Idea Stage
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Taking ClimateTech Hardware from Idea to Prototype
All great businesses and products start with an idea. If you have an idea for a new climatetech product, following this guide can help you advance it to the prototype level. While there is no one “right” way to develop a product, we recommend following the steps outlined in this article in the order they’re listed.
Step 1: Identify a Customer Segment with a Problem
Successful products create value for the customers who use them, and successful businesses capture this value as revenue. Products most often create value by solving a customer’s problem. The more serious or painful a problem is for a customer, the more they will value a solution to that problem.
When you are developing an idea for a product, it’s essential to define the problem first before you settle on the solution. In order to provide the best solution possible for your customers, you must first confirm the exact problem that they have, the severity of the problem, their willingness to pay for a solution to the problem, and the approximate number of customers who share the same problem.
This is accomplished through the process of customer discovery.
Customer Discovery & Product-Market Fit
Customer discovery is a scientific method that provides evidence to support product-market fit. Product-market fit is a measurement of how well a product satisfies a market demand. Customer discovery is a proven process that can help you identify a target customer segment and deliver the right product for their needs.
A customer segment is a group of customers with similar characteristics. Customers may be segmented based on any set of common traits such as their demographics, industry, geography, behavior, etc.
Similar to a scientific experiment, the customer discovery process begins with stating hypotheses – that is, educated guesses and assumptions – about the problems and pain points that a particular customer segment is experiencing. It is recommended that you do research and talk to subject matter experts to help you clearly define your hypotheses. Here are some of the assumptions that you will make at the beginning of the customer discovery process:
- Customers in X segment have Y problem.
- Customers in X segment are willing to pay for a solution to Y problem.
- Your idea can solve Y problem with Z solution.
- Customers in X segment are willing to pay for Z solution.
Once your hypotheses have been stated, you can begin to put them to the test. The best way to do this is to find potential customers from your defined X segment and conduct a customer discovery interview with them. The purpose of the interview is to find out if the customer actually has the Y problem that you assume they have, and if the problem is serious enough that they’re willing to pay for a product that will solve their problem (assumptions 1 and 2 from the list above).
After you have collected data on the customers’ problems and willingness to pay, you can then conduct a solution interview with the same customers. The purpose of this second interview is to test whether your proposed solution solves their problem in a satisfactory way, and if the customers would be willing to pay for a product based on your solution (assumptions 3 and 4 from the list above).
When conducting customer discovery and solution interviews, it helps to ask the customer open-ended (as opposed to simple yes/no) questions about things they have actually done. The goal is to get the customer to tell you a story based on their own experiences that will validate or disprove your hypotheses. If your hypotheses are proven to be incorrect, then change them based on what you have learned and begin the test again with your new hypotheses. This process should be repeated until you have gathered enough data to make you confident that your product idea solves a real problem for your selected customer segment.
For further guidance on planning and conducting customer discovery interviews, we recommend reading Talking to Humans by Giff Constable.
Customer Personas
Customer personas are a common way to summarize findings from the customer discovery process. A customer persona is a semi-fictional representation of your target customer segment that is based on data collected from your research. You should create one persona for each customer segment that you plan to target.
Customer personas are documents that your team should reference throughout the product development process. They can help guide your engineering and design decisions by reminding your team who you are designing your products for.
There is no single way to format a customer persona, but here are some traits that may be helpful to include:
- Demographics and Background (Age, career, location, etc.)
- Personality Characteristics
- Pains and Goals
- Motivators
- Expectations and Values
Customer personas also usually include a name and photograph that are representative of your customer segment, which help to remind your team that your customers are real people with real needs.
Step 2: Define Your Value Proposition
A Value Proposition explicitly states the actual value your product creates for your customer – or put in more blunt terms, why they should care about your product, and what it can do for them.
A Value Proposition statement for a product typically reads something like:
“_______[Product name] is a_______[brief product description]. Through its _______[feature(s)], it provides ______ [unique benefit(s)] to ______[target customer]”
Think carefully about your customer discovery findings and personas when filling in the blanks for your product’s Value Proposition. It may seem like a simple task, but these two sentences will ultimately guide the entire vision for your product. This vision will then be codified in a more complete form in a Market Requirements Document.
Step 3: Write a Market Requirements Document (MRD)
A Market Requirements Document (MRD) is an internal, confidential document that is essentially a detailed description of your product before it’s available. It is driven by your value proposition statement and the findings from your customer discovery, and it defines a common vision of the customer and market-focused product that can be shared with key stakeholders.
It should clearly define the following for your product:
- Target Market
- Buyers and User Profiles
- Sales Channels
- Challenges faced by the Current Market
Keep in mind that your MRD is meant to be a “living document” that is revised as your product evolves.
Step 4: Write a Product Requirements Document (PRD)
A Product Requirements Document (PRD) (also known as a Product Design Specification (PDS)) is a key document for communicating design intent to partners, stakeholders and all engineering development leaders. The purpose of a PRD is to translate the MRD into a technical vocabulary. It is developed cross functionally by the product designers and developers. Similar to MRDs, PRDs are internal, confidential documents.
If an MRD says “this is what we want,” then a PRD says ”this is how we can do it.”
Here is a non-comprehensive list of items to include in a PRD:
- All Product Features Identified and Organized
- Product Appearance, Weight and Size Identified
- All System and Sub-System Interfaces Required (Inputs/Outputs, Formats, Power Requirements)
- Product Certifications and Testing Required. (UL, FCC, CE, FCC, IP Rating, Energy Star, RoHS, Energy Star, etc.)
- Product Packaging and Shipping Requirements
- Product Repair, Service, Return, Warranty and Customer Support Strategy
Once the product requirements have been defined, you may conduct initial research on potential designs and manufacturing processes for your product. This research will inform the work performed during the later prototype and production stages.
PRDs should also enable developers to produce testing plans to monitor progress against targets in the various stages of prototype testing (eg. EVT, DVT, PVT), which we will cover in the next article.
Summary
It is critical to have a customer-centric mindset in the earliest stages of developing any product. You will increase your chances of success if you can validate that there is a sufficient market of customers available who have the problem that your product solves. This can be accomplished through the scientific process of customer discovery, and it will inform the engineering and design choices that you will make down the road. Customer discovery drives the formulation of a Market Requirements Document (MRD), which is then translated into a technical Product Requirements Document (PRD).
Next Up: Prototype Development
In the next article, we’ll cover the basics of the prototype development process.
Are you an entrepreneur with an early-stage innovation that addresses the climate crisis? Venture For ClimateTech is a venture studio + accelerator that provides hands-on support to help get your climatetech idea off the ground.
