A New Process for Products?

  • December 27, 2011
  • Scott
  • 6 Comments

Yesterday’s post on the Cosmonaut has me thinking about how new products are developed and released into the wild.  We focus so much on startups and processes in the software and virtual world, but Kickstarter has exposed a new process for physical products:

  1. Come up with an idea for a product that you think people will want, but you don’t see satisfactorily provided to the market.  (ideas are often for art projects or music albums, not just consumer products like this)
  2. Build a prototype and put together a pitch video to sell the idea
  3. Do the research to figure out how big a production run you need to do to make the object “affordable” (whatever that means for what you are pitching).
  4. Put your kickstarter project page together, including a fundraising goal that supports your minimum requirements.
  5. Wait to see how many people and $ show up to support your project.
  6. When (if) project funds, get started building the product (or producing the benefits the contributors are entitled to).
  7. Ship it.  If it sells well, consider selling more of the product online, knowing that you now have won over an early adopter fan base.

It favors small production runs, prepaid by motivated customers.  The magic is that you don’t put capital at risk until buyers have paid (up front!) for the product.  It is a great way to get pre-commits from a motivated community. And to my way of thinking, this is just a new (and better) process for finding demand when you don’t have the capital to “build it and hope they come.”

If we relate this to the Lean Startup, or specifically to Steve Blank’s incarnation the Lean Launchpad – one of the key tenets is to “get out there and talk to customers”.  Moreover, to find paying customers.  Not just customers who say they will buy it, but customers who will literally write checks to you.

And when they do this – in great dollar amounts or numbers of customers – then you move into production. Kickstarter gives the product team a chance to do this with physical goods in a way that was nearly impossible 10 years ago.  It also allows an innovative team to address niche demand in a way that they previously couldn’t.  In the same way that eBay allowed people to find markets for niche products, so does kickstarter – in one case auctioning used goods, in the other case contributions toward products that don’t yet exist!

This moves physical products into the realm of a process that looks like:

  1. Design
  2. Sell
  3. Build

Which is much more capital efficient than

  1. Design
  2. Build
  3. Sell

As it allows for less waste (building products that no one wants- akin to getting the requirements wrong in software and BPM projects).  And it allows for some feedback loop between design and selling, before moving into the build phase.

It feels like something that could be truly transformative for small business product development.  I have several friends in the business of producing physical objects for sale (furniture, productivity tools, gadgets), and I’m telling all of them they have to try this process and see if it works for their business, and reduces the risk for them.

As a buyer, the other thing that is really fascinating is the exposure to the process, or craft, behind the production of these objects.  The videos and written updates about the procedures are quite educational.  As a process guy, I see it all through the lens of repeatable process with, typically, an irreplaceable human component.  Gratifying craftsmanship.

 

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