The Typical Stages of New Product Development


Agile Product Development

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If you've never built a software product before, you may be unclear about how it transitions from an idea in someone's head to a tangible application. You might be surprised to learn how much planning is involved before anyone starts writing code.

New product development is the process of creating a totally unique product and introducing it to the market. It could be a new idea that’s never been offered before or an improvement on an existing concept.

Whether you are working with an internal team or outsourcing your software development, it's important to understand the typical stages of product development. In this article, we will go through each stage to walk you through the timeline of a new product.

Stage 1: Idea Generation

The first stage of product development is the genesis of an idea. Or, in many cases, a list of ideas. This stage is the foundation for the rest of product development.

Your ideas can be as simple or complex as you like. You might come up with something completely unique and revolutionary. Or you might propose a product that’s an improvement to something that already exists.

There aren’t many “Eureka!” moments when you try to come up with ideas. Don’t expect the first idea to be your big money-maker. Brainstorm, talk about the problem, and ask questions. Generally speaking, your ideas should be inspired by a problem someone experiences.

Source ideas from two places:

  • Internal sources. These are sources from within your organization. They can come from the leadership or your employees. These sources typically have a good understanding of what can be built and what customers want.

  • External sources. These are sources from outside your organization, such as your distributors, supplies, competitors, mentors, and advisors. Your customers are your best source of ideas because they are willing to spend money to have their problems solved.

Don’t limit yourself to a single idea here. It’s not unusual for organizations to generate a list of dozens of product ideas to solve a particular problem. You’ll eliminate most of them in later steps of the product development process.

Stage 2: Screening

Once you have a list of ideas, the next step is to screen them to determine whether they have potential to be successful. You may be anxious to start building, but this step is important.

Why should you screen your ideas? Some ideas sound good at first, but later turn out to be duds. Developing a new product is expensive. You don’t want to invest resources into an idea only to discover that it isn’t technically possible, doesn’t have a market, can’t be monetized, or has some other limitation.

Investigate each idea on your list thoroughly to eliminate the ones that lack potential. Don’t settle for general conclusions of “good” or “bad.” Check for ideas that…

  • Fit in with your general business strategy.

  • Have a clearly defined customer.

  • Address a clearly defined problem.

  • Make sense for the company (i.e. you aren't stepping too far outside of your wheelhouse).

  • Have a clear marketing strategy.

  • Can be scaled up.

  • Have clear development costs.

How you screen each idea may differ depending on the nature of the idea and your organization's needs. For example, if your organization is struggling financially, you may prioritize ideas that indicate a faster payout even if their long-term financial success is limited.

This is a good time to consult experts or any influential parties you may know. For instance you might run one of your ideas by a developer to find out how it would be built. Or you might run an idea by a potential customer to find out how much they would pay for it.

If an idea doesn’t meet your criteria, discard it. Screen the next idea on your list with the same thoroughness. If none of your ideas pass the test, revisit the ideation stage again to come up with some alternatives.

Remember: It’s important to be judicious here. The next step in new product development involves spending real money on a product, so it’s important that you screen each idea carefully.

Stage 3: Concept Development

Once you’ve chosen an idea (or a small group of ideas) to pursue, your next step is to create a detailed concept of the product to get a better idea of what it will take to build and how the market will respond to it.

A concept is simply a collection of documents or a slide deck that outlines the product. You might include a list of features and how they work, a mockup of the UI, or an app’s flowchart like the one below. Notice how it’s not pretty. There’s no branding. It just focuses on the basic functionality of the product.

New product developmentImage: Creately

It’s important to do your research. Which features are must-haves? Which are nice-to-haves? How will you create a frictionless user experience? Does the product solve your core problem sufficiently?

Your concept should also include a marketing strategy. This is where you’ll create a value proposition. You’ll also identify and analyze your target market and your competitors, the costs of development, price strategies, estimated revenue, market penetration strategies, key partnerships, etc. Ask yourself when you’ll break even on the product and what it will take to get there.

Finally, you’ll need to show your concept to stakeholders and potential customers to get their feedback. Reach out to people you trust who will give you their honest thoughts. You don’t want to talk to “yes men” who will praise your idea regardless of its merits. Ask them if the product would solve their problems and if it’s something they would pay for. Incorporate their feedback into the concept.

Stage 4: Product Development

If you’re tired of all the planning, don’t worry. This is the stage where you develop the tangible product that you and potential users can actually touch.

In software development, building a product is a fluid, indefinite process. It’s always ongoing. There’s rarely a “finished” point these days.

Development starts with an MVP, the minimal version of your product that still addresses its core function. This build is based on your initial research and the feedback you received from your concept. Don’t get fancy here. Build something quick that solves your user’s/customer’s problem.

Next, invite customers to use your MVP as early as possible to start gathering data and more feedback. Your goal is to confirm their desire to use it, make sure they get as much value from the product as possible, and find out how you can grow it in the future to continue to meet their needs.

Over time, development goes through continuous iteration by incorporating user feedback. You should be collecting data and running tests constantly, looking for opportunities to better align the product with your users’ needs.

New product developmentImage: Eric Ries

Stage 5: Commercialization

The final step in product development is commercialization. Admittedly, this is a nebulous term in the age of Agile development and the Lean Startup methodology. It’s possible to have lots of active users and bring in plenty of revenue before you open your product to the world.

This is the point in the process where a product launches to the public. Instead of manually inviting select users, you allow anyone to use the product. It’s also the point where you begin to execute the marketing strategy.

If your product is designed to make money (as opposed to, say, an internal tool for your team), this is where real revenue begins to flow back to the organization to recover the investment costs. But that doesn’t mean spending is complete. You’ll still need to invest in marketing, advertising, sales, support, account management, etc.

At this point, you should feel like your product is polished enough for mass consumption. But that doesn't mean you should stop improving it. Continue to iterate over time in order to serve your users and customers.

Final Thoughts

Now that you understand the typical stages of new product development, don’t be afraid to adapt this process to the needs and resources of your organization. Naturally, the ways in which a large, global organization builds new products will differ from how a small, scrappy startup creates.

There’s one place you shouldn’t deviate, however: Your user or customer. Include them as much as possible in the development process so you end up with a product that meets their needs.

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