What is a “sunk cost”? This term might sound technical, but it profoundly impacts our daily decisions.

A sunk cost is any past expense you can’t recover, no matter the outcome of ongoing efforts. It doesn’t matter if it’s money, time, or energy. Once spent, these costs shouldn’t influence future decisions. However, they often do, leading us into what’s known as the “sunk cost fallacy.”

Understanding sunk costs is crucial not only in business but also in our personal lives. It helps us make more rational decisions. When you recognize that sunk costs influence you, you can avoid wasting further efforts on lost causes.

Let’s explore the nature of sunk costs, their psychological impacts, and how we can avoid the common traps around them.

Sunk costs vs fixed costs

It’s easy to confuse sunk costs with fixed costs, but they’re different.

Fixed costs are expenses that do not change regardless of how much a business produces. Think of like rent or salaries. These costs are predictable and often unavoidable.

Sunk costs are funds you already spent and can’t recover, no matter what future outcomes.

For example, let’s say a company invests in a new software system that turns out to be inadequate. The money they spend on this system is a sunk cost. You can’t sell the software later to recover the money.

In contrast, they can sell or repurpose something like machinery (a fixed cost). There’s still some return on investment there.

Recognizing the difference helps make better decisions about where to allocate resources. You can focus on costs you can still influence rather than ones that have already been lost. 

If you focus too much on sunk costs, you may fall into the sunk cost fallacy.

Sunk cost fallacy

The sunk cost fallacy is a common trap. It makes us continue a project simply because we’ve already invested resources, not because it promises future value. This can mean watching a bad movie until the end because you paid for the ticket. Or continuing a failing project because of the time and money already spent.

The fallacy lies in our emotional investment in what we’ve already “sunk” into the project. This clouds our judgment regarding future benefits and costs.

Economists argue that only future costs and benefits should influence our choices. The past costs are gone, and you can’t bring them back, no matter how you proceed.

This flawed mindset can lead businesses and individuals to make poor decisions that amplify their losses. A better strategy is to reallocate resources to more promising areas.

The psychology behind sunk costs

Our psychology deeply influences our decisions around sunk costs. Even when we logically know better, emotional factors can make it hard to let go of investments. Here are key psychological factors that lead to the sunk cost fallacy.

• Emotional impact and behavioral influence. Committing time, money, or effort to a project makes us emotionally attached. This attachment can cloud our judgment. It makes it difficult to abandon the project even when it’s clear that continuing is not beneficial.
• Loss aversion. This is our natural tendency to prefer avoiding losses to acquiring equivalent gains. This can lead to an irrational decision to continue investments to avoid feeling a sense of loss.
• Framing effect. How a decision is presented affects our choices. If quitting an endeavor is framed as a loss, we’re more likely to continue, even against our better judgment.
• Optimism bias. Often, we believe our projects will succeed despite evidence to the contrary. This bias can lead us to continue investing in a losing endeavor, hoping things will turn around​.
• Desire to avoid waste. Stopping a project can feel like admitting this past investment was a waste. This feeling can be so uncomfortable that we continue investing, hoping to validate our initial investment decision.

Understanding these psychological triggers can help us recognize when falling into the sunk cost trap. Then, we can make more rational decisions.

Examples of sunk costs

Sunk costs are everywhere – from massive government projects to personal investments. Here are some good examples.

Concorde project

The British and French governments continued funding the costly Concorde supersonic jet despite overwhelming evidence that it was no longer economically viable. This financial decision is a classic example of the sunk cost fallacy​. People often refer to it as a Concorde fallacy. 

Business investments: Nokia

Companies often continue with projects even after clear signs of their ineffectiveness. Extensive marketing campaigns or new product development under a failing brand are often the evidence. Abandoning the project would mean acknowledging that all the money already spent was for nothing.

Nokia’s continued investment in its Symbian operating system is a good sunk cost example. Rival platforms like Apple’s iOS and Google’s Android saw rapid growth and increasing popularity. Still, Nokia continued to pour resources into Symbian. The company had already invested heavily in developing and establishing the platform in the market. Abandoning Symbian would have meant acknowledging that those investments were now irrecoverable. Nokia decided to stick with a lagging technology due to past investments. This ultimately hindered Nokia’s competitiveness in the smartphone market.

By the time Nokia shifted focus to more competitive operating systems, it had lost a much-valuable market share. This showcases the detrimental impact of the sunk cost fallacy.

Personal relationships, education, and careers

The sunk cost fallacy can affect us personally too. People might stay in unsatisfying relationships because of this. Or they continue pursuing degrees that no longer interest them. That’s because they’ve already invested much time and emotional energy.

Similarly, individuals might stick with unsatisfying jobs due to the training they’ve undergone.

These examples show how widespread and varied the impact of sunk costs can be across different areas of life and decision-making.

How to overcome the sunk cost fallacy

To avoid the pitfalls of the sunk cost fallacy, consider these strategies:

• Reevaluate objectives. Regularly assess whether your current endeavors align with your overall goals. This helps ensure you’re not just continuing something out of habit or sunk costs.
• Consider the opportunity cost. Consider what else you could achieve with the resources you dedicate to a faltering project. Alternative uses of these resources often offer better returns.
• Embrace flexibility. Be flexible and open to change. It can help you avoid unsuccessful ventures more easily and minimize further losses.
• Separate emotions from investment decisions. Try to make decisions based on rational analysis rather than emotional attachments to past investments.
• Seek external advice. Sometimes, an outside perspective can help you see the reality of a situation more clearly. External advisors or mentors can provide objective insights that aren’t clouded by the emotional investments you’ve made.

Conclusion: sunk costs, sunk cost fallacy, and more

Understanding the sunk cost effect is crucial for effective decision-making. As we’ve explored, it can affect both your business and personal life. Learn to recognize when sunk costs influence you. Then, apply strategies to mitigate this bias. This way, you can avoid additional losses and focus on actions that align with your objectives and well-being.

Remember – the key is to look forward and base decisions on potential future benefits rather than past costs.

Maria Vasserman

Maria loves all things creative – writing, photography, movies and beyond 🎥 When she's not creating content to tell the world about Canny, she's either photographing a wedding, jumping at a rock concert, camping, travelling, snowboarding, or walking her dog 🐕‍🦺

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ARR is a key indicator of performance and growth. A growing ARR suggests a business is successfully acquiring and retaining customers. A declining ARR signals it’s time to reevaluate strategy. ARR offers insights beyond revenue. It can also help you understand customer satisfaction and the effectiveness of your business model. 

Let’s explore ARR SaaS metrics more.

ARR vs. other revenue metrics

There are a few ways to measure your revenue. Each has its own advantages and drawbacks.

General revenue

This is everything your business brings in. It counts all kinds of money, not just from subscriptions. It’s good to see the big picture, but it doesn’t tell you much about the steady cash you get monthly or yearly from customers who stick around.

Monthly recurring revenue (MRR)

MRR shows how much money you make monthly from people who subscribe to your service. It helps you see how you’re doing right now. It’s like a quick health check for your business every month.

Annual recurring revenue (ARR)

ARR is about looking ahead. It adds up all the money you expect from subscriptions for the whole year. It helps you plan big things for your business. Want to grow or try something new? ARR helps you see if you can.

Think of it this way:

• MRR is for now. It helps you make fast decisions.
• ARR is for the future. It enables you to plan big moves.

Types of ARR

ARR isn’t just one big number; it’s made up of different parts. Each one tells us something unique about how our business is doing. Let’s use an imaginary startup called CloudTech to illustrate each type of ARR.

• New and expansion ARR – show us where we’re growing
• Renewal ARR – says our customers like us enough to stay
• Churned and contraction ARR – point out where we might need to improve
• Resurrected ARR is a sign we’re doing something right again

Together, they help us see the complete picture of our business’s health.

Let’s learn how to calculate ARR.

Calculating ARR

Want to get a clear picture of your company’s financial health? Start with calculating ARR. Here’s a breakdown.

Basic ARR formula

The simplest way to calculate ARR is:

ARR = average annual subscription price per customer × total number of customers

Let’s continue with our example of CloudTech to illustrate again.

Example 1: CloudTech has 100 customers, each paying an annual subscription of $120. The ARR would be:

ARR = $120 × 100 = $12,000

Example 2: Let’s imagine CloudTech has a competitor called SkyVault. It has 50 customers on a $240 annual plan and 50 on a $480 plan. Their ARR calculation would be:

ARR = ($240 × 50) + ($480 × 50) = $12,000 + $24,000 = $36,000

When a SaaS company offers multiple subscription plans or pricing tiers, calculating ARR is more nuanced. Here’s what to consider:

• Average revenue per user (ARPU). If customers are distributed across various plans:
  

1. Calculate the ARPU first: divide total revenue by the total number of customers.

ARPU = total revenue / total number of customers

2. Calculate ARR using ARPU: multiply the ARPU by the total number of customers to find the ARR.

ARR = ARPU ×  total number of customers

• Adjustments for upgrades and downgrades. Include revenue increases from upgrades (expansion ARR) and decreases from downgrades (contraction ARR). This means tracking changes in customer subscriptions throughout the year.
• Pro-rating for mid-year changes. Sometimes, customers upgrade, downgrade, or churn partway through their subscription. Adjust the ARR calculation pro-rata for the time they were on each plan.

You don’t have to calculate it all manually. Several tools can automate and simplify the calculation of ARR.:

• Baremetrics: provides subscription analytics directly from your payment gateway, including ARR calculation.
• ChartMogul: automates your ARR and other critical SaaS metrics.
• Maxio: provides financial management solutions for SaaS businesses.

ARR and financial implications

Annual recurring revenue is not just a measure of income; it profoundly influences critical financial aspects of a SaaS business. Customer acquisition cost (CAC) and overall financial sustainability are essential. Here’s how these elements interplay.

CAC impact

Customer Acquisition Cost (CAC) is what a company spends to acquire a new customer. A high ARR indicates a strong, steady flow of revenue. This can justify higher CAC if the return on investment (ROI) is positive over the customer’s lifecycle. A robust ARR allows businesses to invest confidently in marketing and sales efforts. They’ll know that the subscription revenue (from new and existing customers) can cover these costs and contribute to profitability.

Financial sustainability

ARR predicts financial health. It provides a reliable revenue stream that supports operational and growth activities. Managing the balance between ARR growth and operational costs (including CAC) is crucial for long-term financial sustainability. A steady or increasing ARR suggests the company is on a sustainable path.

Significance of a high ARR-to-CAC ratio for profitability

The ARR-to-CAC ratio is critical for assessing a SaaS company’s efficiency and profitability. A high ratio means that the revenue generated from customers significantly exceeds the cost of acquiring them. This indicates that the company uses resources efficiently and overall has a sound business model.

This ratio also serves as a guide for strategic decisions. For example, you can:

• Allocate marketing budget
• Determine sales strategies
• Plan product development

Companies with a high ARR-to-CAC ratio might choose to aggressively invest in growth.

Do you have a lower ratio? Try the following:

• Reevaluate your customer acquisition strategies
• Increase customer value
• Increase prices
• Add additional services

You need to either increase revenue or decrease CAC.

How to enhance your ARR

Here are strategies that focus on retaining current customers and acquiring new ones.

1. Customer retention

• Enhance customer support and engagement. A satisfied customer is more likely to renew and upgrade their subscription
• Implement regular feedback channels to improve the product based on user needs
• Consider loyalty programs or incentives for long-term subscriptions to encourage renewals

2. Customer acquisition

• Focus on ROI-positive marketing campaigns
• Use referral programs to leverage existing customers to acquire new ones
• Offer free trials or demos to showcase the value of your product, converting prospects into new subscribers

3. Informed decisions

• Use data analytics to understand customer behavior and preferences
• Stay informed about market trends and competitor strategies to adapt and innovate your offerings

4. Growing sustainably

• Focus on developing scalable product solutions that can grow with your customers
• Encourage them to upgrade their plans
• Add new features and functionality

5. Track other metrics – MRR, CAC, and Customer Lifetime Value (CLTV)

• Regularly monitor Monthly Recurring Revenue (MRR) to get a snapshot of financial health and predict ARR trends.
• Monitor Customer Acquisition Costs (CAC) to ensure that the cost of acquiring new customers doesn’t outweigh the revenue they generate.
• Focus on strategies to maximize Customer Lifetime Value (CLTV). Higher CLTV directly contributes to an increase in ARR and ensures that customers generate more revenue over their lifetime with your company.

Common challenges and solutions

Tracking ARR is pivotal for SaaS companies, but it comes with its own set of challenges. Here’s a look at some common hurdles and how to overcome them, including tools that can help.

Challenge 1: accurately calculating ARR with varied subscription models

Solution: The diversity in subscription plans and pricing tiers can complicate ARR calculation. To tackle this, use a centralized system that automatically updates subscription changes. Make sure it includes upgrades, downgrades, and churns. Tools like Maxio or Zuora specialize in subscription management. They offer robust features for real-time revenue tracking and reporting.

Challenge 2: integrating ARR data across different business functions

Solution: ARR data is not just for the finance team; it’s vital for sales, marketing, and product development. Integrating ARR data across different departments can be challenging without the right tools. Platforms like Salesforce or HubSpot can help. They provide a unified view of customer interactions and financial metrics.

Challenge 3: forecasting future ARR growth

Solution: Predict how ARR will grow and analyze past trends and market conditions. Forecasting tools like Adaptive Planning (from Workday) or Planful can simplify this process. They use historical ARR data and apply predictive analytics to project future revenue growth.

Challenge 4: addressing customer churn

Solution: Customer churn rate directly impacts ARR, so monitoring and addressing it proactively is crucial. Tools like Gainsight or ChurnZero offer comprehensive customer success platforms. They track customer health scores, usage patterns, and feedback.

ARR benchmarks and growth rates

These benchmarks provide a frame of reference for how well your company performs compared to industry standards.

ARR benchmarks vary widely across different sectors within the SaaS industry and depend on a company’s maturity. Early-stage startups often set the first milestone at achieving an ARR of $1 million. This indicates product-market fit and the potential for scalability.

As companies grow, benchmarks evolve. ARR milestones of $10 million, $50 million, and beyond represent company growth and market penetration stages.

For many SaaS companies, the magic number is achieving a growth rate that positions them in the top quartile of their industry segment. For instance, a high-growth SaaS company might aim for an annual growth rate of 40% or more. This indicates strong performance, especially for companies with ARR above $10 million.

Growth rates

The expected growth rate for a SaaS company also depends on its size. Smaller companies (ARR < $10M) are often expected to grow faster (>100% YoY) because they’re starting from a smaller base. Maintaining such high growth rates becomes more challenging as companies scale and increase their ARR. Growth expectations adjust accordingly.

An annual growth rate of 20-30% for mature SaaS companies is generally considered healthy. These companies focus on sustaining growth while expanding their market share and optimizing profitability.

Impact of ARR growth on valuation

ARR growth rate is a critical metric for investors – it signals the company’s future revenue potential and market position. Consistently high growth rates can lead to higher valuations. This attracts more investment and fuels further growth. However, balancing growth with efficient capital use and profitability is essential.

Why ARR is critical and how to measure it right

ARR is vital for any SaaS business. It tells us how much steady income we can expect yearly from subscriptions. This is crucial for planning, making big decisions, and keeping investors interested.

To get ARR SaaS right:

• Be consistent in what you count as ARR
• Update it for any customer changes
• Use good tools to track it
• See how you stack up against others

 It helps companies understand their growth, plan for the future, and make smart moves.

In short, ARR isn’t just about the money coming in; it’s about understanding your business’s health and direction.

Maria Vasserman

Maria loves all things creative – writing, photography, movies and beyond 🎥 When she's not creating content to tell the world about Canny, she's either photographing a wedding, jumping at a rock concert, camping, travelling, snowboarding, or walking her dog 🐕‍🦺

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The SDLC methodology first appeared in the 1960s. Back then, making software was getting very complicated, and people needed a better way to manage it. They came up with the SDLC to help. SDLC began as the “systems development lifecycle.”

Over time, the way people use the SDLC has changed. It began with a simple method called Waterfall, where one step follows another in order. Technology and needs have changed. As a result, more flexible methods like Agile and DevOps came about.

Understanding the SDLC is really useful for everyone involved in making software. It’s not just the people who write the code. It helps everyone turn an idea into a usable software application.

So, what is software development life cycle? In this guide, we’ll break down the process and various methods of using it. We’ll also show how to put the SDLC into action and handle any problems that might come up.

Let’s start with the core phases of the software development life cycle.

Core phases of SDLC

The software development process consists of several key phases.

Planning

In this planning stage, a project team identifies the need for new software. Then, they outline a plan for the development team to create it. The plan includes:

• Setting goals
• Defining scope
• Allocating resources
• Project requirements
• Software requirement specification

Example

A company realizes its customer service team needs a more efficient way to track customer queries. They plan to develop a ticketing system that organizes and prioritizes customer support requests.

Design

It’s time for the software design, architecture, and user interface. This phase turns the plan into a blueprint. It details how the software will work and what it will look like.

Example

The team designs the ticketing system with features like:

• Ticket status updates
• Categorization of query types
• Dashboard for tracking query resolution times

Development

In this phase, programmers write the code based on the system design documents. This is where the software starts to take shape and become functional.

Example

Programmers write the code for the ticketing system. They create functionalities based on the design document.

Testing

The software development team rigorously tests the tool to find and fix any errors or bugs. This ensures the software is reliable and performs as intended. Sometimes, there are dedicated QA (quality assurance) testers. Other times, other engineers do software testing. Sometimes, the company finds beta testers willing to try the product before it’s fully ready.

This stage is super helpful for gathering feedback and refining the product.

Example

Before launch, the system is tested for bugs. For example, they might find that some tickets’ status doesn’t update correctly and fix this issue.

Deployment

The team releases the software once testing is complete and the software is ready. This might involve installing it on users’ devices or launching it on servers.

Example

The ticketing system goes live, and the customer support team starts using it.

Maintenance

The final phase updates the software to add new features or fix issues. Once again, user feedback helps here. This ongoing process ensures the software remains valuable and efficient over time.

Example

Over time, feedback from the customer service team leads to updates. The team adds a feature to assign tickets to specific team members automatically.

Now, let’s explore various models and methodologies your team can use.

SDLC models and methodologies

There are lots of different ways to approach the SDLC process. Here are the most common ones.

Waterfall

The Waterfall model follows a linear, sequential approach. The team divides a software project into phases. Each phase must be completed before moving to the next.

Example: a government agency is developing a standardized payroll system. Multiple departments will use it. This industry has strict regulations and need a clear audit trail. They choose the Waterfall model to complete and document each phase before moving on to the next.

Agile

Agile software development focuses on customer feedback and rapid iterative delivery. It’s highly flexible and promotes adaptive planning. Software startups often use Agile to rapidly iterate based on user feedback.

Example: a mobile app startup is creating a fitness tracking app. They use the Agile methodology to quickly release a basic version of the app. Then, they iterate on it with bi-weekly sprints based on user feedback and usage data.

Spiral

Spiral combines iterative software engineering with risk management. It evaluates risks at each phase. Critical system software companies often use Spiral to minimize potential risks.

Example: a financial services firm is building a new trading platform. They must adhere to various compliance standards. They choose the Spiral model to incrementally develop the software. They also continuously evaluate and mitigate risks associated with financial transactions and data security.

DevOps/DevSecOps

This model integrates development (Dev), operations (Ops), and security (SecOps). It focuses on automation, continuous delivery, and integration. Continuous deployment environments in tech companies often choose DevOps or DevSecOps.

Example: an ecommerce company wants to continuously enhance their online shopping platform. They adopt DevOps to automate their development and deployment processes. They want to release frequent updates with minimal downtime. DevSecOps also helps them ensure that security is a part of the process from the beginning.

Iterative

The iterative model develops software in increments. This incremental model helps detect and correct issues early. For example, a software developer might build a web application and add new features in each release.

Example: a video game development company is working on a complex game with multiple levels. They use an Iterative approach to build and release the first level of the game to testers. Then they progressively design, develop, and test subsequent levels. At the same time, they refine previous iterations based on the feedback.

Big Bang

This model is quite different. It involves minimal planning, with resources thrown in all at once. This is best for small, personal projects with limited scope.

Example: a student is creating a personal blog website to showcase their portfolio. They decide on the Big Bang approach. They invest a limited amount of time and resources to launch the full site all at once. There’s no need for iterative phases or extensive planning.

V-shaped

The V-shaped framework is similar to Waterfall. However, it includes testing at each stage parallel to the development phases. Hardware development projects often require rigorous testing at each development phase. They tend to use the V-shaped model.

Example: an aerospace company is developing software for flight control systems. They use the V-shaped model to ensure that with each development phase, there is a corresponding testing phase. This rigorous testing is critical for the safety and reliability in high-stakes environments.

Prototype

The prototype-focused approach is precisely what it sounds like. The team develops a prototype before developing the entire system. Early-stage software tools demonstrate concepts or potential functionality with the help of prototypes.

Example: a software company is pitching an innovative project management tool to a potential client. They develop a functional prototype of the application. This allows them to demonstrate the proposed features and user interface. They also gather feedback and make improvements before developing the full system.

Models compared

Each of these models offers distinct advantages and challenges. Here’s how they all compare.

How about the whole SDLC? Let’s zoom out and explore the advantages and drawbacks of this approach.

Pros and cons of SDLC

If you feel like SDLC can still work for you, let’s explore its implementation and best practices.

Example: implementing SDLC

If you’re setting up SDLC, review which of the models fits best with the rest of your business and objectives.

Here’s an example of how you’d do that. Let’s say you’re using Agile and want to add SDLC.

1. Mapping Agile practices to the SDLC phases
2. Ensuring that Agile iterations feed into the broader scope of SDLC milestones
3. Use Scrum sprints to address specific development phases
4. Use Kanban boards to manage ongoing tasks across the SDLC
5. Make sure everyone’s aligned and understands the frameworks you use 
6. Document your processes for easy reference
7. Regularly review your process and adjust when something’s not working

Remember – there’s no perfect way to set up your development process. Most teams use a combination of different methodologies.

There are lots of great tools that can help you get organized. Jira (by Atlassian) is a great project management tool, especially for developers. GitHub is an excellent version control tool that many developers use to stay organized.

Emerging technologies like AI and ML come into play here too. They can significantly enhance SDLC by automating tasks and improving decision-making.

Quality assurance and risk management

Focus on three key areas to ensure high-quality and mitigate risks with the SDLC.

Security practices and regulatory standards

Implement security measures from the start. Follow standards like ISO/IEC 27001 for information security. Adhere to regulations such as GDPR for data protection. This ensures software safety and compliance.

KPIs and testing strategies

Define key performance indicators (KPIs). They’ll help you measure the quality and effectiveness of your development process. Use testing strategies to catch bugs early and ensure the software meets the set KPIs. For example:

1. Unit testing: focuses on individual components or code to ensure they work correctly in isolation. It’s the first level of testing and helps catch bugs early in development.
2. Integration testing: after unit testing, integration testing checks how different modules or services work together. This step is crucial for identifying issues in the interaction between integrated components.
3. System testing: comprehensive testing phase where the complete and integrated software system is tested to verify that it meets specified requirements. It covers both functional and non-functional testing aspects.

Identifying and mitigating risks

Early in the SDLC, identify potential risks, including:

• Technical challenges
• Project delays
• Budget overruns

There’s a variety of strategies you can use to mitigate risks:

1. Regular reviews: systematically check the progress and quality of the software development project at various stages.
2. Agile model: provides a framework for adapting to changes quickly. It promotes continuous iteration of development and testing.
3. Contingency planning: prepares you for potential risks by having backup plans and strategies in place. 

We recommend using a combination of all these.

Ready to make SDLC even better?

Enhancing SDLC

Here are a few extra things you can try to enhance your SDLC process.

UX design and accessibility

Focus on creating user-friendly and accessible interfaces from the start. This ensures the software meets the needs of all users, including those with disabilities.

Customer feedback and analytics

Use customer feedback and data analytics to guide development decisions. This helps to refine features and functionalities based on real user experience. A tool like Canny can help you collect, organize, and action user feedback.

Organizational culture

Choosing a SDLC model profoundly impacts organizational culture. Agile SDLC methodologies, for instance, nurture a flexible environment. Team members need to swiftly adapt to changes. This creates a dynamic workplace where collaboration and continuous improvement are essential. It also encourages open communication and iterative progress. This cultural shift toward agility can lead to:

• More engaged teams
• Faster problem-solving
• More innovative approach to product development

 Any change is difficult, so make sure you walk your team through this. You can:

• Provide learning resources
• Break down implementation steps
• Encourage questions
• Answer questions fully
• Highlight the benefits
• Acknowledge the challenges
• Explain how you’ll overcome them

Customization of SDLC

Tailor the SDLC phases to fit the project’s specific needs. This could mean combining elements from different methodologies. That way, you can create a hybrid approach that maximizes efficiency and effectiveness in your unique context.

Conclusion: looking forward

SDLC methodologies will increasingly focus on adaptive, user-centered approaches. SDLC will integrate technologies like AI and blockchain for innovation and efficiency. 

Experts foresee an emphasis on DevSecOps, which will enhance application security. Practices supporting remote collaboration will become more prevalent.

 If you walk away with only one thing, let it be this. Tailoring SDLC to project needs is the key. This will help you keep your development processes agile and aligned with everything else. You’re more likely to build high-quality software when everything works together.

Maria Vasserman

Maria loves all things creative – writing, photography, movies and beyond 🎥 When she's not creating content to tell the world about Canny, she's either photographing a wedding, jumping at a rock concert, camping, travelling, snowboarding, or walking her dog 🐕‍🦺

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The post What is the software development life cycle? first appeared on Canny Blog.

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We all use the term “product” every day. But sometimes we mean different things. Let’s explore what a product really is.

A product is a solution crafted to solve a specific problem or fulfill its users’ needs. A product can be a physical, tangible object you can hold or a service you experience.

 In this post, we’ll explore everything related to products.

Types of products

You can touch and feel a tangible product, like your smartphone or sneakers. Intangible products are services or digital offerings. Think of streaming music services (Spotify, Apple Music) or cloud storage (Google Drive, Dropbox). Each has its quirks in development, marketing, and user experience.

 We can categorize products further:

• Consumer goods – meant for personal use (groceries, clothing, etc)
• Industrial products – used to create other products (like machinery and raw materials)
• Services – encompass everything from haircuts to home cleaning
• Digital products – intangible goods that exist in digital form (software, digital media, etc)

Products are everywhere. And good products make our lives easier and more enjoyable. Not-so-great products can confuse or even irritate us. We want to focus on creating the first kind of course. We’ll also focus on intangible tech-related products in this article.

Developing and launching products

 Five distinct stages can help you build great products.

Ideation

Ideation is the creative process of generating, developing, and communicating new ideas. It’s where innovation starts. Product managers, designers, and the development team brainstorm solutions to the market needs. This stage is all about creativity and thinking outside the box. Product teams use brainstorming sessions, SWOT analysis, and customer feedback analysis. This helps them identify promising product concepts.

Strategy

Once the product team selects a viable idea, developing a product strategy is next. This involves defining the product’s vision, objectives, target market, and competitive positioning. A product manager must also decide on the key features, pricing model, and go-to-market strategy. They do thorough market research and competitive analysis. A well-crafted strategy guides a product roadmap. It guides the product development process and ensures all team members work towards the same objectives.

Design

Design is not just about aesthetics. It’s about creating a user-centric product that offers a seamless and engaging experience.

During this phase, designers focus on usability, functionality, and visual appeal. They often use prototyping tools and design thinking methodologies. They need to quickly iterate on design concepts and incorporate user feedback to refine the product. The goal is to create a design that looks good and intuitively solves the user’s problem. They also need to follow the company’s web design guide to stay consistent with brand standards.

Development

With the design in place, the development team turns the product concept into reality. This phase involves coding, building, and testing the product. Developers often use Agile development methodologies like Scrum or Kanban. They help teams stay flexible and continually improve. Regular testing helps identify and fix bugs early.

Teams will often ship a minimum viable product first. That lets them learn and get feedback, validate the idea, and improve it. 

Launch

The product launch is the moment of truth—when the final product is introduced to the market. A successful launch requires careful planning and coordination across multiple teams. Involve marketing, sales, and customer support here.

Product managers oversee the launch strategy. They ensure that everything’s in place to make the product’s debut successful. Promotional activities, distribution channels, and support systems all play a role here. Monitoring initial user feedback and performance metrics is also crucial during this phase.

Analysis

After the launch, the focus shifts to analyzing the product’s performance. This involves collecting and evaluating data on the following:

• Sales
• Customer feedback
• Usage patterns
• Market response

Product managers use this information and evaluate product performance. They compare results to the objectives they set in the strategy phase. This analysis helps identify:

• Areas for improvement
• Potential updates
• New features that could enhance the product’s value and customer satisfaction

Each product goes through a few stages throughout its life. It’s called a product lifecycle.

Product life cycle

The product life cycle (PLC) describes the stages a product goes through — from an idea until it’s removed from the market. Understanding the PLC is crucial for product managers. It helps them plan, forecast, and manage a product’s journey effectively.

Introduction

This is the product’s debut in the market. Sales grow slowly as awareness builds. Strategies at this stage focus on creating awareness and early adoption. It’s all about getting the product into customers’ hands and gathering initial feedback. Marketing efforts are high, and the goal is to build market share.

Example: electric vehicles by new entrants

Remember when Tesla initially introduced their electric vehicles? They were in the introduction phase. Sales grew slowly as they built awareness and worked towards early adoption. The focus was on showcasing the innovation of EV technology. Goal: to build market share and gather initial user feedback.

Growth

At this stage, the product’s acceptance increases, sales rise rapidly, and profitability improves. The focus shifts to differentiating the product from competitors and maximizing market share. A marketing strategy may involve:

• Expanding the product line
• Adjusting prices
• Enhancing features to attract more users

Example: smartphones

Smartphones experienced rapid growth, particularly in the early 2010s. As they became more accepted, companies like Apple and Samsung saw their sales and profitability soar. They focused on differentiating their products through better cameras, apps, and features. They also expanded their product lines and adjusted prices to capture more market share.

Maturity

The maturity stage shows a slowdown in sales growth. The product is well-established, and the market may be saturated. Competition intensifies, which leads to price reductions. Also, product marketing expenses increase to maintain market share.

Product managers might focus on:

• Finding new markets
• Improving product features
• Reducing production costs to stay competitive

Example: laptops

Laptops, a well-established product category, are in the maturity stage. Most households have one, and the market is saturated. Brands intensely compete on price, features, and brand loyalty. Goal: maintain or grow their market share.

Innovations are more incremental. They focus on improving processors, battery life, and weight to stay competitive.

Decline

Eventually, sales and profits begin to fall. This could be due to:

• Market saturation
• Technological advances
• Changes in consumer preferences
• Stronger competition

During the decline stage, strategies might include:

• Discontinuing weak items
• Cutting costs
• Trying to rejuvenate the product by tapping into a different market segment

Sometimes, this stage signifies that it’s time to phase out a particular product.

Example: DVD players

DVD players are a classic example of a product in the decline phase. Streaming services like Netflix soared, and the demand for DVD players fell. Manufacturers reduced production, and some exited the market altogether. Companies sold off the remaining inventory and stopped production.

Managing the PLC

Effective product teams plan strategically and stay adaptable.

1. During the introduction, they establish a foothold and try to understand early adopter feedback.
2. As the product grows, they scale production, expand distribution, and refine marketing messages.
3. Maturity challenges managers to innovate and differentiate.
4. Decline demands tough decisions about whether to rejuvenate or retire the product.

When you examine and understand each stage, you can ensure product success at every stage. Even phasing out a product isn’t bad sometimes – as long as you have a strategy.

Let’s take this a bit further and explore the complete product experience.

The complete product experience (CPE)

The CPE isn’t just about the product itself. It’s the full circle of interactions and experiences your users have with your product and brand. It encompasses every touchpoint:

1. Initial awareness
2. Purchase
3. Use
4. Ongoing relationship with the customer

This holistic view is vital in product management. It shifts the focus from selling a product to creating a meaningful end-to-end experience. This experience satisfies and retains customers.

CPE and its relevance to product management

Understanding and optimizing the CPE is crucial for product managers. It requires a broad perspective beyond the product’s features or specifications. A well-crafted CPE leads to higher customer satisfaction, loyalty, and advocacy. Those are key drivers of a product’s success. It also helps identify:

• Areas of improvement

• Innovation opportunities
• Strategies for competitive differentiation

Components of CPE

Marketing

Marketing is how you communicate your product’s value proposition to your target audience. It’s the art of connecting your product’s capabilities with a customer’s needs and desires. Effective marketing involves storytelling that resonates with potential users. You want to help users see your product not just as an item to buy but as a solution to their problems.

Sales

Sales is the direct process through which customers buy your products. It’s closely tied to marketing but focuses on converting interest into transactions. The CPE’s sales experience must be seamless, transparent, and customer-focused. This ensures that marketing expectations are met or exceeded during purchase.

Technology

Technology underpins your product’s functionality and reliability. It’s not just about the code or hardware. It’s how these elements come together to create a user-friendly, efficient, and secure experience. For software products, this includes user interface design to the backend systems.

Supporting systems

Supporting systems include customer service, user guides, FAQs, and online communities. These resources empower users to get the most out of your product. They provide assistance and information that enhances their overall experience. Effective support systems are accessible, informative, and empathetic. They address user needs promptly and efficiently.

Third-party integrations

In today’s interconnected world, your product rarely exists in isolation. Third-party integrations extend its functionality. They allow users to connect your product with other tools and services they use. This component of the CPE adds value, convenience, and flexibility. It makes your product more integral to the user’s daily life or workflow.

Support

Support goes beyond troubleshooting or answering queries. It’s about building a relationship with your users. This involves listening to their feedback, addressing their concerns, and providing timely updates. Excellent support solves problems and demonstrates your commitment to user satisfaction and success.

Policies

Policies are critical in shaping users’ trust and confidence in your product. This includes your privacy policy, return policy, warranty, and terms of use. Clear, fair, and user-friendly policies reassure customers about their rights.

Conclusion: products and effective product strategy

A product is much more than just something you buy. It’s a solution to a problem, whether it’s something you can hold or a service you use. From coming up with a big idea to getting that idea into the hands of users, every stage is crucial.

The complete product experience ties it all together. It’s how users interact with your product from start to finish. Each part plays a role in making the experience as good as possible.

To build something valuable, keep your users’ needs at the center. Also adapt to changes and always try to improve the product experience.

Maria Vasserman

Maria loves all things creative – writing, photography, movies and beyond 🎥 When she's not creating content to tell the world about Canny, she's either photographing a wedding, jumping at a rock concert, camping, travelling, snowboarding, or walking her dog 🐕‍🦺

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The post What is a product? How to successfully build products users love first appeared on Canny Blog.

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New product development (NPD) is about creating or significantly improving existing products. It’s not just about having a great idea. It involves understanding customer needs and designing a product to meet those needs. Then, it’s about carefully planning how to bring it to market. Think of it as a bridge that turns raw concepts into real marketable products.

Why prioritize NPD? It’s simple: innovation drives success. NPD empowers businesses to adapt to market shifts, meet evolving customer needs, and stay ahead of competitors. It’s a cornerstone for growth and sustainability, from startups to established corporations.

Mastering NPD is essential for the growth and survival of startups and large companies.

In this article, we’ll dive into the essentials of the new product development process. We’ll explore each step that helps transform a product concept into a successful tool.

Understanding the new product development process

At its core, new product development is about bringing solutions to life. A product development team turns a product concept into a tangible solution. But why is it so crucial for businesses? The answer lies in three key areas: innovation, competition, and customer needs.

Innovation

NPD is the fuel for innovation. It drives businesses to explore new possibilities. As a result, they create products that open up fresh markets or enhance their presence in existing ones.

Competition

New products are popping up all the time, almost in every market. Staying competitive means continuously evolving. NPD keeps businesses at the forefront of change, ensuring they don’t fall behind.

Customer needs

Customer preferences are always changing. NPD helps businesses stay relevant. It encourages companies to evolve their products to meet these changing needs. This ensures long-term customer loyalty.

Example: Salesforce

Salesforce stands out in how it uses customer feedback. They regularly update their CRM system based on what users say. A key update was the introduction of the Lightning Experience – a more intuitive user interface. This change came after users asked for a simpler and more efficient way to manage their sales data

Main steps of the process

The new product development process can be complex. It generally follows these main steps:

• Ideation and idea screening
• Feasibility analysis and market research
• Design and development
• Product planning and implementation
• Marketing strategy development
• Launch
• Feedback and iteration

Each step is essential in creating a product that meets the market need and excels in the competitive landscape. Let’s delve deeper into each development phase. We’ll explore the best practices and strategies that lead to successful new product development. Follow along!

Ideation

The ideation phase is where creativity blooms. Here are some methods to generate and manage product ideas.

Brainstorming

You’ve heard of this classic technique. You gather a team and encourage a free flow of ideas without immediate criticism or analysis. The goal is to generate many ideas, fostering creativity and out-of-the-box thinking. A new idea can come easier when there’s no judgment.

Reverse brainstorming

This method turns traditional brainstorming on its head. You focus on problems instead of solutions. The team identifies potential issues or challenges. Then, you brainstorm ways to resolve these problems, leading to innovative solutions. It’s less about a new idea and more about an immediate issue to solve.

Idea mapping

This visual technique involves creating a diagram showing the relationship between ideas. Some people call this “mind mapping.” It starts with a central concept. Then, related ideas branch out. This helps to organize thoughts and spot connections.

SCAMPER

This acronym stands for:

• Substitute
• Combine
• Adapt
• Modify
• Put to other uses
• Eliminate
• Reverse

It prompts teams to look at a product or service differently, leading to unique ideas. For example, it can get you thinking about combining or modifying different components. You can also explore alternative uses of your product here.

Five “Whys”

A technique used to explore the cause-and-effect relationships underlying a particular problem. Asking ‘why’ multiple times (typically five) helps in drilling down to the root cause of a problem. This often leads to innovative solutions that address the core issue.

Try using a combination of these methods to find what works for you. There’s no universal “best practice” that works for everyone.

Now that your product team has generated lots of ideas, how do you choose the best ones?

Evaluating potential ideas

It’s essential to evaluate ideas critically. This evaluation involves assessing each idea’s feasibility, scalability, and potential market impact. Ask yourself – is this new product idea:

• Solving a real problem
• Technically and financially viable
• In alignment with the company’s goals and values

Tools like SWOT analysis can be instrumental in this phase. Let’s run through this technique.

SWOT analysis

All that sounds like a lot of work! But don’t try to do it all alone. Involve key team members to help you.

Who should be involved

Ideation is most effective when it involves a diverse group of people. This includes team members from various departments:

• Product managers
• Marketing
• Design
• Engineering/software development
• Sales
• Select customers
• External experts

The key is to create an environment where everyone feels comfortable sharing and building on ideas.

Real-world example: Netflix

Netflix’s shift from DVD rentals to streaming services showcases successful ideation and evaluation. Netflix was first a DVD rental service. They identified the growing trend in streaming and pivoted their business model just in time.

It didn’t just happen though. They performed a thorough market analysis and explored changing consumer preferences in-depth.

They also carefully evaluated different ideas and decided to produce original content. As we all know, it’s been a major success.

This is how you can fuel your business strategy with innovative ideation and meticulous evaluation.

Feasibility analysis and market research

Before diving into product development, conduct a thorough feasibility analysis and market research. This stage is all about ensuring your product idea is viable and resonates with your target audience.

Understanding your market through research

This step involves analyzing:

• The target audience
• Current market trends
• Competitor strategies
• Potential demand for the product

How can you do that? There are a few ways.

Data collection methods

Data collection for market research can take many forms:

• Surveys and questionnaires: gathering quantitative data from a large audience
• Interviews: conducting one-on-one discussions for qualitative insights
• Focus groups: facilitating group discussions to explore consumer opinions and attitudes
• Observational research: studying consumer behavior in natural settings
• Secondary research: analyzing existing data from reports, studies, and other sources

Once again, no single method is the best. A combination of these methods often yields the best results.

Here are a few more interesting ones.

Quality Function Deployment (QFD)

QFD translates customer needs into specific technical requirements and operational plans. It focuses on “the voice of the customer.” By using QFD, teams can:

• Prioritize product features based on customer desires
• Systematically transform these desires into design targets
• Identifying and defining product attributes that appeal to consumers

You need to go beyond the basic customer needs. Dig into the more subtle preferences and customer expectations.

Try the following techniques:

• Customer journey mapping
• Persona building
• Trend analysis

Understanding these attributes ensures the final product resonates with and satisfies consumer expectations.

The outcome of a feasibility study helps decision-makers determine what to do:

• Proceed with the project
• Modify the approach
• Abandon the idea

Example: Airbnb

Airbnb expanded from offering just accommodations to unique travel experiences. Now you can book cooking classes and guided tours through Airbnb. This shift came in response to a growing consumer desire for authentic, local experiences.

By this point, you’ve done lots of research. It’s time to start thinking of your actual product.

Design and development

This is where your product starts to take shape. Remember – you’re not creating the final product just yet. Instead, you’re preparing a version for concept testing.

Importance of design thinking and iterative development

Design thinking focuses on understanding users. It’s about creatively solving their problems.

Iterative development means you improve the product step by step. You build, get feedback, and then improve. This approach helps make products that people really want and need.

Keep these in mind as you start product design.

Double diamond process

The double diamond process includes the following:

1. Discover and research the problem
2. Define it clearly
3. Develop solutions
4. Deliver the product

Prototyping

Making a prototype is like creating a rough draft of your product. Some people call this concept development. It’s not final, but it helps you understand how your idea works in the real world. It’s a practical way to explore and refine your product.

User feedback

Feedback from users is super valuable, especially here. You might wonder: “My product isn’t live yet. How can I get feedback?”

You can:

• Find beta testers
• Research feedback for competing products
• Use feedback from a previous product you developed

User feedback tells you what works and what doesn’t. Use these insights to make your product better. 

Testing

Testing is all about making sure your product works well. It includes checking for bugs and seeing how users interact with it. Good concept testing helps ensure your product is ready for the market.

Example: Spotify

Spotify’s data-driven approach to feature development has been pivotal in its success. They continuously analyzed user behavior and preferences through data analytics. Result? Personalized features like Discover Weekly and Spotify Wrapped. These features enhance user experience. They also foster a deeper connection with the platform. This is the true power of data in driving innovative product development.

Product planning and implementation

It’s time to actually create your product! Here’s how.

Understand market needs

If you’ve been following along, you’ve done a lot of research already. Still, it’s important to reiterate this point.

Deeply understanding your customers is critical. This involves more than just knowing their basic requirements. It’s about delving into their behavior, preferences, and unmet needs. You can try:

• Conducting market research
• Analyzing customer feedback
• Observing how they interact with current products

This understanding helps create a product that meets and exceeds customer expectations.

Identify gaps in existing solutions

Carefully analyze the current market offerings. Look for what they lack or where they fall short in meeting customer needs. Your product can address these shortcomings, offering better solutions or filling unmet needs. Try to add real value where competitors are lacking.

Forecast future market trends

Stay ahead of the curve by predicting future trends. Analyze current market dynamics, emerging technologies, and shifting consumer behaviors. You’ll be able to forecast where the market is heading.

Define a clear value proposition

Articulate what sets your product apart. This goes beyond just listing features. Ask yourself:

• How does it solve problems better?
• Why should customers choose it over others?

A strong value proposition is clear, compelling, and directly addresses the needs and wants of your target market.

Prioritize features

There are lots of prioritization methods. Here are some of the most common ones:

• MoSCoW method: categorizes features into Must-haves, Should-haves, Could-haves, and Won’t-haves. It helps in understanding the criticality of each feature.
• Kano model: classifies features based on customer satisfaction. Categories include:
  • Delightful
  • Expected
  • Indifferent
• Value vs. complexity matrix: compares the value to the customer against the complexity of implementing a feature. It helps in identifying high-value, low-complexity features for early release.
• 100-dollar test (cumulative voting): stakeholders are given a hypothetical $100 to ‘spend’ on features. How stakeholders allocate their budget signals how important each feature is.
• Story mapping: creates a visual map that lays out the user journey and plots features against this journey. It’s great for understanding how features fit into the overall user experience.

These methods offer different perspectives on feature prioritization. Try a few of these and see which method is best for you. It may vary from project to project, so keep them all in mind.

Check out Canny’s roadmap prioritization software to make prioritization a breeze. 

We’ve compiled the best prioritization techniques in this free guide. Get it here and learn more about prioritization.

Example: Asana

Asana is a great example of smart feature prioritization. They faced a challenge: their users were from diverse industries, each needing different things. So, Asana used the MoSCoW method. They categorized features into ‘Must-haves’ and ‘Nice-to-haves.’ This helped them focus on essential features first (like task assignments and progress tracking). This way, the tool remained useful for a broad user base.

Design with users in mind

Focus on creating an intuitive and easy-to-use design. This is called a “user-centric approach.” You need to understand the user’s journey and design a seamless and engaging experience for them.

This involves:

• Feedback collection
• User testing
• Empathy for the user’s experience
• Ensuring the design is equally attractive and functional

Plan for scaling and flexibility

Plan your product with growth in mind. Ensure that your product can scale effectively as user numbers increase. Additionally, keep your design flexible. This will help you adapt to market changes, user feedback, and new opportunities.

Implement security measures

Enforce strong security measures to protect user data and build trust. This is particularly crucial for digital products. Data breaches can have significant consequences. Consider the following:

• Data encryption
• Secure authentication
• Regular security audits

Develop a minimum viable product (MVP)

Start with developing an MVP. This version should include just enough features to be functional and provide value. This way, you can enter the market quickly and start gathering user feedback. An MVP approach helps test your product idea in the real world and iteratively improve it.

Adopt Agile methodologies

Adopt Agile development practices for more efficient and flexible product development. Agile teams are known to rapidly adapt to feedback and changes. New product introduction can benefit from this.

Make decisions with data

Base your decisions on data and analytics. Track and analyze:

• How users interact with your product
• What features they use the most
• Where they face issues

This data-driven approach helps make informed decisions about product improvements and marketing strategies.

Think about marketing

Develop a marketing strategy that specifically targets your audience. Identify the most effective channels and messaging to reach your target market. A focused approach helps here. It ensures that your marketing efforts resonate with your potential customers. We’ll talk more about marketing later in the article.

Add customer support and education

Establish robust customer support systems. Provide resources like tutorials, FAQs, and help centers to educate users about your product. Good customer support enhances user experience and significantly impacts customer satisfaction and retention.

Determine pricing

Create a competitive and flexible pricing strategy. Consider different pricing tiers to cater to various user needs and preferences. Offering options like free trials can attract users to try your product. Consider running product pricing experiments to perfect your pricing. 

Consider compliance and legal aspects

Ensure your product complies with all relevant laws and regulations. Staying compliant is crucial for operating legally and maintaining user trust. Regulations like GDPR are top of mind for many SaaS companies right now.

Iterate

Continue to develop and improve your product based on user feedback and market trends. Here are some more ideas to consider.

Product readiness assessment tools. Evaluate how ready your product is for the market. You need to understand the product’s maturity and how prepared it is for customer use.

• Technology Readiness Level (TRL). Assess the maturity level of your product’s technology. How developed is the technology? What needs to be improved for successful market adoption? This technique might help answer those questions.
• Investment Readiness Level (IRL). Evaluate your product’s attractiveness to investors with IRL. How prepared is your product for investment? How viable is your business model? What’s the market potential?

This ongoing iteration process is crucial. It ensures your product stays relevant, competitive, and continually meets user needs.

Remember: it’s a mistake to assume you already have the final product. A good product keeps evolving.

Example: Zoom

Zoom’s response during the COVID-19 pandemic is a textbook case of rapid iteration. Everyone was faced with unprecedented demand and new security challenges. Zoom quickly implemented enhanced security features and expanded its server capacity. This showed agility in addressing user feedback. They quickly adapted to a changing market environment and grew when everyone else was struggling.

This was an overview of everything in the new product development process. Let’s talk more about bringing it to the market.

Marketing strategy for new products

You may have a great product. But how will people learn about it? This is where marketing comes in.

Your marketing team will likely take care of this. However, knowing what’s involved will help product managers understand the entire process better.

Understanding the market

Start by gaining a deep understanding of the market landscape. This involves studying industry trends, consumer behaviors, and market dynamics. Look for emerging patterns and shifts that could impact your product’s success.

Researching competition

Analyze your competitors thoroughly. Understand their products, marketing strategies, strengths, and weaknesses. This insight helps you find opportunities to differentiate your product and uniquely position it in the market.

Finding your target audience

Identify who will benefit most from your product. Analyze demographic data, interests, and behaviors to pinpoint your ideal customer base.

Developing user personas

Create detailed user personas representing your target audience. These personas should include demographics, interests, pain points, and motivations. They guide your marketing messages and strategies.

Crafting your unique selling proposition (USP)

Define what sets your product apart. Your USP should clearly articulate your product’s unique benefits and value to the customer.

If you’re launching a new project management software, your USP could be: 

“Revolutionizing team collaboration with AI-driven task prioritization.”

This USP highlights the unique feature of AI-driven task management. It sets the software apart. That’s because it offers a specific and innovative solution to a common challenge in project management.

A value proposition is another way of looking at this. Explore more about value propositions here.

Creating compelling messages

Develop messaging that resonates with your target audience. Your messages should align with your USP and effectively communicate the benefits of your product.

Determining optimal channels

Choose the best channels to reach your audience. Consider:

• Social media
• Digital advertising
• Email marketing
• Traditional media

How do you pick? Choose based on where your audience is most active. Test marketing is the key here – experiment and see what works best for your unique product and audience.

Launching the product

Plan a product launch strategy that makes an impact. Think about:

• Launch events
• Influencer collaborations
• Digital campaigns

The goal is to create buzz around your product.

Promotion: grabbing their attention

Think of what promotional tactics could make sense. Discounts or limited-time offers can attract and retain customer attention.

Evaluating

After launching, assess the effectiveness of your marketing strategy. Analyze metrics and feedback to understand what worked well and what can be improved for future campaigns.

Let’s talk more about evaluating your marketing success and overall new product development.

Measuring and iterating

This process is crucial. Many companies are just happy to release the product into the world and exhale. But you can’t move forward unless you know what’s worked and hasn’t.

Here’s how you can evaluate the effectiveness of your efforts. Don’t skip this step!

Customer feedback and market trends. Regularly collect and analyze customer feedback. Monitor market trends to stay updated on changing consumer preferences and industry shifts. This information is vital for making data-driven improvements to your product.

Lean Startup methodology. Embrace the approach of ‘build-measure-learn.’ This involves introducing changes, measuring their impact, and learning from the results. It’s a cycle of continuous improvement based on real-world data.

Example: Dropbox

Initially, Dropbox released a beta version to gather user feedback. This was crucial in refining their file-sharing service. Their unique referral program offered additional free storage space for both the referrer and the referee. That significantly boosted their user base.

Conclusion: how to make new products successful

Success in new product development hinges on several key factors:

• Deep market and customer insight. Knowing your audience and market trends is foundational. Without this, even the most innovative products may miss the mark.
• Continuous idea generation. Innovation starts with great ideas. Cultivating an environment where creativity flourishes is essential.
• Iterative development. Product development is not a one-time effort but a continuous cycle of improvement. Implementing Agile methodologies ensures your product evolves rapidly to meet changing user needs.
• Customer feedback integration. Your users are your best critics. Incorporating their feedback ensures your product not only meets but exceeds their expectations.
• Unique selling proposition (USP). In a crowded market, your product needs to stand out. A strong USP will set your product apart and define its place in the competitive landscape.
• Adaptability and flexibility. The ability to quickly respond to market changes and emerging trends is crucial. Staying flexible and ready to pivot based on user feedback and new insights ensures long-term relevance and success.

You need to quickly respond to market changes and emerging trends. You also have to listen to user feedback. That’s how you can ensure your product stays relevant and successful. We’ve discussed lots of frameworks that can help you stay on top of all this.

We’re excited to see what new products you bring to the market! Canny can help you collect, manage, and analyze feedback for those invaluable insights. Give it a try today!

Maria Vasserman

Maria loves all things creative – writing, photography, movies and beyond 🎥 When she's not creating content to tell the world about Canny, she's either photographing a wedding, jumping at a rock concert, camping, travelling, snowboarding, or walking her dog 🐕‍🦺

All Posts - Website · Twitter - Facebook - LinkedIn

The post Mastering the new product development process first appeared on Canny Blog.

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Are you a product manager? Understanding planning poker is like having an ace. It’s a vital tool for boosting productivity and ensuring everyone on your team is on the same page.

Breaking down planning poker

Imagine you’re playing a card game. Instead of playing for chips, you estimate how much work a project will take. That’s planning poker in a nutshell. It’s a simple yet powerful way for Agile teams to determine the effort needed for different tasks.

You use a special deck of cards, each with a number representing work effort. The higher the number, the more complex the task. When a new task comes up, each team member picks a card that matches the required effort. Then, everyone reveals their cards at once to keep things fair and unbiased. If there’s a big difference in guesses, you’ll have a chat about it until everyone agrees.

Planning poker’s roots

Planning poker started turning heads in Agile around 2002, thanks to James Grenning and Mike Cohn. Agile methodologies were gaining traction. The need for more effective estimation techniques became evident.

James Grenning is a pioneer in the Agile and Extreme Programming (XP) spaces. He introduced this technique as a more engaging and accurate way to estimate project work.

Mike Cohn, a key figure in the Agile community, put planning poker on the map. In his 2005 book “Agile Estimating and Planning,” he described the method in detail. He also championed its benefits, highlighting how it:

• Fosters collaboration
• Provides a consensus-based approach to estimation
• Injects a bit of fun into the often dry process of project planning

Initially, people practiced planning poker with physical card decks – a nod to its poker game analogy. These decks were not your typical playing cards. They were specifically designed with the Fibonacci sequence or similar progressive scales to represent the complexity and effort of tasks. This tangible element made estimations more interactive and grounded.

As Agile methodologies evolved, so did planning poker. Today, everyone does it digitally.

Planning poker is now a part of various Agile methodologies, including Scrum and XP. Small startups and large corporations use it. It’s easy, transparent, and really cuts down on guesswork in project planning.

Why planning poker is excellent for Agile teams

Agile is all about being quick and adaptable. Teams work in short bursts, constantly tweaking and improving. Planning poker fits right into this cycle.

It aligns with Agile’s fast-paced cycles

Before each sprint, your team determines how much effort each task will need. It’s a democratic process where everyone’s opinion counts. This leads to more accurate planning and better communication.

Agile methodology thrives on speed and flexibility. The Agile team consists of sprinters. They move fast, embrace change, and constantly seek ways to improve. This is where planning poker really shines. It perfectly dovetails with Agile’s dynamic rhythm.

It fosters democratic estimations

Planning poker is not just about coming up with numbers. It’s a democratic process that values each team member’s perspective.

In a typical session, everyone has an equal say in the estimation after a user story is presented. This inclusivity is vital in Agile teams where cross-functional collaboration is critical. Planning poker allows each member to voice their opinion and estimate. This way, it ensures that a task’s different aspects and potential challenges are considered. This collective intelligence approach leads to more reliable and realistic estimations.

It enhances communication and understanding

Planning poker isn’t all about numbers. It’s also a fantastic communication tool. When individual estimates differ, it sparks a conversation. These discussions are gold mines for insight. They reveal different understandings of the task, assumptions, and potential risks. This is especially beneficial in Agile, where understanding and adapting to requirements is continuous. Through these discussions, team members align their understanding of each task. This creates a more cohesive and informed team.

It builds team cohesion and commitment

There’s another less talked about but equally important aspect of planning poker in Agile.

Team members feel more connected and committed to their decisions. This sense of ownership and team spirit is crucial in Agile. After all, team dynamics directly impact productivity and project success.

It streamlines sprint planning

Finally, planning poker streamlines the sprint planning process. In Agile, time is of the essence, and long, drawn-out meetings can be counterproductive.

Planning poker has a structured yet flexible approach. It keeps sprint planning focused and efficient. It also helps teams quickly assess the effort needed for tasks. As a result, it paves the way for a more streamlined and effective sprint.

When to run a planning poker session

Timing planning poker sessions correctly can significantly enhance their effectiveness. It can also ensure they positively contribute to the project’s lifecycle. Here are a few ideas for timing your planning poker sessions.

1. At the beginning of sprint planning

This is the most common and strategic time to hold a planning poker session. That’s when the team needs to commit to a set of tasks for the upcoming sprint. Planning poker helps in accurately estimating the effort required for each task. This is essential for effective sprint planning.

2. When new user stories are introduced

This timing helps the entire team properly understand and estimate any new or changed requirements. This needs to happen before they are added to the product backlog or the current sprint.

3. After significant project changes

Suppose there are significant changes in the project scope, direction, or resource availability. In that case, it’s wise to reconvene for a planning poker session. Significant changes can alter previous estimations. So it’s important to reassess and realign the team’s understanding and commitments.

4. When new team members join

Introducing new members to the team can change the dynamics and impact the project’s progress. Conducting a planning poker session at this time can help new members get up to speed and provide fresh perspectives on the tasks.

5. Periodic refinement meetings

Some teams enjoy regular planning poker sessions. This helps refine their product backlog better. This ongoing practice helps keep the team aligned on the project’s current state. It allows for continuous adjustment of estimates based on the most recent information.

6. Before major milestones

Before major milestones or releases, a planning poker session can be invaluable. It helps ensure that all tasks leading up to the milestone are correctly estimated. The team also gets on track to meet its commitments.

Now that we’ve determined the best time to hold a planning poker session, let’s discuss the process.

How to run a planning poker session

Planning poker isn’t complicated. Here’s the lowdown:

1. Kickoff: the product owner describes a task.
2. Estimate: team members pick a card that represents their effort estimate.
3. Reveal & discuss: everyone shows their cards at once. If estimates vary a lot, it’s discussion time.
4. Repeat: this goes on until everyone agrees on an estimate.

Let’s go over each step.

1. Kickoff: set the stage

The planning poker session begins with the product owner (or the facilitator) presenting a user story or story point. This step is crucial as it sets the context for the estimation. The product owner should ensure they describe the task clearly and succinctly. They also need to provide all the necessary details. This is also the time for team members to ask clarifying questions. The goal is to ensure that everyone has a solid understanding of what the task involves.

2. Estimate: make informed guesses

The task is straightforward. Now, each team member selects a card from their planning poker deck. These cards are often numbered according to the Fibonacci sequence (0, 1, 2, 3, 5, 8, 13, etc.). They represent the effort they believe is required to complete the task.

Important: team members must make their selections independently and without influence from others. This ensures unbiased estimates.

3. Reveal & discuss: bridge the differences

After everyone has selected a card, all members reveal their cards simultaneously. This is where the magic happens. If all members agree more or less, the process moves quickly. If there’s a significant difference in estimates, it’s an opportunity for a valuable discussion.

Team members with high and low estimates are encouraged to explain their reasoning. This discussion is not about convincing others but about understanding different perspectives. It’s a chance to uncover any misunderstandings or overlooked aspects of the task.

4. Revise & repeat: reach consensus

After the discussion, team members may revise their estimates based on the insights gained. Then, another round of estimation occurs. This cycle of estimating, revealing, discussing, and revising continues until the team reaches a consensus or a close approximation. It’s important not to rush this process; the goal is to arrive at an estimate that everyone can agree on and commit to.

5. Finalize: lock in the estimate

Once a consensus is reached, the final estimate is recorded. This becomes the agreed-upon effort estimation for the task or user story. Document this and any key insights or discussions that led to this decision.

6. Keep it engaging and efficient

Remember – planning poker should be engaging and not turn into a tedious process. Keep the session lively and focused. If discussions are going in circles, the facilitator should step in to steer the conversation. Maybe the team can break down the task further?

Also, keep an eye on the clock. A thorough discussion is valuable. But it’s also important to respect the time constraints of the session.

Best practices for a winning hand in planning poker

Nailing planning poker isn’t just about following the steps. It’s about cultivating the right environment and mindset among your team. Here are some essential practices to make your planning poker sessions productive.

1. Encourage participation

Encourage every team member to participate actively. In planning poker, diverse perspectives lead to better estimations. Whether someone is a seasoned developer or a new QA analyst, their insights are valuable. This inclusive approach improves estimation accuracy. It also fosters a sense of team collaboration and ownership.

2. Present tasks clearly

The product owner plays a crucial role in presenting each task or user story. They need to provide clear, concise, and complete information about each estimated value. This might include:

• Task’s objectives
• Known constraints
• Context within the larger project

A well-understood task leads to an accurate estimate.

3. Invite open and respectful discussions

Encourage open discussions. Conduct them respectfully and constructively. Team members should feel comfortable sharing their perspectives and reasoning behind their estimates. Create an environment where differing opinions are opportunities for learning, not conflicts.

4. Commit to no “wrong” estimates

Emphasize that in planning poker, there are no “wrong” estimates. Each playing card is an opportunity for insight. This mindset removes the pressure to conform. It encourages more honest and thoughtful estimations.

5. Focus on learning

Use planning poker as a learning tool. Each session is an opportunity to better understand the nuances of tasks and learn from each other. Over time, the team will become more adept at estimating and understanding each other’s perspectives.

6. Manage time

While thorough discussion is beneficial, keeping the session moving is also important. Set a time limit for each estimation round. This will make the session productive and not bogged down in prolonged debates.

7. Stay consistent and reflect regularly

Be consistent in your approach to planning poker. Regularly reflect on how the sessions are going.

After each session, take a few minutes to discuss what worked well and what you can improve. This will make your planning poker sessions more effective over time.

8. Adapt and customize

Remember – planning poker is not a one-size-fits-all solution. Adapt the process to suit your team’s unique dynamics and project requirements better.

Common traps to avoid in planning poker sessions

Planning poker is a powerful tool in Agile environments. However, you can easily compromise its effectiveness. Here are some common traps that teams should be aware of.

1. Vague user stories

One of the main stumbling blocks in planning poker is dealing with vague or poorly defined user stories.

Suppose the task is not clearly outlined. There are no specific acceptance criteria or a well-understood goal. In that case, team members will find it difficult to estimate accurately.

The product owner must provide detailed and precise user stories that give enough context to the team.

2. Rushing the process

Another trap is rushing through the planning poker session. It’s essential to keep the session efficient. Still, hastily made estimates can lead to inaccuracies and problems down the line.

Allow enough time for everyone to fully understand each task and think through their estimates.

3. Influencing others’ estimates

Team members should avoid influencing each other’s estimates.

Imagine that a senior team member (or a particularly persuasive individual) reveals their estimate early. This can easily sway other opinions.

Ensure that everyone reveals their cards simultaneously to maintain an unbiased estimation process.

4. Ignoring external factors

Sometimes, teams get so wrapped up in the task details that they forget to consider external factors. For example:

• Dependencies on other teams
• Resource availability
• Technical constraints

Take a holistic view of each task within its wider project environment and encourage your team to do the same.

5. Over-reliance on planning poker

While planning poker is a valuable tool, it shouldn’t be the only method used for estimation. Teams should be flexible and consider combining it with other techniques or adapting it to suit their project’s needs better. Over-reliance on any single method can lead to blind spots in project planning.

6. Not learning from past sprints

A common mistake is not reflecting on past estimations. Regularly review the accuracy of your previous planning poker sessions. Learn from any discrepancies. This can help you estimate accurately and better understand the team’s capabilities.

7. Disregarding team morale

Finally, it’s essential to keep an eye on team morale. Planning poker should be a positive, engaging process. If it becomes a source of frustration or conflict, it’s time to reassess how you conduct the sessions. Ensure everyone feels heard and respected during these sessions.

Conclusion: the power of planning poker in Agile teams

Planning poker stands out as an indispensable tool in the Agile toolkit. It’s vital for precise project estimation and fostering team synergy. Its real strength lies in the following:

• Combining quantitative assessments with qualitative discussions
• Ensuring that every team member’s perspective contributes to a well-rounded view of project tasks
• Enhancing estimation accuracy
• Reinforcing team cohesion and a sense of shared responsibility

The key to success with planning poker is adhering to best practices:

• Clear presentation of tasks
• Inclusive participation
• Open and respectful dialogue

Avoiding common pitfalls, such as rushing the process or relying solely on this method, is equally crucial.

Adopting planning poker is more than adopting a technique. It’s about embracing a culture of collaboration and continuous improvement.

Tools like planning poker remain essential for navigating project complexities. They ultimately lead to more successful, team-oriented project outcomes. Happy planning!

Maria Vasserman

Maria loves all things creative – writing, photography, movies and beyond 🎥 When she's not creating content to tell the world about Canny, she's either photographing a wedding, jumping at a rock concert, camping, travelling, snowboarding, or walking her dog 🐕‍🦺

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Imagine a group planning to hike a mountain. Before they start, they look at the map. They decide how far they can go and what they’ll need. Sprint planning is similar. The team looks at the list of things to do, picks the most important ones, and plans to finish them quickly.

Sprint planning helps everyone understand what to work on. It makes sure the team knows what’s most important. It also helps them figure out how to do it together.

Let’s learn more about how it helps product teams succeed.

The purpose of sprint planning

Sprint planning helps you set goals and decide how to reach them. In Agile projects, this planning phase is essential. It helps teams focus on what’s most important for the next few weeks.

Key objectives in Agile projects:

1. Set clear goals. A soccer team decides on its play before the game. A product team picks goals for its sprint. This keeps everyone on the same path.
2. Choose tasks. Imagine picking ingredients for a recipe. Agile teams choose tasks that match their goals. 
3. Plan work. It’s like planning who does what in a group project. Teams determine who can do each task and how long it will take.

Example 

Let’s say a team is building a new website. In sprint planning, they decide their next goal is to make the homepage look great. They pick tasks like designing a logo, writing welcome text, and coding the layout. Everyone knows what to do. Ultimately, they aim to have a homepage that draws people in.

Sprint planning turns big projects into smaller, doable steps. It’s about ensuring everyone knows the game plan and is ready to go. This way, teams can work better and make their projects a success.

Roles in sprint planning

Sprint planning is a team effort, but each member has a unique role. Let’s illustrate with our previous example – a group of people preparing to hike a mountain.

Product owners are the hike leaders. They map out the route (project goals) and ensure the team is aware of the destination’s value (customer needs). Their main task is to organize the journey’s steps (product backlog). They prioritize the most crucial paths to take first. This preparation guarantees that the team embarks on the most impactful trails during their expedition.

Scrum Masters are the navigators. They keep the group on pace (facilitate sprint planning) and help navigate through unexpected terrain (overcome obstacles). Their objective is to ensure a smooth journey. They provide guidance and support to keep the hike enjoyable and on track.

Team members are the hikers. They use their skills to traverse the path (complete the tasks). In sprint planning, they assess their capabilities and decide how far they can go and what equipment they’ll need. They commit to specific segments of the trail and prepare their packs for the sprint ahead.

These are the main “characters” involved in sprint planning. You could have more stakeholders though. Typically, larger teams or more complex projects involve more people.

Stakeholders include anyone with an interest in the project’s outcome. They provide feedback and input that guide the product’s development​​​​. Use a user feedback platform to track this feedback. 

Integrators ensure that different components work together seamlessly​​​​.

Independent testers and auditors do quality assurance. They catch mistakes before the product reaches the client​​.

Technical and domain experts are brought in to advise on specific challenges. This ensures the project is technically sound and adheres to standards​​.

Architects ensure the solution fits within the enterprise structure. They facilitate architectural decision-making​​.

An Agile coach or mentor helps the entire organization adopt Agile practices. They offer guidance and mentorship to improve the Agile implementation process​​​.

Sponsors support the project. They provide resources, manage large-scale risks, and ensure the project aligns with organizational goals.

These roles harmonize to create successful sprints. Each role is vital. Understanding these responsibilities can lead to more effective sprint planning and project execution.

Real-world example

It’s all good in theory. But how do real teams use Agile sprint planning?

Intel

Intel adopted Scrum to tackle various challenges:

• Waterfall culture
• Functional silos
• High turnover rates

What did they do? 

Phase 1: Intel hired an external company for Scrum training and coaching

Phase 2: Scrum teams focused on debugging Scrum events and maintaining Scrum artifacts

Phase 3: Intel ran a pilot test on cross-functional teams. Focus: minimize handoffs and influence the organization’s leadership

Results: 

• 66% reduction in cycle time
• Improved morale
• Increased transparency 

Are you excited to start planning your sprint? Let’s lay down the groundwork first.

Preparing for sprint planning

Preparing for sprint planning is crucial for Agile project success. The team reviews and prioritizes the product backlog. This process is known as product backlog refinement. It enables teams to start the sprint planning process effectively and efficiently. Here are the steps.

1. Define sprint goals: start by outlining the objectives for the upcoming sprint. This will provide clear direction for the team.
2. Determine sprint duration: decide on the length of the sprint. It typically ranges from two weeks to one month. Base it on team capacity and project needs.
3. Select user stories: choose user stories from the product backlog. These should align with the sprint goals and be realistically completable within the sprint duration. Prioritize stories based on importance, estimates, and dependencies.
4. Break down user stories: if necessary, break down complex user stories into smaller, more manageable tasks or sub-stories. This facilitates better estimation and task assignment.
5. Estimate tasks: estimate the effort required for each task or user story. Use techniques like story points or hours to understand the workload and ensure realistic planning.
6. Create the sprint backlog: compile a list of tasks for each selected user story. Include estimated effort and task assignments based on team members’ skills and availability.
7. Conduct backlog grooming: before the sprint planning meeting, hold a separate session to groom the product backlog. Prioritize work items, ensure they are fully formed, and estimate each item’s effort.
8. Involve key stakeholders: the whole development team should participate in the planning meeting. The primary planners are the Scrum Master, product owner, and engineering manager. The product owner should be in close contact with the client and responsible for updating the product backlog.

Spotify’s Agile transformation is a prime example of effective backlog refinement in action. Spotify adopted Scrum and Agile principles and improved its engineering and development processes.

They implemented a modified version of the Scrum framework – “Spotify Model” or “Spotify Squad Framework.” It included:

Squads: teams with different skills handling specific tasks. They’re like small startups in the company. They can decide things on their own.

Tribes: group squads based on similar goals. Each Tribe has a leader who gives general guidance.

Guilds and chapters: informal groups where people share what they know. This helps everyone learn together.

Playlists: product backlog. They include user stories and functionalities.

This approach led to enhanced innovation and rapid delivery.

Conducting the sprint planning meeting

It’s time to sit down with your team and start planning. Here’s how you can set up a smooth and productive process.

1. Review the sprint goals and confirm the duration of the sprint.
2. Review the backlog. Discuss any changes or updates since the last grooming session.
3. Discuss capacity and constraints.
4. Select tasks from the sprint backlog that align with the sprint goals and team capacity. Ensure each task is well-defined and understood by the team.
5. Estimate the effort required for each task. Use techniques like planning poker or relative sizing. Reach a consensus on the estimates to ensure alignment.
6. Assign tasks to team members based on their skills, availability, and interest. Distribute tasks evenly to balance workload and maximize productivity.
7. Define success criteria. Include specific deliverables and outcomes to be achieved.
8. Recap and confirm. Summarize the decisions made during the meeting and confirm everyone’s understanding and commitment to the plan.

We’ve mentioned estimation a few times. So how can you accurately estimate how much time, effort, and money something will take?

Estimation techniques

Estimation techniques are vital for sprint planning in Agile projects. They help teams assess the effort required for tasks. This ensures realistic planning and efficient sprint execution. Let’s explore two popular methods: story points and planning poker.

Story points

Story points represent the required effort to complete a user story. Unlike time-based estimates, story points consider the complexity, the amount of work, and the risks involved. Teams use a relative scale, like Fibonacci numbers (1, 2, 3, 5, 8, 13…), to assign points to stories.

Example

Imagine your team is working on a new login feature. The task includes creating a secure login page, integrating two-factor authentication, and testing user acceptance. Given the complexity and the security aspects, the team might assign this user story 8 story points. This indicates a higher level of effort compared to more straightforward tasks.

Planning poker

Planning poker is a collaborative and fun way to estimate work. Each team member gets a set of cards with numbers representing story points. Team members select a card representing their estimate for each user story. Then, all cards are revealed simultaneously. If estimates vary widely, the team discusses their reasoning and repeats the process until reaching a consensus.

Example

Your team plans to add a feature allowing users to upload profile pictures. During planning poker, estimates range from 3 to 8 story points. After discussing, the team agrees on 5 story points. They consider the need for image validation, storage considerations, and UI changes.

Three-point estimate

This method uses three figures: the most optimistic, most likely, and most pessimistic estimates. Teams then find the average for a balanced view.

Example

You’re estimating the time to develop a new feature. You might consider:

• The quickest possible time (optimistic)
• The most likely time based on experience
• The longest it could take (pessimistic)

Affinity grouping

Teams group similar tasks together. It helps when you have a lot of items to estimate. You can then assign effort levels to groups instead of individual tasks.

Example

Sorting tasks into groups like “quick updates” and “new features” can help estimate work chunks at a time.

T-shirt sizing

This technique uses size labels (XS, S, M, L, XL) to estimate tasks. It’s suitable for a broad view of task sizes.

Example

Minor fixes might be “S,” while developing a new module could be “L.”

Dot voting

Everyone gets a set number of dots to vote on tasks’ effort. More dots mean more effort.

Example

If a task gets many dots, it’s seen as needing more work, guiding the team on prioritization.

Top-down & bottom-up estimates

Top-down starts with a project deadline and breaks it down. Bottom-up looks at each task to build up a total time.

Example

For top-down, you might allocate weeks to phases. For bottom-up, you’d estimate hours for each small task and add them up.

Help your teams understand each other better and agree on the required effort. This will help you plan better and ultimately have a successful sprint.

Setting sprint backlogs

Let’s start turning plans into actions.

First, know the difference between product and sprint backlogs.

A product backlog is a list of all things that need to be done.

A sprint backlog is what you’ll actually tackle in the upcoming sprint.

Now, it’s time to create a sprint backlog. Pick items from the product backlog for the next sprint. Think about the sprint goals and what’s realistic. Keep it lean and achievable. This should be easier if you’ve followed the previous sections’ steps.

Example

A web dev team’s product backlog has 50 items. For the next sprint, they choose 5. These are related to the sprint goal: revamping the checkout process. They’ve picked tasks like redesigning the payment page and testing the user flow. This focused list is now their sprint backlog.

By clearly setting a sprint backlog, teams have a roadmap for the sprint. It’s about choosing wisely and setting up for success.

Common challenges in Agile sprint planning

No system is perfect. But knowing common obstacles will help you overcome them. Here are some of them.

Scope creep

This happens when the sprint backlog grows unexpectedly. This is often due to additional tasks being added mid-sprint.

Sticking to a well-defined sprint goal and practicing discipline in adhering to the original plan is essential. The development team should feel empowered to push back against changes that affect the sprint’s scope. This will ensure that any addition is genuinely necessary and beneficial at that time.

Underestimation of tasks

Even with all the techniques we mentioned above, this happens. It leads to overcommitment and potential burnout.

Solution: use historical data from previous sprints to estimate better. Encourage each team member to be open and honest about their capacity and skill set.

Over-optimistic planning

Teams can sometimes be too optimistic about their capacity. This sets unrealistic expectations.

Solution: base planning on past performance. Allow the development team to have a say in what is realistic.

Unforeseen technical challenges

Unexpected technical issues can slow down development and cause delays. For example, a task is more complex than anticipated. This leads to longer development times.

Solution: have contingency plans and be adaptable.

Ambiguous requirements

Not spending enough time on product backlog refinement can create vague and ambiguous requirements. This results in a development team that does not fully understand how to proceed.

Solution: hold regular backlog grooming sessions. Make sure the product owner clarifies any ambiguities before the sprint planning meeting.

Best practices for effective sprint planning

Now that we know what not to do, let’s talk about what you should do instead.

To ensure effective sprint planning, incorporate these proven strategies and best practices.

Before the sprint planning meeting:

1. Come with a refined backlog
2. Set a clear agenda and roadmap
3. Optimize attendance

During sprint planning:

1. Start with a product roadmap review
2. Present new information
3. Share data on target velocity
4. Review and assign work
5. Reach agreement and understanding

After the meeting:

1. Avoid changing sprint goals mid-way
2. Check in on your team
3. Adapt if necessary

Tools and resources for sprint planning

You’re almost ready to start sprint planning. Let’s go over some tools that can simplify this job for you.

Tara

Tara offers a modern, simplified interface. It’s designed to remove the stress from sprint planning. Tara supports sprint planning, task prioritization, and progress tracking all on one platform. It features automation capabilities for streamlining workflow. You can integrate Tara with Slack, GitHub, and GitLab.

Wrike

Wrike is a collaborative work management software ideal for enterprise-grade projects. Wrike facilitates easy tracking and management of workflow processes. It offers automated systems, real-time alerts, and comprehensive collaboration tools.

ClickUp

Known for its intuitive design, ClickUp is more than a task management tool. It’s an all-in-one productivity platform. It supports billing, invoicing, and time tracking. ClickUp offers various views and statuses for detailed project management.

Jira

Jira (by Atlassian) is a widely recognized platform tailored for Agile teams. It allows you to track projects in real time. You can plan sprints with customizable scrum boards and detailed reporting tools.

Teamwork

Teamwork helps manage team collaboration and task organization. You can outline tasks and prioritize work. There’s also built-in compliance tracking.

Asana

Asana helps you with project management, task assignment, deadline specification, and collaboration. It offers workflow builders, project templates, and customizable dashboards.

Canny integrates with ClickUp, Jira, and Asana to help you manage projects and products together. Check it out.

Looking for more Agile and sprint planning resources? Check out the following:

• Scrum.org
• Agile Alliance
• Easy Agile
• LeadingAgile

Let’s wrap up everything we’ve learned.

Conclusion: Agile sprint planning done right

We’ve taken quite the journey through Agile sprint planning. Agile is all about moving fast and staying flexible. Sprint planning is when the team gets together to plan their next adventure.

Sprint planning isn’t just about assigning tasks. It’s about aligning visions, setting clear objectives, and ensuring everyone is on the same page. It’s a time for reflection, adjustment, and, most importantly, collaboration. Sprint planning can transform a group of individuals into a cohesive team when done right.

Here’s the takeaway: sprint planning helps teams do great work together. Try it today!

Maria Vasserman

Maria loves all things creative – writing, photography, movies and beyond 🎥 When she's not creating content to tell the world about Canny, she's either photographing a wedding, jumping at a rock concert, camping, travelling, snowboarding, or walking her dog 🐕‍🦺

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What is product management? Think of product managers as the bridge between the business side and the customer side of a product. They figure out what to build and why, then lead a team to make it happen.

Why is product management a fantastic field to be in? For starters, it’s incredibly diverse. You get to wear many hats – from market analyst to customer advocate. Every day is different. You’ll brainstorm new ideas, talk to users, and analyze data. You’ll also work with engineers, designers, marketers, and other teams. You can see your work’s impact as you bring products to life that solve a real customer problem.

Moreover, product management is at the heart of innovation. It’s about looking ahead, predicting trends, and creating products that shape the future. It’s exciting, challenging, and hugely rewarding.

This guide will dive deep into product management. We’ll explain why it’s a crucial part of any business and how you can excel in this dynamic field.

Evolution of product management

We can trace the origins of product management back to the 1930s at Procter & Gamble. Product management was initially part of brand management. The role oversaw the development, marketing, and distribution of consumer goods. This was more about maintaining the brand’s image and less about the product development processes and lifecycle management.

Product management experienced a few transformative shifts throughout the years.

1. From brand to product focus. Product management shifted from being brand-centric to product-centric. This meant a deeper involvement in marketing, conceptualizing, and product development.

2. Strategic and multidisciplinary approach. Modern product managers are both strategists and executors. They analyze market trends, identify customer needs, and craft a vision for the product.

3. Technological adaptation. Product managers today need to grasp technology trends, software development processes, and digital marketing strategies.

The future of product management leans heavily on data analytics and enhancing user experience. Understanding how to leverage data for product improvement and user engagement will be crucial.

Product managers must be agile and adaptable. You need to be ready to pivot strategies in response to market shifts or new technological advancements.

Roles and responsibilities of product managers

Product management demands a unique blend of skills and a broad range of responsibilities. Let’s break down what this looks like in practice.

First, product managers are the voice of the customer within a company. They spend time understanding what users need and want. The product management process involves:

• Conducting market research
• Gathering feedback
• Shadowing users to see how they interact with products
• Processing, analyzing, and managing that feedback
• Creating and maintaining a product roadmap
• Creating a product backlog from feature requests
• Making product decisions based on that feedback
• Closing the loop with users to maintain relationships
• Sometimes, elements of product marketing

It’s all about empathy – really getting into the customer’s shoes.

Next, there’s the strategic aspect. A product team defines the vision and strategy for a product. They answer crucial questions like:

• What should we build?
• Why should we build it?
• How does this fit into our overall business goals?

This requires a deep understanding of the market, the competition, and the business.

Then comes the execution. The product management team works closely with engineering, design, marketing, and sales to bring a new product to life. This means deciding what features to include, setting timelines, and prioritizing tasks. It’s a balancing act – aligning business objectives, technical possibilities, and user needs.

But that’s not all. Product managers also play a crucial role in launching the product. They collaborate with marketing and sales to craft the right messaging. They also ensure the market understands the product’s value to deliver a successful product.

This sounds like a lot of responsibilities for just one person. That’s why some organizations distinguish between different kinds of product managers.

1. Growth product managers

Growth Product Managers (GPMs) expand the product’s user base and increase engagement and revenue. They need to identify growth opportunities within the product and market.

GPMs often leverage skills in digital marketing, user psychology, and advertising. They design and test growth strategies, usually using A/B testing. This improves user acquisition, retention, and monetization.

They work closely with marketing teams and rely heavily on data to guide their decisions. Their role involves a mix of marketing insights and product development.

PM spotlight: Lenny Rachitsky is a former product lead for growth at Airbnb. His role involved growing and monetizing Airbnb. Lenny’s newsletter and podcast are very popular for their useful and down-to-earth tips.

2. Technical product managers

A technical product Manager (TPM) is deeply involved in the technical aspects of the product. They often come from an engineering background.

They work closely with the development team to create and improve the product’s core functionalities. They are less focused on the outward appearance and more on the technical robustness and innovation.

PM spotlight: Ken Norton is well-known for his role as a former Product Manager at Google. He is currently a Partner at Google Ventures. Ken has always been deeply involved in the technical aspects of product development.

3. Data product managers

These product managers specialize in data-driven products. They are pivotal in businesses that rely heavily on analytics and data science.

Data product managers collaborate with data scientists and analysts. They are responsible for developing data models, implementing analytics tools, and interpreting data to inform product strategies.

A background in mathematics, finance, or data science is common for these PMs. They excel in extracting insights from data. They use these insights to guide product development and decision-making processes.

PM spotlight: Gibson Biddle is a former Netflix product manager. He played a pivotal role in using data to drive significant growth in the company’s membership base. His approach to product management involved deep data analysis and insight-driven strategies. This enhanced user experience and business growth.

In all these roles, the common thread is a deep understanding of the product, the market, and the customer.

The product lifecycle

What do product managers actually manage? People often refer to it as the “product lifecycle.”

Imagine it as the entire journey of a product – from its first inception to its eventual fade-out from the market. A product lifecycle is a series of stages almost every product goes through.

Let’s explore each stage.

1. Ideation

This is the “Eureka!” moment. You’ve got an idea for a product. It’s all about brainstorming, validating the idea, and sketching what it could be.

Example: think of the early days of Instagram. It started as Burbn, a check-in app with photo-sharing as a feature. The founders realized the photo-sharing bit was catching on, so they pivoted. That’s ideation – finding that spark.

Strategy: focus on market research, customer needs analysis, and brainstorming sessions. Validate your idea with potential users and stakeholders.

Management tips: use tools like surveys, interviews, and focus groups to gather feedback. Be open to pivoting based on what you learn.

2. Development

Now, you’re putting the wheels in motion. This is where the coding, designing, and building happen.

Example: consider the development of the original iPhone. Apple took the idea of a phone and reimagined it completely. It wasn’t just about making calls but about creating an experience.

Strategy: prioritize feature development based on user needs and business goals. Implement agile methodologies to manage the development process efficiently.

Management tips: work closely with developers and designers to ensure the product aligns with the vision. Regularly test the product with users to gather feedback and iterate accordingly.

3. Launch

This is D-day! Your product hits the market. It’s all about marketing strategies, getting customer feedback, and initial sales.

Example: remember when Dropbox started? They didn’t just throw the product out there. They used a demo video to stir up interest before launch. That generated a massive waitlist even before the product was ready.

Strategy: develop a go-to-market strategy that includes marketing, sales, and distribution plans. Prepare for customer support and feedback channels.

Management tips: focus on creating a buzz around your product launch through marketing campaigns. Monitor initial user feedback closely to address any immediate issues.

4. Growth

Your product’s in the market, and now you want to scale. This is about marketing, refining the product, and customer retention strategies.

Example: look at Netflix’s evolution from a DVD rental service to streaming. They grew by constantly adapting to technology and user preferences.

Strategy: implement strategies for user acquisition, retention, and monetization. Optimize the product based on user data and market trends.

Management tips: use analytics to understand user behavior and refine your product. Experiment with different growth strategies like referral programs or partnerships.

5. Maturity

The product’s established, and growth slows. Now, it’s about maintaining market position and optimizing.

Example: Microsoft Office has been around forever, right? They keep adding features, tweaking the interface, and moving to a subscription model to stay relevant.

Strategy: focus on sustaining your market position and optimizing profitability. Explore ways to expand your product line or enhance existing features.

Management tips: conduct competitor analysis to stay ahead in the market. Keep innovating and updating the product to retain customer interest.

6. Decline

Every product has its sunset. Demand drops, and maybe technology moves on. The trick is deciding whether to rejuvenate, retire, or pivot.

Example: think of Kodak. They were huge in film photography but didn’t keep up with the digital revolution.

Strategy: decide whether to rejuvenate, retire, or pivot the product. Explore options like targeting new markets or rebranding.

Management tips: conduct a thorough analysis to understand the reasons behind the decline. Be prepared to make tough decisions about the product’s future.

As you can see, product management is vast and requires many different skills. Let’s talk about those.

Product management skills

These skills are essential for building and managing successful products.

Strategic thinking

Product managers need to see the bigger picture and align decisions with business goals. This involves identifying opportunities and threats and developing a solid product strategy​.

Problem-solving

Across the product lifecycle, product managers must overcome various obstacles. Those range from resource limitations to internal process challenges​.

Understanding of UX

Collaborating with UX designers and understanding user experience principles is essential. Design thinking is a trendy term in UX. It’s an extension of innovation that allows you to design solutions for end users with a single problem in mind.

Leadership

Product leadership is crucial in this field. Product managers often need to make strategic decisions and motivate their teams.

Flexibility

Being adaptable and able to manage changing priorities is a vital skill for product managers. Product needs and business landscapes can shift rapidly​.

Data analytics and research

Conducting ongoing market research, detecting trends, and monitoring competitors are crucial to staying ahead.

A data-driven mindset is essential for making informed decisions. This includes analyzing customer feedback and using data to track key performance indicators​.

Communication

Practical verbal and written communication skills are vital to conveying product vision and strategy. They also help produce technical product specs, changelog entries, and more.

User-centricity

Understanding and empathizing with user needs is crucial. This involves defining user cases, creating customer personas, and gathering constant customer feedback​.

This area is so important that it deserves its own section.

Customer centricity in product management

Customer centricity in product management puts the customer at the heart of every decision. It’s understanding their needs, their struggles, and what they truly value. Here’s how product managers can achieve this.

Understand customer needs and market trends

Being customer-centric means staying in tune with evolving market trends and understanding how they affect customer preferences. It asks: “What’s changing in our customers’ world, and how does our product fit into that picture?”

This can involve analyzing market reports and keeping an eye on industry news, emerging technologies, or shifts in consumer behavior.

Follow our blog updates to always know about the latest product management developments.

Methods to achieve customer centricity

User interviews: these are intimate, one-on-one conversations with your users. They’re a goldmine for insights. You can uncover pain points, discover hidden needs, and get candid feedback about your product.

Market analysis: this is where you dive into the broader market. What are the trends? Who are your competitors? What are they doing right or wrong? Market analysis helps you position your product to meet unfulfilled market needs.

Customer feedback mechanisms: tools like surveys, feedback forms, or even comments on social media are powerful. They provide direct input from the people using your product. It’s real-time, actionable feedback that can guide your product development.

See how Canny can help streamline your feedback management.

Remember – customer centricity is not just a strategy; it’s a mindset. It means constantly asking: “How does this decision impact our customers?” and “Does this move us closer to solving our customers’ problems?”

Overlap with project management

Wait, is product management different from project management? Which one is which again?

If you’re asking yourself that, don’t worry! Lots of people confuse these two roles every day. And there’s actually lots of overlap.

Similarities

Here are a few things that both roles involve:

• Planning and keeping track of timelines. This requires organizational skills and ensuring that deadlines are met.
• Setting key milestones. These are essential checkpoints to assess progress and align team efforts.
• Keeping an eye on the development process. Both roles need to ensure everything is proceeding as planned and adjusting strategies as necessary.
• Communication skills. They need to keep the team updated and manage stakeholders’ expectations of stakeholders.
• Using Gantt charts, project management software, and Agile methodologies. They track progress, identify potential delays, and ensure alignment with the overall objectives.

Differences

Focus and scope

A project manager is typically more focused on executing specific tasks and projects. They work within set parameters like time, budget, and resources.

Product management has a broader scope. It includes:

• Defining the vision and strategy for a product
• Understanding customer needs
• Ensuring the product’s long-term success in the market

End goal

The end goal of project management is to complete a project on time and within budget. In contrast, product management aims to deliver a product that meets market needs and drives business success.

Longevity and evolution

Project management often deals with a defined, finite set of tasks with a clear endpoint.

Product management is ongoing. It focuses on the product’s lifecycle. This means adapting and evolving the product based on market feedback and changes.

There’s definitely an overlap between project and product management. But the core focus and objectives of product management and project management are distinct.

Challenges in product management

Product management is an exciting and dynamic field. But it has its own set of challenges. Let’s break down these challenges and explore strategies to overcome them.

Feature prioritization

When you have a lot of ideas and feature requests, deciding what features to develop can be daunting. It’s about balancing what users want, what the business needs, and what’s technically feasible.

Strategies for overcoming

1. Use a prioritization framework. Tools like the MoSCoW method or the RICE scoring model help objectively evaluate and prioritize features. Learn more about the most popular frameworks here.

2. Base your decisions on customer feedback and market research. This ensures that the features you prioritize are aligned with user needs.

3. Ensure that stakeholders are on board with the prioritization. Clearly communicate the rationale behind it.

Team alignment

Ensuring everyone in your cross-functional team is on the same page can be tricky. Misalignment can lead to confusion, inefficiency, and a product that doesn’t meet its objectives.

Strategies for overcoming

1. Regular, clear communication about the product vision, goals, and roadmap helps keep everyone aligned.
2. Use product management, project management, and collaboration tools to maintain transparency and real-time updates on progress.
3. Regular meetings, like stand-ups or retrospectives, can help teams stay aligned and promptly address misalignments.

You’ll face challenges in product management even if you follow all the best practices. So save these tips for overcoming them. Then you’ll be better prepared and will know exactly what to do.

Tips for career progression and skill development

There’s always more to learn. Product management is a field that keeps changing, so ensure you’re always updating your knowledge.

Always learn

Check out online courses, webinars, or industry conferences. Learn about Agile, Lean, or Scrum. While these are more for project managers, they will help you excel too.

Certifications like PMP (Project Management Professional) or PSPO (Professional Scrum Product Owner) can formalize your knowledge and make your resume more attractive.

Network

Build a professional network within and outside your organization. Attend industry meetups and join LinkedIn groups and relevant subreddits. Find some Slack and Discord communities (like Canny’s!)

Networking can provide insights into best practices, new job opportunities, and mentorship possibilities.

Seek out mentors who can provide guidance and share their experiences.

Ask for feedback

Regularly seek feedback from peers, mentors, and supervisors. Understanding your strengths and areas for improvement can guide your career development.

Set clear goals

Define clear, achievable career goals. This could be aiming for a senior product manager position, leading a larger product, or moving into a specific industry sector. Break down these goals into smaller, manageable steps and track your progress.

Develop related skills

Enhance skills that complement product management:

• Project management
• UX design
• Data analytics
• Customer research and success

Improve soft skills like leadership, negotiation, and problem-solving too.

Share knowledge

Write articles or blog posts, speak at industry events, or join panel discussions. Sharing your knowledge helps others and establishes you as a thought leader. Plus, reiterating what you know helps you remember it.

Check out our list of the top product management blogs for inspiration. 

Start side projects

Work on side projects or volunteer for new initiatives within your organization. This exposes you to different aspects of product management and broadens your experience.

Stay user-focused

We can’t emphasize this enough. Regularly interact with users and customers to understand their needs and feedback. Users hate feeling ignored. Don’t let that happen!

Product management is changing daily. You need to make sure you’re ready for what’s next. Speaking of the future…

Future of product management

The future of product management looks incredibly dynamic. Several emerging trends are shaping the field and influencing the evolving role of product managers.

Data analytics and customer insights

In the future, product management will become even more data-driven. Analyzing and interpreting data will be crucial. It’ll help understand customer behavior and market trends. You’ll also need to measure product success; analytics can help here.

This means product managers will need to know how to gain insights to make informed decisions.

Increased focus on customer engagement

Understanding customer needs and preferences will be more critical than ever.

Product managers will interact with customers more frequently. Learning how to do that effectively is vital.

Emerging technologies and trends

Technologies like AI and ML will play a more significant role in product management. They offer new ways to analyze data, understand customer behavior, and personalize the user experience.

Learn more about the top 2024 product management trends.

Agility and flexibility

Adapting quickly to market changes and pivot strategies will become increasingly important. Product managers must balance long-term strategic planning and the agility to respond to immediate market demands.

Ethical and responsible product development

There are growing concerns about privacy, data security, and ethical implications of technology. Product managers will need to be more mindful of these aspects in product development.

Why product management is a promising field and an important job

Let’s sum up what we’ve learned in this article. What is product management again?

This role spans various stages of a product’s lifecycle. Each stage demands different strategies and focus. Challenges like feature prioritization and team alignment are common. But, with the right approach, you can turn them into opportunities for growth.

The future of product management is shaping up to be even more data-driven and customer-focused. Emerging trends like AI and ML stand out. This evolving landscape offers a promising career path.

Product management is not just about managing products. It’s about innovation, understanding customer needs, and making strategic decisions. It’s a dynamic, challenging, and rewarding field.

Stay up to date with the latest news from product management – subscribe to our blog 🙂

Maria Vasserman

Maria loves all things creative – writing, photography, movies and beyond 🎥 When she's not creating content to tell the world about Canny, she's either photographing a wedding, jumping at a rock concert, camping, travelling, snowboarding, or walking her dog 🐕‍🦺

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Imagine you’re cooking a special meal. You need to know which ingredients are essential and which ones will give that extra zing. That’s what the Kano model does for product features.

Why is it important? It’s about making smart, impactful choices. This model helps you figure out which features will satisfy your customers, which will delight them, and which might let them down. It’s a practical approach to understanding customer needs and exceeding their expectations.

Ready to explore how the Kano model can change the game for you in product management? Let’s get started!

What is the Kano model?

The Kano model is a prioritization framework that product managers use to plan the roadmap. It helps product development and customer satisfaction as well. To use the Kano model, you need to categorize customer preferences into different levels. This helps to determine how various aspects of a product can influence customer satisfaction.

History of the Kano model

Dr. Noriaki Kano, a Japanese professor, created the Kano model in 1984. His goal was simple yet powerful: understand what makes customers happy.

Dr. Kano’s idea was groundbreaking. He saw that not all features in a product are equal in customers’ eyes. Some are must-haves, while others are nice surprises. His model aimed to identify these different factors.

The core of the Kano model is customer satisfaction. It’s all about figuring out what customers expect, what they love, and what they can do without. Since 1984, this model has been a key tool in product management. It helps teams make products that people not only use but also enjoy.

Dr. Kano’s insights from decades ago still guide product managers today.

Understanding the Kano model

The Kano model breaks down features into categories based on how they affect customer satisfaction.

Kano model categories

First, there are ‘Basic’ features. Think of these as the essentials. If these are missing or done poorly, customers are unhappy. They’re like the foundation of a house – without them, everything else falls apart.

Next, we have ‘Performance’ features. These are directly linked to customer satisfaction. The better these features are, the happier your customers will be. It’s a straightforward deal: improve these features and improve satisfaction.

Then, there are the ‘Excitement’ features. Sometimes people call these “Delighters.’ These are the surprise elements. Customers don’t expect them, but they love them when they’re there. These features can turn a good product into an amazing one.

The critical role of the Kano Model in feature prioritization is balancing these categories. It’s not just about adding more features. It’s about understanding which features will bring the most satisfaction to your customers.

‘Indifferent’ features are those that customers don’t particularly care about. Their presence or absence doesn’t significantly affect satisfaction. They’re like the color of a basement – not a deal-breaker for most.

Lastly, there are ‘Reverse’ features. These are unique in that customers might actually be dissatisfied if they are present. It’s like adding too much spice to a dish – it can be a turn-off for some.

Let’s walk through an example. Imagine you’re creating an app.

Using the Kano model, you’d ensure the app nails sending and receiving emails first. Next, you’d work on a robust spam filter. Finally, you’d add AI-powered replies to really stand out.

The evolution of features in the Kano model

In the Kano model, features evolve over time. What starts as an excitement feature can become a basic necessity. It’s all about how customer expectations change.

From excitement to basic

Initially, a feature might wow customers because it’s new and unexpected. Over time, as it becomes more common, customers expect it as standard. It moves from an ‘Excitement’ feature to a ‘Basic’ feature.

Example: mobile phone battery life

When mobile phones first came out, a long-lasting battery was a delight. Users were thrilled with batteries that lasted more than a few hours. This used to be an ‘Excitement’ feature.

Now, a long battery life is a must. It’s no longer a delight; it’s expected (‘Basic’ feature). If a phone doesn’t last a full day, it’s seen as a drawback.

This evolution reflects how technology and user expectations change. What was once a luxury becomes a standard. Understanding this shift is crucial for product managers. It helps in planning future feature enhancements and staying ahead in the market.

Implementing the Kano model

Using the Kano model effectively means getting into your customers’ heads. Here’s how you can do it.

Customer surveys and feedback for categorization

Surveys are your best tool. They let you hear directly from your customers. This feedback is gold for categorizing features into Basic, Performance, and Excitement.

1. Craft effective surveys

Keep it simple. Ask straightforward, direct questions. Make sure each question targets a specific feature. Your goal is to understand how much each feature matters to your customers.

2. Ask the right questions

Use functional (positive) and dysfunctional (negative) questions. For example, ask: “How would you feel if this feature were available?” and “How would you feel if this feature were not available?” This approach helps you gauge the impact of each feature.

3. Analyze responses

Look for patterns. Which features are consistently seen as must-haves? Which ones bring excitement? Responses will show you which features are vital, which are nice-to-haves, and which might not be necessary.

Ricardo Vargas highlights how the Kano model can effectively prioritize product features based on their potential to satisfy clients. Check out his podcast to hear more from him.

Continuous customer feedback

In product management, staying in tune with your customers is critical. Here’s how continuous feedback plays a crucial role.

Adaptive feature categorization

Customer needs evolve. What’s exciting today might be basic tomorrow. Regular feedback helps you re-categorize features as customer preferences change.

Ongoing engagement

Keep the conversation going. Regular check-ins with users keep your product aligned with their needs. It’s like having a constant pulse on what your customers really want.

Data-driven decisions

Let feedback guide you. Analyze the data to understand trends and patterns. This approach ensures your decisions are backed by solid customer insights, not just gut feelings.

Embracing continuous feedback helps you stay agile. You’ll be better equipped to adapt features, engage with your customers, and make decisions that hit the mark.

Canny’s feedback management software offers a complete tool for feedback and product management. You can prioritize features, keep the conversation going, and analyze trends all within Canny. Give it a try today!

Integrating feedback into product roadmaps

Feedback isn’t just valuable; it’s essential for shaping your product’s future. Here’s how to weave it into your product roadmap.

Align with strategic goals

Match feedback with your long-term vision. Ensure that customer insights support the broader objectives of your product. It’s about finding that sweet spot where customer needs and business goals meet.

Prioritize features

Use feedback to rank features. Look at what your customers say and weigh it against your product’s capabilities. Focus on features that align with customer desires and your strategic goals.

Kano model insights guiding UX design

The Kano model offers valuable insights for enhancing UX/UI design.

Feedback on ‘Excitement’ features can inspire creative UX/UI enhancements. They’re about adding elements that users don’t expect, but love once experienced.

Improve user interface aspects that directly impact user satisfaction. This might include streamlining processes or enhancing the interface’s efficiency.

These insights ensure that every design element meets user needs and contributes to an engaging and satisfying user experience.

Real-world examples

That’s all great in theory. But how does it actually work? Here are some examples of well-known companies using and implementing the Kano model.

Apple

Known for its innovative products, Apple often includes delighters in its product launches. For example, the introduction of the touch screen on the iPhone was a delighter that exceeded customer expectations.

Amazon

Amazon’s introduction of free two-day delivery for Prime members started as a delighter and became a must-have feature for online shoppers.

Netflix

Netflix introduced personalized recommendations based on viewing history, creating a delighter for its customers. This feature not only exceeded customer expectations but also increased customer loyalty and retention. Additionally, Netflix’s introduction of original content, such as the hit series “Stranger Things,” was a performance attribute that satisfied customer needs and expectations.

Challenges and best practices in implementing the Kano model

Implementing the Kano method has its challenges. Here’s how to navigate them effectively.

Addressing biases

Be aware of biases in customer feedback. Diverse sources of feedback can help balance these biases. Considering a wide range of user perspectives is crucial to get a true sense of needs and desires.

Resource allocation

Balance is key. Invest in basic features for stability, performance features for satisfaction, and excitement features for delight. Prioritize based on customer impact versus resource investment.

By being mindful of these aspects, you can effectively utilize the Kano method to enhance your product development strategy.

Kano model versus other frameworks

There’s no one perfect framework. We’re breaking down the Kano method in this article. But other methodologies are worth mentioning too. Let’s see how the Kano model compares to other popular approaches.

Most product managers use a combination of a few frameworks. Sometimes, they’d use one methodology for one feature and a different approach for another feature. Other times, they distinguish approaches based on the teams they’re working with. 

Sometimes, a larger company has a few products, so a product manager can select the best framework for each.

The best thing you can do is understand each framework. Then, you’ll know which method is best for each unique situation.

We put together a complete guide to prioritization to help you. It gives you an overview of the most popular prioritization frameworks. Picking a framework is much easier when you can compare them all at a glance.

Kano model in today’s product management

The Kano model remains a vital tool in modern product management. Here’s why.

Today’s market demands products that meet basic needs and offer something extra. The Kano model helps identify what ‘extra’ means for customers, keeping products competitive and relevant.

Balancing feature investment with customer delight is all about wise investment. The model guides where to put resources for the most significant impact on customer satisfaction. This balance is crucial for delivering products that not only function well but also bring joy to users.

In an era where customer expectations constantly evolve, the Kano model helps product managers stay ahead. It ensures the products are both efficient and delightful.

Conclusion: why you should use the Kano model

The Kano model isn’t just a framework; it’s a roadmap to customer satisfaction. Here’s why it’s a must-use.

1. Understanding customer needs. It gives you a clear picture of what customers want, from basic necessities to exciting features that delight.
2. Prioritization of features. It helps you smartly allocate resources. You know which features to perfect, which to improve, and which innovative ones to introduce.
3. Staying competitive. Keeping your product appealing is a necessity. The Kano model keeps you aligned with evolving customer expectations.

The Kano analysis is essential for anyone in product management. It guides you to meet and exceed customer expectations, ensuring your product isn’t just good but great.

Maria Vasserman

Maria loves all things creative – writing, photography, movies and beyond 🎥 When she's not creating content to tell the world about Canny, she's either photographing a wedding, jumping at a rock concert, camping, travelling, snowboarding, or walking her dog 🐕‍🦺

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The post What is the KANO model? first appeared on Canny Blog.

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