Creating an Opportunity Hypothesis

Product managers must understand customer's needs and wants.

• Be sure that what you build is right for the customer.
• Companies are typically successful in building the planned product.
• Companies fail due to lack of customers.
• • Your planned product needs to match what the customer's needs and wants are, and what are they willing to pay (or willingness to pay at all).

A product manager has to make sure what he/she is building is right for the customer.

The Scientific Method

1. Make an observation
2. Ask a question
3. Form a hypothesis, or testable explanation
4. Make a prediction based on the hypothesis
5. Test the prediction (Validate or invalidate the hypothesis)
6. Iterate (Use the results of this to make new hypotheses, or predictions.)

Establishing your goal

• Acquire new customers for existing product?
• Increase revenues for an existing product without increasing the number of customers?
• Acquire new customers for a new product?
• Something completely different? Etc?

What you work on next should depend on this goal.

Validating the Hypothesis

Every idea has an opportunity cost. Working on product A, means you're not working on product B. There's no single 'right' way to validate your opportunity hypothesis. Instead of building a full product that may be costly and time-consuming, companies adopt lean principles to find less expensive ways to validate an idea before building the product.

• Assess product fit the company strategy
• Collect objective data
• Include anecdotal data
• Cost/benefit analysis
• A/B tests
• Talk to customers in your target market
• • Current (if any) and potential.

Some ideas are easy to validate - looking at external data and analytics, having discussions with customers and stakeholders. Doing cost/benefit analysis, or other sort of A/B testing.

For new, innovative ideas, talking to actual customers might give you extra insights. This approach is called customer development - to help to understand the customers' pain points and their goals.

Customer Development

• Customer Discovery - Problem-Solution Fit - Proposed MVP - Proposed Funnel(s)
• Customer Validation - Product-Market Fit - Business Model - Sales & Marketing Roadmap
• Customer Creation - Scale Execution
• Company Building - Scale Operations

You may pivot between the 2.

Interviewing customers provides open-ended reponses and insights. It's an effective and low-cost way to validate your opportunity hypothesis.

Current State - Motivations - Obstacles.

Interview

1. Current State
2. 1. What's their current view of the problem?
   2. What's the impact of this problem?
   3. How frequently do they experience it?
   4. What current steps do they take to remedy the problem?
2. Motivation
3. 1. Are they satisfied with existing solutions to this problem?
   2. Do they like your solution (product)?
   3. Why?
   4. Do they believe that it will work?
   5. Are they able and willing to use it?
3. Obstacles
4. 1. What do they like about existing solutions?
   2. Are there any challenges to switching from existing solutions to your solution?
   3. How do they measure success?
   4. Any other obstacles to using your product?