If you talk to the people in our Product POD, they would tell you that developing and launching a new product is some of the most fun you can have. But the speed at which innovation happens today, regardless of industry, is causing people to make one of two key mistakes:
- Analysis Paralysis – when a team can’t decide because they spend too much time considering all the options. They either want more data or information to make a “better” decision, or they fear making a bad decision.
- Investing without Vetting – when a group stays within its circle and makes decisions without conducting research or collecting Voice of Customer (VOC) data.
In both cases, the underlying problem is a lack of clear processes and decision-making criteria that were defined objectively before a project or idea started. This is known as the Product Development Life Cycle (PDLC).
Depending on your business needs and size, there are multiple variations and “stages” to consider when building your own PDLC. In the end, each stage should have very clear entry and exit criteria, using objective, pre-determined details to facilitate confident decision-making. If you don’t know where to start, our Product POD has identified the key components you might need to build your PDLC, either independently or with a partner if you feel you need outside help.
The Essence of Entry Criteria
New ideas are the cornerstone of the PDLC, and they often come with emotional attachment from their originators. When setting our entry criteria, we aim to filter that emotion through the lens of defined company goals and objectives. For many companies, the early stages have very simple entry points, such as:
- Alignment with current product portfolio categories.
- Relevance to the needs or usage of our current Ideal Customer Profile (ICP).
- A Total Addressable Market greater than a certain market size.
- Fewer than three direct competitors.
Regardless of what criteria you select, best practices suggest 3-5 elements. This allows you to score the idea, project, or partnership in a way that helps prioritize them for your product team. Essentially, entry criteria serve as a litmus test, ensuring that only the most promising ideas advance to the development stage.
The Significance of Exit Criteria
Establishing exit criteria can be challenging because team members may recall specific instances where a particular number or data point influenced a decision, either positively or negatively. When creating these criteria, aim to select elements that would have led to the right decision on 85% of previous projects. This approach helps narrow the focus for each stage, emphasizing that the goal is to catch potential issues before maximum investment is made, rather than at the very first gate clearance.
It is also important to ensure everyone understands that exit criteria serve as a reality check for the project’s progress and a review point to confirm its alignment with the company’s goals.
Our team has found that setting clear expectations for successful exit criteria at each stage is beneficial. This models for the team that exit criteria act as potential off-ramps for projects, allowing them to be parked and revisited or potentially closed. Additionally, exit criteria demonstrate how well the product team can forecast, manage scope, and evaluate market needs, providing valuable coaching opportunities.
Ultimately, exit criteria facilitate informed decision-making, enabling stakeholders to determine whether to pivot, persevere, or pull the plug on a project.
Harnessing the Power of Simplicity with Clarity
In a world inundated with complexity, simplicity emerges as a guiding principle for effective product management. When it comes to entry and exit criteria, simplicity is key, but clarity is equally important. Complex, convoluted criteria obscure overarching goals and cloud the judgment of the leadership team, leading to excessive meetings, unnecessary busy work and ultimately inefficiency.
Clearly defined PDLC criteria foster a culture of accountability and transparency, empowering stakeholders to make data-driven decisions and course corrections as needed. Clear criteria also help remove emotion from decision-making regarding the next steps for an idea’s progress. To foster a culture where innovation thrives, it is essential for the product team to understand how decisions are made so they can learn from unsuccessful gate clearances. This will offer them a chance to revisit the project, better align it to the company goals and attempt the exit again. Ultimately, it means the team sometimes must move on to the next great solution that better aligns to the company goals.
This level of transparency in product management enhances agility and responsiveness and maximizes the chances of achieving company goals, particularly in revenue, profit, and EBITDA.
Conclusion: Embracing the Power of Process
Processes are often seen as clunky and slow, but when you work collaboratively to define the right number of stages and set simple and clear criteria, they can be very fluid and nimble. Recently, our team completed a project for an established healthcare company, building out its first PDLC, and they saw measurable impacts on the speed of new idea evaluation, roadmap development, and revenue growth. Consider these ideas for building your own PDLC criteria.
Remember, great ideas drive innovation forward; embracing the PDLC is how business leaders can ensure they are maximizing their investment in the teams managing the product, developing the product, and selling it.