Inspired Book Summary: An In-Depth Guide

By Stephen M. Walker II in Reviews — Jan 16, 2023

Inspired is a collection of blog articles, organized into chapters for how to build a modern product-centric culture, align teams, and understand true customer needs.

Behind every successful product lies a great product team. But in today's complex tech landscape, building a team that can consistently deliver intuitive, delightful products is easier said than done.

How do you assemble a crew of talented "pirates" driven by intrinsic passion?

What processes can empower them to navigate from fuzzy concept to concrete solution?

And how do you evolve a culture of experimentation that slashes waste?

In his seminal book Inspired, Silicon Valley veteran Marty Cagan tackles these challenges that every tech leader faces. As a respected product management thought leader, Cagan synthesizes decades of experience into a practical playbook for product excellence. His insights on assembling mission-driven teams, embracing continuous discovery, and always keeping the user's needs first have become integral to modern product thinking.

This comprehensive summary distills Cagan's enduring wisdom to help any product builder craft superb experiences users love. We'll dive into proven team structures, goal-setting techniques, discovery methods, prototyping strategies, and testing processes. You'll learn how to foster innovation through autonomy and cross-functional collaboration. We'll also explore case studies illustrating Cagan's insights in action at leading companies.

Whether you're a seasoned product leader or just starting out, this summary provides indispensable guidance on delivering successful products. By embracing user-centricity, disciplined discovery, and a culture of passion, your crew can set sail for a voyage of impact and ingenuity.

So grab your compass and chart a course to build products that truly inspire.

Read our short Inspired book review here.

Great Product Teams

Great Product Development Teams

Successful product development requires teams made up of passionate, engaged individuals rather than unmotivated or uninvested employees. Companies should seek to build teams of "missionaries" rather than "mercenaries."

Missionaries are team members who truly believe in the product vision, understand the problems it aims to solve, and advocate for it. They are intrinsically motivated by the meaning and impact of their work. Mercenaries are team members who are primarily motivated by a paycheck and lack deeper connection to the work. They aim to complete tasks without going above and beyond.

An effective product team requires collaboration between different roles, all aligned by a shared passion for the product:

Product managers deeply understand customers, analyze market data/trends, and guide product vision and strategy.
Designers empathize with users and craft experiences that solve real needs.
Engineers use their technical expertise to bring the product to life.
Marketers strategize how to generate interest and spur adoption.

With a team fully invested in the product's success, companies can more effectively deliver innovations that create real value for customers. Passion fuels perseverance through challenges and creativity in solving problems.

Product Managers

A product manager understands what ideas will succeed and what ideas will fail by understanding customers, data, the company, and the industry.

Customers – The product manager understands who the desired customers for a product are and what they want or need. This includes a qualitative understanding of the customer—or why customers buy—and a quantitative understanding of the customer—or exactly what they buy and at what rates.
Data – A product manager knows how to use analytics to make good decisions. This contributes to the quantitative understanding of the customer—if a product manager understands sales and usage data, they’ll understand customer behavior better.
The company – A product manager knows what’s going on at all levels of the company and who makes decisions. They understand the sales department and the marketing departments, but also know the CEO and what their interests are. Understanding who the stakeholders are in each part of the company helps the product manager make decisions.
The industry – A product manager also knows the competitors and the landscape of the industry. Is it growing, which would suggest more potential competitors, or contracting, which might make it harder to make sales? In addition to knowing what competitors are doing, the product manager also has insight into changes in technology and how social media relates to the market.

Product Designers

Two types of design important to product design: interaction design (how it works) and visual design (how it looks).

The product designer (some company’s label as UX designer) is responsible for designing the product with the customer and user experience in mind. The product designer is also a strategic partner of the product manager.

Product designers answer some of the following questions when designing a product:

Where will customers hear about the product?
How will users interact with one another?
What other, competing products can get in the way of the customer choosing, and subsequently using, ours?
How will users’ experience change as they continue to use the product over time
What will users enjoy about the product?
What will users find unique about the product?
What will users tell their colleagues about the product?

Engineers

Engineers play a crucial role in bringing a product from vision to reality through their technical expertise and hands-on building of the product. While most product teams have one product manager and designer, they typically include 2-10 engineers.

The primary responsibility of engineers is writing clean, high-quality code to implement the core product functionality and features. They architect the technical infrastructure to bring the product to life and make it work smoothly. Beyond coding, engineers also contribute:

Technical guidance on product capabilities and limitations based on intimate knowledge of the codebase and architecture. This informs planning and prioritization.
Technical insight into new features and enhancements based on understanding possibilities and challenges in the code.
Identification of bugs and issues through testing and troubleshooting. They work to resolve these and improve system stability.
Optimization of product performance and scalability as usage grows over time.

Engineers are an integral part of the ideation process, providing perspective on technical feasibility and approach. They ensure new product ideas align with technical capabilities and resources.

The technical contributions of engineers enable products to evolve from early prototypes into mature offerings that reliably deliver value to end users. Engineering excellence and innovation is essential for product success.

Product Marketing

While product teams design and build excellent offerings, savvy marketing is essential to drive widespread adoption and commercial success. The key responsibilities of product marketers include:

Defining the target audience and market positioning for the product through extensive customer and competitor research. This shapes messaging and go-to-market strategies.
Crafting compelling messaging and value propositions that highlight the product's differentiating capabilities and benefits versus alternatives. Memorable branding and positioning builds awareness.
Identifying and utilizing the most effective marketing channels and campaigns to reach the target audience through paid media, organic social media, SEO, events, and other avenues.
Generating buzz and advocacy through influencer, community, and press outreach. Favorable third-party validation accelerates growth.
Analyzing performance metrics to optimize marketing initiatives and spending for maximum results. Continued optimization and agility is key.
Collaborating with product, sales, and customer success teams to align messaging and strategies across the customer journey.

An adept marketing team serves as the amplifier that makes the target audience aware of how the product uniquely solves their needs and compels them to engage. Product-market fit is fulfilled by product builders and marketers working hand-in-hand.

Roadmaps, Vision, & Strategy

Roadmaps

Product roadmaps are strategic plans that outline the vision, priorities, and development timeline for a product over a set time period, usually 3-6 months.

Well-crafted roadmaps serve several key functions:

Align teams around product objectives and key results (OKRs) by defining the most important initiatives and goals for the upcoming period. This focuses efforts.
Enable planning and resource allocation by mapping out the sequencing, staging, and resourcing needed to deliver on the roadmap. Dependencies are identified.
Communicate plans with stakeholders about where the product is headed and when/why. Transparency builds trust.
Provide a framework for agility when reprioritizing as circumstances change. Roadmaps are flexible.

While high-level roadmaps traditionally came from product executives, collaborative roadmapping that incorporates bottom-up insights across functions is ideal. Cross-functional teams should shape priorities and timelines together.

At the feature level, product managers fill in details based on customer needs, data, and engineer feedback. Execution plans address technical considerations and team capacity not captured in high-level roadmaps.

The most effective roadmaps strike a balance between structure and flexibility. They align teams to a product vision while allowing room for adapting based on learnings and new opportunities. Inclusive roadmapping unlocks better solutions.

Vision

A compelling product vision outlines the ambitious long-term future you are working towards and rallies teams to bring it to life.

Here are key principles for developing a strong vision:

Why – Your product vision explains why you’re building your product and why you think it will succeed.
Problems – Be more curious about the problem you’re trying to solve than the possibility that a solution could make you rich or noteworthy.
Long-term thinking – Again, it’s not a three-month horizon, it’s from three years to up to a decade. Don’t be afraid to dream.
Disrupt Ourselves – If you’re not constantly reinventing products, another company will be and will take your market share or your goals.
Inspire – Your vision should inspire your employees to be missionaries for the company. Build a vision that makes them excited to work for you.
Consider Trends – Similar to point #4, constantly monitor trends in your field, and adjust your plans accordingly.
Be Ready for Change – Even better than watching where the market is heading is predicting the market. Being on top of trends can help a company understand where trends might be going next. This way, you can be proactive rather than reactive.
Change Details, Hold Vision – As we’ve outlined in the past few points, sometimes the details of your plan are going to change. But your overall vision should almost always stay the same.
Vision is faith – If the vision you create isn’t a leap of faith, it’s not ambitious enough. It will likely take a few years to know if what you’re doing is working. This shouldn’t panic you.
Spread the faith – Constantly communicate your vision inside and outside the company. Get people excited about your plan, and it’s more likely to come to fruition.

Strategy

A product strategy outlines the specific plans and steps a company will take to achieve their long-term product vision. While the product vision may remain relatively stable over time, the product strategy is more fluid and can change in response to shifts in the market, team dynamics, or competitive landscape.

A strong product strategy has four key elements:

Focus your attention on a target: Pick one target and focus there before moving on. This could be a new geographic market or a new type of customer. If you’re trying to be all things to all people, you’re bound to fail.
Align the business and the product: The business side of the company has to believe that the product will succeed, while the product-creation side of the company has to believe in the business strategy to make the product succeed. The marketing/sales strategy, in particular, needs to make sense to the product people, who understand the product the best.
Consider the customers more than the competitors: Often, companies can get into a death spiral because they’re simply reacting to their competitors’ actions. Instead, focus on the customers first. This will be the best buttress against competitors.
Communicate: Make sure that everyone within the company understands the product strategy.

Business Context, Goals, and Commitments

Business Context

Understanding the broader business context is critical for employees developing a new product, as it informs decision-making and helps give meaning to their daily tasks.

At technology companies, having insight into the business context means grasping two key components:

The big picture.
This is the company’s strategy and how its vision was developed. This gives employees an understanding of why they’re building the products they’re building.
The objectives.
This is, on a more granular level, what each team has to accomplish. Rather than giving teams a specific task, it’s better to give them an objective—like reducing onboarding time for a new customer from a few days to a few hours—and then letting the team figure out how to accomplish it.

Equipping employees with business context and autonomy can empower them to effectively prioritize their work. Rather than relying on rigid roadmaps from above, employees who grasp the company's strategy and market landscape can determine priorities that align with core goals.

By understanding the reasoning behind objectives, employees can devise efficient technical solutions themselves. Since they possess specialized expertise, their strategies may excel compared to those prescribed generically from upper management.

Giving employees both business insight and independence fuels informed, strategic prioritization. Employees comprehend the business value of their efforts, enabling them to focus on the most impactful tasks. Their technical prowess and closeness to the work also position them to plan pragmatic solutions.

Blending top-down context with bottom-up freedom creates an environment where employees can deploy their skills for maximum benefit. When equipped with purpose and autonomy, staff can optimally prioritize work in tune with business needs and technical realities.

High-integrity Commitments

A key distinction of vision-driven commitments, compared to roadmap deadlines, is that they are made later in the product development process. Finding the right balance between executive direction and team autonomy is integral to setting achievable delivery timelines.

Rather than top-down mandates, vision-based commitments emerge organically from collaboration. Once product managers have identified essential features that fulfil the vision, soft due dates can be proposed based on realistic team bandwidth.

The art is timing commitments properly - not so early that they become prescriptive roadblocks, yet not so late that alignment suffers. Constructive dialogue between leaders and doers finds the sweet spot.

Vision-driven commitments thus create accountability while preserving agility. By working jointly to align on goals, teams commit to outcomes they help shape and believe are attainable. This facilitates high-integrity commitments focused on achieving collective priorities.

Objectives & Key Results

Product principles can be broken down into “Objectives and Key Results,” or OKR. This is the system that Google has used almost since its inception. The system is meant to empower employees while also properly measuring their progress.

Here are some things to keep in mind when setting objectives and results metrics:

Make the objectives organization- or product team-wide. They shouldn’t be personal.
Maintain a small number of objectives that you feel confident you can complete. Keep clear data on your progress toward completing objectives.
Maintain transparency across the company on teams’ progress.
Create accountability by establishing an incentive structure in the case that teams can’t accomplish their objectives.
Make all results measurable.

Individual employees, of course, can and should have their own goals. But the OKRs, again, should be at least product team-wide, and should be uniform across the organization, so that everyone knows that they are being judged on the same broad standard as their counterparts.

Naturally, this is more difficult the larger the company is. When a company is scaling up, OKRs are useful, because they’re fairly conducive to scale; you can easily add objectives and new data points to OKRs while your company is growing. During a company’s scaling process, leadership needs to make sure that all OKRs remain aligned toward the same larger goal/vision.

Evangelism

As mentioned in the vision section, “spreading the faith” is essential to success. The more people there are inside and outside the company who believe in your idea, the more likely you are to succeed. On the other hand, if you can’t excite many people about your idea, you’re almost certainly doomed to failure. Here are 10 ways to get employees excited about a product:

Build prototypes. Allow people to see what you envision rather than having to imagine it from a description.
Explain the pain. Make clear exactly how your product will make people’s lives better, or reduce their pain and frustrations.
Explain the vision. Make sure your product vision is airtight before presenting it to anyone else, and make sure that you believe in the vision yourself.
Share what you learn. Make sure that all stakeholders understand a product’s potential efficacy. Team members won’t understand the good of the product if leaders don’t share their vision.
Share credit. When you find successes in focus groups, surveys, technological improvements, or anything else, give credit to your team and other stakeholders.
Work on your presentations. Make sure your presentations to your own team, customers, and other executives effectively sell the value of the product.
Be prepared. Make sure you know everything there is to know about your product and your industry. People trust those who know what they’re talking about.
Be excited. Be aware of your own enthusiasm level—if it’s lagging, consider ways to increase it, like thinking about the final launch, or about how customers might respond.
Show your excitement. Make sure your team and your managers know that you’re excited. This could make them more excited as well.
Hang out with the team. Be sure that your team likes and trusts you. Spend time with everyone on your team.

Leadership & Team Structure

Even when teams are functioning properly and leadership is properly overseeing the company, if there area lot of product teams that are working on different components of the same larger product, it can be difficult to keep everyone on track and aimed at the same goal. There are a few principles to rely on that can help to fix this issue.

Leaders should communicate the vision of the company and the strategic direction down the ladder to the bottom rung of the company.
Everyone should be aware of the company’s larger goals. In order to maintain a cohesive unit, leaders should have a clear investment strategy. They should know what products or divisions are succeeding and pour more money into those, while reducing investments in units or products that are starting to stagnate.
Teams should share services and lessons learned with one another, but not depend on each other. This is a tough balance to strike, but leaders should encourage collaboration among teams while also stressing that each team is responsible for delivering on their own work and has the autonomy to do so without interference.
Leaders should keep team size between two and 12 engineers to every product manager/designer.
Develop and improve upon the structure/architecture of the company before attempting to engineer the vision. People should understand their roles and prove their competency at them before starting a huge project. Companies should also realize that in response to challenges, their structure may well change. The structure of a company should always be flexible.
A company should know what its customers want before launch, and should have specific teams targeting specific groups of customers.
Leaders should continue to stress the importance of cultivating and keeping missionaries.

Customer & Product Discovery

Companies need to balance improving existing products while also exploring new offerings. Maintaining quality sustains current customers – innovation creates future ones.

Engineers often excel at incremental upgrades but can struggle with experimentation. To foster ongoing product discovery, it should infuse all levels of the organization. Dedicate specific resources for R&D projects, protected from short-term demands. Make continuous learning part of the culture through activities like hackathons, prototypes, and concept testing. Empower all employees, not just product teams, to identify issues and imagine solutions.

Develop mechanisms to quickly trial ideas in the market to glean real-world feedback. Allow some "slack" in engineers' schedules for tinkering and learning without pressure. Recognize that failures are learning opportunities, not just successes.

Embedding continuous discovery throughout the company balances delivering today's products while creating tomorrow's possibilities. With the right resource prioritization, culture, and mechanisms, innovation can flourish across the organization.

Framing

Framing is a crucial tool for unraveling complex product discovery challenges. When the problem is well-defined, the solution path may be clear. But for more ambiguous or open-ended questions, framing helps reveal the core issues to address.

Effective framing involves looking at potential products from multiple perspectives to identify needs, pain points, use cases, and other insights. Rather than jumping to solutions, framing explores the context and characteristics of the situation to frame the right problem statement.

By taking the time to frame complex discovery challenges properly, we can clarify the problem before seeking the solution. Framing transforms messy issues into well-defined problems, bringing focus to product innovation efforts. It lays the foundation for solutions that truly connect with people's needs.

Align team on objective and problem

Make sure the whole team is aligned and understands what the objective is or what problem we’re trying to solve.
Find the risks that the company will take on during discovery. These could be risks related to value, usability, feasibility, or business viability. The risks can include questions ranging from whether the company has the money to pay for the creation and rollout of the product to whether the product is ethical.

Opportunity assessment

What’s the business objective – The product needs to help with one of your team’s objectives—for example, a tech company, which previously had most of its sales come from one segment, might launch a product that it hopes will interest another segment.
What does success look like – Quantify this. Using the same example, success might be 40% of that company’s products are bought by a specific segment in the next calendar year, up from 25% before the launch.
What is the customer problem the product can solve – Again, focus on the customers and the problems they have first and internal successes second. Let’s say the company is a sports gambling website that catered to men’s sports. The new product caters to other kinds of gambling, including on women’s sports, that interest women more.
Who are the customers for the product – What segment of your overall customer base, or the overall base of consumers around the world, are you targeting?

Customer letter

In the customer letter technique, product managers imagine a letter from a satisfied customer, which helps them better understand their goals. Using the technique, you’ll work backward. Begin by writing a (fictitious) letter from a satisfied customer who has tried your new product. Why does she like it? What problems does it solve? Then, build your discovery strategy around the letter. Ask how do we make this letter come true? How do we solve these problems?

This technique is well-suited to larger projects with overlapping goals because in working backwards, product managers can understand how their goals dovetail into customer satisfaction. A project may attempt to solve multiple problems for a customer in an effort to make her more satisfied overall.

Startup Canvas

The startup canvas framing technique is useful for quickly highlighting the biggest risks of starting a new company or product line.

Startups have many questions, like how to raise or make money, how to find customers, and how to build a new line/company from scratch. Rather than creating a full business plan, though, you can use the startup canvas as a leaner option.

The biggest risk for startups is generally related to value. You’re looking for something that your customers will buy, but it’s difficult to know whether they will be willing to do so. Plus, if you’re competing in an existing market (which the grand majority of companies, even the new ones, are), your product needs to be substantially better than your competition’s in order for people to feel justified in switching.

Take a look at the market, the big players, the risks, your own product and financial stability, and answer all of the questions in the previous two frames as well. Once you’ve identified your risks, whether the effort is feasible will become clear.

Planning

Step two in the product discovery process is figuring out how to create the infrastructure necessary to get a product to market. This is the planning stage of the process. Useful techniques include story mapping and customer discovery.

Storymapping is the creation of a more complex “to do” list. It’s a simple but useful technique that helps companies plan how to build products. Create a 2D map of your product. From left to right along a line, place the activities your user can do on your product, basically in the order that they’ll do them. You might have dots like “open the app” or “sign in” near the beginning and “edit their profile” closer to the middle/end. Vertically, add the tasks necessary to make all of these activities work. The more complex the activity, the higher the vertical bar will be. This way, you can clearly see what to accomplish and what parts of your idea will be more or less difficult. As customers provide feedback on prototypes, you can add that to the map.

Customer Discovery

Customer discovery is a technique that helps to find reference customers, or customers who are loyal to the product. These customers are the lifeblood of any company—they help you determine how to market the product, and they help spread the word about it to similar customers.

They are people who would pay for a final version of your product and like it enough that they would recommend it to friends. The process is generally more complex than story mapping.

As few as six reference customers can help your company grow exponentially. Before fully launching, a company should recruit between six and eight of these people. The best reference customers share these characteristics:

They are in the company’s target market/audience.
The product helps them solve a significant problem in their life.
They are not obsessed with tech.
They are willing to help the company and have the time to do so.

Prospective reference customers will be excited by the idea of having some input into the product. The product team can use the reference customers to test out their products before launch. The product manager needs to identify one solution that solves the problem that all reference customers had going into the test. Otherwise, it’s possible the solution will be too specifically tailored.

All of this is a lot of effort, especially for the product manager running all of this. But if you have six people at the end of it whose problems are truly solved and who are willing to go to bat for the company, this almost necessarily means that there are a lot more people in the target market who would benefit significantly from this.

Ideation

Customer Interviews

Interviewing current or past customers can help the team generate ideas, because customers who regularly use the product may notice issues with it and consider how it can be better. If we know, from the customer, what our company needs to do to make them use our service, they’ve almost generated some ideas for solutions for us. In every interview, the interviewer should consider the following questions:

Does this person have an issue that we’re trying to solve?
How is this person attempting to solve their problem right now?
What could our company do that might make this person switch to our problem-solving mechanism?

Concierge Testing

The idea behind concierge testing is that the company becomes the “concierge” for potential customers, helping them with their needs. After interviews with customers, product teams know their needs. The product teams then focus on helping specific customers with their problems. By trying to solve specific problems, the product teams are able to better understand these issues and how they might relate to more than one customer.

Again, an engineer, the product designer, and the product manager should do this together and debrief on their experience afterward.

Customer Exploration

In addition to generating ideas for designing new products, companies need to generate ideas for improving existing products. One way to do this is by observing how customers use a product, which may be different from the way its designers intended.

eBay’s “everything else” marketplace is an example. When eBay launched, they wanted to be a website that facilitated transactions mostly for collectibles and electronics. But they also created an “other” or “everything else” tab where people could buy/sell (mostly) whatever they wanted. eBay didn’t realize that their customers would sell items like cars on their site. But today, eBay has a huge market share in the used car industry.

eBay allowed their customers to behave in ways that they didn’t expect or prepare for with their service. By doing so, they grew their business exponentially, and in response to customer demand, they built up more infrastructure around customer interests like the used car market.

Obviously, this strategy only works in specific cases. If your product is ultra-targeted, it’s more difficult to pull off. But if done correctly, as we’ve seen, it can reap huge dividends.

Hack Days

The final strategy for ideation is holding “hack days,” in which the company’s engineers, product managers, product designers, and senior executives spend the day brainstorming and solving problems. Hack days may focus on a specific issue or be unstructured.

The benefits include:

Involving engineers in generating ideas, in addition to their usual design role.
Improving morale by generating creativity and enthusiasm for the company’s larger mission.

Prototyping

After generating ideas, the next phase in discovery is prototyping. Prototypes are often envisioned as nearly finished products, but rough, low-fidelity versions are more useful and affordable to create.

Though less intensive than final products, prototypes still require teams to translate concepts into tangible forms. This process crystallizes fuzzy notions into concrete implementations for testing. Prototypes strike a balance - more effort than thought exercises, but less than polished products.

Four types of prototypes flow from low to high time and effort:

Feasibility prototypes involve minimal code to validate technical viability. Engineers build just enough to assess if the full product is possible.
User prototypes simulate the user experience without functionality. Simple versions visualize product flow while high-fidelity prototypes mimic a polished UI for refined testing.
Live-data prototypes are pared down working products that generate real user data. This provides quantitative usage metrics and qualitative feedback on a smaller scale.
Hybrid prototypes combine approaches for quick testing. A "Wizard of Oz" prototype has manual back-end processes behind the UI to fake functionality.

The right prototype clarity and fidelity depends on the question needing answers. Rough prototypes fuel early learning while more refined ones evaluate detailed usage. Prototyping brings ideas to life at the smallest viable scale.

Feasibility Prototypes

Feasibility prototypes are designed to test the viability of building a product's core functionality. Engineers create these prototypes when there are open technical questions about whether proposed features can successfully be implemented at scale.

These prototypes involve writing minimal code - just enough to prove the high-risk aspects can work. The goal is not perfection but rather quickly validating feasibility. The code quality and completeness is secondary, as this prototype likely will not directly become the final product.

Engineers build feasibility prototypes for their own benefit, to resolve technical uncertainties. Product managers typically are not heavily involved, beyond deciding whether to proceed once feasibility is demonstrated. This allows engineers to rapidly experiment with solutions to complex technical challenges during discovery.

By building stripped-down prototypes focused solely on resolving technical risks, engineers can determine if the full product vision is realistically achievable. Feasibility prototypes answer the question: "Can we build this?" before major development investment. Their spartan functionality provides crucial technical validation.

User Prototypes

Unlike feasibility prototypes, user prototypes focus on simulating the end-user experience rather than technical function. They emulate the look and feel without actual functionality. For example, users could not truly purchase items from a user prototype of an ecommerce site.

Simple user prototypes visualize product workflow and information architecture. Often low-fidelity wireframes or storyboards, these are for internal team use in early concept stages.

High-fidelity user prototypes mirror the polished UI and UX of the final product. They support testing with external users to gather feedback in later discovery stages. However, the backend lacks full capabilities at this point.
The goal of user prototypes is observing usage and flows. Simple versions facilitate internal alignment while high-fidelity prototypes enable refined usability testing. They answer "Will users understand/adopt this?" without building final technology.

Prototyping the user interface separates validating desirability from technical viability. User prototypes model future functionality to optimize and refine the experience before full development.

Live-Data Prototypes

Live-data prototypes are limited but working models that generate real usage data during discovery. This provides evidence on market viability before full development.

These prototypes lack scalability, robustness, and complete features. However, core functionality is built so real users can interact with the product and give feedback. This yields both qualitative insights on user perceptions plus quantitative metrics on behavior.

For highly risky product concepts, live-data prototypes give empirical validation early. Feedback indicates if target customers will actually use and pay for the proposed solution.

It is crucial to remember the prototype's constraints at this stage - the product remains in an early state. The technology is not production-ready and the feature set incomplete. But the goal is signal, not scale.

Live-data prototypes answer the question "Will people use this?" with real-world data. Their lean implementation provides room to pivot before major investment in the full product. Early signal trumps scalability.

Hybrid Prototypes

Hybrid prototypes blend attributes of feasibility, user experience, and live data prototypes. A common example is a "Wizard of Oz" prototype.

In this approach, the front-end user interface is fully simulated but the backend operations are manual. For example, an engineer may manually process search results instead of connecting to a real search engine.

The hybrid combines the appearance of a finished product with the quick hackability of a simulation. It provides user feedback without all features actually working yet.

Hybrids aim to rapidly test concepts with minimized engineering. They trade off scalability for speed and learning. The goal is indicating desirability and usage before heavy development investment.

Prototyping is about answering questions with just enough effort - hybrids filter feedback through a facade. They synthesize approaches to maximize learning with minimal viable effort. This flexibility fosters informed product discovery.

Testing

Testing is the final phase of discovery, separating viable ideas from those to discard. Rigorous testing mitigates four key risks:

Value - Does a target market exist for this product?
Usability - Can users understand and use the product?
Feasibility - Is it technically buildable by our teams?
Business viability - Does it align strategically and financially?

Ideas must pass all four validations to proceed further. While testing cannot guarantee success, it screens for major flaws using prototypes and customer feedback.

Transparent communication across functions is vital. For example, engineers may determine technical infeasibility while sales highlights poor market fit. Equally weighing perspectives ensures rigorous evaluation.

No process prevents all failures, but robust testing minimizes wasted effort on losing ideas. Though many concepts won't pass, disciplined testing fails fast and cheap. Teams can then focus resources on high-potential products that fulfill user and business needs.

While testing takes effort, it reduces greater waste on ideas lacking viability across technical, user, and business dimensions. Failing fast saves time and money while enabling teams to build the right solutions.

Value Testing

Validating product value and market fit is crucial to testing. Customers only adopt new solutions offering significant improvements over current options.

Three methods assess value:

Fake door tests validate demand by measuring interest in a non-existent product. This quantifies baseline market interest.
Qualitative testing elicits feedback on value through focus groups, surveys and interviews. It reveals subjective perceptions of worth.
Quantitative testing uses prototypes and landing pages to capture behavioral data on willingness-to-pay, conversions, and metrics. It supplements qualitative data with hard statistics.

Together, these techniques probe the value proposition from multiple angles. They illuminate not just theoretical interest but tangible customer behaviors and trade-offs. Robust value testing ensures the product resonates before committing to full development.

Fake Door Demand Test

The fake door demand test determines whether there’s a demand for your product. The test works like this: You add your idea for a product to your company’s already-live system. If it’s a new feature on your company’s app—you’d put the feature link where it would be if you were to launch it. But clicking on it would take the customer to a page recruiting test subjects for the feature.

Similarly, for a new product, you’d build a landing page that links the potential customer to a recruiting page. You can track the number of clicks on the feature or product to see if demand exists, and you can find some new test subjects.

Qualitative Test

This type of value testing will show why a product has value or doesn’t. If the latter is the case, it will also show what a company can do to fix its value problem (if it’s fixable). You’re not proving that your product is good here. Rather, you’re learning quickly. This type of testing is the most important part of the discovery process.

First, interview the test subjects to make sure that they have the problems that you screened them for, and determine what might convince them to switch from their current product to yours.
Then, perform a usability test (explained in the next section) to see whether customers can figure out how to use your product.
Next, determine whether they perceive your product as having value:
Ask whether they’ll buy the product on the spot. You won’t sell it because it’s a prototype, but you’ll learn whether they’re willing to pull their wallet out for it.
Ask how likely they’d be to recommend the product to their friends (use a 1-10 scale).
Ask whether they’d spend time on more tests.

Quantitative Value Test (A/B)

The third type of value testing—quantitative testing—is generally done with live-data prototypes, which allow the company to acquire enough data for statistically significant results. While qualitative testing is about learning, quantitative testing is about building evidence. Generally, larger companies do more quantitative testing because they have more resources to do so and they’re more risk averse. They may also have more site traffic to build their quantitative tests around.

The best type of quantitative test is an A/B test. In this test, 99% of users use the “A” version of the product, or the version that’s already publicly available. The other 1% uses the “B” version, or the product that’s in the discovery stage. The company then collects data on the behavior of the two groups.

Usability Testing

Usability is the second of the four risks that testing must address in the discovery process. Usability testing tests whether users understand how to use your product by putting an early prototype in front of them and asking them to use it. This gives companies an idea of how potential users approach the product, how they understand the product design, and whether they have functionality concerns that you may not have spotted.

Feasibility Testing

A third risk addressed in testing is determining a product's technical feasibility. Can our engineers build what we envision based on available skills, resources, and materials?

Feasibility is assessed by prototyping enough to prove viability or by engineers' judgment on achievability. Factors include:

Skillsets - Does our team have the required technical capabilities?
Resources - Do we have sufficient staff, time, and budget allocated?
Scalability - Can the system handle expected growth and usage levels?
Materials - For hardware, do we have access to needed components?

Engineers gauge feasibility through hands-on prototyping or evaluating the challenge speculatively. They determine if the solution is within realistic technical scope and constraints.

Assessing feasibility ensures we do not proceed with development that is impractical or impossible to deliver technically. It aligns ambition with achievability to mitigate wasted effort on the wrong ideas.

Technical feasibility sets the boundaries for what is possible. Rigorous testing reveals whether our vision fits within those boundaries before overcommitting resources.

Business Viability Testing

The final dimension of testing is determining if a product makes strategic and financial sense for the business.

Business viability risk is often overlooked, but is crucial to building enduring, loved products. Ask yourself: will it advance our goals and be profitable?

To assess viability, the product manager shares financial models and business cases with key internal stakeholders. Each department analyzes for potential issues from their perspective. The goal of a product manager is to socialize, gather buy-in, and reduce risks from the perspective of other departments.

Marketing – The marketing department is concerned primarily with driving sales. They will be looking for a product that they can easily explain to customers and one that will have a lasting impact and relevance in the marketplace.
Sales – While the marketers are the ones trying to drive people to the product, the sales team are the ones getting pen to paper (or hand to credit card or keyboard) and completing sales. Especially if your company has a direct sales team, they will be interested in whether they have a product that they can get off the shelves and one that they can make good money on.
Customer Service – Product managers should be aware of a company’s customer success strategy while they are building their product. A customer success strategy is how companies have decided to help their customers through using the product. Some companies use a high-touch strategy, meaning that they provide significant support for their customers, while others provide a low-touch strategy, which is hands off. The product needs to fit with the company’s strategy.
Finance – The finance department will ask whether the company can afford to produce and sell the product. Additionally, they’ll have a good sense of investor expectations—it’s useful to talk through the costs associated with the product (and the benefits) with someone in the finance department.
Legal – Product managers must address legal concerns before they can launch a product. Companies that don’t consider whether there are potential privacy violations, intellectual property violations, or compliance violations may be opening themselves up to legal action that can cost the company money and reputation.
Security – The product manager needs to be clear that the product is secure before launch. The easiest way for a tech company to enter into a downward spiral is to compromise the security of its users’ information.
Leadership – Finally, the product manager needs to get approval from leadership. The leadership of the company has to be satisfied that all of the previous business viability conditions have been met before they give their signoff. Hopefully, they’ve been involved for much of the process, but no matter what, they’re always aware from experience of the risks associated with launching a product.

Build A Culture of Innovation

A Culture of Innovation

In order to foster a culture of innovation, companies should: put customers at the center of their business, have a clear vision and strategy, hire capable product managers, and encourage engineers to be involved in the discovery process.

Innovation Principles

Some customers are always annoyed with the current product, always asking for something new, and are always curious about new innovations, so they can be a great resource if companies listen to them.

A clear vision – For many companies, starting to significantly scale means that they’ve achieved their first vision as a startup. They don’t adopt a new vision, and they start to get stuck.
A clear product strategy – This means prioritizing one market rather than trying to please every possible customer.
Capable product managers – As we’ve discussed, the product manager is at the heart of every good product team’s success. They are ultra-competent.
Long-term employees – Teams that innovate over quarters and years can learn from one another and build up relationships.
Engineers engaged in discovery process – Engineers are involved in customer/problem/solution discovery and innovation, not just building.
Courage – Great companies continue to take risks, even as they grow.
Product teams feel empowered – Again, this means that stakeholders shouldn’t just be handing down orders based on roadmaps. Product teams should know they can innovate.
Product-first mindset – Product teams must know that they’re serving the product, and thus the customers, before protecting the business.
Time for objectives – Product teams need time to innovate. This means not constantly bogging them down with work like fixing bugs in the existing program. Obviously, there will be some of this, but teams that consistently innovate have enough people to multitask.

Maintaining Speed

Many organizations strive for consensus. While this typically comes from good intentions, what this means in practice is decisions are very hard to make and everything slows to a crawl.

The engineers need to participate in product discovery from the start of ideation. They will often contribute alternative approaches that can be significantly faster to implement if you include them early enough in the process for the product manager and designer to adjust. If not, their critical input will come too late in the process.

If the existing technological architecture doesn’t properly allow for development, innovation will slow down to rebuild it. This is not something that can be fixed overnight, but it needs to be attacked in an ongoing and concerted effort.

The lack of a strong and capable product manager is typically a major reason for slow product. The impact of a weak product manager shows up in many ways, but it shows up very visibly as a team of mercenaries rather than missionaries. The product manager has not inspired or evangelized to the team, or the team has lost confidence in their product manager.

If teams are split across locations, besides the dramatic decrease in innovation, the velocity of the organization will suffer significantly.

Even simple communication becomes difficult.

If a company’s priorities are constantly changing, it’s going to slow down innovation, because teams will constantly be switching gears.

Some organizations, in order to create a pleasant work environment, are always looking for consensus. Striving for consensus rather than innovation, though, will stop companies from considering innovative ideas as quickly as they should.

It’s not easy to change a company’s culture so that it takes on all of the above attributes. But there are some strategies that can help employees get interested in the discovery process, which in turn will lead to an improvement in a company’s ability to innovate.

Improving Existing Products

As with new product development, everything starts with having a very clear understanding of what you’re trying to achieve. For example, let’s say you’re the product manager responsible for new insurance coverage applications at an online insurance site.

Your primary tools for gaining insight into what’s going on are to study the site analytics, and to test your product on real users. You’ll also gather data from NPS/CSAT tracking, customer service, the sales team, and from win/loss analysis.

So when you’re trying to improve an existing product, don’t fall into the trap of gathering subjective feedback, eliciting customer requirements and chasing features. Instead, focus on relentlessly pursuing your metrics by studying live use and working the numbers in the right direction.

FAQs

How has Inspired by Marty Cagan influenced product management?

Marty Cagan's work has significantly influenced modern product management in several key ways:

Emphasis on customer-centricity - Cagan stresses making customers the North Star that guides all product decisions, from problem discovery through testing and iteration. This user focus is now core to product management.
Lean and agile principles - Cagan advocates building minimally viable products, iterating based on feedback, embracing flexibility, and fast experimentation. These tenets are now widely adopted.
Product discovery mindset - Cagan pioneered rigorous discovery processes before development, ensuring product-market fit. This upfront validation prevents waste.
Innovation culture - Cagan urges creating a culture and processes that foster innovation and appropriate risk-taking. Psychological safety, autonomy, and collaboration enable this.
Cross-functional collaboration - Cagan highlights aligning design, tech, and business around delivering user value, not functional silos. This integrated approach is standard today.
Continuous improvement - Cagan argues successful products require ongoing optimization, not just launch. This sustainment focus is now integral to product thinking.

Cagan's intense user focus, adaptable processes, and culture of innovation have become central pillars of modern product management. His work helped define and evolve the field.

How should a product manager pay attention to relevant and meaningful trends?

Here are some tips for product managers to pay attention to relevant and meaningful trends:

Set up Google Alerts and Twitter searches to passively monitor news and developments in your industry, target markets, and relevant adjacent spaces. Review the most interesting hits.
Actively explore industry publications, blog posts, conferences, forums, and communities to identify emerging trends. Dig deeper on resonant themes.
Talk to customers, sales teams, customer success staff, and partners to get insights on trends they see on the ground. Listen for patterns.
Competitive analysis of new features, messaging, and announcements provides signals on what rivals are betting on. Connect the dots.
Consumer surveys and user interviews can reveal shifting user expectations and pain points to address. Ask probing questions.
Consider potential disruption from other industries, technologies, business models, and cultural shifts. Think expansively.
Balance reactive observation with proactive ideation on how you could create new value and get ahead of trends. Speculate intelligently.
Focus on trends offering meaningful value to users and your business, not just hype cycles. Filter with strategic clarity.

Staying on top of relevant trends without getting distracted is a balancing act. Make observation systematic, talk to users, filter intelligently, and explore creatively.

How can an engineering team influence engineering business objectives and reduce usability risk?

Here are some ways an engineering team can influence business objectives and reduce usability risk:

Closely collaborate with product and design to ensure technical solutions deliver intended user value. Seek to deeply understand user needs.
Participate in discovery processes to share technical feasibility perspectives early. Help shape viable concepts.
Advocate for including usability testing throughout development, not just at the end. Prevent late-stage issues.
Identify and recommend new technologies/architectures that could enable better user experiences. Stay on top of technical capabilities.
Develop strong partnerships with UX designers and researchers. Incorporate their expertise into engineering processes.
Implement robust instrumentation to identify usability issues and prioritize fixes based on user impact.
Balance perfectionism with business needs - optimize for "just good enough" rapid iteration versus endless tweaking.
Communicate transparently on technical tradeoffs and risks to find solutions that fulfill user and business goals.
Influence prioritization by articulating technical debt and tech-focused opportunities to improve the user experience.

Proactively partnering across functions, advocating for design thinking, and taking ownership of the user experience allows engineering to shape better products.

How can a product leader empower teams and foster team development?

Here are some ways a product leader can empower teams and foster development:

Provide clarity of purpose - ensure teams understand how their work ladders up to company goals and user value.
Give autonomy and trust - allow teams discretion on how they accomplish outcomes rather than prescribing solutions.
Invest in growth - support training, mentoring, job rotations, and other growth opportunities.
Promote psychological safety - encourage risk-taking and speaking up without fear of failure.
Develop leaders - groom team members to step up into leadership roles and coach them.
Foster collaboration - break down silos, facilitate open communication, and promote helping behaviors between teams.
Value contributions - recognize achievements, celebrate wins, and reinforce progress.
Model accountability - take ownership as a leader and resist blame.
Seek input - listen to ideas and feedback from all levels and incorporate them.
Be human - show you care about people as human beings, not just productivity.

Empowerment comes from clarity, autonomy, trust, growth, and psychological safety. Foster development through teaching, visibility, collaboration, feedback, and genuine humanity.

How will talking to users and customers influence product team objectives?

Here are some key ways directly engaging with users and customers can positively influence product team objectives:

Builds empathy - Humanizes users and their needs, motivates teams to help them.
Identifies pain points - Surfaces real user problems and jobs-to-be-done. Focuses efforts on user value.
Provides feedback - Allows teams to iterate and improve products based on real usage and issues.
Drives innovation - Sparks new ideas and features based on user needs and latent asks.
Enables co-creation - Collaborating with engaged users can mutually design better solutions.
Tests concepts - Validates product direction and upcoming features with user input.
Gathers data - Quantitative and qualitative insights from usage inform decisions with facts.
Narrows assumptions - Direct contact replaces guessed user needs with truth.
Builds loyalty - Interacting with customers strengthens engagement and advocacy.
Grounds strategy - Keeps user value central to plans vs. internal-facing only.

Human connection with real users reinforces teams' purpose, focuses execution, accelerates learning, and ultimately results in better solutions. It is indispensable.

Which risk is bigger: value risk or feasibility risk?

There is no definitive answer on whether value risk or feasibility risk is bigger - it depends on the context of the specific product, company, and team. However, some general perspectives on comparing these two key product risks:

Value risk is often viewed as the bigger potential showstopper if ignored. Building something feasibly that no one wants is useless.
But infeasible products also fail. Technical barriers can be just as challenging to overcome as market adoption.
Feasibility risks tend to surface earlier in the process during discovery and design phases. Value risks crystallize later via user testing.
A minimum feasible product can test value risk through live prototypes. The inverse is difficult.
Domain experience and capabilities influence risk profiles. An experienced team may see more value versus feasibility risk.
Markets and technologies differ in rate of change. Feasibility in fast-changing tech may trump stable value.
Organizational context also plays a role. More structured firms may overweight feasibility.

Both risks are critical and interdependent. There is no universal bigger risk. Astute teams hedge by testing both value and feasibility early and often. They adapt plans based on what tests reveal.

How does speaking to actual users improve business development?

Here are some key ways that speaking directly with actual users can improve business development activities:

Provides insights on pain points - Helps identify customer needs and problems to solve. This focuses BD efforts on potential offerings that deliver real value.
Informs early positioning - Direct user feedback helps frame value propositions and guides go-to-market messaging.
Surfaces partnership opportunities - Conversations can reveal where users have unmet needs aligned to other companies' solutions, suggesting win-win partnerships.
Validates ideas and concepts - Quickly testing new offerings directly with target users provides reality-checks and rapid learning.
Builds relationships - Interactions during product development establish rapport with engaged potential customers for BD.
Narrows targeting - Identifies differentiated customer segments, personas, and use cases to hone BD focus.
Drives authentic messaging - Marketing and sales materials grounded in user conversations resonate better.
Uncovers trends - Users provide an early signal on where needs and the market are heading.
Fuels innovation - New technologies and business models often derive from unarticulated user needs.

At its core, business development is about understanding and serving users. Speaking directly with them provides invaluable context that focusing just on partners cannot replicate.