8 Strategies to Develop a New Product

There are multiple ways for you to develop a new physical product and bring it to market. However, the strategy that is best for you depends on your specific experience, your product, your team, and your finances. There is no strategy to develop a product that is best for everyone under every situation.

In this article you’ll discover eight different strategies that you can follow to get your product idea out of your head and on the market.

This article was originally published on PredictableDesigns.com. Download their free cheat sheet 15 Steps to Develop Your New Electronic Hardware Product.

Be sure to check out strategy #8 (the Smart Strategy) which is essential for your ultimate success. Regardless of your experience or financial situation you should always start by following strategy #8 while combining it with one of the other development strategies depending on your specific case.

NOTE: This is a long, very detailed article (nearly 5,000 words) so here’s a free PDF version of it for easy reading and future reference (includes printer friendly version).

Strategy #1 — The Outsource Strategy

This strategy is for those of you who don’t have the technical skills to do any significant development on your own, yet you have the financial means to pay someone else to do it.

This is one of the more common strategies I see followed, probably because if you have the money it will be easier to make initial progress than using the other strategies we’ll discuss. For instance, finding good developers to work on your project will typically be much easier than finding co-founders or a manufacturing partner.

All of the risk is placed on you (the payer) when outsourcing product development, and the developers you hire generally have no risk since you pay them by the hour.

There are really two options when outsourcing development. You can hire individual freelancers or you can hire a design firm.

The advantage of freelancers is they’re going to be, by far, the cheapest way for you to outsource the development of your product. This is especially true if you’re able to outsource to engineers located, say, in India. They will charge less than someone in the US, for instance, or even parts of Europe or Canada.

The downside of working with freelancers is you really need technical knowledge to be able to review and judge their work. Otherwise, you have no way of determining the quality of the work being done. If you aren’t able to do this then hire an independent engineer to review their work before you pay.

Hiring a firm is going to be quite a bit more expensive than hiring individual freelancers, but it’s usually a safer option. The key advantage of hiring a firm is it’s going to be a more predictable and reliable development process because they have established processes in place. They’ve developed many, many products and they do it in an organized reliable fashion.

The other advantage is a firm will typically manage the product development. They’re going to manage all the various engineers, since multiple engineers are usually required to fully develop a product.

If you hire freelancers, then you’re going to be, or someone on your team will have to be responsible for managing all those engineers and making sure that all their pieces come together to form the final product.

Strategy #2 — The Maker Strategy

As a maker, you’re probably going to focus all of your effort on developing a proof-of-concept prototype. This is a prototype typically based on an electronic development kit (Arduino, Raspberry Pi, etc.) and a 3D-printed plastic enclosure.

As the name implies, the purpose of a POC prototype is to prove the concept of the product. A proof-of-concept prototype can also be helpful for gathering market feedback. It’s not going to be something that you can actually take to market, but it proves the fundamental concept of the product.

Typically, a POC prototype is absolutely required only if you have major questions about your product and whether the solution you have in mind will actually solve the intended problem. However, for many products, a POC prototype doesn’t provide much additional benefit.

Makers tend to over-focus on the POC prototype. Regardless of the strategy followed, I have found that most people focus their effort on the steps they feel most comfortable performing. They don’t worry about the later steps until they’ve completed the steps they find most comfortable or rewarding.

The classic case is an engineer focusing all of their efforts on development without ever giving serious thought to sales and marketing until they finally finish development.

But don’t forget to ask yourself, what’s the next stage after the proof-of-concept? For all of these strategies to be successful, you have to know all the steps that lie ahead, you can’t just take one step at a time with no visibility of the other steps.

The majority of people get stuck where they feel most comfortable, but that’s not a recipe for success. To be a successful entrepreneur you will always need to force yourself to focus on those steps that may not feel so comfortable to you.

After you get through the proof-of-concept prototype stage, the next step is to develop a custom design that can actually be manufactured. Most makers are fine doing a POC prototype but not a manufacturable version of their product.

Because of this fact most makers will want to outsource the custom product design. Although, some makers may have the ability to learn these skills themselves if given enough time.

Strategy #3 — The Engineer Strategy

This strategy is for those of you that are engineers, particularly if you already have real-world product development experience with either electronics or plastic enclosure design.

If you’re an engineer that feels confident doing at least some of the development of your product, and you are up to learning the skills that you’re lacking, then this is going to be the cheapest way to get a product developed.

If you have the skills to do it all yourself, obviously you’re going to save a lot of money on engineering fees that you would normally pay to outsource. Regardless of your background, most engineers will not have experience in every specialty required to fully develop a commercial product.

This means you’re going to have to start off by teaching yourself any skills that you are lacking. In some cases, learning these skills yourself can be faster than outsourcing them.

For example, my own product had a large mechanical component to it. I’m an electrical engineer, so I started off hiring a mechanical engineer to do the 3D modeling. I was very frustrated with how slow things were proceeding. I felt like the project wasn’t getting the priority it deserved.

I got rid of that mechanical engineer and hired a second one who was just as slow.

The engineers didn’t seem to be devoting the time I thought my product deserved. But keep in mind, freelancers have lots of other projects that they’re working on. They’re not your full-time engineer. Most entrepreneurs aren’t exactly patient, myself definitely included, so this can be frustrating.

After two engineers and many delays I decided to just teach myself how to do 3D modeling. I also began studying injection molding, and how it relates to product design and production.

It probably took me a couple of months to get up to speed, but it ended up being much faster in the end. The design was finished much quicker because I was highly motivated. I was working on it every free moment that I had, versus a freelancer only working on it part-time. This can be a good strategy if you’re comfortable learning new things.

This strategy has the lowest financial risk because you’re not paying engineering fees. The downside with doing the product on your own is you’re most likely going to pay higher prototyping fees.

The reason is you’re more likely to make mistakes than an experienced design team. This means you will probably need to produce multiple iterations of your prototype to get everything just right.

In almost all cases, the increased prototyping costs will be more than offset by how much you save in engineering fees. The cost to develop a product is, by far, dominated by engineering fees and not prototyping costs. Prototyping can be a significant cost, but it’s not the biggest expense.

Strategy #4 — The Inventor Strategy

Initially, most inventors focus entirely on obtaining a patent, and perhaps later on licensing their idea. I’ll say upfront that I don’t recommend this strategy. It is, however, the strategy that I see most inventors following.

The first step that an inventor almost always focuses on is getting a patent. In my opinion, getting a patent is not the best use of your time or your money, at least initially. Patents are quite expensive. It can cost $10,000 or more to get a full utility patent.

It’s also takes a really long time to obtain a full patent. In 2017 the average approval time for a utility patent was 25.7 months!

You have to remember that most, or in fact nearly all, patents never make it to market. These patents never got to market because the inventor was focused on the patent instead of developing a proven product that people actually want to buy.

The problem with a patent is that you’ve starting off with the assumption that you’ve figured out the best way to solve a problem. You are assuming that you don’t need any feedback from anyone. This thinking will cause you to jump right in to spending $10,000 to hire a patent attorney.

Focusing exclusively on a patent stems from the fact that you’ve placed way too much value on your idea and not enough on the execution of that idea. The number one mistake that I see new entrepreneurs make is they overvalue their idea while undervaluing the execution of that idea.

When you focus on a patent, you’re focusing on the value of your idea. You can’t develop a product and expect it to be a success entirely in your own head. You have to get feedback from the market to find out what people really want.

I cannot stress this enough, so let me repeat it. You are making a major mistake if you feel 100% confident that you have the actual solution that people want. But that’s what you’re doing by starting with a patent.

I speak from experience, because I did the exact same thing.

I started off with a patent and even went one step further and purchased patent insurance. If someone tried to infringe on my patent, this insurance would pay any legal fees to sue that person. I made the mistake of putting way too much value on my product idea. As my mother always told me as a child “Do as I say, not as I do!”.

When I was a design engineer at Texas Instruments, I worked on dozens of product development projects. In almost all those cases, the product didn’t have a patent. Many designs had portions that were sometimes patented, but never the entire product.

Instead, a large company like Texas Instruments is focused on the execution. They focus on understanding what the market wants, and developing and manufacturing the best product possible. This secures their market share, not a patent.

After getting a patent, a lot of inventors try (usually unsuccessfully) to sell or license their idea. Once again, this places too much value on the idea and not the execution. With this strategy, you’re attempting to entirely skip the execution phase. You had the idea, and now you want someone else to handle the execution. If only life was that easy.

It’s very, very rare to find someone to license your product just from your idea. You’re going to need a prototype and market proof that it will sell before you can even consider licensing your product.

Strategy #5 — The Co-Founder Startup Strategy

In this strategy, your first step is to search for co-founders to fill in any gaps in your own skill set. For example, if you’re really strong at sales and marketing but you have no engineering or technical skills, then I highly recommend that you find an engineer to be a co-founder.

The ideal co-founder team is probably three people for most projects. You’re going to need someone that knows the hardware, you’re going to need someone that knows the software, and you’re going to need a third person that you could call the hustler — the sales and marketing person.

The hardware co-founder role could be potentially split into two, making a total team of four. In this case, you may have an electronics engineer as one of the co-founders and then, say, a mechanical engineer or industrial designer to be the other one.

The issue with finding a co-founder is you’re asking for a huge commitment. In a lot of ways you’re essentially looking for an investor. Instead of investing money, you’re asking them to invest their time in your project and time is extremely valuable to pretty much everyone. For this reason, it can be extremely challenging to find a co-founder.

You want them to be excited and passionate about your product. You want them to believe your product will succeed, and that they want to be part of that success.

You also want to find co-founders that are in the right stage of their life. If they’re focused on their own career or startup they might not have the time or passion to devote to your project.

You need to find someone that can put a lot of mental energy into your project for free. They have to be financially stable and also have the time to commit to your project.

Since you’re asking for such a big commitment, in most cases you’re going to need to do some upfront work. You have to offer more than only your idea.

Early marketing research and any work accomplished so far will help sell them on the potential of your idea. But you have to prove that you know how to execute on the idea. You always have to bring something to the table beside your idea.

For example, if you don’t know how to design a product, then you need to become great at marketing and sales. I’m a classic technical introvert, but I’ve been able to come out of from behind my computer screen to do sales and marketing. If I can do it, I know that you can successfully leave your comfort zone too.

Look for co-founders who are compatible, but with contrasting personalities. For instance, if you’re an engineer, and you’re an introvert that’s more comfortable working in a lab or behind a computer, then I would recommend finding a co-founder that’s an extrovert who loves doing sales and marketing.

You need to be compatible yet contrasting. You don’t want someone just like you because they’re not bringing a new perspective to the table. Also keep in mind that a co-founder is like a spouse. You will be working together all the time, for years, so make sure you like each other.

Strategy #6 — The Small Company Strategy

This strategy is aimed at small, established companies that haven’t previously developed a custom product.

As an established business, you have the funding for developing the product. You’ve probably done a good amount of market research and some of the upfront work. Now, you’re ready to jump into fully developing the product.

For this strategy, we’re going to discuss two options: do you hire a full-time engineer or do you outsource the development?

First of all, most products are going to require more than one engineer to develop them. If you’re looking at hiring an engineer to develop your product, most likely, you’re going to have to hire at least two engineers.

Obviously, hiring one engineer or even two engineers full-time is exceptionally expensive. That may make sense later, once you are developing multiple products and need design engineers on a regular, ongoing basis. But for the first product, I highly discourage you from hiring a full-time engineer.

First of all, until you’ve been through the process you won’t have a good understanding of the qualifications required for the ideal engineer. Once you’ve gone through this process by outsourcing development, you’ll be in a much better position to hire full-time engineers to develop future products.

The other issue with hiring a full-time engineer is, obviously, you must make sure you have enough work to keep them busy. A benefit of outsourcing is you pay only when you need an engineer.

That’s why it’s typically best to only bring on full-time engineers once you’ve gotten past the first product and you’re planning on developing products on an ongoing basis.

Strategy #7 — The Manufacturing Partner Strategy

For this strategy, your focus is on finding a manufacturing partner that will help develop your product and scale it to manufacturing. If you’re going to try this strategy, you need to find a manufacturer that believes in your product enough to partner with you.

They’re going to be investing their money, time, and resources into your project. Therefore, most manufacturers are not going to be interested in this strategy.

Similar to finding an investor or a co-founder, you’re asking for a serious commitment from a manufacturing partner. Expect that only a small percentage of manufacturers will be interested in this offer, so you will need to pursue multiple manufacturers.

Having a prototype and some solid market feedback will help prove to a manufacturer that your product is worth pursuing. An even better case is if you also have a retailer that has expressed interest in your product.

After you find a manufacturing partner, they can help finish any remaining development. You will typically be expected to handle the sales and marketing.

You have to prove to a manufacturer that you can do the sales and marketing because that’s not likely to be their strength, especially if they are located in China. You can provide value to them by having access to a new market.

A manufacturing partner is most likely going to require an exclusive manufacturing agreement, at least for a certain amount of time. They don’t want to do all this work and invest in your product and then, a few months after manufacturing starts, you decide to take your business to another manufacturer.

This is a good strategy if you don’t have a lot of capital to develop the product on your own. This is also a good strategy if you’re really good at sales and marketing and you’ve done enough upfront work to convince a manufacturer that your product is worth the risk.

Strategy #8 — The Smart Strategy

The last strategy I’m going to discuss is what I call the smart strategy. For this strategy we’re going to focus on some early steps that should be done that we’ve not discussed in-depth for any of the other strategies.

This smart strategy is followed by most large companies that develop products on a regular basis. It’s really a good idea to model your development process after these large companies because they’ve spent a lot of time and money determining the best process.

Market Research

The first step of the smart strategy is to conduct market research.

All the other strategies I’ve discussed so far typically started with some type of development or a patent, but that’s the wrong way to start. You need to do significant market research as your first step.

Many entrepreneurs come up with a product idea, and feel so confident that it’s the best solution and that everyone will want it. It’s easy to make the wrong decisions when you’re just having these conversations inside your head. However, you need outside market feedback.

I know that with hardware products it’s really challenging to do early market research because you don’t have a product yet. You’re obviously going to be limited in the type of market research you can conduct.

The best market research entails putting the product out in the market and seeing how well it sells, but that’s not possible at the beginning.

You’re going to have to research other products that are similar to your own. Also consider conducting surveys to get feedback from potential customers. Don’t be secretive with your idea, and always gather feedback from either people in that industry or people that would be potential end users for your product.

Preliminary Design

A preliminary production design should answer a lot of your big questions.

How much money do you need to raise? Is the product feasible to manufacture? How much will your product cost to manufacture? What should the retail price be for your product? These questions and others can be answered using a preliminary design.

The preliminary design should include selecting all the critical components, estimating the size and the cost of the printed circuit board(s), estimating the size and cost for the enclosure, and determining the assembly and testing times.

You want to answer these big questions before you start spending the really big money.

Once you have a preliminary design, estimate how much funding is required for your product. You don’t necessarily have to have a preliminary design to estimate the funding required. But, you will gain a much better understanding of all the pieces that go into your product by creating a preliminary design. This allows you to more accurately estimate how much funding will be required.

The amount of funding that you’re going to require consists of the development cost, the scaling cost, and the inventory costs. You need to know how much the product itself is going to cost to be able to estimate all of these funding requirements.

Production Cost and Sales Price Analysis

Next you want to perform a production cost and sales price analysis. This step absolutely requires that you start with the preliminary design.

The preliminary design allows you to review the manufacturing feasibility of the product, and to estimate early on how much the product will cost to manufacture, assemble and ship to your warehouse.

You need to know that cost so you can calculate what your profit margins are going to be. This in turn allows you to determine what type of sales price to pursue.

You need to know this as early as possible. The majority of people developing products think about this after they’ve completely developed their product. That’s not the way to do it. You need all this information as early as possible so you can make the right decisions.

Here’s an example — you may find that one particular feature of your product doubles the cost. Through market research you realize that this isn’t a feature that people absolutely must have. By understanding how much each feature adds to the cost of the unit, you will be able to make design decisions from a much more informed viewpoint.

The Predictable Hardware Report is a custom done-for-you service where I create a preliminary production design for your product and perform the detailed feasibility and cost analysis that I just discussed.

Create a Plan

Once you have all these costs estimated, you have your preliminary design, and you have market research, the next step is to create a plan.

If you’re not seeking outside investment from professionals, then you don’t need a formal plan but you need at least an informal plan on how you’re going to go get past each of the obstacles that lie ahead.

You cannot take the ostrich approach and keep your head down in a hole (even though ostriches don’t really do that). If you’re narrowly focused on developing your product and you’re not looking up to see what you need to do after it’s developed then you’re not going to succeed.

The most common thing, whether you’re a maker, an inventor, or an engineer, is that most entrepreneurs new to product development focus all their effort and energy on product development. As soon as their product is done and ready to go, then they finally look up and to see the next step.

Ideally, marketing, and even sales to some extent, needs to happen concurrently with the product development.

Provisional Patent

After you have a plan to surpass all the obstacles that lie ahead, and you clearly understand all the steps that lie ahead, then its time to get a provisional patent.

A provisional patent in the US is going to cost around $100 and it will give you patent pending protection for one year while you continue working on your product.

At the end of that year you can make the decision to proceed with a full patent or not, depending on if the product has proven viable and has a market.

Even if it is viable on the market, you may decide it isn’t worth the money, time and effort to obtain a full patent, especially if it’s not going to offer significant protection.

Find an Advisor

The next step that I recommend is finding at least one adviser. Try to find an advisor that has executive experience working with ideally a physical product company. The closer their experiences are to the type of company you’re running, the better.

It can also be helpful to find advisors with general sales, marketing or executive experience, especially if you don’t have any business experience yourself.

In the US I highly recommend the nonprofit agency SCORE. They have a huge selection of advisers that are happy to work with you for free. Few things in life are free, but this happens to be one of them. SCORE is made up mostly of retired executives, or really successful people, that have extra time available to help others.

Build an Audience

The next step in the smart strategy is to begin building an audience. This will go along with marketing and eventually sales, and is something you can do while you’re developing your product.

It takes a long time to build a sizable audience, so start now. This audience will be extremely useful if you run a crowdfunding campaign on Kickstarter. To be successful with crowdfunding you have to have an existing audience get the ball rolling with early investors.

This audience can also provide feedback on your product and how to make it better.

Build Prototype

Depending on which of the previous strategies best fit your situation, now it is finally time to start working on building the production-quality prototype.

Begin building the prototype while you’re incorporating feedback from both your advisers and your audience.

Your adviser and your audience should be an integral part of the development process and not something that you do afterwards. If you incorporate feedback as you develop your product, then you’re more likely to develop a product that will sell well and be profitable.

Conclusion

Developing a new electronic product and bringing it to market is a massive undertaking. In this article I’ve presented you with eight different product development strategies. Which strategy is best for you depends on your experience, your team, and your financial position.

By following the smart strategy your chance of ultimate success increases significantly.

In some cases you may find a combination of several strategies is your best option. For example, for my own product I followed both the Engineer Strategy and the Manufacturing Partner Strategy, as well as most of the Smart Strategy.

Originally published at predictabledesigns.com.