uses the guts of a carburetor to optimize its performance. (One advantage of working with product development consultants is their exposure to a wide range of products that gives them this broad base of knowledge.)

Entrepreneurs must be cautious when selecting off-the-shelf components to use in their new products. They risk putting themselves at the mercy of whoever makes the components, so it is critical to choose wisely and make sure the supplier is dependable. Think about whether that other company might view you as a threat and how you would recover if the product, component, or subsystem became unavailable. Have a production plan that doesn't depend on one supplier.

Navigating Time Pressure and the First Move Advantage

Insane time pressure has become the norm in product development. Tools have evolved to meet this pressure, and rapid prototyping, rapid tooling, quick manufacturing, and air shipping allow unprecedented velocities during product launch. But there is still plenty of risk in going fast. Entrepreneurs are more likely to rush a decision, not test something fully, or miss an opportunity for a design breakthrough if they are too focused on delivery dates. Speed can be costly. Overnight shipping alone can add thousands of dollars to prototyping costs.

The flip side to that is that delivery dates can sometimes mean all the difference between launching first and getting the spotlight versus being a follower. Since it is easier than ever for entrepreneurs and start-ups to create new products, these new products are flooding the market. With so many people creating products along the same thought lines, being the first to launch a new product can provide a real advantage.