When you're having a brilliant idea for a product, you need to know whether there is solid business case and if it provides value to the customer. The product idea should be targeted to the right audience, for the right price and on the right time. Introducing a new product involves planning and strategy. The Product Canvas is an easy tool to develop a strategic product planning.
The goal of the Product Canvas
The first goal of the Product Canvas is to have a clear and well thought objective to develop a product. The second goal of this tool is to shortly communicate the advantages and value of the proposed product to stakeholders in order to get support and feedback quickly.
Before these canvas tools were known, often long requirements documents were written that took time and effort to read. At the beginning, when you elaborate your product idea, it is crucial to get feedback quickly from other people on your vision and ideas. The Product Canvas tool is an intuitive and accessible tool which provides structure and gives a high level overview of your plan. This is an ideal way for product managers to communicate their plans to stakeholders. When the plan is finished it can be worked out into a requirements document.
There are several types of canvases and 'boards' that are used to map out a strategy. One of the most popular ones is the Business Model Canvas, introduced by Alex Osterwalder in the book Business Model Generation (2010). Based on this model several new variants derived. One of them is the Product Canvas by Shardul Metha, which is in structure very similar to the Business Model Canvas.
The main difference is that it is focused on customers and their problems, which also gives attention to the early adopters. By starting on the left side of the canvas with the customers as the first priority, you can work to the right to fill in the other boxes. This also fits well in agile and lean thinking by focusing on delivering value to the client. Another big difference is the addition of 'existing alternatives' and 'key stakeholders'.
The 10 Steps of the Product Canvas
The image above shows the 10 blocks of which the canvas is build up. We will describe them from left to right, starting with the customers and their problems.
1. Customer Segment
The first step is to describe your clients as specific as possible. Identifying the right target group for your product is essential. Think about market segmentation and demographics. You could focus on your existing customers, a segment or a totally new market. It is also a good idea to map out their wishes. If there is not enough demand for your proposed product, it is not worth to develop it in the first place. Once you know what they need, you can focus your product accordingly.
1a. Early Adopters
For new products it is important to determine early adopters as well. Not all new products will be adopted by the intended target group. Often there will be a distinctive group to be the first to buy the product. The success of a product launch depends heavily on this group. Therefore it is important to know their wishes and behavior.
When you know your target audience, the next question is: What problems do they have now that you can solve? Try to list the top 3 of them.
2a. Existing Alternatives
How is the target audience currently solving this problem (without our proposed product)? This can include products from competitors or just a different process.
3. Unique Value Proposition
In this box there should be one sentence describing the value we are providing to our target customers. What problem is solved (uniquely) by using your product? Or how are you satisfying their needs?
Try to define how you are actually different than the competition. The product needs to be functional, but also better than the competition. It should include distinctive competence or an advantage over other solutions in the market, than can't be easily copied. E.g. knowledge, branding, business process, patents and IP.
Try to list the top 3 features of your solution that is going to solve the problem of the client. In which ways do you provide value to the defined customer segment?
Now you know what value you create for you customers, the next question is how do they find your product? In which way can you reach the customers, what marketing and sales strategy is needed? There are three parts in this:
- Acquire customers, how do you create interest and awareness?
- Keep customers: How do they keep using our product?
- Grow: How do you cross-sell or up-sell to existing customers?
6. Revenue Streams/Business Value:
What is the business case? How will you make money and what will be the price for your product? If the product is not meant to generate revenue, what other business value is it providing. This can include efficiency, customer satisfaction, safety etc.
7. Key Metrics or Success Factors:
When will your product be successful? This can be based on the amount of revenue, conversion or other data. Try to list the most important metrics that are driving box 6 (Revenue streams / Business Value).
8. Key Resources / Partners:
What and who do you need to deliver the solution to the client? It involves not only physical resources such as materials, but also business processes, partners, personnel, intellectual property, platforms etc. What are the most critical internal and external resources? Also from whom do you receive those resources.
9. Cost Structure:
Like we filled the box for revenue/business we can now focus on identifying the cost structure. How do you spend your money? What costs are really essential for your product and which one can you avoid? Where do you have a break-even point?
10. Key Stakeholders:
Within large organizations you often need internal support and feedback from several stakeholders before a new product can be developed. Therefore, identifying and aligning those stakeholders is very important. Who are the decision makers and the influencers and what are their agendas? Without the support of the key stakeholders your product idea will probably never be developed.
When you have filled in all the boxes, it is important to share it and get feedback on your plan. Check your assumptions and make iterations on your strategy. After that you can start to work out every detail of your plan and setup the functional requirements of your product.
When discussing a new product idea with us it is recommended to follow the steps above. When you have this Product Canvas ready in advance we can easily give feedback and provide you the next steps for your innovation. Please contact us to discuss your new product idea.