Updated 22 April 22
Lean startup methodology is all about minimising risk. And what’s more risky than building a product that has never previously existed? Applying a lean startup method to your hardware product development is the best way to minimise risk and potential costly mistakes.
Having managed the development of a number startups and internationally successful electronic products in my career, I wanted to share some insight into the process of building a hardware product that shows though it is challenging, it’s not as daunting as it may seem.
A study from CB Insights analysing the failures of 382 hardware startups, found that the biggest reason they failed was lack of demand for their products. In order to create a successful product, you need to have a solid understanding of what your customers want. This way you can build products people love and reduce the risk of failure. In the Lean Startup world, we use a BUILD, MEASURE, LEARN cycle to quickly test a hypothesis, collect a lot of feedback, digest it and move forward with each iteration.
The hypothesis can be in relation to any part of your hardware startup; product features, customer needs, the right pricing and distribution channel, etc. just don’t be fooled by the term “BUILD”. It does not mean “build a final product”. Rather, the simplest thing that you can show to customers to get the most learning at that point in time.
Software products can do this quite easily. Developers can use existing tools or “build” functionalities quickly and relatively inexpensively for their customers to start interacting with. For hardware however, production costs are greater and manufacturing takes longer. It is very unlikely that a hardware startup could match the iteration speed of a software startup, but the same philosophy can be applied.
Successful products delight users and deliver functionality in equal measure. This is especially important for hardware. So It invariably makes sense to explore both of these in separate development streams, focusing on those two key aspects.
A product that delights
You have to spend time understanding your users and what they are looking for in a product. The users need to have a personal connection to the product and it needs to address their needs in terms of being intuitive, usable and visually appealing. Skilled product designers will spend time carrying out extensive user research and iteratively creating designs of increasing realism (from sketches through photo-realistic renders to 3D printed models). This journey is directed by the users at every step of the way until we have a validated ‘looks-like’ prototype.
A product that works
In parallel, we have to explore the technology and iteratively develop prototypes that eliminate technical risk and eventually deliver the required functionality. Initially, it is quite likely that you’ll have to prove your proposed solution is technically feasible first. This might involve piecing together different technical concepts or building upon some existing research (where you might need to actually build a small element of your solution to eliminate a key technical risk). Then by focusing in turn on the system components that represent the largest remaining technical risk we can iteratively build a works-like prototype - it might not be pretty but it will prove we’re ready for the next step.
Bringing it together
This is the exciting stage where you finally have something that really represents your vision. Combining the user validated design with the functionally validated engineering solution in a fully working prototype. This is the stage that often requires significant capital investment in things like injection moulded tools or custom Printed Circuit Boards (PCBs). That’s why it’s so important to carry out the former less costly, parallel activities; to eliminate the risk of this prototype failing to provide the required functionality or delight the users, without wasting the money on expensive production costs.
It doesn’t end there though. Even the best designed and engineered first prototype will require small adjustments. Besides the user and performance aspects of the product, additional requirements like manufacturability and regulatory compliance become more demanding and you might need a small number of additional iterations.
Anticipating these requirements and minimising both the number and cost of the iterations is the key to launching a successful product before you run out of money!
Getting it out there
After the excitement of reaching the milestone of your fully working prototype, there’s still another set of obstacles to overcome that a software startup doesn’t have. Routes to manufacturing, packaging, distribution, service design, regulatory compliance, IP protection, regionalisation, go-to-market strategy, and more! All need to be understood and managed, often, at the same time.
How long does it take?
Software startups have a low barrier to entry, just about anyone can launch a basic website or app within a matter of hours! For a Hardware Startup, the journey from validated problem to product launch is much longer.
Design activities like 3D CAD (computer-aided design) and PCB (printed circuit board) design layouts can easily eat up weeks. And though there have been great advances in prototyping technology over the years, you can still find yourself waiting for manufacturing or rapid prototypes to be printed. Unfortunately, you can often suffer delays due to lead times on material or component delivery.
Once you’ve achieved the milestone of a fully working prototype, activities such as a route to manufacture and achieving product compliance are other sources of delays that are measured in weeks. It’s rare to be able to navigate the complete journey in less than a year (and this is really only achievable for a relatively simple low cost product involving minimal technical innovation). It’s more typical for the timescales to be measured in years especially if the regulatory requirements in your target market are particularly onerous.
It’s called hardware for a reason - why do it?
There’s no doubt the journey to building a successful hardware startup is long and challenging but the rewards are worth it. Customers subconsciously attach more value to a physical product and margins associated with your initial product sale can be very healthy. With most hardware products now, there is a software element to them (the ‘software wrapped in plastic’ model) and that comes with the opportunity for recurring subscription revenue. Adding all of these advantages together can result in a strong business with longevity baked in!