Product Development Process

What Is the Product Development Process?

The product development process encompasses all steps needed to take a product
from concept to market availability. This includes identifying a market need, researching
the competitive landscape, conceptualizing a solution, developing a product roadmap,
building a minimum viable product, etc.

Who Is Involved in the Process?

Because they are ultimately responsible for the success or failure of the company’s
products, product managers typically drive the product development process from a
strategic standpoint. But this process is not strictly a product management
function. Product development requires the work and input of many teams across a
business, including:

 Development
 Design
 Marketing
 Sales
 Finance
 Testing

Product managers act as the strategic directors of the development process. They pull
together the cross-functional team, communicate the big-picture goals and plans for the
product (via the product roadmap), and oversee the team’s progress.

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What are Common Flows of the Product Development Process?

There are several popular systems for new product development. Below are a couple of
examples of frameworks that suggest specific product development process steps.

The Design Thinking Approach

Design thinking is a framework for developing new products based on first identifying a
problem or need from the user’s perspective. The steps involved in the design thinking
process are:

Step 1: Empathize with users

Step 2: Define the problem

Step 3: Brainstorm potential solutions

Step 4: Build a prototype

Step 5: Test your solution

For a more detailed discussion of each of these steps, see our page on design thinking.

The New Product Development (NPD) Framework

This is a standard, composite approach that businesses often use to develop physical
products — as opposed to digital products like software. There are many variations to
the NPD framework. Some organizations use a five-step approach, while others break it
into as many as eight stages. Here is a common approach that divides the process into
six steps:

Step 1: Ideate

Brainstorming, sometimes called the Fuzzy Front-End step, where the team shares all
of its innovative ideas.

Step 2: Research

Validating your idea with potential users, and reviewing competitive offerings.

Step 3: Plan

Sourcing suppliers, estimating the production budget, determining how to price your

product, etc.

Step 4: Prototype

Developing a sample of your finished product to share with key stakeholders. Note: this
is different from the minimum viable product, which is for early adopters.

Step 5: Source
Putting together a plan for vendors, materials, and other resources needed to turn the
successful prototype into a mass-market product.

Step 6: Cost

Documenting all of the costs required to bring the product to market. This should include
line items for manufacturing, materials, setup costs, storage and shipping, taxes, etc.

Another approach to the product development process is rational product management.

Based on the rational development process used by the software industry, this
approach offers a framework to strategically plan, iteratively develop, continuously verify
quality, and control changes.

What are Best Practices for Your Product Development Process?

Although their specific approaches vary, most companies that repeatedly deliver
successful products to market share certain strategies. Below are some of these best
practices for new product development:

 Start with your users’ needs and frustrations in mind.

 Use market research and your own users’ feedback. (Don’t innovate in a
vacuum.)
 Communicate regularly across your company. Share knowledge and insights.
 Use one of the many available frameworks for your product development
process. (Don’t try to develop without a system in place first.)
 Validate your product concepts as soon in the process as possible. For some
products, this might include a “soft launch” in which you test the product with a
small group of early adopters, before a full-scale market release.
 Invite your cross-functional team into the ideation and brainstorming stages.
(Great insights about your market can come from everywhere.)
 Set realistic development timelines.
 Focus only on ideas your organization has both the resources and the expertise
to execute on.

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What are Real-World Examples of Product Development

Processes?
The founders of Airbnb had neither a business nor funding, but they intuitively
understood one of the most important elements of successful product development:
validate your product concept before you begin production.
Airbnb

They tested their idea for peer-to-peer rental housing online by posting the details of
their own apartment and offering it as a short-term rental. When several users signed up
to stay in the founders’ home, they knew they had a viable product idea.

Crystal Pepsi

PepsiCo made a critical mistake when they introduced Crystal Pepsi — the new soda
they marketed as healthier than their other soft drinks. The company failed to validate
their concept before its market launch. Because they didn’t gather enough early
feedback from their target customers, or use a soft launch to validate the product with
early adopters, Pepsi’s management was blindsided when their full-scale release of
Crystal Pepsi proved a failure.

What is One Key Difference Between Developing Products at a

Startup vs. a Large Business?
These examples highlight one of the differences between the product development
process in a startup vs. developing a new product within an established company.
Because the Airbnb founders did not have funding, a large team, or any track record,
they had no choice but to validate their idea with real-world users before spending any
time or money on development.

PepsiCo, by contrast, could afford to pour hundreds of millions of dollars into its Crystal
Pepsi launch (which they did, including Super Bowl ads) without first investigating
whether or not the clear-colored soft drink would resonate with customers. In other
words, they had the means and a corporate culture that allowed them to skip the
research, validation, MVP, and user testing stages of the product development process.
As it turned out, though, this was a mistake.

This is one example of why in some cases it can be easier to develop new products for
a startup than within a large, well-funded organization. T