Season 5 Highlights: The Product Discovery Loop
In this episode of the Product Science Podcast, we share Season 5 excerpts as we cover the product discovery loop, a tool to break down the components of achieving product market fit.
Holly Hester-Reilly is the Founder and CEO of H2R Product Science, a product management coaching and consulting firm that teaches the principles and practices of high-growth product development, and the host of the Product Science Podcast. Holly is a former Columbia University research scientist and has spent over 15 years leading product initiatives at startups, high-growth companies, and enterprises like FalconX, MediaMath, Shutterstock, The Lean Startup Co, Unilever, Capital One, and Weight Watchers.
Holly also teaches at NYU Stern School of Business as well as public and private workshops and has spoken about building high-growth products for events such as Lean Startup Summit Europe, the Women in Product Annual Conference, ITX Product + Design Conf, Parsons School of Design, and INDUSTRY: The Product Conference.
In this episode of the Product Science Podcast, we share Season 5 excerpts as we cover the product discovery loop, a tool to break down the components of achieving product market fit.
Questions We Explore in this Episode
How does Holly view product-market fit?
- The term was first coined by Marc Andreessen.
- It’s not a big bang event, but rather a continuous process as your product develops over time.
- It can be broken into sets of target market segments, user pains, users’ desired outcomes, and solutions.
What is the Product Discovery Loop?
- A tool for breaking down the components of achieving product-market fit.
- It begins with target market segments that have cohesive needs and contexts.
- Within those market segments, we find user pains that people spend time and/or money to address.
- We look at what these people want as desired outcomes from addressing those pains.
- Then we test and build solutions that fit within those users’ contexts.
- Finally, we bring those solutions to market with support and usage restrictions aligned to the readiness of the product.
How do we bring solutions to market when using the Product Discovery Loop?
- It often starts with an invite-only beta program.
- Then it goes to an open beta program.
- A marketing launch is timed for when the product has grown to meet the needs of a significant amount of the desired market, which often takes more than one pass through the product discovery loop.
Quotes from Holly Hester-Reilly in this Episode
People often get confused thinking that product market fit is a binary thing. It's easy to think of it as something that you get and then have forever. But that's not the case. Product market fit isn't a big bang event. It's a series of events that happen as you grow the number of market segments, the number of problems addressed, and the values of outcomes reached as your product develops over time.
In some cases, this first version will be a private invite-only beta. In other cases, it will be a public beta. It might be a soft launch, or you might put some marketing behind it. Whatever you choose, you are bringing that solution to market. In closing the first iteration of the product discovery loop, you brought something from understanding the market, through understanding the user pain, through understanding the desired user outcome, through building a solution, and then bringing that to market. The next step is to watch the data and feedback, and most importantly, how customers use it, to make sure it is achieving the outcomes you wanted for it. When it does, you have some small slice of product-market fit.
Once you have that first bit of product-market fit, now your job is to expand. Begin your next pass through the loop. Add something. Maybe it's the same segment, but an additional outcome. Maybe it's an additional segment. Wherever you go next, you are adding to the total your product delivers. On each pass through the loop, you do research, talk to users, and explore multiple options. You build the continuous discovery practice of your organization, looking at product and market, and talking to customers regularly while checking in with data and constantly shipping new versions. Over time, this cycle will lead you towards product-market fit. Not in a big bang event with a splashy and successful launch, but a methodical, continuous process that grows value for your users and your company over time.
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Holly Hester-Reilly: Hi, and welcome to the Product Science Podcast where we're helping startup founders and product leaders build high growth products, teams, and companies through real conversations with the people who have tried it and aren't afraid to share lessons learned from their failures along the way. I'm your host, Holly Hesta, Riley founder and c e o of H two R Product Science. This week on the Product Science Podcast, we're wrapping up season five. In this episode, I'm going to share with you one of my favorite tools for breaking down the components of product market fit into a cycle of steps that can be repeated. It's a tool I created called the Product Discovery Loop. First, let's discuss what most people get wrong about product market fit.
Holly Hester-Reilly: The term product market fit was coined by Mark Andreesen, founder of the venture capital firm, Andreen Horowitz, as well as some of the greatest hits of nineties tech companies like Netscape and Opsware. Andreesen famously said, quote, and you can always feel product market fit when it's happening. Money from customers is piling up in your company checking account.
Holly Hester-Reilly: You're hiring sales and customer support staff as fast as you can. end quote. Yet people often get confused thinking that product market fit is a binary thing. It's easy to think of it as something that you get and then have forever. But that's not the case. Product market fit isn't a Big Bang event.
Holly Hester-Reilly: It's a series of events that happen. As you grow, the number of market segments, the number of problems addressed, and the values of outcomes reached as your product develops over time. I know that you care if the product you're building is the best for the market, and you want to build a product that people love using, and you need that to build a business.
Holly Hester-Reilly: But that's not so easy to identify. Lots of people say there's no way to know that until you build and release a version of your product. Building and releasing often is critical to be sure. But I also believe that you can get critical information to guide your path to product market fit, even before you build any version of your product, let alone bring it to market.
Holly Hester-Reilly: I use the product Discovery loop to break down product market fit into components you can more easily identify and test along the way. So what is the product Discovery Loop? The product discovery loop includes market segments, customer pains, desired outcomes, and solutions. Going through discovery around these four components gives you a better understanding of who your business is, trying to target, what they want, what gets in the way of that, and how you can help them.
Holly Hester-Reilly: Each successful pass through the product. Discovery loop increases customer love for your product. Growing the addressable market by covering additional customers pains or use cases. Next, I'm going to share more detail about each component and share how focusing on one pass through the product discovery loop with each build face sets your team up for high growth product development.
Holly Hester-Reilly: So let's start with market segment, step one in the product discovery loop, the first components of the product Discovery loop involves knowing which segment of the market you're building for. Typically, a founder will have a vision for the business they're going to build, and the product that goes along with it.
Holly Hester-Reilly: They'll have an idea of what market it's for, but many times they'll describe a market in terms that are overly general for a new product. We get so excited about all the uses of the products we're building. We're also encouraged to think this way to attract investors and motivate team members with a big problem worth solving.
Holly Hester-Reilly: For example, I've recently heard a pitch for a new social media management tool that helps with scheduling. My first question was, why would I want to switch to this tool if I've already tried several tools that do this? The language used to explain it was overly broad. So much so that it didn't stand out as something that would be solving any specific problems given the assistance tools on the market.
Holly Hester-Reilly: It was too broad. So market selection is important. Your market needs to be big enough to support a business, and trending in the right direction needs to be growing, not stagnating. It's also important to have a sense of how much competition there is in that market. Is it already saturated or not? Do you have a competitive advantage that can help you gain a foothold with some segment of that market?
Holly Hester-Reilly: More often than not, you can't build for an overly broad market from the start. Your first phase of work should focus on a segment within the market, one that is most likely to love your first version. This first segment may not make your funders as excited, but it's a critical step to building the flywheel for continuous discovery and delivery.
Holly Hester-Reilly: So I wanna share here something from this season's podcast episodes. In episode 5 25, Jeff Patton touched on the importance of selecting who you are building for. He was telling us about how he uses getting ready for the day as a case to practice journey mapping, and he shared the following.
Jeff Patton: Then at the end of this, I'll say, okay, how many people had tasks or steps left in there for things like taking care of their pets or taking care of their kids? And almost every group has something like that. And I said, Rate. You can make your slice smaller by kicking those people out of your group. If you get them out of your group, you can get rid of their stupid kid stuff and pets, and that'll make this smaller.
Jeff Patton: I want people to understand that we don't prioritize features and products, we prioritize people. It's deciding who you're focused on and who you're not focused on.
Holly Hester-Reilly: One of my own examples of this comes from when I was working at Shutterstock as the group product owner for Workflow Tools. We were developing a new product, the Shutterstock editor. The vision for the product was to create an easy to use tool for non-professional designers to create great designs with our stock images.
Holly Hester-Reilly: Think things like social media, images, website graphics, something for your mailing list, flyers, signage menus, and more. So for this product, the market was for these non-professional designers, but the first segment of the market that we worked with was smaller. We needed to find a subset of this market whose needs we could meet more easily.
Holly Hester-Reilly: To do that, we turn to qualitative research to help us move to the next step in the product discovery loop. That next step of the product discovery loop is user Paynes. Typically, a founder or products leader has some idea of what problem they're going to solve, but it's often lacking in context or details.
Holly Hester-Reilly: For example, the problem we were told to solve for Shutterstock editor was that our target users wanted to create better looking designs more easily, but we didn't really know how unhappy with their current designs they were or how frustrated they were with the process. If you're trying to launch a new product, you're trying to get people to change their behavior.
Holly Hester-Reilly: You're trying to get them to change however they solve these problems currently and solve them with your product instead. The difficulty here is that people generally aren't willing to change their behavior for something just a little bit better. For most people, there are way too many options out there already, which makes it hard to decide what's right for them.
Holly Hester-Reilly: Because of this friction, they don't bother to change their behavior until it becomes glaringly obvious that something in their life will be solved by trying something new. In episode five 18, we talked to Andrew Scotzko go about behavioral economics. He had this to say.
Andrew Skotzko: In some ways, many products are behavior change interventions, and so if you're gonna try and change somebody's behavior, which by the way is super hard, you better understand it. So I think looking at behavior change, behavioral economics is a gold mine as
Holly Hester-Reilly: So you want to find a hair on fire problem that people are willing to change their behavior to solve. To do this, think about your product in terms of pain. You can better understand customer pain through interviews which allow you to assess pain points from the customer's point of view rather than your perception of their pain points.
Holly Hester-Reilly: The problem your product addresses should be a problem that they notice ideally when they're actively trying to solve and hopefully something they're already spending money trying to solve. Finding this out lets you know if there is potential for a business there. In episode five 15, Andrew Michael shared a story about how his team uses user interviews to dive into understanding user paynes and market segments.
Andrew Michael: Yeah, so I think like we started in the beginning with this ideal customer profile in mind, just because we had done a lot of research in the beginning and we understood like who had this pain point, who had this problem the most. What we're starting to notice is there's different segments that we didn't expect to be using our product or service.
Andrew Michael: So that's been interesting and what we are doing now with that is just really, okay. The data's showing us one thing, we don't understand it. So we know what's happening. We don't know why. So now we're diving into using interviews and really just trying to pick some learnings out from there. But yeah, I mean our still ideal custom profile is fairly close to what we envisioned from the start, and it's what we researched at the start and is what we still see today.
Andrew Michael: So those companies that are mid-market, Product teams, they tend to be like really good active users retained. So in most cases we definitely see weekly usage and then a lot of them daily usage of the product. So that's where our focus still lies. But like I said, we are seeing like interesting different segments that we didn't expect.
Andrew Michael: So we see like journalists using the product to research articles or students using our service to research for their master's thesis or putting together a dissertation. So these are segments.
Holly Hester-Reilly: In my own story, at the time that we launched Shutterstock editor, non-professional designers would often get their work done using a word processor or present. Presentation program at the other end of the spectrum, they might use a tool way more complex than what they needed, like Adobe Photoshop, when all they really wanted was a CRO version of the image for a post.
Holly Hester-Reilly: So the pain points that resonated were that the process was difficult and it took too long. The next step of the product discovery loop is the outcome here. You want to make sure you understand what outcome your target customer desires. How will they know if they've been successful? Why is this separate from customer pains?
Holly Hester-Reilly: Because this is the joy, the part where they feel great about what you've accomplished with them. Keep in mind that there's more than one outcome for a given problem. A customer could make their problems go away by overcoming it and achieving a goal, or they could make the problem go away by having someone else solve the problem for them.
Holly Hester-Reilly: For example, there are many different ways to solve a problem. We often lose sight of this when we get caught up in making incremental improvements to solutions that are already out there. So we need to understand which outcome our users care about and would pay for. How do they define and measure a successful outcome to their challenge?
Holly Hester-Reilly: In episode 5 25, Jeff Patton tells about an analogy he uses to illustrate the difference between features and outcomes.
Jeff Patton: I'll use oftentimes a home remodeler, as an example, if you're remodeling someone's home, you want. To please that person and they make a lot of the decisions, but home remodelers aren't responsible for the outcome. If someone comes in and they lay down the flooring I want, they put the cabinets in, I want, they install the appliances I want.
Jeff Patton: If I later on hate the flooring, hate my cabinets, hate my appliances, it's some of my problem. It's not. My kitchen remodeler's problem, and it takes the outcome and it makes it your customer's responsibility. Now, the problem is when you lean on stakeholders for do that, your stakeholders aren't actually your customers.
Jeff Patton: They're not actually your users. And if stakeholders are happy, there's no business that thrives. When stakeholders are happy, that's not where the money comes from. Your business model isn't making stakeholders happy. Money comes from outside customers and users. Money comes from people using your product and being more efficient and more effective.
Jeff Patton: Happy stakeholders don't fund your company. They aren't actually your customers. They may be your users. The stakeholders being happy isn't making your company more money anyway. I, I don't see any company whose purpose is to make stakeholders happy.
Holly Hester-Reilly: If you go back to our shutter sock example, the outcomes these users wanted were pretty simple, quick, great looking images for their business. The problem was that with the digital tools available at the time, many companies were no longer willing to give them the resources they needed to have an expert do it for them.
Holly Hester-Reilly: The users tasked with making these images almost always had some other job they'd prefer to be doing over navigating these finicky, complicated tools. So more precisely the outcome our market wanted was to create images that looked like they were done by a professional, but took as little time as possible to create.
Holly Hester-Reilly: But we were able to go deeper than that. We saw that different types of non-professional designers needed images with different challenges around them. Small business owners needed print media and digital media communication. Staff needed great presentation materials, but social media managers only needed cropped images often with a bit of text.
Holly Hester-Reilly: That was the easiest outcome for us to deliver. So we started with that. We built an outcome roadmap, showing leadership that we were going to start with social media managers, then expand to social marketers, and then expand further to include communication staff and small business owners. In episode five 16, Roman Pichler shares his approach to roadmaps.
Roman Pichler: So for me, the key is really to work with outcomes and goals and focus first and foremost on outcomes and goals, and keep the product roadmap fairly high level. I've mentioned that for me, a good product goal or outcome on a product roadmap. Map, it covers a timeframe of about two to three months. It's specific and it's ideally measurable.
Holly Hester-Reilly: The final step of the product discovery loop is the solutions. This is where your business comes in, helping your target customers overcome their pains and get the outcomes they want. There might be more than one way to solve the problem and get your customer to the outcome they want. In fact, the best teams make sure they're thinking of and evaluating multiple options.
Holly Hester-Reilly: Evaluate those potential solutions based on what's doable for your business, and then validate them by putting them in front of customers to see what works and what doesn't. In episode 5 0 5, JH Forster told us about how they do this kind of research at user interviews. With Shutterstock editor, we wanted to launch a feature that would let users add text to their images.
Holly Hester-Reilly: We wanted to do it as lightly as possible, but at the same time, many felt like we needed a full text editing bar with font sizes, styles, weight alignment, et cetera. As the product manager, I had to remind our team that we were trying to make something easy to use, not complicated. And give people only the options they needed.
Holly Hester-Reilly: They might not be able to align the text, but they can move the text box around, for example. So we tested the most minimal version of this with users and asked them to use the tool to prepare a social media post with an image and text. From our perspective, we were trying to learn more about how to get to the outcome we were supporting with this release.
Holly Hester-Reilly: When we put it in front of some customers before we launched it, we discovered that we needed something more. What we found was that because our customers were using the tool to put text on top of images, they had a lot of readability issues and they needed something to make sure text could be readable no matter what was in the background of an image.
Holly Hester-Reilly: Even more importantly, we understood why we needed this feature. If we hadn't tested with users regularly, we would've been arguing over opinions. Instead, we pointed to the evidence and launched the version with only the elements that were absolutely needed. We could see how and in what ways text was important to our users before deciding whether we should add more advanced text features or move on to a different area like shapes.
Holly Hester-Reilly: Once your minimal prototype or beta shows the users getting their desired outcome, you are ready to release the product to your targeted market segment. Depending on how representative this set of target market segment use your problem. Desired outcome and solution are determine the appropriate amount of marketing support.
Holly Hester-Reilly: In some cases, this first version will be a private invite only beta. In other cases, it will be a public beta. It might be a soft launch, or you might put some marketing behind it. Whatever you choose, you are bringing that solution to market. And closing the first iteration of the product discovery loop, you brought something from understanding the market through understanding the user pain, through understanding the desired user outcome, through building a solution, and then bringing that to market.
Holly Hester-Reilly: The next step is to watch the data and feedback, and most importantly, how customers use it. To make sure it is achieving the outcomes you wanted for it. When it does, you have some small slice of product market fit. In episode 5 0 6, Adam Thomas described what it's like when you iteratively release products that make an impact.
Adam Thomas: As you do this over and over and over again, you'll be able to stop releases before they happen. Before you get to that release point, you'll be able to look at something. Your processes will guide you into jetting things that don't serve the company. And not only that, the company will understand. The people that you're communicating with will understand why, but the things you do release, they'll have impact.
Adam Thomas: And maybe just maybe you'll start to find your way to that product market fit that's being asked of you. And while you do it, everybody's along for the ride. The teams along for the ride, you're getting more trust in the organization. People feel like they know what's going on. People stop asking you for roadmaps, right?
Adam Thomas: Because they have an understanding of what's happening when
Holly Hester-Reilly: Once you have that first bit of product market fit, now your job is to expand. Begin your next pass through the. Loop. Add something. Maybe it's the same segment, but an additional outcome. Maybe it's an additional segment wherever you go next, you are adding to the total your product delivers. On each pass through the loop, you do research, talk to users, and explore multiple options.
Holly Hester-Reilly: You build the continuous discovery practice of your organization, looking at product and market, and talking to customers regularly while checking in with data and constantly shipping new versions. Over time, this cycle will lead you towards product market fit. Not in a big bang event with a splashy and successful launch, but a methodical, continuous process that grows value for your users and your company over time.
Holly Hester-Reilly: Eventually, you'll arrive at the point where if a person from the outside looks in, they'll see that you found product market fit. Sometimes, somewhere along the journey you decide to do a big marketing launch, and that might be the place that feels like the finding of product market fit, but really it's a continuous process along the way.
Holly Hester-Reilly: So use the product discovery loop to help you find product market fit by going through, starting from the market, going to understand user pains through qualitative research. You can use the product discovery loop to find product market fit by starting with the market segment that you're investigating, figuring out what user pains are deep enough to drive the early adoption.
Holly Hester-Reilly: Developing an understanding of what outcomes those early adopters want and will pay for ideating on different solutions, and picking one that does the best job of driving that outcome and then bringing those solutions to market and then going through the loop again and again. So that's how you use the product discovery loop.
Holly Hester-Reilly: To find product market fit. I hope you enjoyed this season five finale episode. We'll be back later this year with a new season. Until then, keep learning. The Product Science Podcast is brought to you by H two R Product Science. We teach startup founders and product leaders how to use the product science method to discover the strongest product opportunities and lay the foundations for high growth products, teams, and businesses.
Holly Hester-Reilly: Learn email@example.com. Enjoying this episode. Don't forget to subscribe so you don't miss next week's episode. I also encourage you to visit firstname.lastname@example.org to sign up for more information and resources from me and our guests. If you like the show, a rating and review would be greatly appreciated.
Holly Hester-Reilly: Thank you.
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