New product generator canvas
This canvas helps you validate and optimise a new product in the market. It should also be used when creating high-risk features such as extending towards a more end-to-end solution. For example, adding a reports engine to a data product.
The process is iterative, which means you should learn, test and improve as you go. For example, you may have an initial product idea and then change it due to potential competitors.
Why don’t we just build the product?
New products can carry a great risk of failure. Investment in an innovation process can reduce your costs and waste. “Just building” can lack strategic direction, leading to very high costs, or you can end up releasing something quickly that’s very poor and will almost certainly fail. Every failure started as a “good idea”, even though it wasn’t. By following this innovation process you can test and learn quickly to validate and improve your business model. Do not be afraid to kill ideas that won’t work!
Innovation anti-patterns
The organisation avoids innovation:
Loss aversion
We perceive the amount we lose as more important than what we gain. For example, losing £1 is worse than gaining £1. This can result in less risky innovation, as we want to feel confident about how much we will get back before investing. This can result in the organisation stagnating as it puts more and more low-risk changes into its existing business model.
Desire to avoid waste
New ideas can be seen as wasteful if they have a low chance of succeeding.
Prioritising short-term gains
The organisation prefers immediate wins over long-term investment, even if less transformative.
Bad ideas run too long:
Sunk cost fallacy
As we invest more in our idea and it isn’t working, we continue, despite it being better to stop. This is because we see the amount spent as being wasted.
Commitment bias
Our tendency to remain committed to save face and avoid embarrassment.
How to start
Identify the type of innovation to confirm you need the canvas. Follow the advice to reduce your innovation risk. Finally, move to the Process tab. Each canvas section has a detailed guide associated with it. Once you have an established product, you can follow the Commercial Agile Framework to incrementally improve it.
Make sure you have the right team and stakeholders identified. For example, do you have developers with sufficient technical knowledge?
New Product Generator Canvas
Feel free to recreate the canvas in a tool of your choice. Please attribute the author (Timothy Field), the source of the canvas (this webpage) and add the CreativeCommons BY-SA license
Types of product innovation
The canvas is designed for:
Disruptive new products, both incrementally and radically.
Radically sustaining innovation where:
You are extending towards an end-to-end solution. For example, a new reports engine for a data product.
A significant improvement that contains a lot of risk. For example, replacing manual audit functionality with an AI solution.
You do not need this canvas if you are Incrementally Sustaining your existing product.
Reducing innovation risk
This section covers:
Reducing risk of entering a market - The different risks based on the market’s maturity.
Reducing risk in existing organisations - How to select innovation that carries less risk.
Reducing delivery risk in existing organisations - How to be more efficient when delivering innovation.
Reducing risk of entering a market
Radically disruptive products will create a new market. More competitors will join until, eventually, that solution is replaced or significantly improved. Risks change as the market gets more mature. Understanding the market maturity can help you create the right product:
Creating a new market
Strategies to reduce risk (these are built into the process provided):
Engage potential early adopters to determine interest.
Validate demand by releasing a small product to a real customer.
Entering mature or saturated markets
Strategies to reduce risk:
Smaller release
Better serve niche customers where their needs are neglected. This can help you avoid needing a very large product that will be expensive and slow to release.
Having a simpler use case at a lower price where there is lower competition. Not all markets will have this opportunity.
Set an initial low price that may loss lead in order to gain market share. When you have sufficient traction, you can raise prices.
Use extensive (and potentially expensive) advertising and marketing to create an established brand.
Risk reduction summary - Adapt your product and entry strategy based on the maturity of the market you are entering. Stop if the risk versus reward is too low.
Reducing risk in existing organisations
The Ansoff matrix is a useful tool for understanding strategy and how existing organisations can lower their risk of failure. There are four different expansion strategies an organisation can take:
Market development - Reduce risk by finding new customers that are the same or very similar to existing ones. For example, being in a different country. This strategy can be significantly lower risk than expanding a product.
Product development:
Reduce risk by releasing similar products to those you know.
If you are responding to a radically disruptive product, you can utilise your existing customer relationships to gain a competitive advantage.
Diversification - This can be a high-risk strategy. Use the market development and product development risk reduction strategies together.
Risk reduction summary - Use your organisation’s strengths to reduce innovation risk.
Reducing delivery risk in existing organisations
Reduce innovation delivery risk in existing organisations by:
Removing the blockers to innovation from your teams.
Making time for your teams to succeed.
Avoiding expert innovators handing over the work to build teams.
Value Proposition
In this canvas section, you are defining why a customer will buy from you.
You must consider the many aspects on the canvas to create an effective value proposition. For example, you will not be able to determine your differentiators without understanding the competition. This may even impact your overall product vision if you decide you can’t compete.
Vision Statement
A vision should describe a highly aspirational future state. It will act as the foundation for all future product development.
Your vision will provide direction, consider these two for an airline company:
Low-cost, but always on time!
Where flying feels like you’re at home
From these, you would implement very different strategies. It also makes it clear to customers why you exist. Your branding will also need to reflect how you position yourself.
A vision statement consists of:
The benefit or need(s) addressed—the why? The highly aspirational future state
OPTIONAL The target customer—the who? In some cases, you are targeting a specific group
Be careful that your vision statement has real meaning. For example, our mission is “To be the best pensions provider.” This has no real meaning and doesn’t provide a clear aspirational future state.
Why customers will buy from us
Goal
What the customer is trying to do, sometime know as the goal or Job To Be Done (JTBD), is where all solutions start. For example, if you are creating a camera for cave diving, the customer’s goal is to capture images in dark underwater caves.
Problems
With this in mind you should review current solutions for strengths and weaknesses. For example, you find a couple of underwater cameras that work in low light, although rugged (a strength), these are large and bulky (weaknesses). They are therefore, not well suited to caves. You now understand how to differentiate in the market and win:
The problems customers face will depend on how they are achieving their goal today. They may:
Not have a solution at all.
Have created their own solution that is very labour intensive (manual).
Be using a competitor’s product.
Each of these solutions can their own problems. For example, my goal is to move a lot of dirt from my garden:
No solution / manual - I am using my hands or a bucket.
Problem - This is very hard work and slow.
Metal wheelbarrow from Competitor X - A steel wheelbarrow.
Problem - The wheelbarrow will rust within 3 years and fail.
Plastic wheelbarrow from Competitor S - A plastic wheelbarrow.
Problem - The wheelbarrow will not rust but can crack if something is dropped onto it.
You need to solve a big enough problem with existing solutions for customers to care about your product. It can be very hard to sell if you don’t do this. Big is a relative term but can usually be quantified. For example, this could be cost, time lost or even the number of accidents. In this section, you may list a number of competitor solutions and their weaknesses.
Is there even a problem? A major anti-pattern is to try and validate if a solution is desirable to customers rather than focus on the problem. For example, I may have a new product that tidies up old wine corks in people’s kitchens. If I ask for feedback on the product, I will get information about how good it looks, its quality and how well it functions. All the while, I am missing the point that this is not a big problem for people, and no matter what I do, they won’t buy it. You are likely to find the majority of people don’t use a product in this case.
Before you start, you should do some basic analysis work to identify your competitors. Consider those that:
Have a large market share.
Have a new type of solution that could disrupt the market.
That are rapidly growing.
You will perform detailed competitor analysis on these (competitor tab). If you have a new superior type of product may find a lot of people with big problems.
Differentiators (our solution)
Differentiation is vitally important in a crowded marketplace. Differentiators can be used to:
Increase sales at the same competitor price point.
Justify a higher price.
Unique differentiators can give you a significant competitive advantage. You need to make sure that customers care about these. You may have better service, but if customers don’t need it, the messaging will not land.
There are many ways you can differentiate. For example:
Functionality
Service quality
Customisation
Usability
Stability
Performance
Security
Price
Minimum product depth
A common anti-pattern with product development is to put out a product that is too small by rushing. Even the most basic product must solve a problem for a customer. Too little functional depth and they will reject you regardless of price. Imagine buying a fridge that doesn’t cool down properly.
Creating something new can be time-consuming. For example, in mobile development, releasing a substandard product carries a huge risk. Customers can delete your app and never come back. This means that your “live testing” is doing active damage to your future sales. These people may then tell others that you have a poor product, doing even more damage. It is important to note that this does not stop you from validating your ideas with prototypes or doing small-scale targeted testing.
Low-cost product
The picture below shows two features with just enough functional richness to satisfy the customer. This situation is typical with a low-cost product. Anything less than this and the customer will probably not buy from you or if they do, you will see very low satisfaction scores.
Pricing & viability
In this canvas section, you will consider if your idea is commercially viable:
Decide on a pricing model.
Create a price based on the value of other competitor’s solutions.
Consider your initial pricing strategy.
Perform break-even analysis using your price and expected costs to see when you will likely return a profit.
Monitor the impact of your price changes.
Pricing models
Pricing is a complex subject. Therefore, this guide is provided as a starting point. This does not cover tiered subscription-based pricing.
Cost plus pricing
This strategy adds a percentage on top of the cost for one unit of the product. Sales volume must be projected, and then a percentage is added on top.
If this sales projection is too high, then the costs won’t be covered.
Competitors are not considered:
You may be too expensive.
You may be too cheap, leaving money on the table.
Product value analyser
The product value analyser is a very simple tool to assess your offering versus the competition. Most importantly, you need to understand which differentiators a customer sees as value. Consider value overall rather than trying to evaluate each differentiator.
Competitor value - Use competitor threat analyser to determine the differentiators that affect why they win and lose.
Pricing should match the value you offer:
Pricing too low - The customer may assume you are of low quality.
Pricing just right - The customer understands the value you offer, and this matches the price.
Pricing too high - The customer will hesitate, avoid buying and potentially go with a competitor.
When setting price by value, you should also consider your costs. You may not be able to afford to set the price point.
Penetration pricing
A penetration pricing strategy can be used with a new product to gain market share. Prices may rise when you have gained enough. If existing competitors start reacting to your penetration prices, you can see a race to the bottom where profits significantly shrink. You should maintain penetration pricing only when:
You see a sustained increase in sales.
If you are operating at a loss and can afford to continue to do so.
This strategy is very dangerous when you have higher operating costs than your competitors. If competitors respond and keep prices low you may go out of business.
Skim pricing
This strategy can be used when you have a new type of product in high demand with little to no competition. For example, when streaming services like Netflix eventually replaced Blockbuster. You will be able to maintain skim pricing until your competitors respond. You may make fewer sales at this point due to the high price.
Break-even point analysis
Break-even analysis helps you determine how long it will take to be profitable. It can even tell you if your idea won’t work:
Costs are too high based on the maximum price we think we can set.
It will take too long to become profitable based on very little difference between costs and revenue.
Demand is too low to even cover the development costs.
Basic sense check
As a most basic option, you can sense check the figures. For example:
We have 50 clients, 10 have expressed an interest in our new product.
We will charge £5000 per annum for the product.
Product will cost around £1m to develop.
Even without doing any detailed analysis (I haven’t captured run costs here), I can see that the product will take years before it breaks even. It is not going to work.
Modelling scenarios
The following graph shows how you can perform a more detailed break-even analysis. The graph below shows the break-even point before a product moves into profit. The graph starts when a single unit of product is sold. The fixed costs don’t start at £0, taking into account product development costs.
Costs are either:
Fixed - Static costs such as licenses for development tools and the cost of the development team.
Variable - Change depending on the amount of production.
As each unit of a product is sold, it starts to burn through the total costs.
We need to charge above our variable costs to make a profit:
With a temporary penetration pricing strategy, this can last longer.
At a certain point, we break even.
Beyond this, we make a profit.
Viability analysis
These techniques aim to determine if sufficiently high numbers of customers will pay for this product to outweigh the cost of building and running it. With your break-even analysis, you should have an idea of how many this will be. For example, do you need to make 100 sales?
Internal team assessment
This first check relies on expert opinion. You should do this during the Structure process stage. You should invite senior specialists to review the product. For example, the sales leads may have a strong opinion based on what has been sold before. The picture below shows the considerations:
Can we compete for a large enough percentage of customers within the SAM?
Percentage of customers with no process / manual work.
Percentage of customers with their own custom process.
Percentage of customers using a third-party tool where:
We offer a competitive level of functional depth.
We offer a significant enough benefit for them to switch.
The ease and cost of switching is low enough.
External assessment
This relies on discussions with a sample set of customers that you think will buy from you. You should do this during the Experiment process stage. Discuss the following with potential buyers and users (if a B2B product):
Problem size - Confirm the problem you are solving is big enough. For example, does this save them a lot of time and money?
Use cases - Record what the customer doing. Record specific features used if working with a competitor’s product.
Positive forces that drive a customer to you:
Identify the most important things they can’t do or do well in their current solution.
Test solution desirability with lightweight UX. This can be done initially with wireframes. Ask them to rate what they have seen. Delighted will suggest they may pay.
Negative forces that drive a customer away from you:
Identify what they love doing in their current solution.
Identify any worries about switching to you.
Beta test sign-up
You should do this during the Experiment process stage. Offer a Beta test sign-up and see how many take this option.
Testing prices when live
Changing your prices
Monitor the new sales trend and revenue when you change your price. The increased sales revenue may make up for the reduced profitability.
Lowering prices - Consider a limited-time offer. This will give you feedback on the impact of a lower price without needing to permanently lower it. It can even buy you enough time to release new functionality.
Increasing prices - You can raise prices based on inflation but also where you offer more value.
Price modelling
Model price changes based on previous events. For example:
What impact did the last 10% rise have?
What impact did a competitor’s rise have on them?
Tracking prices
Regularly track prices so that you can react proactively. For example, if your competitor slashes prices by 20%, you should be ready to respond
Process
It’s advisable to read through this and the other sections before you start.
Working with the canvas should be an iterative process (test and learn). The process contains extensive detail on how to do this. Avoid the “tick-box” mentality of quickly filling in the sections without thinking. The amount of product testing you do is always a balance. For fully understood products, you will do a lot less. This is in contrast to disruptive innovation, where extensive testing is vitally important.
The diagram below shows the process steps. Certainty is increased the further you go. Decision points stop you from completing expensive build work when the innovation idea is flawed. At the end of each step a decision is made:
STOP - This idea won’t work and cannot be saved.
PIVOT - Change your solution or target customer group to achieve success.
CONTINUE - You make a decision to invest more.
Stage 1 - Structure
Stage objective - Shape the product idea to better understand it and its risks.
This stage should last around 2 weeks.
Stage activities
Creating the business model
Use the canvas to structure your business model. If you know very little about the product, avoid brainstorming the sections and immediately identifying risks. If you do this, you will end up with the entire canvas being one great big assumption, and you will need to test all of it! In this case, doing some basic work up front is advisable. For example, you wish to gather information about your competitors. Avoid large amounts of testing here. You should be doing just enough work to understand the business model. Additional guidance for this stage is provided below:
Guidance - User Experience Concept
It is strongly recommended that you create a basic visual design at this stage. The UX concept simulates the way the product works. These are very powerful for removing risk and can:
Aligning the whole team on the product including its high-level scope.
Ensuring the product can be built and run (feasibility).
Confirming desirability with customers.
These techniques are in order of creation effort, from low to high. At this stage, wireframes are a good option:
Wireframes - These are a rough draft of your product’s design. Their key benefit is that customers will not evaluate the visual aspects but focus on the functionality.
Mockup - These are a visually realistic product design. Their key benefit is getting feedback on the product’s look and feel.
Prototypes - These are representations of how a user interacts with your product. They are typically high-fidelity and done with UX tools rather than code. Their key benefit is helping customers understand how the finished product looks and functions.
Sketch.com have created this article to help you learn more about these.
Guidance - High-level technical design
With the UX concept, you can now create a view of the technical implementation. If the UX concept will cost too much to build, iterate on its design. Then consider:
Technology options and the skill-set of your team. You can test these options in the Experiment process stage.
Basic overall feasibility (Technical and Service Design tab).
Very high-level understanding of the investment timescale required for this. For example, is this a year’s worth of work?
Very high-level understanding of costs (Technical and Service Design tab).
Guidance - High-level service design
You should do lightweight research to firm up the canvas at this stage. You should work with one or more ideal customers that you believe will buy from you then:
Problem definition - Gather evidence of the problems you are solving and their size with them.
Solution desirability - Validate the solution and its desirability with them. The UX concept will be useful here.
Service definition - Record the main customer touchpoints with your service.
Run costs - Consider the overall cost of running the service and how realistic it is.
Identifying assumptions
Assumptions are best described as things you think you know but may be wrong about. The sentence starting “We believe that” sums this up. Assumptions can come from any of the parts of the canvas. For example:
We believe that the business can support the new product without additional people.
Assumptions should be recorded where they are high impact:
Feasibility - Can it be built and run for a sensible cost?
Desirability - Do customers want this? They may not use this if the problem it solves isn’t big enough. Additionally, they may have better alternative solutions.
Viability - Does the business case stack up? Customers may say they like something, but this is not the same as paying for it. Consider if this will justify the return on investment.
Assumptions mapping below helps you identify their level of risk. This allows you to vary the amount of up-front testing. Where you have many large risks, you will do more. When prioritised, move them to the grid below and develop tests to remove them.
Creating tests for assumptions
Once assumptions are recorded, tests should be created to remove them. For example, you may not be sure if a new server architecture will be performant (feasibility) and want to run a 3-day spike. If you can’t easily test them, you can leave them for later build stages. In the unusual case you have no testing to do, move straight to the Validate stage.
Visual tests with customers and internal stakeholders using wireframes, mockups and prototypes.
Technical tests:
Spikes - These are timeboxed tests with a clear purpose. For example, you may not be sure if a new server architecture will be performant (feasibility) and want to run a 3-day test. You can extend the spike if it makes sense. Consider these when you have specific areas of high risk.
Proof of Concept (POC) - These are more comprehensive than spikes and demonstrate that your technical solution will work. It can also help validate costs. They are rarely shown to customers. Consider these when you have a high-risk build, such as when working with several new technologies. Your POC’s purpose and scope should be very tightly defined, or you will find testing will last a very long time.
Stage outputs
A first version of the New Product Generator Canvas.
The assumptions testing grid below:
Prioritising assumptions for testing - It is highly advisable to prioritise desirability and viability testing. Desirability - If a customer doesn’t want your solution, then don’t waste time trying to build it. Viability - Are they prepared to pay for it and can they afford it?
Overall Experiment stage estimate - Time for tests plus feedback. Consider building a simple plan here. For example, 5 days of testing are required for one feasibility test and two desirability tests. Then, make time for improvements based on feedback.
End of stage decision point
Should we continue, pivot our idea or stop?
Desirability - Do we believe customers want this?
Feasibility - Do we believe we can build and run this?
Viability - Do we believe that the Total Available Market (TAM) is big enough to justify the investment and we can achieve sufficient benefits?
Overall - Does the idea still make sense?
Stage 2 - Experiment
Stage objective - Improve the innovation idea by running tests to remove risks.
At the end of this stage, you should have removed a lot of risk and gained more confidence in the idea. As you gather the results of the tests, you should refine your canvas. Don’t be afraid to pivot or even stop early if the idea won’t work.
Stage activities
Run the assumptions tests, evaluate the results and respond to them. For example, look at other options if a technical design doesn’t work well. If a test completely fails consider an early review meeting.
Stage outputs
Results of assumptions testing:
An updated version of the canvas.
Updated design artefacts.
Plan for the Validate stage - You will build a Minimum Viable Product (MVP):
Have clear goals - Objectives and Key Results (OKRs) are recommended for this (see example below).
Any outstanding assumptions that need testing.
Identify high-level MVP scope - This includes the features you will build. Consider story mapping for this.
More detailed technical and service design.
Rough build estimate - This can be ranged. For example, 8 to 10 weeks.
Example OKRs for MVP build (next stage)
Objective - Validate the product is good enough for customers to buy it
Key Result 1 - Ten customers who are likely to buy signed up by January 2026 - Stretch target
Key Result 2 - Less than three support calls per week by June 2023 - Stretch target
Key Result 3 - Seven out of ten delighted by the product by June 2023 - Stretch target
“Stretch target” is used where you cannot guarantee the result.
End of stage decision point
Should we continue, pivot our idea or stop?
Desirability - After testing, do we have good enough evidence customers want this?
Feasibility - After testing, do we have good enough evidence we can build and run this?
Viability - After testing, do we have good enough evidence we will achieve sufficient benefits?
Overall - Did any tests fail or expose too much risk in any of these areas?
Stage 3 - Validate
Stage objective - Early validation of the product in the market with customers.
In this stage, you will build a Minimum Viable Product (MVP). The MVP is a basic version of the product containing just enough functionality to solve the customer’s problem(s). This is used to validate the idea in the market with minimal investment, where there is significant uncertainty about market fit.
Stage activities
Create the MVP and test it with internal stakeholders and a limited number of customers:
Remove remaining high-risk assumptions.
Detailed technical design to support full production release.
Detailed service design to support customers using the product.
Identify or create the teams that need to support the solution.
Create a detailed backlog for the MVP.
Build the MVP - Track progress and manage risks and issues.
Optional Alpha Testing - Launch to internal stakeholders to gather feedback and improve the product.
Go-to-market activities - Launch to a limited set of customers to gather feedback and improve the product.
Stage outputs
MVP built, released and supported.
Results of MVP testing (OKRs).
An updated version of the canvas.
Capture improvements required to the product and live service.
Plan for the Market stage - You will release the full product:
Have clear goals - Objectives and Key Results (OKRs) are recommended for this (see example below).
Finalised technical and service design.
Finalise high-level scope - This includes the features you will build. Consider story mapping for this.
Identify required go-to-market artefacts.
Rough build estimate - This can be ranged. For example, 10 to 12 weeks.
Example OKRs for marketable release (next stage)
The next stage is a full release to customers. This should be more functionally rich than the MVP. You can still run a limited rollout of the full product. For example, you create a release only for customers in Scotland. This will represent less risk but still allow you to get real-world feedback. You can then scale the product up when you have optimised it. An example OKR for the market stage is below:
Objective - Confirm product viability
Key Result 1 - Fourteen sales in Scotland by June 2026 - Stretch target
Key Result 2 - 100% of new customers use the app each day (Mon to Friday) by Jan 2026 - Stretch target
Key Result 3 - Quarterly Customer Satisfaction Score (CSAT) over 6 out of 10 by June 2026 - Stretch target
Key Result 2 is a leading indicator for desirability, it tells me that the product is being used. If it wasn’t, you are unlikely to see good CSAT score. This means I can react faster to unhappy customers than waiting a quarter for feedback. “Stretch target” is used where you cannot guarantee the result. I don’t know if my CSAT will be over 6 but I will aim for this.
End of stage decision point
Should we continue, pivot our idea or stop? Do we have strong enough evidence that:
Desirability - Customers want this?
Feasibility - We can build and run this?
Viability - We will achieve expected benefits?
Overall - This is worth taking to market?
Stage 4 - Market
In this stage, there can be a lot to do. You will have to build your product in full and get your service ready to support potentially large numbers of customers. This service can include sales, marketing and product distribution. If you are an existing organisation, you will likely have processes for this already. You can use your existing governance structures to take the product live.
Stage objective
Produce the first version of a functionally complete working product that you can market to customers. The customers should be able to buy the product at this stage.
Stage activities
Create the full product for customers:
Finalise technical design.
Finalise service design.
Finalise the teams that need to support the solution.
Create a detailed backlog for the final product.
Build the full release version of the product - Track progress and manage risks and issues.
Consider your brand strength using the Brand Equity section of the Market Positioning Canvas.
Optional - Launch to internal stakeholders / a smaller group of customers to gather feedback and improve the product.
Go-to-market activities - Publicly launch to customers.
End of stage decision point
Based on the OKR results, should we continue, pivot our idea or stop?
Stage 5 - Post-market improvements
Your product should be in the market and ready for incremental improvements at this stage. Follow the Commercial Agile Framework to decide on your next strategy. Start by creating the Market Positioning Canvas then look to define your next Strategic Direction.
Technical and service design
In this canvas section, you will:
Decide how you will build your solution (technical design).
Decide how you will support your solution (service design).
Identify build and run costs.
Given the canvas size, this section will contain very brief summaries and should be augmented with design documentation. In the early stages, you should be designing at a high level. As you get closer to the full release, more details will be required. Pay particular attention to aspects that are high-risk. For example, if you have a manual security clearance process that could derail your entire product. The section is deliberately lightweight. Technical and service design are very large subjects. It is highly advisable for experts in these domains to be part of the innovation team.
New organisations
If you are creating a start-up and don’t have an existing organisation to rely on, you can find significant complexities in launching. These include diverse requirements, such as regulatory requirements and disaster recovery. The details below are provided as a starting point. It is highly recommended that you bring experts in to confirm you are ready to go to market. Run as lean as you can at this point. For example, you may not need to create a full support team and process if you only have a few customers.
Technical design overview
Technical considerations:
Infrastructure, e.g. live and test environments.
Testing, e.g. smoke test packs and rollback strategy.
Performance Testing, e.g. volume, load and stress tests.
Legal, e.g. storage of personal data.
Security, e.g. penetration testing strategy.
Observability, e.g. error logging.
Disaster recovery, e.g. data loss, system downtime, cyberattack.
System migration, e.g. from previous product versions or competitor products.
Cost optimisation, e.g. using the cloud for scaling.
Development team design.
Skills required, particularly if in new technologies.
Future ability to support the product if few people have the required skill set.
Service design
A product will need to be supported. This can include aspects like set-up, error handling and manual processes. There are two very useful tools for designing how a customer will interact with the organisation:
Customer Journey Maps are a visual representation of the customer’s touchpoints.
Service Blueprints extend these to show how the organisation works behind the scenes. It is very advisable to produce a high-level Service Blueprint.
Service considerations:
System set-up, e.g. consulting services and training.
Live Service Support, e.g. support team readiness, support team hours and SLAs.
Communication, e.g. feedback mechanisms, launch announcements and system problem updates.
Security checks, e.g. verification and fraud detection.
Payment, e.g. taking payments and disputes.
Error handling, e.g. support for failed processes.
Legal, e.g. terms of service and liability.
Data privacy, e.g. regulatory compliance.
Security checks, e.g. verification and fraud detection.
Team design to support the new service.
Partnership considerations:
There are many potential partners including:
Technology
Sales
Distribution
Marketing
Regulatory and compliance
Investment
Costs
These costs will form the basis of break-even analysis in the pricing tab. Consider the following as a starting point:
Build costs - At this stage, consider your likely investment period and the cost of the team involved. For example, is this one team taking a year to build? Don’t try to estimate the change, as you won’t have enough information to do this accurately. For example, one team at £1m for a year.
Run costs:
Fixed - Static costs such as licenses for development tools and the cost of the development team.
Variable - Change depending on the amount of production.
Types of cost:
Business run costs - For example, do you need more support team members?
Technical run costs - For example, do you need new software licenses, and if so, how many?
Customer acquisition costs - For example, do you need new to run paid marketing campaigns or increase the size of the sales team?
Target market & channels
In this canvas section, you will:
Define your Ideal Customer Persona.
Make sure the target market isn’t too large and competitive to make a profit.
Make sure the target market isn’t too small to expand into.
Define the channels for customer awareness, purchase and delivery.
Why have a target market?
What happens if we target a product at everyone? We can get radically different requirements, a bloated product and confusing feedback. You will find tools to model your target customers for B2C (business to customer) and B2B (business to business) at the bottom of this page.
Ideal Customer Persona
A single Ideal Customer Persona (ICP) representing similar customer needs will give your product clear direction. Selecting the right ICP to match your offering will also help you achieve the highest potential revenue. This is because when a product meets customers’ needs, they are more likely to buy it. With a new product, you will be testing and improving your ICP.
ICP selection during growth cycle stage
Start – Optimise your ICP definition
Growth – Prioritise a single ICP
Scale – Consider changing your ICP as the market becomes saturated
Maturity – Change your ICP to continue to grow
Tiered subscription-based pricing
In the case where you have a tiered pricing strategy, you may have specific tiers targeted at different customer groups. For example, you have a cheaper pricing tier for more price-sensitive customers or those with a simpler use case. In new product development, it is advisable to keep this simple. Although you could immediately go broad, this may slow you down.
Market size and Ideal Customer Persona
Customer personas can help us model our target customers. These will differ based on selling directly to customers (B2C) or to businesses (B2B). In B2B sales you can have the additional consideration of numerous people involved in the buying process. For example, representatives from finance and technology. The templates below show you how to model the ICP and buyers. Additionally, the canvases contain information on market size considerations.
B2C Customer Persona
Customer personas can help us model our target customers. Where a business sells directly to customers (B2C), the product user is typically the person who is buying. Click the persona picture or this link for the full guide.
B2B Company Profile
Where a business sells directly to other businesses (B2B), they need to profile the type of company they are selling to. Click the picture or this link for the full guide.
B2B Buyer Persona
Where a business sells directly to other businesses (B2B), there can be a variety of people involved. The product user may not even be involved in the buying process. Click the persona picture or this link for the full guide.
Channels
Once we have identified our customers, we must decide how to interact with them. Below are some considerations.
Awareness
How do they find out about the product?
Online marketing - For example, social media, working with influencers and websites.
Advertising - For example, Television, radio and Google Ads.
Public relations - For example, media coverage and industry events.
Partnerships - Working with complementary organisations.
Referral programs - For example, affiliate marketing and cash back for referring friends.
If your brand is new, you should consider following the comprehensive advice in the Marketing Positioning Canvas.
Purchase
How do they buy/acquire your product?
Subscription model - For example, pay for usage and tiered subscription pricing.
Freemium model - Where you offer a free product, and they can upgrade to a paid one. Avoid this where set-up and run costs are high.
Product trials - Where you offer a free trial period.
E-commerce - Payment via online marketplaces such as Amazon.
Direct sales - Sales team outreach.
Delivery
How do you deliver the product to them?
Physical products - Shipping or pick-up.
Digital products - Download, streaming or access on the cloud.
Services - Face-to-face or remote consulting.
Competition
In this canvas section, you will:
Identify your competition’s offerings.
Evaluate the health of your competitors.
Understand their product’s strengths and weaknesses.
Consider the market’s barriers to entry to ensure you can compete.
Competitor types
Capture competitors and their products that you will go up against. You can also consider those you should monitor. By profiling your competition, you can:
Understand the size and maturity of current offerings to evaluate the effort required to compete.
Probe for strengths and weaknesses to gain a competitive advantage.
Replacement competitors
A market can decline when a competitor releases a new superior product type. It is most important to be aware of these competitors. For example, where Blockbuster’s DVD rental business was replaced by video streaming. STOP - In this case, you should immediately consider your approach and potentially stop development. This is why this is not a section on the canvas.
Direct competitors
Direct competitors are those competing for sales with similar products and target customers. You should pay particular attention to those with the following factors:
Have a significant market share.
Show major market growth.
Competitors to monitor
It is important to understand that different customers have different needs. If you are selling a high-priced premium product to a customer who has a basic use case, it is unlikely to work. Competitors targeting different types of customers should not be viewed as a problem. Typically, you won’t respond to them, but you may look at their product development for new ideas.
Monitor other competitors that:
Have high levels of innovation that you can copy.
May be growing and eventually start to compete with you.
May be looking to pivot into your market.
Competitor offering
Use the Competitor Threat Analyser Canvas (full details in the link) to evaluate each competitor. This will help you understand the differentiators that help them win and also why they lose.
Shaping your solution to compete
In the Value Proposition tab we considered the minimum product scope required. Next, you must consider how to respond to the competition.
Matching competitors
On top of a basic product, customer’s expectations are also based on the competition. If all competitors offer certain features, many will become expected. For example, you don’t need electric windows to use a car, but these are now considered a must-have. This means that creating products without competitor analysis can create a massive risk to success. The size of the minimum required product increases:
Functional differentiators
Differentiators allow you to stand out in the market and can help you avoid a price war. If pricing is your only differentiator, this can be a “race to the bottom”, as competitors reduce prices to match you, and everyone sees reduced profitability. Functional differentiators can be:
Additional functional depth within a feature (FT2).
Additional feature(s) (FT3).
Nullifying differentiators
If a competitor has a large differentiator and you know this will cause you to lose, you should copy it if the effort is low enough.
Selecting new differentiators
You need to make sure your customers care about the differentiators you select.
How big a problem does this differentiator solve?
When you have finished, you can update the value proposition on the canvas. You’ll typically find a situation like the one below:
Barriers to entry
Barriers to entry are attributes that make it hard to create a profitable product. Understanding these is vital, or you could spend a lot of time and effort just to find out your new offering is not viable. There are two types of barriers to entry:
Strategic barriers
These barriers are created by a competitor’s strategy. When you have an established product you can use these yourself to reduce the risk of new entrants (except for predatory pricing).
High switching costs - The cost to switch from a solution is very high and puts customers off.
Contracts - Long contracts can make it hard for you to gain new customers.
Limit pricing - The competitor deliberately sets a low price so that you cannot make a profit. This is combined with their lower costs so that they don’t make a loss. They can run this for as long as it takes to drive a competitor out of the market.
Predatory pricing - This is similar to limit pricing, but in this case the competitor prices below their own costs and makes a loss. This makes it even more difficult for their competitors. This is not a strategy you should follow as it violates anti-trust laws.
Brand - Strong brand loyalty can be a significant barrier to entry as customers will even pay more for one they trust.
Advertising costs can be much higher to increase brand awareness than an established competitor.
Loyalty schemes - Offering discounts for staying with a product.
Patents and licenses - If a competitor owns these, you may not be able to create a product that works or have to sink a lot of investment into new solutions.
Structural barriers
Economies of scale - The competition has a significantly lower cost per unit due to a large-scale operation. This can be due to lower operational costs, technology efficiency, and logistics.
Network size - The competition may already have a strong customer network. This will make it difficult to convince them to switch.
High set-up costs - When the initial investment is very high, the new entrant must have enough money to fund this. An example of this would be research and development.
Core product size - Where all major competitors offer the same set of core features, it is advisable to match these. As customers become more familiar with mature solutions, their expectations will grow. Imagine a car without adjustable seats.
Ownership of raw materials - When the competitor(s) have ownership of the raw materials, they can either block you from purchasing or raise their prices, meaning you cannot compete.
Avoiding barriers to entry
Direct competition is described as “similar products / similar ICP (Ideal Customer Persona)”. If the barriers to entry are too high consider changing the product or who you are targeting.