The importance of a well-structured product scope in a highly competitive economic landscape
Whether you’re already a provider of B2B-focused products, or you’re considering launching a new product, it’s crucial that you have a very clear understanding of the current state of the market, because according to Harvard Business School, of the 300,000 new products that hit the market every year, 95% fail. [1]
Experts largely credit this attrition to the fact that business owners and entrepreneurs are failing to have answers to the most important questions before launching a product. For example, will your chosen niche support an additional competitor? Do you understand your competition? Is there enough demand to make your product a profitable endeavor?
The answers to all of these questions will determine what’s referred to as the product scope used by the project management team to bring your product to market. The product scope in turn will drive your annual strategy, inform your plans for production, and impact how you grow your team to support your business needs.
This concept is best understood when one understands the benefits of establishing product scope at the start of project planning, why it’s an important component of the project planning process, and the role it plays in helping the project management team establish a proper project scope. With an understanding of its role in project planning, one can then properly plan and compose a project scope, and track the effectiveness of the plan relative to established benchmarks.
What is product scope?
A well-defined product scope is used to communicate to project managers and their teams what steps need to be taken to bring the product to a viable state. The product scope should include the function and defining characteristics of the product, such as dimensions, functional description, and the materials necessary to construct the product.
Why is product scoping important?
Product development isn’t an overnight process and can span months or even years. Throughout that process, team members and business strategies can change drastically. Regardless of these and other challenges, it’s important that the final product remains aligned with the purpose or end-use it was designed to fulfill. The product scope establishes these baseline requirements and provides a necessary framework for the team to follow.
Alternatively, in the event that outside influences such as budgetary constraints or changes in consumer demand require a change in the product scope, the project management team has a clear blueprint that can be revised to meet current market conditions, saving resources and time in the process.
Before we dig further into the benefits that proper product scoping practices bring to the project management workflow, we should first differentiate the product scope from the overarching project scope.
How does product scope differ from project scope?
The practice of establishing scope, whether for a project or specific product, revolves around several key planning practices. By designating the scope of a product or project, the team is allocating the necessary resources and budget to accomplish the task at hand, and listing out the deliverables—the objectives and milestones—that must be achieved throughout the process.
By defining the boundaries in which the product or project will be completed, the team is able to establish the timeline in which the final deliverables will be made available.
Extremely similar at the planning level, there are some key differences between product scope and project scope.
Product scope, as we’ve defined it here, provides direction to the project management team at a granular level relative to the development and production of the final product. The focus is strictly on the functional requirements to bring the final product to completion and defines the function it serves for the target customer.
At a broader level, project scope lays out the entire roadmap for the project management team to follow for a specific project. It breaks down all of the work that needs to be completed and provides transparency on how success will be realized. Project scope includes budget and resource lists, as well as personnel rosters and task assignments. The project scope will also enumerate internal and external stakeholders who should be involved beyond those working directly on project tasks.
What are the benefits of product scoping?
The primary benefit of requiring your product development team to have an established product scope is that it helps to avoid scope creep. Scope creep occurs when the development of the product expands beyond the financial and time constraints due to unexpected and unmitigated changes being made to materials used, required features being added, or other changes that impact the team’s ability to deliver the product on time and on budget.
Creates synergy between stakeholders and the product objectives
Products often require input from multiple departments and external contributors. Each individual involved is likely to have their own view of what will make the product successful and how to achieve that goal.
A well-developed product scope plan allows the product development team to take input from all stakeholders and craft final requirements that take into account the needs and requirements of every stakeholder and balance them against the goals of the product.
Sets you up to plan for resource scarcity in an uncertain economy
With an established product scope, the team can account for variability and instability in the supply chain and identify ahead of time alternative materials that may be used. This ensures that if a material becomes unavailable during production, valuable time and resources aren’t wasted in testing alternatives.
Maintains your flexibility and responsiveness to consumer demands
While the iterative product development process might take time, consumer demands can shift quickly. A comprehensive product scope ensures product development teams are able to remain flexible and responsive, and that the deliverable queue of features is organized to prioritize the most in-demand and vital product features.
Protects your budget and your bottom line
The most important thing that a product scope protects is your business’s bottom line. With an established plan that includes contingencies and methods to mitigate scope creep, you minimize additional, unplanned costs.
A poorly planned product can quickly balloon out of control and end up costing more than it could ever recoup on the open market. By establishing a roadmap of milestones and deliverables, there are plenty of opportunities for leadership to make budgetary or scope changes to the final product.
How to write a product scope
Of the products that do survive on the market, studies show that 21% fail to meet customers’ needs, which is often attributed to poor planning and execution during the production process. [2]
Creating an effective product scope can be challenging, as teams are often working against rapidly evolving technologies and equally unstable consumer demands. Often folded into a product requirement document, the product scope should include a number of elements, regardless of whether your team is building a physical product or a digital product.
Aside from a clear product overview, which outlines and introduces the product’s purpose and target audience, you should also include the following elements:
User stories
These help to describe what business challenge your product solves. User stories should be crafted around extensive research that identifies your target audience and their needs.
Features the product will have at launch
- Functional features and requirements lay out what the product will do or tasks it will perform.
- Non-functional features and requirements refer to the performance and technical specifications the product must achieve in order to be released.
- Design specifications and mockups are often folded into the statement at this point, providing the design team with a clear understanding of the final product.
Constraints, assumptions, and mitigation strategies
These should outline any factors the product development team should take into account throughout production. This could be a prioritization of features that should be taken into account during iterative sprints or alternatives to the materials used in production in the event of supply line disruptions. Potential risks and challenges in the development process should also be considered in this section of the statement.
Acceptance criteria
This criteria will make clear the requirements that the product must meet in order to be released to the customer. This often will outline the minimum viable product (MVP), which is the most basic state in which the product can be released to customers, with the intent to add additional features and functionality at a later time. The features list can include the future deliverables, and establish a target for those features to be developed and released.
How to measure product scoping efforts
Want to get ahead of your competition in the new product arena? Track your metrics. With such a high failure rate of new products hitting the market, it shouldn’t surprise you that while 72% of organizations are setting product development objectives, only 26% have established performance metrics for their teams. [3]
Regardless of the project management system your team has adopted, or which tools you might be using for project management, you should be measuring your team’s performance throughout the production process.
Because your product scope includes the milestones and deliverables that must be achieved throughout the production process, it follows that these requirements can be converted into measurable goals and objectives for project leadership to track. As key performance indicators (KPIs), these measurables can be tracked and monitored, and subsequently tailored to meet your current business strategy.
Important product development KPIs
Successful product implementation requires product management teams to be able to track several metrics unique to the product development cycle for both physical and digital products.
- Defect density reflects how many errors or defects occur in the production process. These defects are tracked differently for physical products than they are digital products, but the overall implications of a high number of defects are the same in that it reveals flaws in the process that need to be addressed.
- Feature adoption rate is important when you’re releasing new features over time. Slow adoption rates in the user base of new features could indicate poor design or a focus on features not highly in-demand and a need to revisit feature prioritization in the development process.
- Velocity is an important KPI in several development schemas that reveals how quickly your team can plan, produce, and release new features or products. Understanding velocity in your team helps ensure realistic timelines have been established.
- Time to market is the most important overarching KPI that needs to be tracked, as it is used to establish the full production or development cycle for a product and establishes the timeline in which the team must successfully make a deliverable available to the customer base.
Choose the right product management tools for the job
There are a number of product management software tools on the market that can be used by the project management team in bringing your product to market. While there are industry leading tools that make product management easy, it’s more important to find a tool within your budget and expertise that your team can use to create and track the elements of your product scope plan. It also needs to provide your team access to three important sets of tools:
- A dashboard that tracks and visualizes the KPIs that your team has deemed important to track the product development team’s progress and success.
- Data collection and management tools combined with comprehensive reporting tools that allow data to be easily collected and communicated.
- Collaborative communication tools that allow current state, progress reports, and KPI information to be relayed to product stakeholders.
Don’t plan and execute your next product launch without a skilled product manager leading your team
With artificial intelligence (AI) and big data driving innovation and 3D printing advancements improving the production cycle, product development is anticipated to become extremely technical and complex in the coming years. Despite the widespread availability of product development management platforms, Department of Labor statistics show that the demand for skilled product managers is anticipated to increase by 10% throughout 2024. [4]
In such a competitive and challenging economy, you can no longer afford to not support your production team with a skilled professional who specializes in product management. If you’re a company with a need for constant product development support, you should consider hiring a professional that can oversee the product development workflow.
However, it’s more likely that your business is releasing new products as the need arises, and it would make more sense to consider partnering with a professional product management team to minimize the expenses of managing and maintaining a team in-house and ensuring you still have the support of an expert product manager in your corner.
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