May 24

New Product Development Process: 2021 NPD Guide

Creating new products can be a really exciting journey – both for start-up Founders and Product Managers alike. Some succeed where others fail – but what sets those apart who go on to launch successful products? We take a look at the new product development process steps that can set you off in the right direction.


The product development process is the end-to-end journey for taking a new product from idea to market. The stages cover everything from defining your outcomes and identifying a problem worth solving through to ideation, prototyping, testing and finding product market fit.

7 product development process steps

Whether you’re aiming to create an entirely new product from scratch as a start-up or developing a new product as part of an existing business, the product development phases to follow are very similar.

New product development stages may focus more heavily on proving out customer demand and growth in the first instance and the testing cycles will be initially more qualitative in nature, but this can also be true of the regular product development cycle too.

Let’s take a look at the stages of new product development here.

1. Define your outcome

The temptation to start the product development process with an idea or a solution is a common one. It’s really important to be clear about what you’re trying to achieve before embarking on each of the stages of new product development. This is so that you know what success looks like and you have a benchmark to measure against and a goal to bear in mind when coming up with ideas to solve your identified problem.

In this first stage of new product development your initial outcome might be more to do with demand or proving out customer value in a more qualitative sense. For more established businesses you may have a set of outcomes or metrics that cover both customer and business value and that tie into your existing product strategy or overarching company OKRs or goals.

2. Pinpoint your problem to solve

If you’re a Product Manager in a business with an existing product, the chances are that you will have access to a plethora of customer research and quantitative data that make it easier to define a customer problem worth solving.

If you’re a start-up Founder then this may not be the case but you might still be able to find relevant industry reports or information to help you understand customer needs in the first instance and it’s likely that you’ve spotted a gap in the market for a problem that isn’t being solved well (or at all) today.

It’s likely in either scenario that you will have gaps in your understanding about any problem spaces you have identified so you may need to conduct customer research and gather further insights before moving onto the next stage in the product development process.

Once you have defined a problem worth solving then you can move on to rounding this out with identifying your opportunity.

3. Identify your opportunity

The goal of this stage in the new product development process is to really dig deep on your defined customer problem.

You should be asking yourself questions such as:

  • How big is the opportunity? Is this a problem worth solving?
  • How else is this problem being solved today?
  • What is our differentiator? Why are we best placed to solve this?
  • Is this a problem worth solving now?

On the size of the opportunity you’re doing due diligence to see if there is a large enough audience to warrant the success of solving your defined problem. If only 10 people have the problem that you have identified then it isn’t worth your while spending time and money to develop a new product to solve it!

Looking at how (or if) this problem is being solved today by potential competitors or other products in the market will help you to see if there’s a gap or market need for alternative solutions to your defined problem. If you conduct market research and discover that the world is saturated with products that solve your chosen problem well, you may think twice before pursuing it.

It’s also important to consider your differentiators (and by that we mean your competitive advantage or unique selling points) – is there a reason you or your company is best placed to solve this particular problem in a new or innovative way?

Another important factor to consider is time – it might be a strange thing to ask yourself but “Is the world ready for our product?” is a valid question. People’s habits with technology change over time and things that customers may have found creepy (think: personalised recommendations / webcams / Zoom etc) 10 or 15 years ago are now just a part of everyday life.

4. Brainstorm new product ideas

Once you are happy that you have a well-defined problem and opportunity space, you can move on to the fun part: idea generation!

The goal in brainstorming is to generate multiple ideas to solve for your defined problem that have a chance of helping you to meet your chosen outcome(s).

There are many different ways to facilitate ideation – if you are a Product Manager you will likely be fortunate enough to have a Product Designer or UX Lead to help you design workshops to solicit ideas. One key factor here is to make sure you include your stakeholders and cross-functional team members at this stage if you can as you will get more of a variety of ideas from a mixture of different people. There is also the added benefit of bringing stakeholders along for the journey and encouraging buy-in for your work.

If you’re a Founder, maybe you have a few colleagues that you are working with who can take part in your brainstorming process or you may have some existing ideas for solving your specific customer problem.

Using How Might We statements is a great way to open up the problem space by posing customer problems as questions. For example “How Might We enable our customer to do XYZ?”.

Once you have a long list of ideas you can use voting or other methodologies to whittle things down to a set of potential solutions to take forward for prototyping and testing. These should be the ideas you believe (at this stage) to have the most potential for success.

5. Prototype and test your ideas

At this stage in the product development process you should have a small set of product ideas to test.

The goal here is to arrive at a validated solution that meets your original outcome(s) in the leanest way possible through prototyping.

The first step towards validation and by far the leanest way to do this without building the entire solution for each idea is to create a set of lightweight, throwaway prototypes that bring your product concepts to life. Throwaway is an important element because it’s likely that you will have to test several ideas before identifying one to take forward, so you don’t have to worry about designing a full user interface or for full functionality and feasibility at this point.

To help you design throwaway prototypes for concept testing, you should start by identifying your assumptions about your potential solutions. The aim is to identify your riskiest assumption. You might have lots of assumptions about your ideas but your riskiest assumption is the one that means your whole idea fails if it turns out to be true. An example of this might be: you have an idea for a new Q&A tool that enables users to ask journalists questions at your company – your riskiest assumption here might be that users want to ask journalists questions – if they don’t, then your idea falls over.

There are some great prototyping tools out there that enable you to create clickable prototypes (InVision, Marvel, Figma etc) but you can also go back to basics with paper prototypes, Google Slides and even previews built on any existing technology that you might have (e.g. content management systems). The key is to not spend more than ½ day to 1 day making these prototypes, as a guide.

Next you need to get your prototyped ideas in front of your potential customers to hear their thoughts – you may have a User Researcher who specialises in this or if you’re a Founder you may have to improvise a bit! The book Sprint by Jake Knapp has some great research questions in the back if you need guidance. At this stage you’re looking to see if your risky assumptions hold true and it’s likely some potential solutions will end up in the ideas graveyard.

The ideas that survive prototype testing may have to go through subsequent rounds of prototyping until you feel confident in the potential solutions to take forward. At this point you can consider live testing on a larger scale and consider your pricing strategy as part of testing. You may still be looking to prove out value and demand at this stage so things like 404 tests, landing page tests, concierge testing, Google Ad / Facebook testing, etc, may be most useful at this point.

At the end of this process you have hopefully arrived at a validated solution that you can take forward with confidence.

6. Develop V1 of your solution

At this stage you will have a validated solution that you can start to turn into a reality for a product launch! Version 1 of your product (sometimes known as your minimum viable product) doesn’t need to have all the bells and whistles that you envision your more polished solution to have, the focus is still to keep it lean.

You will also need to consider your marketing strategy at this stage of the product development process to ensure a successful product launch.

Most importantly, you need to deliver something that meets your original outcome(s) from Phase 1 of the product development process.

7. Iterate!

Once you have validated the winning solution or idea and delivered a first version, that isn’t the end of the process, rather it’s the beginning of a journey of iteration and improvement. Now you have time to work on the product development strategy and roadmap.

We are very fortunate to live in a time where advances in technology mean that we can make updates to new products every minute of the day if we chose to (not recommended, but you get the idea).

You will be in a position where you have delivered a new product but now you have to continue building on it in order to grow and retain your customer base, keep up with their needs and evolving habits and remain competitive. You can achieve through continuous learning and feedback from your customers, as well as monitoring your data and analysing behavioural changes over time. There is no such thing as a ‘final product’!

3 frameworks useful for product development

There are many different frameworks out there for the product process, but here are some of the most useful for helping specifically with new product development.

Design Sprints

Super useful for product development phases 1-5, Design Sprints can really help you to short-circuit the product discovery process in a collaborative way for new product development and set you on the path to learning about your customers.

Popularised by Jake Knapp (ex-Google Ventures) and his book “Sprint”, the Design Sprint is a 5-day process for answering critical business questions through product design, prototyping, and testing ideas with customers.

  • Day 1: Make a map, choose a target audience
  • Day 2: Sketch a variety of potential solutions
  • Day 3: Decide which ideas to prototype
  • Day 4: Prototype potential solutions
  • Day 5: Test with customers

IDEO’s Human-Centred Design Process

Innovative and award-winning design firm IDEO defines its new product development process in 6 steps. Whether you’re creating new physical or digital products, the process is firmly centred on problem-solving for people:

  • Observation – learning about end-users through observation to identify habits and pain-points
  • Ideation – brainstorming ideas based on learnings in the Observation Stage
  • Rapid-prototyping – building simple prototypes to test with end-users
  • User feedback – getting prototypes into the hands of end-users to help evolve your ideas
  • Iteration – integrating user feedback to improve your prototypes and design
  • Implementation – getting your idea out into the world

Lean Start-Up

Ten years later, lessons from Eric Ries’s book “Lean Start-Up” still hold true in the new product development world. Ries advocates for customer-focussed discovery and experimentation.

Ries’s framework broadly covers the aspects of the new product development process we have laid out here:

  • Build – test your ideas with real customers
  • Measure – gather insights and data to fuel improvements
  • Learn – optimise and pivot where necessary

Techniques such as Ries’s “The Five Whys” can also help you to get to the root of a customer problem by asking “Why?”. Here’s the example often quoted, from the Toyota Production System:

  1. A new release broke a key feature for customers. Why? Because a particular server failed.
  2. Why did the server fail? Because an obscure subsystem was used in the wrong way.
  3. Why was it used in the wrong way? The engineer who used it didn’t know how to use it properly.
  4. Why didn’t he know? Because he was never trained.
  5. Why wasn’t he trained? Because his manager doesn’t believe in training new engineers, because they are “too busy.”

Best practices to a successful new product development process

Talk to your customers!

One of the very first things you should always do in your product process is to speak to your customers, whether they are new, potential or an existing audience. This could take the form of user interviews to pinpoint customer jobs to be done, ethnographic research to observe habits or needs as well as demand / value testing with throwaway prototypes and later, usability testing.

This should also be an ongoing conversation and learning experience at every stage of the product development process to ensure that your solution is meeting their needs, providing value and is easy to use. It is very challenging to develop a new product without interfacing with your customers!

Collaboration is key

You may have heard the phrase “The best ideas for new products can come from anywhere” – as a Product Manager or Founder it is tempting to think that you need to come up with the winning idea, but that just isn’t the case.

Developers are working with new technologies every day, your Sales team and Marketing folks interface with customers on a regular basis and Product Designers are always connected with users.

Founders may have spotted a gap in the market for a brilliant new product that solves a pressing customer need at the right time (most likely by collaborating with their potential customers!).

Creating a new product is not a solo affair, whether you’re in the early stages of identifying a problem or looking to deliver your first version of a validated solution, work with your product team and stakeholders to super-charge your process.

Fail fast – let go of ideas that don’t work

One of the most common reasons that start-ups fail (and 9/10 fail!) is that there is no demand for their idea or product. Failing fast is all about cycling through rapid rounds of testing to wheedle out ideas that have no customer value or demand and finding the one that does. It’s very easy (and human nature!) to become emotionally attached to your own ideas – and let’s face it, it’s easier to think about solutions than the uncomfortable problem space.

The same is true of existing businesses – not failing fast can lead to lengthy periods of product discovery, or worse, developing and delivering a solution that doesn’t meet your outcomes or provide customer or business value. This can be a financially costly endeavour – it’s always in your company’s best interests to throw away ideas that don’t work as quickly as possible.

Test multiple ideas

Another best practice in the new product development cycle is to always remember to test multiple ideas or solutions. You would be very lucky to hit upon your winning solution with just one idea and single solution thinking does not allow for experimentation to happen where you have the opportunity to find the very best solution to your customer problem.

As a start-up Founder or Product Manager it’s tempting to press forward with a single idea in the interests of time, money, prior investment into that particular solution or pressure for stakeholders or investors, but in the long-run, you are much more likely to reach a desirable outcome if you test a variety of ideas during product discovery.


There’s plenty to consider when setting out to design and develop a brand-new product – defining success is key and making sure you identify a problem worth solving for your potential audience will get you started on the right foot. Rapid prototyping and throwing away ideas that don’t work at an early stage will help you get to your validated solution quickly. Remember to involve your customers at every step of the journey and you will be well on your way to creating products that they love and want to use. Good luck!

Monica Viggars

About the author

Monica Viggars is a Product Coach with over 15 years of experience working in product and tech. A Product Manager in a past life, Monica now enjoys helping product teams to improve their ways of working and best practices as well as supporting companies on their journey to becoming more product-led. When not writing or product coaching, Monica enjoys travelling (when there's not a pandemic happening!), arts and crafts and baking cakes.


You may also like