Everything we see around us started off as an idea, a thought, and figment in someone’s imagination. When you use a phone, you are actually using someone’s else’s idea of communicating, when you switch on the TV you are using someone’s else idea of entertainment, when you go and vote you are using someone’s idea of democracy should be like. I can argue that everything we do and use is in some way someone else’s version of how things should be done, it doesn’t mean it is right or wrong, it’s just an idea, an idea to attend school, to work from 8-5, to have a fridge and stove all of that is someone’s else idea. Human beings are very creative it’s one of the fundamental difference between us and animals, we can think, use our imagination and create new things to make our lives easy. If you have an idea of a product you would like to invent or design that can solve a problem but you not sure how to go about it, well this article is for you.
Overcoming fear and biases
When we were younger it was possible to imagine flying cars and spaceships. We had big ideas to change the world and having superpowers to do anything but as we get old tend to reserve our comment, experiment less, and we say things like “That will never work”, “It is not feasible”, “I don’t have time to chase dreams” and as a result we deprive the world of our creativity.
We have a lot good products in the world but still, there is a lot of artwork we haven’t seen yet, paintings, machines, movies and solutions to healthcare that hasn’t materialized yet because no one had the confidence to pursue those ideas.
Not every idea is a good one but it is still worth exploring the possibility, to raise awareness and stimulate intellectual conversations about matters that affect our society. Therefore it is important to separate your self from conventional wisdom, reason from first principle and pursue your ideas with confidence even if they are not conventional.
What is product development?
Product development is an iterative process of designing and improving products. The goal is to go through this process as quickly as possible and as many times as possible. Not to go through it once for a very long time. It’s always better to get feedback early on that later when you have invested a lot of time and resources.
If you have an idea of a product to develop, you can follow one of two ways; the first one is the DIY approach where you try to build your product by experimenting and focusing on the prototype. This works well for hobby products, quick builds, and home products. The other approach is to use the engineering methodology to product development, this is a well thought out plan that has been proven to work, it is not always the best approach but it reduces the possibility of failure significantly. Using the engineering approach we will consider the five main stages of product development, Opportunity stage, Market research, System-level Design, Concept generation, Detail Design, and Manufacturing.
The focus keywords at this stage are; Problems, Value and Solution. Unless you are building a product just for your entertainment, every product you design must solve a real problem. The solution you provide is the value you bring to the market place. How much valuable your solution depends on the market or the end user of the product. It is possible to design a product that provides a real solution to a problem but it is not very valuable in the market place. For example, you might decide to build an automatic bed folding machine that makes up your bed, it’s solving a problem but no one is willing to pay R80 000 for a bed folding machine. A simple case of a good product is when it solves a real problem and the end user values it enough to pay a price that makes it worthwhile for the entrepreneur/designer to keep producing the product.
Solve valuable problems
We have already mentioned that your new idea or invention must solve a real problem, but the question now is “what kind of problems are valuable?” Every problem that you solve is valuable but not every problem is valued the same. For example, most people have a problem of misplacing their keys every now and again but they don’t go through the effort of buying a key tracking device and if they do they won’t be willing to pay R10 000 for it. Contrast this with another example, a cure for cancer, people will climb high mountains travel all over the world to find a cure, and when they do find it they will be willing to pay hundreds of thousands of rands if not millions in order to get it.
Solve difficult problems
In general, the problems your product is addressing shouldn’t be trivial even though the solution might seem simple. The problem should include some level of difficulty. The difficulty of the problem, in fact, is the opportunity. Trivial (easy) problems are typically low margins and not very valuable to solve, for example we all know people need food, clothes, shelter, transport, and energy that’s why if you drive 10 km from your house you won’t struggle to find a business that solves one those problems. You won’t struggle to find a place that sells food, clothes or petrol, these problems are trivial because everyone knows they exist. Other problems are trivial but are very difficult to solve like a bank, it’s obvious that people need a place to store their money, however, it is not easy to store other people’s money and have it readily available anytime they need it which is why there are so few banks.
An example of non-trivial and difficult problem was an iPod, when Steve Jobs introduced the iPod it wasn’t so trivial that people enjoyed listening to music while traveling, the reason why people were not so interested in listening to music while traveling is because Mp3 players were bulky, needed you to carry many CD’s which made it hassle. Steve Jobs was able to unearth the truth and provide a solution that works. The difficulty in the iPod was storing as many songs as possible on a very small device and giving reliable battery life. The end product was a success, and Apple made billions of dollars from the iPod.
We have discussed the kind of problems that make business sense but how do we find these valuable problems? What do people want? To discover what people want we will consider the generally accepted theory of Maslow hierarchy of needs. Maslow hierarchy of needs gives us an idea of what people need and what drives their behavior to satisfy those needs. The hierarchy basically consists of five levels, ranked in order of importance.
Level 1: Physiological Needs
These are the basic needs people need to survive such as food, air, and water. Other important items that fall in this category would be clothes, shelter and a clean environment. These needs need to be met for every human before they can progress to satisfy other needs. Products that meet needs in this category include food, clothing shops, and real estate.
Level 2: Security and Safety Needs
Fear of loss or being hurt dominates this category of needs, at this level human beings seek assurance that they are safe from any harm. Products in this category include firearms, alarms, insurance products, remote gates, safety belts, etc.
Level 3: Social Needs
Once we feel safe and all our physiological needs are met, human beings tend to go and look for mates. At this level the need to be heard, seen, accepted and the feeling of belonging with others becomes important. Products are associated with this category include board games, video games, dating apps, sporting goods, and gift products.
Level 4: Esteem Needs
Human beings need to feel appreciated and need to feel important. At this level, humans seek status, respect, and admiration. People have a need to accomplish things and their efforts recognized by others, things like education, sports, careers or even hobbies like going to the gym. Products in this category include personal gym equipment, learning courses, books, puzzles, and building kits.
Level 5: Self-Actualization Needs
At this level, human beings have all their basic needs met and are looking for a deeper meaning of life. At this level, human beings are not concerned so much about what others think or what they have but are more interested in fulfilling their full potential. Products that appeal to this category include self-help books, courses, yoga classes, world trips, and adventures packages.
Now the needs hierarchy as theorised by Maslow is not an honesty test, it’s possible for humans to meet a need via another need up the hierarchy, for example, people can go look for a job not for esteem reasons but to satisfy their physiological needs. Some people might get married not because of social needs but purely because of financial reasons and security. Also when people buy a cake, they are not buying it because they are hungry they are buying it to satisfy their cravings. In real life, people are more complex than that and their needs change rapidly at any given time, Maslow’s hierarchy should only be a guide of understanding the general needs of people.
Understanding the needs of people
Understanding what people need helps you to formulate your solution better and understand who to target. For example, if you selling a laptop, your ideal customer is not someone living in the village whose more concerned about survival than esteem needs.
It often happens especially in South Africa that due to western influences startups tend to build products that no one really needs. It is easy to look at developed countries like the USA, and try to copy their innovative ideas and bring them home, however, the next big thing in Africa is not 3D printers or an Ai that can help you manage your sleep better. Half the population is still not connected to the internet, more than half are computer illiterate and almost a third of the population is living below the poverty line. That is why understanding what people need at their current situation can help you identify your market.
Types of products
Generally, products fall under two categories; High Fidelity and Convenience products although a product can exist as both. Convenience products derive their value from their functionality and are measured usually on some empirical metric such as efficiency, price, and durability. Whereas high fidelity products derive their value from the emotional appeal and are measured subjectively based on perceived value such as prestige, status, and exclusivity. The best products in the market are the ones that maximize one trait although having both is very advantageous.
Convenient products are all around us every day, they are mostly commodity products meaning they are driven solely by price competition. A common example is your door handle, your spoon, the washing cloth you use to wash dishes, the extensions cable you use, the home geyser, toothbrush, toilet seat, car jack, calculator, pencil, a valve, tires, pump, printing machine, stove, a crane, etc. The products on this list are the products we don’t have much much emotional attachment to, we just want the fastest, most efficient, and reliable product we can afford, if we can’t have the most efficient one we will settle for the cheapest.
For example, when buying a geyser for your home you want a geyser that will work reliably, holds more water, uses less electricity and you will buy the first cheapest geyser that meets those requirements. When you want to buy a calculator you will almost always go for the one you understand and is also cheap. The same thing with a valve for your pipes, you are not looking for any particular brand, you just want a valve that works and is cheap.
The disadvantages of convenient products
At this point, you might be tempted to think that this is how we buy everything and that there is nothing unique about how we buy convenient products but that’s not true. For example, when buying a door handle, you will go to your local hardware store and look for the one you like but cheap, if the next day you want to buy another one but it’s not available you will go to another hardware store to get another one similar to the one you purchased at another hardware store. You don’t really care about the brand that made the door handle, you just want a door handle in a specific color, material or shape. If you can’t find it in one store you will most probably find it elsewhere and if they raise their prices you will go find it somewhere else cheaper. These highlights three important points about convenience products; they are easily available, undifferentiated and price sensitive.
For example, the water bottling business makes mineral bottled water a convenient and commodity product. If customers are given two options of mineral water and the other one is $10 more, people will take the cheapest because there isn’t much separating the two, and the alternative is easily available at a lower price.
Convenient products can change to high fidelity products
Convenient products can also change to high fidelity products when they excel in one or more metric that customers value the most. For example, if you run an internet cafe, you rely a lot on the computer hardware you use, at first you might buy the cheapest hardware you can find. However, after using different hardware for a while you will be able to tell which brand of mouses, or keyboards break the most and you will begin to develop trust on the brand that offers you quality products. In fact, you might continue buying the products of that brand even if there are better products in the market. This does not happen overnight though, it takes time to build customer loyalty but it becomes easier when you offer quality products consistently. This process is called de-commodifying the products, and there are a lot of products today that have been de-commodified.
De-commodifying commodity products
Let’s take for example razor blades, a few decades ago, men didn’t care much about the razor they used to shave after all it’s just a razor, right? Today Gillette wants to convince you that a razor is not just a razor, it can be stronger, sharper and ultimately make you look good. All of a sudden a simple razor blade has a different meaning to a man and has created a multibillion-dollar industry with one dominating player. But it doesn’t end there, most products we use today have been de-commodified in some way even things we consider simple like a chair, a bag, a phone cover, the kettle, etc. It doesn’t end there we even went as far as to de-commodify underwears, its no longer just about comfort it’s about the brand even if people won’t see you wearing it.
Making profit from convenient products
Now a question often arises, should every product become a high fidelity product? Can every product become a fidelity product? Not every product needs to be a fidelity product it depends on the market and most certainly not every product can become a fidelity product. No one will be willing to pay $1000 for a roll of toilet paper even if its made of gold, or will make you eternally blissful, that would be literally flushing money down the toilet. Should the toilet paper manufacture close down because they are selling a commodity? Commodity products can also be profitable if done on a large scale big enough to be competitive on price. If you sell a million toilet paper rolls a month even if you make a dollar profit on each, you would still be fine.
Scaling is not the only profitable method for convenience products. You can serve a market with a commodity product even if there aren’t many alternatives. For example, bread at your local tuck shop might cost you R5 more than the supermarket but going to the supermarket is too much of an inconvenience so you will settle for the bread at the tuck shop. Commodity products can also be profitable if you have a big enough market, for instance, oil and platinum, even though the market is commodity based. If there is a big enough market everyone remains profitable. Commodity products are a step below convenience, every commodity product is a convenient product but not every convenient product is a commodity.
High Fidelity products
Most fidelity products that are successful in the market place started off as convenient products that excelled in one or more metric that customers cared about. Some become high fidelity product because of their unique features that distinguish them from similar products in the market place. Every entrepreneur looking to build a business that creates products should strive to make their products have some high fidelity in them especially if you are selling consumer products.
It is very hard to compete on convenient products as a startup because you need to produce on a large scale for low margins and often times most start-ups don’t have the capital to compete on large scale operations. For example if you have an idea for a type of bolt or clap that is is easy to use, in order to be profitable, you will need to secure distribution with large retailers and find a manufacturing partner that can produce them cheaper than what is available in the market, to do that is very hard. However, if you have a high fidelity product you don’t have to compete on price alone because you generally attract customers that are emotionally engaged with your product and see more value than the asking price.
Creating high fidelity products
To create a high fidelity product you need to create something remarkable, and building something truly remarkable is both difficult and takes a lot of time but once you have it, the benefits far exceed the initial investment you made. It’s possible today to create your own phone, watch, shoes, or even a car just by reading a few articles on the internet and watching Youtube videos. This method of design is easy because the information is readily available and anybody can do it but it rarely produces something remarkable, and products created in this way don’t have much value.
Remarkable products often don’t have a manual or a how-to book, they are often the result of someone’s imagination creatively formed into a useful product. There was no reference on how to build a personal computer when Apple came out with Apple I in 1976, there was no handbook on how to build a wireless phone or an electric engine. All these products can be considered remarkable and were not created in a week, they were difficult to imagine let alone build and required a lot of creativity.
Don’t follow the trend
Today, we look at a phone and most people would say of course I need a phone, some people go as far as even saying they can’t live without one but for a very long time many people disputed the need for personal phones, they thought it was a silly idea, the same thing was true for cars, no one thought there could a better form of transportation than a horse. However, once the product is created then everyone wants it.
Easy to launch in the market
Another reason why you would want to create high fidelity product is that since they are remarkable it is to get attention and convince potential customers to switch what they are currently using. It is extremely difficult to sell a product that is a slight variation of something that already exists in the market. You can’t create a phone with slightly longer battery life or water resistant, scratch proof and expect your product to be successful. You might get some attention at first, but big phone manufactures will copy that and add it as one of the many features they already have which will diminish any unique advantages you had.
High fidelity products don’t have to be something completely new, but it must be unique and have remarkable intrinsic or external features that make it stand out above the rest. Nokia didn’t invent wireless cellphone neither did BlackBerry or iPhone but for a very long time, they dominated the market by producing great products. Some examples of high fidelity products include the MacBook, BMW, PlayStation (latest), Rolex watch, Beats by Dre headphones, Fitbit, Nespresso coffee machine, canon cameras, SMEG kettles and many more. These products are certainly not the best in their industry but because they have the highest perceived value they have high fidelity, it’s how it makes the customers feel about themselves when they own it and how others see them.
People don’t buy the iPhone because it has the best screen or camera, they buy the brand Apple because they believe they will be using the best of the best and it will improve their perceived status when others see them. When buying high fidelity products the emotional decision is more dominant than the logical decision of whether or not it is the superior product. If you are an upper-middle-class wife who cares about your kitchen, what kind of kitchenware would you buy? You will definitely not buy the closest kitchenware you would find or the cheapest, you will look for something that will stand out, even if it means traveling to another city or waiting 3 months for delivery. Once customers are emotionally engaged with the product they will be willing to go out of their way to get the product, that’s when they don’t need the product but rather they want it. This is why having high fidelity built in your product makes them better.
The last thing will discuss is the human tendency to seek status. Human beings are social creatures, and we arrange ourselves in a packing order similar to animals. A relative pecking order, based on power and status within a community (work, sports team, neighborhood, or class) and we are constantly competing for power and status consciously and sub-consciously.
Most people care a lot about their status, reputation and power even though they might deny it or pretend they don’t care about it. Status consideration is present in every transaction people make, questions such as “how will people look at me if I buy this ?” are always running in the background. If I buy this car, will it make me look sophisticated? If I go to study at this university and pass will people respect me and think I’m smart? Will people think I’m cheap for using this product?
In general, you always want to create products that make your customers look smart, rich, sophisticated, trendy and envied by others. You can do this by associating your products with social signals that your customers care about, if you selling watches it would be a good social signal for your customers to know that it’s Swiss made or if you are selling personal training equipment to be promoted by a famous sports star. Social signals help your customers have something to talk about regarding your product, people enjoy saying things like “They only made 100 of these and I’m the only one in South Africa to own it” or “This company is the same company that makes military equipment but now they make phone covers”. These social signals might seem silly but customers care dearly about them.
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