I’ve been thinking long and hard about how to apply lean startup techniques, such as the minimum viable product approach, to hardware products.
After much head scratching, I have to conclude that you can apply it in spirit, and you can do it energetically too. You just can’t do it literally.
There are several issues:
- Manufacturing lead times
- Regulatory approval – cost and lead time
Let’s say you invested minimally, developed a great theory regarding your customers’ needs and wants, came up with a feature set, completed the design and negotiated a price for your tooling, all for peanuts.
Now you have to wait for your contract manufacturer to go through all the stages of their validation process to get to the beginning of the ramp for mass production. That’s a couple months right there.
Once you have a pilot product to test, you will need to submit it for regulatory approval in all the countries you plan to sell the product in. That’s a couple more months and tens of thousands of dollars of regulatory certification cost.
Then, mass production starts. Capital is tied up in component cost. Then you start churning units on the manufacturing line. More capital is tied up in finished goods.
By now, it’s been many months since the inception of this new product idea. Finally you are able to sell your product to real buyers and users – and you find a fatal flaw, which you have missed in your haste to bring your product to market.
Guess what? You can’t afford to write off the inventory. So your sales team will need to sell the flawed product as is. If you are selling through retail channels, that’s even worse: you have to make sure they are incentivised to sell through to end users. Suddenly, instead of spending your available capital on the next iteration of your product, you are now spending every available dollar on marketing in hopes of moving units out of inventory and freeing up cash.
So, much as I love the idea of lean startup techniques, I regretfully came to the conclusion that when it comes to hardware products, you have to do it much more old school. Do your homework. Make your business case. Test, test and test some more using storyboards, white models, reference products and so forth, without charging people money for it, and get buyers and users to be heavily involved during the product development process. Validate and verify to the death.
There’s still opportunity to apply MVP principles: avoid waste, don’t overdesign, put it in the market as quickly as possible, charge whenever you can to test the business model, pivot with learnings. But unlilke software products or services, there is no give on quality: you must meet minimum quality expectations because you can’t fix it with a patch after the product leaves the factory.