Building a new digital product is always exciting. Whether you’re starting from a clean slate or redesigning an existing product, there’s opportunities to experiment, design, and develop new possibilities.
However, building products, especially new ones, comes with its own host of risks. There are 4 inherent risks, according to the Silicon Valley Product Group (SVPG):
- Value Risk: Will users find enough value in the product to buy or adopt it?
- Usability Risk: Will users be able to easily use the product and enjoy doing so?
- Feasibility Risk: Will you be able to design and build the product based on the budget, time, and resources you have?
- Business Viability Risk: Will this align with the business goal and fit with the whole business?
De-risking a product is about testing your assumptions or ideas, understanding the risks involved, and then making a decision. There are two types of decisions: reversible and irreversible. Jeff Bezos once said that you should move fast on reversible decisions, and slow on irreversible decisions.
For things that are easy to resolve, you want to be working on them quickly, testing and improving rapidly. Meanwhile, for things that are hard or impossible to rectify, well, you’ll need to research, test, and calculate long and hard before you decide.
In this article, I will list down the things that have worked for my clients when building a new digital product, be it a website, an app, or software. Please note that de-risking means you are managing the risks, not eliminating them completely.
De-risking is about improving the likelihood that your new product will be a hit with users. You are trying to make an educated guess, based on early user feedback, on where and how much to invest. You are trying to create a product that has longevity and continuous growth in the market.
How to De-Risk Your New Product
Incrementally test your assumptions
Firstly, build a process and culture where you are always testing your ideas and assumptions early. More importantly, you need to test them incrementally. Start with a small assumption, and test it with your users. If the feedback is good, expand the assumption further, and test it again with your users.
For example, the founders of AirBnB first tested their idea by renting out air mattresses in their own apartment. When they saw people were willing to pay for it, they expanded their assumption further – that other people would be willing to rent out their space or pay to stay in someone’s house.
This is the best way to mitigate and manage the risks, especially when creating a new product where there are a lot of unknowns, or very few such products in the market. You’ll also avoid analysis paralysis, where you’re stuck in overthinking mode and nothing much gets done.
Build a Minimum Viable Product (MVP)
An MVP is the easiest way to launch your product in the market. You will build only the core functionalities for an MVP. Start with the smallest set of features that will meet the needs of your users. If you have more than one type of user, focus on the biggest user group.
Building an MVP also gives your team clarity on which direction to take, based on feedback from early adopters. With an MVP, it becomes easier to convince your investors and other stakeholders of the viability.
Set what success should look like
In order to achieve success, you need to define what it should look like. From the get-go, you need to define your goals and the metrics that will measure those goals. Having a yardstick helps you progress further and faster.
Be specific about what you want to see. You can also set timelines for when you expect to achieve those results, which will give you an indication of whether your product is working or not. In the case of an MVP, common metrics are adoption rate, churn rate, acquisition cost, and average revenue per user (if you are charging for your product).
Be flexible, adaptable, and keep fine-tuning
Try to be adaptable to fluid situations, flexible in crafting a new plan, and mitigate issues as they arise. As you’re building and expanding your new product, roadblocks will arise. You may need to pivot or start all over again. In any case, don’t put all your eggs in one basket. Always have a backup plan.
You should always be incrementally improving your product, fine-tuning features as you get more feedback. Success is often the result of a million small improvements, rather than one big swoop of change.
Prioritise feasibility and scalability
Your idea may test out great, but you need to be able to build it and expand it. This is what feasibility and scalability are about.
Think ahead about the technology stack you will be using. Don’t forget about product testing, data security, and user privacy. If you’re in a heavily regulated industry, you’d want to think about meeting the regulations too. These are all essential things you want to tick off early, so you’re not stuck with a costly decision that is draining resources and time.
Collaborate and communicate
Lastly, get the right people involved and communicate regularly. It’s a common mistake that big companies make when one department decides without involving other stakeholders, which eventually makes the product a failure.
You should be building a strong team with diverse experiences, including product experts, UX designers, developers, marketers, researchers, and customer support professionals. Get everyone on the same page and keep communication lines open. Risks can be managed if they are identified early, and that requires all hands to be on board.
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