Lisa Zhu

@lisazhu

Where Do Product Ideas Come From?

A How-To Guide on Product Ideation

One of the most important skills that separates a junior product manager from a senior PM (or a project manager from a product manager) is the ability to generate good product ideas. Good project managers may excel at managing sprints and shipping features, but the secret sauce of knowing what to build and when is more difficult to master.

That does not mean you should immediately draft up a stream-of-consciousness email to your manager with 500 random thoughts entitled “Stuff we could build”. Instead, coming up with the right set of high-impact product ideas depends on your team/role, your company goals, and the nature of your business.

At a high level, there are three types of product ideas:

  1. Optimizations & testing: Small improvements to the product that lead to better performance against one or more key metrics.
  2. Solutions to user problems: Functional features that address explicit or latent needs of your current users.
  3. Visionary, strategic plays: New product extensions aimed at expanding the business to a new market or pivoting in a new direction.

Optimizations & testing

As the name suggests, these product ideas involve the continuous process of experimenting with small changes to the UI and experience that result in modest improvements to key metrics like conversion rate and retention rate. Examples include:

  • Removing and combining screens from the onboarding flow
  • Single page checkout flow vs. multiple sequential screens
  • Modifying copy and visual elements on a landing page

When to focus on it: Many companies feel like they should be variant testing because everyone else is. In practice, you should only focus on testing if your traffic volume or average customer lifetime value is large enough that a ~10% relative conversion improvement results in a substantial increase in revenue. In other words, unless you’re Amazon, it probably doesn’t matter much if Checkout Option #2 improves conversion rate from 0.21% to 0.22%.

How to come up with these types of ideas: Start with one or two KPIs that you’re aiming to improve, whether it be conversion, engagement, or retention. Then, identify the completion rate for every step the user takes in the funnel. It can often help to print these screens out, label the drop-off rate from one screen to the next, and lay them next to each other in order to facilitate a brainstorming conversation across stakeholders.

Other potential sources of optimization ideas include secondary market research. At this point in 2018, A/B tests to improve conversion or onboarding completion rate are well-documented online in various articles and company case studies. For example, this article about Duolingo highlights a number of basic principles that are definitely worth testing in a consumer app.

Changing the copy on the button from “Try Aaptiv Now” to “Try Aaptiv for Free” led to a double-digit increase in our subscribe rate — but that only made a difference because our traffic numbers were high to begin with.

Solutions to current user problems

These types of product ideas break down into three categories:

  • Tablestakes features: In 2018, user expectations for digital products are a lot higher than they were ten or even five years ago. Features like seamless checkout, keyword searching, and social media integrations are more than just commonplace, they’re expected. Not having tablestakes features can damage user trust and sow doubts about whether you’re running a legitimate business.
  • Explicit needs: Explicit needs are problems with solutions that users have already identified. One of the most successful companies built around addressing explicit user needs is Spotify. In the pre-streaming dark ages, users had to download tracks onto computers, plug in phones to transfer the files, and periodically clean out older songs to free up space. Spotify took a lengthy, multi-hour process and created a simple solution that only required a few taps on the phone.
  • Latent needs: On the other hand, users may not be aware of latent needs, and definitely don’t have solutions in mind to address them. For instance, before GPS, people researched directions before they left the house. If they wrote it down wrong, they’d wander around asking people until a kind soul pointed them in the right direction. Inconvenient though it was, most people didn’t lost sleep over it, and certainly few would have asked for a funny little pocket computer that could tell you where to go in real time.

When to focus on it: All day erryday. As a Product Manager, your job is figure out what your users want, and go build those things. However, the composition of tablestakes features to explicit needs to latent needs will differ depending on what stage of company you’re in, and how well it’s doing.

How to come up with these kinds of ideas: Coming up with solutions to user problems can seem easy (“Let’s just ask our customers what features they’d like to see!”) But beware: relying too heavily on inbound user feature requests opens you up to self-selection bias. You end up building features for a small but vocal group of users, while ignoring silent ones or those you haven’t been able to capture. In the long run, your product becomes more and more niche, eventually alienating everyone outside of your core fanbase.

We asked our users what they wanted, and this is what they said.

Instead, use a combination of quantitative and qualitative feedback to ensure you’re getting product feedback from a representative sample. Specifically:

  1. Perform data analysis to figure out which users you need to be targeting. These segments may include users who opened the app a few times and then churned, or perhaps they created an account but never made a purchase. It’s generally more impactful to win over lost users than to obsess over optimizing the experience for the most engaged ones (who will continue to use your product regardlessly).
  2. Conduct behavioral interviews with these less-engaged users to learn more about their initial experiences with your product, and their motivation for trying it. Avoid asking them what features could have made it better since that may prematurely bias you towards a solution. If you don’t have a dedicated user research function, check out these great articles on how to conduct a good user interview: Never Ask What They Want and Asking the Right Questions.
  3. Identify common themes in your user feedback. Are there certain sentiments that multiple users expressed? What was the intensity of these emotions? Highlight these issues and discuss them with your team of designers, engineers, and stakeholders — these should determine your next set of product feature ideas.

Visionary, strategic plays

Sometimes your company may need to pivot or expand in a different direction to succeed. In these cases, you’ll have to look beyond your existing users to come up with new product ideas that are more creative and visionary — maybe it’s finding an enterprise application for the technology that currently powers your consumer app, or perhaps it’s expanding your reach further up into the supply chain.

When to focus on it: Unless you’re a huge corporation with near-infinite resources, you can’t focus on building a great product for your primary users and simultaneously explore new business lines. For most startups, prioritizing one often comes at the expense of the other, so it’s critical to understand when to start exploring new strategic product directions:

  • If you don’t have product-market fit: There is no magic formula to measure product-market fit. But, if your conversion, user engagement, and word-of-mouth share rates remain stubbornly low despite whatever features you launch, users probably don’t value your product. In this case, you might want to pivot to a new application of your core technology or a dramatically different solution to the underlying user problem.
  • If your current product isn’t profitable: Alternatively, users may love your product and you’re growing reliably, but not making enough money to break even. Assuming you can’t simply raise prices, explore product features that allow you to charge more for a more premium version of the feature, or to repackage your core product for a different set of customers.

How to come up with these ideas: Creative, visionary product ideas may seem like they spring fully-formed from the minds of savants, but they actually follow a few familiar patterns. Some of these include:

  • Consumer to enterprise: Determine if private companies have any interest in your users, your product, or your underlying technology, then figure out what features you’d need to build in order to sell to these businesses. This strategy can work well for consumer-focused companies, but rarely vice versa. For example, Facebook and Snapchat built up a massive base of engaged users, then sold ads to businesses who wanted to target specific segments based on their demographic and behavioral data.
  • Higher-margin premium features: Conduct research to determine what features users value most; then create a premium membership tier where users pay extra to get access to these features. Successful examples of this strategy include everything from Tinder Premium where you can undo hasty swipes to Invision’s Pro, Team, and Enterprise tiers that offer increasing numbers of prototypes and user accounts.
  • Adjacent user journeys: Finally, interview users to figure out other actions they commonly take outside if your product, and design features to allow them to complete their entire workflow in one place. For instance, Atlassian started with Jira to allow teams to collaboratively assign work and track progress on projects; shortly thereafter, they came out with Confluence to help teams better document their collective knowledge.

In Conclusion

Coming up with good product ideas can often seem daunting, but the reality is that most of them fall into one of several familiar patterns. In fact, coming up with more ideas is often easier than knowing the right way to prioritize each of these ideas. Ultimately, product managers must master both of these skills before they can “level up” to become strategic and visionary leaders.

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