The Product Discovery Phase Can Make or Break Your Startup

Here's a hard truth about startups: most of them fail.

Even the best ideas, state-of-the-art technologies, and a team of superheroes may not be enough to prevent failure.

Even if it seems like nothing can go wrong, something surely will.

The reasons for startup failures vary greatly. The research by CBInsights shows us that 38% of failures are related to financial troubles, 35% provide solutions no one actually needs, and 20% lose the competition.

According to various sources, including Bloomberg and Forbes, eight out of ten businesses die in the first eighteen months. Still, there are sources that claim it's just a myth.

Although it may be a myth, startup post-mortems sound heartbreaking. Annually, startup founders lose thousands of bootstrapped dollars and millions of VC investments. They spend their time on ideas that will never work (of course, if it's not a new Netflix.)

But no matter if you build a new Netflix, a simple SaaS, or any other startup, you surely don't want it to fail.

And there's a way to save your startup from disaster.

Product discovery phase is a proven way to minimize uncertainty

As you're about to start a new project, you may face dozens of complex yet significant questions:

• What kind of application should I build?
• How to do this?
• What tools to use?
• What functionality is a must?
• How to reach out to investors?
• How to validate an idea?

And so much more.

And while you may struggle to answer each question correctly and get on the path to success, a product discovery phase is an activity that will help you and your team make the right product decisions from the very beginning to the successful launch and beyond.

A product discovery phase is a way to turn uncertainties, assumptions, and rough ideas into a definite plan of action, working prototypes, and development documentation.

This is the initial stage of startup development, and it is a phase where you can minimize your startup risks.

The whys of the product discovery phase

In a legendary TedTalk and his books, Simon Sinek, an author and inspirational speaker, recommends us to always start with why.

While all companies worldwide have a vision of what they do, only some of them may state clearly how they reach their goals. And only a handful of businesses - industry leaders - may explain why exactly they do what you do.

The discovery phase helps you start with why.

Processes, actions, research, and investigations behind discovery may help your team ascertain there are enough reasons to invest time, money, and effort in a particular idea.

A product discovery phase helps to reveal ways to improve the original idea, switch to another concept, share a common product vision, and understand how many resources you may need to invest in your business.

The power of a product discovery phase

In his book, Inspired, Marty Cagan, an author, and product executive, describes an insightful story of how Google Ads was launched. In 2021, the revenue generated by Google Ads exceeded an unbelievable $146 billion. But back in 2000, neither Google's sales team nor an engineering team was interested in launching a self-service ads tool.

Jane Manning, an engineering manager at Google, initiated the product discovery phase, implemented a data-driven approach, and collected reasons that helped to persuade decision-makers and turn an idea into a billion-dollar-worth project.

And that's not the only case when a discovery phase was a springboard for a product's success.

• Startups can't avoid discovery: in a red ocean of opportunities, it may be a waste of time and money to dive right into development without comprehensive discovery;
• Small businesses use discovery to investigate existing tools that may satisfy their needs or agree on an idea to build a custom solution for their demands;
• Enterprises implement discovery principles to strengthen their positions and find new ways to outrun competitors, provide better services to their customers, and set trends in their industries.\Let's pay particular attention to primary tasks you can solve with a product discovery phase:

Clarify product vision

What would you like to build? How do you see your future product? What problems would you like to solve with this product, and how? What features would it have?

These are some of the crucial questions entrepreneurs mustn't skip before they dive into product development.

A clear, well-described product vision may help you communicate your idea to the stakeholders. At the same time, an initial product vision is a handy canvas where you can put your further assumptions and ideas.

Clear vision leads to expected results. But first, you need to define these results.

Define measurable goals

I want to build X is not really a goal.

During a product discovery phase, you and your team agree on key metrics that can describe your product growth. This may be the number of active users and conversion rate, bounce rate, and customer retention rate - basically, your goals may include numerous lines and components. Measurable goals allow you to easily track your progress; however, if you have abstract goals and are unsure how to measure them correctly, the product discovery phase will help.

Study the target market

In The Lean Startup, Eric Ries, an entrepreneur, blogger, and author, tells us a heartbreaking story. In 2004, the author worked on a brilliant idea. He and his team invested an enormous amount of time, money, and nerves in a promising product. But no one came to use it. The principle if you build, they will come doesn't work. Users are interested only in products that heal their pains, simplify their lives, or uniquely entertain. And to make your way to success, you need to know your users well. Market research and analysis are components of a product discovery phase. Not only will they result in insights into real users' needs, but they also help you understand the target market, identify market patterns and trends, and find out about regulations and laws. During discovery, you get a chance to reveal pains and needs customers didn't even know they had and cater to these needs immediately with your product.

Analyze competition

To avoid reinventing the wheel, you should make sure there's a wheel in the target market. In a startup landscape, before you start building your product, you should answer three critical questions: Is there a similar solution in the market? How does my idea differ from existing solutions? How can I improve my idea and make it stand out? During a product discovery phase, you and your team analyze competitors' products and businesses to reveal their flows and advantages. Then, you discover the ways to improve your product or decide to pivot if there's no room in the target market for a similar solution.

Assess and mitigate risks\Whatever may go wrong will go wrong.

But if you start with a product discovery phase, you know for sure what may go wrong and how you will act as obstacles emerge.

Have you been thinking about what dangers you may face on your road to a successful launch? Have you been brainstorming on ways to reduce the risks or avoid them? Together with your team, during a discovery phase, you can find answers to these and many more related questions that are capable of saving your business from failure.

#Validate your idea\There are multiple ways and tools to validate your idea. You can launch a simple concierge MVP or post a poll on your Linkedin page; you can bring a product prototype to users and ask for their feedback; you can launch a custom product from scratch and wait for someone to use it.

At the same time, a product discovery phase is the fastest and the most affordable way to find out if you should launch this product. During discovery, you and your team conduct researches, build and test assumptions, and create prototypes and documentation to answer key questions:

Is there enough evidence that your app can become successful? Is there a real need to invest in your product?

Discovery methods allow you to validate your idea before you invest in software.

Product discovery team

To make the best out of product discovery, you should invest time and attention in it.

But you'll never walk alone.

There's no need to try to handle all discovery processes and tasks yourself. If you delegate effectively and cooperate with professionals, you get an opportunity to finish a discovery phase in one to three months and have all its deliverables ready for the next step - product development.

Teresa Torres, an author, speaker, and coach, emphasizes the role of the product trio in discovery processes.

A product trio is a product manager, design lead, and technical lead working together on all discovery-related tasks.

This is the basic team you should work with to get the best results in the discovery phase.

Besides, other specialists may participate in the discovery. Consider engaging a business analyst, a quality assurance specialist, and a project manager to assign tasks effectively, assess as many risks as possible, and optimize the duration of discovery.

Startup post-mortems describe the same mistakes: wrong understanding of a market, lack of resources, flawed business model, intense competition… The list may go on and on, and as you hear about another failed startup, it's very likely that the reason is listed above.

If you start with product discovery, you get a chance to prepare for development properly, understand what your target audience wants and needs, come up with a technical implementation of your idea, and decide on ways to improve your product.

After product discovery, you have a clear vision of what product to build, why to build it, how to build it, and how much it may cost to launch your startup.

After product discovery, you're aware of financial, technical, marketing and business risks you may face and have a ready plan on how to mitigate each risk.

The topic of discovery is super hot now; social media boom with a variety of related posts, CBInsights and Bloomberg showcase fascinating discovery-related stories, and podcasts streamline episodes related to do's and don'ts of discovery.

We at Clockwise Software start real projects with a discovery phase, collect insights on each particular case, and help companies worldwide avoid failure and launch software products loved by both investors and users. Are you about to start a discovery phase for your next product? Let us help you with seamless discovery, high-quality development, and successful deployment.