It’s not only new companies that benefit from new product develop; product development is a critical part of any thriving business, no matter its age. Markets change, competitors change, and if there’s one thing that the digital era has shown us it’s that customers change too. 

As a result, even the most seasoned companies with the most established offerings won’t be caught standing still. Take Hubspot, for example: The company moved from an Inbound platform to today, a true hub for marketing, sales, and customer service. It's now inbound AND outbound, it's allbound, in a relatively short period of time. Truly successful companies are always generating new ideas and refining their existing products to meet customer demand and scoop up market opportunity.

In this article we’re going to take a look at:

• What digital product development is
• The phases of developing a product 
• Specific product development models 

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What Is the Digital Product Development Process? 

In this article, we’re going to be looking specifically at digital products, like software, apps, and dashboards, and algorithms. In a way, digital products can be similar to digital services in the sense that they automate tasks or operate like a tool. As a result, you may sometimes see these words used interchangeably. We want to clarify on how we’re using the language here:

• Digital goods are intangible items that are stored and delivered in an electronic format, including eBooks, wallpapers, music, software, etc. 
• Digital products can be thought of as a subcategory of digital goods; we specifically use this to refer to digital goods that are code-based and typically interactive. 
• Digital services, meanwhile, are not assets; a digital service involves selling time for money. 

The development process is the means by which a product, digital or physical, is created. In practice there isn’t a ton of difference between digital and physical product development—but as you’ll see, the models we mention evolved out of the tech and software industry and reflect that origin. 

Before we dive into the individual models, let’s check out a high-level overview of what the digital product development process looks like. 

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Stages of Digital Product Development Process 

Even if you subscribe to a specific model for digital product development, you’ll find these common themes: 

• Ideation 
• Strategy 
• Design cycles
• Development cycles
• Validation
• Launch

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Phase 1: Ideation

This is the phase of pure ideation, also known as the Fuzzy Front End (FFE). This pre-development phase is fueled by creativity and limitless possibilities. The key to this stage is to put ourselves in the customers’ shoes, and there are many avenues that can help you do that:

• Analyzing gaps in the market 
• Internal brainstorming 
• Competitor analysis 
• Surveys and feedback
• Social media listening 

Often what happens, especially in startups with green founders, ideation is no more than a lightbulb turning on  in the ether above. However, before Eureka! is declared we really really recommend kicking tires and validating an idea before mountain on startup money is spent on a product no one wants buts you.

In the initial stages of ideation, the nature is inclusivity, no idea should be left off the table. For two important reasons: one, it protects the creative process and those in it; silence no one and you'll have a better product for it. Two, you never know where one 'out there' comment will lead... quite possibly the next unicorn no one has thought of yet. (pro note: not everyone in your org, employees, vendors ect, knows all the in-and-outs of your org's politics, board demands, and investor pressures. Leave these sentiments out of ideation process.)

If you are struggling with the ideation phase (or need to reign it in) you might try using a structured technique. While it may seem counterintuitive to use structured thinking to break down creativity barriers, many companies find success with creative thinking techniques like SCAMPER or SWOT. 

SCAMPER

SCAMPER was popularized by Bob Eberle to ignite creative brainstorming. Each letter of the acronym represents a different way of developing a new product:  

• Substitute. What parts of the product could be replaced with something else? 
• Combine. What products or processes can we merge? 
• Adapt. How can we optimize the product we already have? 
• Modify. How can we tweak the processes we have in place around this product?
• Put to another use. How can we use the existing product to solve new problems?  
• Eliminate. How can we pare down anything excess?  
• Reverse. How can we rearrange our existing process?  

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For example: Someone had the clever idea of combining a mobile phone with an mp3 player and a camera. 

Industry disruptors like Amazon and Netflix eliminate an intermediary. 

Twitter is a great example of a company that adapted. Before Twitter was Twitter, it was Odeo — a podcasting platform. Apple beat Odeo to the punch, so Evan Williams held a series of hackathons with Odeo employees. He asked them to hold off on their normal tasks and instead consider how Odeo could be reinvented. On the last hackathon, Jack Dorsey created Twitter (a rough MVP, if you will). This was an historical pivot, and it essentially came from asking the question “What can we do with the product we already have?” 

SWOT

SWOT analysis is a simple framework used to assess a company’s current position in order to inform a new strategy. This can be applied to marketing and sales initiatives (or any other facet of business that requires strategy), as well as product development. The idea is to take stock of the existing circumstances, and to use that reality to chart a course forward.

SWOT consists of: 

• Strengths. What advantages do we have? What do we do better than anyone else?
• Weaknesses. What could we improve? What factors cost us sales?
• Opportunities. What trends are relevant to us? What options do our strengths create?
• Threats. What is the competition doing? What do our weaknesses expose?

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SWOT is also called external-internal analysis, because the first two points tend to relate to internal forces, and the second two points tend to relate to external forces. Using this framework as a guide, we can discover ways to minimize risk and maximize resources. 

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Phase #2: Strategy 

At this point the product development team, in theory, will be linking up with the marketing department. ('marketing department? what marketing department?'- looking at you, Founders) After all, we can’t talk about strategy without talking about the customers that strategy is in service to, and understanding customers falls largely into marketing’s purview. 

If you use one of the creative problem solving methods in phase #1, it’s likely that you will already have considered your current standing in a market or industry. That comes in handy as you now move onto developing strategic elements like: 

• Pricing strategy, where you set price points, determine break-even points, and how much of a product you expect to sell. 
• Positioning strategy, where you define a value proposition and benefits of the product, as well as the tone you’ll use to market to consumers. 
• Promotion strategy, where you create a launch plan that determines all the activities that will take place along a campaign timeline.  
• Sales strategy, where a business figures out what assets and understanding sales will need in order to close a deal (including price points, positioning, pricing, training, demos and collateral).
• Content marketing strategy, which may overlap with promotion strategy but focuses specifically on the assets that will need to be created (blogs, videos, landing pages, service pages, podcasts, infographics, guides, etc.)
  
  

There are a lot of moving parts when it comes to strategy, and this is where teaming up with seasoned growth experts is beneficial — they bring the insight and expertise needed to bring all these elements together. 

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Phase #3: Design and Development 

If there’s one thing to bear in mind about digital product development, it’s that the process tends to be highly iterative; whereas that idea from phase #1 is the germ of sand, phase #3 is the layer upon layer of nacre.

The first layer is the prototype. The idea here is to establish the most basic version of the product. This means it will likely have little to no functionality. It’s mostly a basic design with the UI and UX hashed out. Like a mockup that can be as high- or low-fidelity as needed. The prototype is often used to solicit initial feedback from stakeholders and prospective users. 

Then, there’s typically some iterative development that takes place. One way of breaking this down is: 

• Alpha testing. The prototype is for internal use only; used to tweak functionality and design. 
• Pilot testing. In this phase, a select group of end users experiments with the product and provides feedback. 
• Beta testing. After the bugs and flaws from the pilot tests are addressed, a public version of the product is released. 

Prior to the official release, the digital product is continuously put through the wringer. These strict quality control procedures help to eliminate defects. And then comes...

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Phase #4 Launch 

...the peak moment. Also called commercialization, this is when a company publicly rolls out a product. 

Depending on how polished the product is, you may or may not opt for a soft launch. Often with digital products, there are still bugs and kinks to be worked out. Launching an MVP or keeping the launch semi-private may actually help you scale more efficiently. Following that, there may be other, bigger marketing pushes. 

There is a lot that goes into a successful launch but it can be mostly boiled down to three key components: 

• Timing. Make sure you’re not releasing around the time of competitors or events that could negatively impact your launch. 
• Awareness. Part of phase 2 were those promotional and content strategies; now those are put to the test. 
• Product-market fit. The moment of truth. Product-market fit is never an exact science but success is contingent upon everything that came before. Did you create a great product for a group of customers that would actually use it? 

Of course, launching a product is just the start. Following launch, the singular objective of a company is growth. We’ve written about using insight-driven data for growth here. 

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Common Models for Digital Product Process Development

What we’ve laid about above is the general trajectory of the digital product development process. There are, however, specific models that tech and software companies often use. 

In our experience, the best approach tends to vary on a case-by-case basis. You may need to meld models together in order to tailor something to your company’s needs. 

Common models and methods include: 

• Waterfall Development
• Agile Development 
• Lean Development 

Waterfall Development 

This is the most traditional approach. Waterfall development offers a logical, top to bottom progression in which one stage must be entirely completed before moving to the next stage. 

What it looks like: 

1. Conception
2. Requirement analysis 
3. Design 
4. Implementation 
5. System Deployment 
6. Maintenance 

Between each of these stages, there is usually a “stage gate,” which is a review of the prior stage. 

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Pros of Waterfall: 

• Established scope and timeline. 
• Understanding of the entire scope means a more complete product at launch.
• Customer presence not required. 

Cons of Waterfall: 

• Inflexible; what you plan is what you get; software requirement specifications (SRS) will not be allowed to evolve much, if at all. 
• Longer timeline. 
• Needs may be difficult to define. 

Agile Development 

Agile development (or more specifically, SCRUM) is waterfall development’s more dynamic and iterative cousin. Rather than one long timeline, agile is arranged into “sprints.” A sprint is usually a duration of weeks and each sprint is distinguished by a list of deliverables. At the end of each sprint, the result is evaluated by the project team and customers. Agile relies heavily on customer involvement throughout the entire development process. 

What it looks like: 

1. Plan 
2. Design
3. Develop 
4. Test
5. Deploy
6. Review
   
   

You’ll notice, however, that the stages aren’t too different from what we see in the traditional waterfall model. Perhaps the biggest differences between the two are: 

1. At the end of each stage in SCRUM, there is a new MVP available for testing; and 
2. The waterfall model is visualized as being a linear path, whereas agile creates a never-ending flywheel. After review, the process can start right over again 

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Pros of Agile: 

• High adaptivity; customer get to solutions sooner because they’re constantly involved.
• Quickly produces basic version of product. 
• Tends to be more user-centric.
• Greater flexibility; software requirement specifications (SRS) are allowed to evolve.

Cons of Agile: 

• Timeline and costs can be uncertain.
• Challenges at scale (this works great for a team of ten, but not a team of 500).

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Lean Development 

Adapted from Toyota’s legendary manufacturing process (which has gone on to shape industries all over the world), lean development is all about quick delivery and quality-first progress. The lean digital product lifecycle usually looks something like this: 

What it looks like: 

1. Ideate
2. Explore 
3. Validate
4. Grow
5. Sustain
6. Retire

It can be thought of as a subset of agile development, since it also speeds up the development process by taking an iterative “learn as we go” approach.   

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Pros of Lean: 

• Highly efficient because it hinges on eliminating all waste (saves time and money).
• Software requirement specifications (SRS) are allowed to evolve.
• Very scalable. 

Cons of Lean: 

• Success is dependent on how cohesive the devops team is. 
• Success is dependent on how stringent the documentation is. 

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Summary 

There are as many approaches to new product development as there are businesses; in our experience, it’s never the same journey twice. If you’re about to take the plunge into product development, consider partnering with Orogamis growth experts. We’re well-versed in digital product development and know how to leverage data and market research to provide you with the strongest possible foundation for the development and launch of a new product.

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