Product Development Process: Objectives, Challenges and Solutions

by Sasha B. on Feb 2, 2023

The new product development process is a structured approach to creating a new software product from idea to launch. It is designed to help organizations develop software products that meet the needs and expectations of their target audience. In this article we will cover 7 stages in the new product development process, challenges you may face at every of them and tips on how to deal with them.

If you ask Google or ChatGPT “what is product development process” you will get the answer similar to the one we gave in the first abstract — purely technical, taking you nowhere. We have been in this business over two decades, and our goal is to show you how it works for real. It is a long article, so here is an outline for easier navigation.

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Recent Changes in the New Product Development Process

They have been developing software when we just started in 2001, they have been also doing it 20 and 40 years before that. New software product development has undergone significant changes in recent years due to advances in technology and changes in market conditions. Here are the changes we’ve tracked and trends we believe will hold:

Increased use of agile development methodologies: Agile development methodologies, which involve iterative development and rapid prototyping, allow for more flexibility and adaptability in the development process, which can be helpful in rapidly changing market conditions.
Greater emphasis on user experience: There has been an increased focus on user experience in recent years, and this has led to a greater emphasis on developing software that is easy to use and intuitive. This includes gathering and analyzing data on user needs and preferences to inform design decisions. It is not about what you want to do, it is about what they want
Increased use of cloud computing: The use of cloud computing has had a significant impact on software development. Cloud computing allows for more flexible and scalable software development, as well as easier access to data and resources.
Greater emphasis on security: The importance of cybersecurity has strengthened exponentially, and has led to a greater emphasis on developing software that is secure and protects user data.
Increased use of artificial intelligence: AI allows for the development of more intelligent and sophisticated software applications, which can provide greater value to users

Why is it important? Following these trend may cost money, and not following them may cut your chances to succeed in half. It means you need to plan thoroughly and choose employees, partners and outsourcing companies that have experience in new product development with the usage of the features and methodologies mentioned above.

For example, you’ve decided to use cloud computing to make your product more user-friendly. You face at least four major problems immediately:

Security. Organizations must ensure that their data is secure when it is stored in the cloud and that their applications are protected from unauthorized access or attacks.

Compliance. Use of the cloud should comply with relevant laws and regulations, such as data privacy laws and industry-specific regulations.

Integration. Integrating cloud computing with on-premises systems and processes can be a challenge as it involves updating existing systems and processes to work with the cloud, or integrating cloud-based tools with existing tools and systems.

Cost. You must carefully evaluate the costs and benefits of using the cloud in order to determine whether it is a cost-effective solution for their needs, or it is better to choose on-premises solutions.

We are well-versed in dealing with this kind of challenges and will show you which solutions you can rely on at every stage of product development process.

Seven Steps In Product Development Process

We won’t reinvent a wheel here. This list will be just the same as in 90% of other articles elaborating on “what are the steps in the new product development process” topic. Here is what you get as a product owner or an outsourcing company, joining from the very beginning:

Step #1. Idea generation. Ideas for new products are generated and hand-picked through brainstorming sessions, customer feedback, market research, and other methods;

Step #2. Feasibility analysis. In this stage, the ideas are evaluated to determine whether they are technically and economically feasible. This includes analyzing the market demand for the product, the cost of production, and some of the potential risks or challenges that may arise.

Step #3. Concept development. Once an idea has been deemed as potentially possible to realize, it is further developed into a detailed concept. This includes defining the features, benefits, and target market for the product, as well as creating prototypes or mock-ups to test the concept.

Stage #4. Design and development. The product is designed and developed based on the concept that was created in the previous stage. This may include prototyping, and preliminary testing to ensure that the product meets necessary specifications and requirements.

Stage #5. Testing and validation. Before the product is released to the market, it is thoroughly tested to ensure that it is functional, safe, and meets all quality standards. This may involve testing the product in a variety of real-world scenarios to ensure that it performs as expected.

Stage #6. Launch. Once the product has been successfully tested and validated, it is ready to be launched to the market. This may involve creating a marketing plan, setting up distribution channels, and other activities to ensure that the product is introduced to the market in a way that maximizes its chances of success.

Stage #7. Maintenance and improvement. Even after the product is launched, the product development process does not end. That is why depicting the product development process as a straight line is a mistake. It is not a line, it is a rising spiral. The product may need to be maintained and improved over time to ensure that it continues to meet the needs of the market and customers.

“One of the biggest risks in product development is understanding the problem that the product is trying to solve. For example, suppose the product is designed to solve a symptom rather than the root cause of a problem. In that case, it is likely to be less effective and may ultimately fail. It’s important for product managers to thoroughly research and understand the needs of the target market and to design a product that addresses those needs effectively.”,

Vignaraj Gadvi, Senior Product Manager at Better.

Ideation Stage

This stage sets the direction for the rest of the product development process and helps to ensure that the product that is eventually developed meets the needs and desires of the target market.

Key Components

Brainstorming. A group of people come together to generate ideas through a series of open-ended discussions and exercises. The goal is to generate as many ideas as possible, without evaluating or criticizing them at this stage.

Customer feedback. Gathering input and feedback from potential customers through surveys, focus groups, or other methods to gather insights into what customers are looking for in a product.

Market research: Conducting market research can help to identify trends, gaps, and opportunities in the market, which can be used to generate ideas for new products. This may include analyzing data on customer needs, market trends, and competitors.

“Invest adequate time to do market research and ideation on your new product. The more data you have, the more data-driven decisions you can ultimately make, which will reduce risks and uncertainty.”

Bhargav Sathish, Product owner at Capital One, Co-founder at Earth Hacks

Potential Challenges

Limited creativity. We sell the same services and products, to the same people, using the same marketing channels. It can be difficult to come up with new and innovative ideas, especially when working within a specific industry or market.

Limited resources. Generating ideas can be a time-consuming and resource-intensive process. Here is the dilemma: smaller organizations are more creative and innovative, but they have more limited resources to devote to idea generation.

Lack of focus. Creativity is important, but it is too easy to get sidetracked and generate ideas that are not aligned with the overall strategy.

Limited diversity. Idea generation is often more effective when it is done by a diverse group of people with different backgrounds, experiences, and perspectives. In reality, it is close to impossible to assemble such a group.

Evaluation bias. It is important to evaluate ideas objectively in order to select the best ones to pursue. At the same time, it can be challenging to avoid biases that may influence the evaluation process, such as personal preferences or preconceived notions about what makes a good idea.

Possible Solutions

Encourage creativity. Try different techniques that can be used to stimulate creativity and encourage the generation of better ideas: brainstorming, idea mapping, and lateral thinking exercises. Let people even not normally included in the process have “open mic” nights.

Allocate resources in advance. This may include assigning dedicated personnel to the process, setting aside budget for research and development, and utilizing tools and technologies to streamline the process.

Set clear goals and objectives. Clearly defining the goals and objectives of the idea generation process can help to keep the focus on generating ideas that are aligned with the organization’s overall strategy and target market.

Encourage diversity. Diversity in the team doesn’t happen overnight. Prioritize to build diverse teams, but in the meantime, consider looking for the outsource specialists and teams you can include to step outside the box at the ideation stage.

Implement objective evaluation criteria. Establishing clear and objective criteria for evaluating ideas can help to reduce bias and ensure that the best ideas are selected for further development.

Are you ready for an alternative, educated point of view? Here is a brief fresh take from our Head of Delivery:

“It is a myth that you always need to ask potential customers about what they want and what they think before developing a product. Sometimes, it is more efficient just to hire an outsourcing team to whip up an MVP and put it to market “as is” real fast. Ideas are in the air, and it matters who introduces them first to clients. You need to claim the territory, and often it requires moving fast and not consulting anyone but your team.”

Olexii Pavliuk, Head of Delivery QArea

Feasibility Stage

Feasibility analysis involves evaluating the potential of a new product idea to determine if it is worth pursuing. Its goal is to determine the feasibility, or likelihood of success, of a new product idea.

Key Components

Market analysis. Analyzing the target market for the new product, including the size and potential of the market, the competition, and any potential regulatory or legal issues that may arise.

Technical analysis. Assessing of the required resources, such as materials, equipment, and personnel, as well as any potential technical challenges that may arise. Check further some tips on how to choose the best tech stack for your development project.

Financial analysis. Analyzing of the costs involved in developing and producing the product, as well as the potential revenue and profitability of the product. For small and medium businesses, cash flow gap is a real threat. More often than not, companies face cash deficiency way before they can earn any money for their product. You should be a pessimist here, and meticulously count when you can reach the breakeven point. Think at what expense you will cover salaries, mandatory tech and legal payments before that.

Why are we insistent on being pessimist in this case? Because too many factors can play against you.

“The time goes against you and there are cases where you need to reformulate the product, which implies new costs such us legal, marketing, or any other depending on the product that you will launch.”

John Harold Erazo Chamorro, Senior VP, Citi.

Resource analysis. Evaluating the availability and allocation of resources, including personnel, materials, and equipment, needed to develop and produce the new product.

This stage helps organizations make informed decisions about the allocation of resources and the potential risks and rewards of the project.

Potential Challenges

Limited data. Often, there is limited data available about the potential market, technical and financial feasibility of a new product. This can make it difficult for organizations to accurately assess the viability of the product, especially if you have small to no experience in the domain. In this case, you can rely on the experience of the outsourcing team.

Changing market conditions. The market for a new product can change rapidly, which can impact whether the product can be developed and delivered. For example, new competitors may enter the market, or consumer preferences may change.

Technical challenges. There may be technical challenges associated with developing and producing the new product. Not everything you think of at the ideation stage is possible to realize and commercialize with the current tech.

Limited resources. Organizations may have limited resources, such as personnel or funding. It is better to see this potential lack at this stage, than to be left shorthanded in the middle of the development process.

Time constraints. Time limitations can impact the accuracy and completeness of the analysis.

Possible Solutions

Gather as much data as possible in the given time. This may involve conducting market research, consulting with experts, and analyzing data from similar products or industries.

Monitor market conditions. Monitor the market closely to stay up-to-date on trends and changes. Keep conducting regular market research and track the competitors’ activities.

Develop contingency plans. To mitigate the risks associated with technical challenges and limited resources, develop contingency plans that outline alternative courses of action in case these challenges arise.

“Make sure that you have contingency plans in place. Not all data-driven decisions will work out in your favor, so it’s important to make sure that you always have a “fail-safe” in case your decision does not go as planned. By investing time in thinking through the fail-safe and “what-if” decisions, you are removing a bulk of the uncertainty ahead of time.”

Bhargav Sathish, Product Owner at Capital One, Founder at Earth Hacks

Allocate sufficient time and resources. To overcome time constraints and ensure the accuracy and completeness, engage additional personnel or seeking external expertise as needed.

Involve a diverse group of stakeholders. To ensure that all relevant perspectives are taken into account, involve a diverse group of stakeholders, including employees from different departments and external experts.

Pay the utmost attention to the tech stack you choose.

How to Choose the Best Tech Stack for Your Product Development Project

Projects differ, but most probably you need to think about the following:

Database, as a place to store information;
Server-side frameworks to respond HTTP requests;
A client-side framework for actual client-software interactions.

Obviously, to begin with, you will contemplate what tech stack will cover the product specification and functionality and serve the required functions, speed and performance the best. Here is what else you should keep in mind when choosing a tech stack:

Scalability. Technology develops fast, but the scalability potential is not equal for all the tech stack options you can choose from. Think about app’s horizontal scalability (can handle more requests) and vertical scalability (adding new resources without damaging performance). Decide, whether a chosen tech stack will allow for a system to handle a considerably higher load without a necessity for redesign.
Specialist availability. It all comes to money and time you need to hire and change particular specialist in your team. Outsourcing gives you direct access to pre-vetted candidates with a variety of backgrounds, but if you are determined to keep development in-house, focus on a wide-enough pool of specialists.
License and maintenance costs. You will have to pay annually for the technology you use. Also, you will have to pay for servers, support and updates implementation. Choosing a predominantly open-source products you win financially, but lose in customization, and, sometimes, security. Healthy balance is a key.

QArea experts are united in opinion that it is worth starting on a stack that is quite popular, has good support and distribution. It will be easier to lock the resources and technology will be updated regularly. This is much better than using something “proven” but long-forgotten and creating legacy right away, or experimenting with something promising, but not enough tested yet, that can go off rails any minute.

Concept Development Stage

Concept development is a stage in the new product development process that involves generating and evaluating ideas for new products or product improvements. It is an important step in the process because it helps to identify potential opportunities for the company to create new products or improve existing ones.

The goal of this stage of these activities is to identify areas where the company can create value for its customers and differentiate itself from its competitors. You need to find both what differs you from others and what matters to customers from those differences. Doing something differently that no one cares about is no go.

After the concept development stage, the company may choose to move forward with one or more of the ideas by conducting further research and development. This may involve prototyping, testing, and refining the product concept before launching it to the market.

Potential Challenges

Generating ideas. It is a challenging and time-consuming process, as it is difficult for companies to come up with ideas that are both unique and possible to realize.

Size limitations. Smaller companies have more problems with feasibility, and bigger companies find it hard to think outside the box. Larger companies struggle to adapt to new technologies. Good profits and stability make you a bit blind to what is happening on the market. Startups don’t have that baggage, but at the same time they don’t have enough resilience and resources to test disruptive ideas at the needed scale.

Evaluating ideas. You need to consider a variety of factors, including market demand and alignment with strategic goals, and both lack of experience and innovative market blindness make it overcomplicated.

Limited resources. The concept development stage can be resource-intensive, as it involves conducting research, prototyping, and testing.

Competition. It may be difficult to differentiate a new product idea from those of competitors, and there may be pressure to move quickly to bring the product to market.

Risk of failure. There is always a risk that a new product idea will not be successful. This risk may be particularly high during the concept development stage, as it is the earliest stage in the development process.

Possible Solutions

Use a structured approach to idea generation. Use a structured approach, such as brainstorming sessions or design thinking, to generate ideas for new products or product improvements. This can help to ensure that a diverse range of ideas is considered and that the process is systematic and efficient.

Collaborate with others. Collaborating with other departments within the company, such as research and development or sales and marketing, can help to bring different perspectives and expertise to the concept development process. You can also consider working with external partners, such as customers, suppliers, or academic institutions, to generate and evaluate ideas. When just starting talking about the product (back at the ideation stage), think, which collaborations may help you get the valid concept assessment later.

“The product owner’s job is to absorb all the “I need this done ASAP” demands and prioritize among them, keeping SMEs happy and in line. The trick is giving at least something to everybody as fast as you can so all the SMEs feel included. It is exactly why you need a product owner with pro soft skills!”

Bruce Mason, QArea Delivery and UK director

Use a systematic approach to idea/PoC evaluation. This can help to ensure that the company is focusing on ideas that have the greatest potential for success.

Be prepared to pivot. Be ready to modify your product ideas if necessary, based on feedback and additional research.

At this stage, you try to come up with a Proof of Concept, and if you don’t have enough experience with creating and assessing it, it is better to look for the external help. We have seen great ideas lost in attempts to create a viable PoC, and you need an expert product owner to manage this process successfully.

Proof of Concept vs Minimum Viable Product

Proof of Concept (POC) and Minimum Viable Product (MVP) are two terms that are often mixed when talking about product development process. Here is a brief overview of the main differences between POC and MVP:

Purpose. The primary purpose of a POC is to demonstrate the viability of an idea or concept. This may involve creating a simple prototype or a more fully-featured version of the product, depending on the complexity of the concept. The primary purpose of an MVP is to test the viability of a product with a targeted group of users, in order to gather feedback and validate assumptions about the product.

Scope. POCs are generally more limited in scope than MVPs, as they are focused on demonstrating the feasibility of a specific concept or idea. MVPs, on the other hand, are more fully-featured products that are intended to be used by a targeted group of users.

Timeframe. POCs are typically completed in a shorter timeframe than MVPs, as they are focused on a specific aspect of the product and are not intended to be used by a large group of users. MVPs, on the other hand, are typically developed over a longer period of time, as they involve gathering feedback and making iterative improvements based on that feedback.

POCs are used to demonstrate the achievability of a specific idea or concept, while MVPs are used to test the viability of a product with a targeted group of users.

Looking for a product development team to refine your ideas into strong-suited software?

Design and Development Stage

At the design and development stage of the product development process, a company takes a product concept and turns it into a tangible product that is ready for testing and release.

Key Components

Requirements gathering. Gathering and documenting the functional and non-functional requirements for the software product. This includes determining the desired features and functionality, as well as the target audience and any constraints or limitations.
Design. Creating a detailed design for the software product, including the user interface, architecture, data models and mockups. May also include prototyping and user testing to validate the design.
Implementation. Writing the code for the software product based on the design. May include developing individual features or modules, as well as integrating them into a cohesive whole.

Potential Challenges

Gathering and documenting requirements. Ensuring that all relevant requirements have been gathered and properly documented can be a complex and time-consuming process. It is important to involve stakeholders and users in the requirements gathering process to ensure that the final product meets the needs of all relevant parties.

Managing complexity. Software development is a complex process, especially for large and feature-rich products. Managing this complexity effectively is critical to the success of the project.

Maintaining project scope. It is important to ensure that the project stays within its defined scope, as adding new features or functionality can significantly impact the schedule and budget.

Managing project resources. Ensuring that the project has the necessary resources (e.g., personnel, funding, equipment) is critical to its success. In the changing environment, it is increasingly difficult to predict which and how many resources will be needed.

Dealing with changing requirements. Changes to requirements can occur throughout the development process, and it is important to handle these changes effectively to avoid project delays and cost overruns.

Ensuring quality. Ensuring that the final product meets the necessary quality standards is critical to its success. This includes testing the product thoroughly and fixing any issues that are discovered.

A true “no go” strategy at this stage is adding new functions endlessly, conducting new SMEs gatherings, and spending money and time on something that should have been released and earn you money long ago.