Developing a strong business case is a critical first step when proposing a new product. It demonstrates market viability, validates assumptions, estimates costs and timelines, and most importantly – justifies why company resources should be allocated to launch the product. Traditionally, intricate business plans took weeks or months to craft. However, today’s accelerated product cycles call for more agile approaches. This is where lean business cases excel. By enabling teams to rapidly vet and iterate concepts before over-investing, lean business cases typify “fail fast, fail cheap” product development strategies. Constructing a clearly articulated yet flexible business case is vital to convincing key stakeholders that your proposed product deserves their support. This article will guide you through creating focused lean business cases to help new products succeed in dynamic markets.
What is a Lean Business Case?
A lean business case is a high-level document outlining critical details about a new product to stakeholders. It is intended to quickly validate if ideas are viable and worth pursuing further. Key elements include:
Value Proposition: An overview of the unique value the product will provide customers and how it solves their needs better than rival solutions. This is the heart of the business case – if a compelling value proposition isn’t presented here, the rest of the document won’t matter.
Target Customers: Clearly defines one or more customer segments who will derive value from the product and context about their needs. Supported by customer research and data.
Concept Description: A high-level summary detailing the core concept, features, and stage of development. Keeps implementation details low for initial vetting stages.
Resources Required: Outlines primary human, technological, and facility resources needed to build, launch, and operate the product. Supported by realistic estimates.
Cost Structure: Projects total costs across product development, production, marketing, and operation. Aims to provide confidence in achievability.
Revenue Model: Describes how the product will make money – advertising, subscription, sales, etc. Backed up by market size data.
Major Risks: Identifies technological, operational, organizational, and market risks involved to demonstrate thoughtfulness about what could go wrong. Having mitigation strategies boosts credibility.
Unlike intricate 50+ page business plans, lean business cases focus less on elaborate text and detailed financial projections, focusing more on conversations and rapid iteration using visual models and direct customer feedback over hard numbers. They delay burying stakeholders in complex spreadsheets and reports until basic assumptions around product-solution fit and commercial viability are stress-tested first. The flexibility helps teams pivot quickly if early evidence conflicts with key hypotheses. Crafted and presented effectively, lean business cases enable clarity and alignment which smooths obtaining green lights. With funding and resourcing gates passed faster, product developers can shift their focus from boardroom battles to delivering value for customers.
Steps to Develop a Lean Business Case
- Identify Target Customers and Needs
The first step is researching your potential target customer segments and gaining clarity about their needs. Without a solid understanding of specific groups of customers and what outcomes they want to achieve, it is impossible to build products that add value. Common techniques used during customer discovery include:
- User Personas: Construct detailed archetypes of your ideal customers. Explore their goals, behaviors, pain points, and motivations as they relate to your solution space. Give them names and backstories for easy reference.
- Customer Interviews: Directly engage with current and prospective users about existing solutions. Inquire about their likes, dislikes, and desired improvements. Identify recurring themes.
- Surveys: Gather input from a wider sample by asking customers structured questions to quantify needs. Keep surveys focused and scannable.
- Ethnographic Research: Observe how groups currently select and interact with solutions in their natural environment. Note where they encounter obstacles and deviations between stated and actual behaviors.
- Analytical Data: Leverage tools like Google Analytics to uncover visitor behaviors on existing customer touchpoints. See which links they click, the content they consume, and the calls to action they complete.
Compile all primary qualitative feedback and supporting data into a summary of recurring needs and “pain points”. Map these directly to features your potential product would offer to highlight the match between customer desires and your planned solution. Demonstrate that ample customer validation provides confidence in the proposed value proposition.
2. Sketch Product Concepts
With target users and requirements identified, generate high-level concept sketches rather than polished wireframes. These translate previously scattered ideas into clear visualization aids that facilitate discussion and analysis with stakeholders. Consider using:
- Napkin sketches: Hand-drawn mockups emphasizing core features rather than cosmetic details
- Wireflows: Illustrate critical user flows connecting screens and functions
- Storyboards: Use four to six panels to visualize a typical user scenario with key interactions and pain points highlighted
- Concept posters: Single-page visual snapshot summarizing product functionality
The ease and malleability of rough sketches encourage valuable early feedback. As concepts progress, collect input from customer advisory panels, internal team members, and relevant experts. Account for diverse perspectives before conducting extensive design work and coding. This fail-fast approach allows major issues around technical capabilities, user experience, and solution applicability to be flagged immediately instead of after significant expenditure.
Describe each iteration and how it evolved based on specific input. Maintain an evidence trail showcasing how closely customer wants and needs are tracked. Build a case for which concept(s) have resonated strongest amongst target groups based on empirical support rather than opinions. Select one or two to focus on for the next phased elaboration backed by documentation. Brief written descriptions should supplement sketches to orient stakeholders unfamiliar with assessing visual models.
3. Define the Value Proposition
With preliminary concepts vetted, the core value delivered to target customer groups must now be clearly articulated. Construct a compelling value proposition statement that serves as the keystone holding all business case elements together. The structure is as follows:
[Product Name] is a [product category] that provides [key benefit] to [target customers] who want to [customer need/desire]. Unlike [primary competitors], our product [primary differentiation].
For example:
HomeHelper is a mobile app that provides customized home maintenance schedules and DIY video tutorials to busy homeowners who want to independently complete routine house repairs and improvements. Unlike generic YouTube tutorials, our app offers personalized task recommendations adapted to users’ specific home systems and skill levels.
The value proposition defines how the product uniquely addresses customer needs in ways competitors do not. Support core claims by citing specific upsides revealed during user research around desirability, suitability, and differentiation. Demonstrate truly recognizing user goals using the following evidence derived directly from discoveries.
Improve outcomes: Show measurable improvements in time-to-completion, error reductions, quality, etc. over current solutions customers use. These make the strongest cases for adoption and pricing power.
Increase ease-of-use: Reduce learning curves and usage friction by linking data proving fewer interactions, simpler workflows, correctly-matched skill recommendations, etc. required with your product compared to alternatives.
Save costs: Lower total spending on current solutions when factors like replacement purchases, wastage, and professional services are included. Motivates to switch to budget-conscious segments.
Any area where existing options fail to satisfy user aspirations represents prime opportunities to emphasize strengths. The litmus test for value propositions is if they remain compelling when made highly specific. Vague promises typical of overhyped products wilt when subjected to even mild scrutiny, revealing fundamental disconnects between claimed benefits and reality.
4. Specify Key Resources Needed
With a solid vision defined, key questions about how to transform concepts into working products emerge. Outline resources needed to progress through development, launch, and ongoing operation by documenting:
Human Capital: Estimate numbers and types of talent required in areas like software engineering, UI/UX design, content creation, analytics, marketing, etc. Factor ramp-up times for complex roles. Identify gaps relative to internal capabilities.
Technologies/Platforms: List core tools for product functionality e.g. programming languages, databases, and payment systems. Estimate costs of software, infrastructure, and services. Clarify if open-source sufficies initially.
Facilities: Calculate needs around workspaces for dev and design teams. Evaluate flexible options if internal capacity insufficient like coworking spaces or outsourced dev shops. Consider hardware requirements as well.
Implementation Partnerships: Explore synergistic partnerships with completion vendors. For example, affiliate programs and API integrations with complementary products to enhance platform stickiness.
Balancing Resource Prioritization: Determine essential upfront vs. nice-to-have later roles, tools, and capabilities. Prioritize must-haves for v1.0 launches on lean budgets over uncertainty-laden nice-to-haves. Show realism around viability using existing resources.
Specifying key requirements demonstrates thoughtfulness about operationalizing concepts. It tempers tendencies for unchecked scope creep by framing conversations around resource constraints. Discussing pragmatic needs aligns stakeholders earlier around tough launch decisions. This further reinforces crafting focused v1 products tuned precisely to validated user wants.
5. Estimate Costs
With requirements identified, develop preliminary cost projections based on resources needed to develop, launch, and operate the product for the first 12 months.
Typical categories include:
- Development – salaries, contractor/agency fees, software, computing costs
- Production – inventory, equipment, facilities, etc.
- Marketing – advertising, promotions, content creation
- Administration – legal, accounting, HR
- Hosting, distribution platforms, and payment fees
Begin with bottom-up estimates for resources defined in the previous section. Outline formulas and assumptions used to derive amounts. Conduct market research on existing vendor pricing for external services when relevant.
Present ranges when uncertainty exists, labeling best and worst-case extremes. Request help from finance or accounting to validate methodology used adheres to internal protocols.
Avoid precise figures implying unfounded accuracy. The objective is to communicate the overall scale and demonstrate rigorous thinking around budgeting for activities essential to getting the product to customers. Revisit projections as assumptions become more grounded.
6. Describe the Revenue Model and Projections
Detail the revenue model(s) powering financial success. Common options:
- Sale of the Product – one-time purchases or subscriptions
- Transactions Fees – commissions per each sale through the platform
- Advertising – free tiers convert users then premium offerings unlock features
Outline complimentary models if appropriate e.g. freemium tiers later drive premium subscriptions. Justify why selected approaches make logical sense based on market potential and use cases.
Provide estimates for three model factors:
- Total Addressable Market (TAM) – Total consumer or business spend in product space
- Served Available Market (SAM) – TAM share reasonably targeted
- Target Market Share – SAM portion achievable as new entrant
For example, the total addressable home improvement market is $400 billion in the US (TAM). Our initial target DIY customer segment spends $60 billion annually (SAM). If we conservatively aim for a 2% category share of DIY budgets, our first-year target is $1.2 billion in revenue.
Document assumptions and data sources powering projections. IDC and Statista research reports or industry metadata often yield credible foundations to base claims.
7. Identify Major Risks and Mitigation Plans
Delivering successful products requires foresight about what might go wrong. Use the following prompts to stress test feasibility:
Technical Risks
- Are capabilities dependent on technologies still maturing like AI, VR, or Blockchain?
- Does sufficient talent exist to architect complex solution stacks crucial for product functionality?
Market Risks
- Will core features satiate target users’ needs better than current or emerging competitor offerings entering the space?
- Could shifts in external factors like regulations, data policies, or macroeconomic conditions severely constrain product-market fit?
Organizational Risks
- Is the product timeline reasonable considering reliance on inadequately skilled internal teams or departments?
- Will projected budgets receive approvals from relevant executive decision-makers?
Adoption Risks
- Does the value proposition compellingly surpass outside options enough for users to abandon existing behaviors and workflows?
- Is supporting the marketing ecosystem resourced sufficiently to trigger public awareness and purchase consideration?
Identifying 12-15 major threats informs risk mitigation planning. For each, specify:
- Likelihood of occurring: low/moderate/high
- Potential impact: low/moderate/high
- Proposed contingency plan if happens
This analysis sensitizes stakeholders of areas requiring caution before moving forward while lessening the chances of materializing through vigilance. Revisit assessments periodically as new evidence emerges.
8. Specify Key Metrics and Milestones
Setting measurable targets creates accountability over the length of the project. Complement financial projections with operational metrics spanning:
- Product Development
e.g. Alpha launch date, number of specification changes post customer testing
- Market Entry
e.g. Press release date, integration partners secured, App Store availability
- Growth
e.g. New registered users, pageviews, engagement depth
- Revenue
e.g. Sales thresholds, advertising clicks
- Expense Control
e.g. Dev cost per feature relative to projections
To demonstrate achievability, reference precedents of your company launching similar solutions successfully according to predefined timelines and budgets previously.
Map specific metrics to a roadmap covering the first 12-18 months from conceptualization through scale launch phases. Call attention to major milestone timing needed to hit targets relative to typical enterprise speeds. Accelerated agility may compel changes from usual release protocols requiring buy-in.
Reviewing progress against quantitative milestones promises to enhance mastering mechanics which propel products from ideas into the hands of eager users. Assign owners to each KPI for accountability.
Subscribe for free and never miss another post!
Conclusion: Lean Business Cases
Developing concise yet compelling lean business cases enables product teams to justify critical resources to explore high-potential ideas. By accelerating initial validation using customer-driven designs rather than isolated opinions, only the most promising options receive further investment.
Carefully researching user needs provides evidence confirming you are solving real problems for defined segments. Estimating implementation requirements and costs lean on facts, not guesswork. Articulating unique value and differentiators through customer lenses sharpens positioning against competitors. Identifying likely risks allows mitigation planning to prevent derailment.
With a strong business case clarifying visions and choices made, securing stakeholder support smoothens. Rather than enduring endless debate cycles, teams can shift focus onto building Minimum Viable Products that promptly deliver value. The flexibility of light frameworks balances prudent financial management with quick adaptation as new learnings emerge.
As markets and technologies rapidly evolve, companies must match customer speeds. Condensing progression requirements, targets, and underpinning rationales through lean business cases propels teams through fuzzier initial stages rapidly. Accelerating answers to “Should we even build this?” minimizes wasted efforts pursuing misguided whims. With product/solution fits decisively confirmed using speedy empirical tests, developers can then confidently commence crafting game-changing products matched closely to needs.
