How can I estimate the value of new ideas for a product?
Exceptional ideas lead to innovation. And innovation leads to breakthrough products. A crucial part of your job as a product manager is to drive that process forward. Everyone has an opinion about how you can make the product better but it is up to you to evaluate ideas and choose the ones that are most aligned with your product goals.
But it is not always easy to tell which ideas will bring the most value. Especially if you are sorting through hundreds of requests from customers, stakeholders, sales leaders, and internal teams.
You need a consistent way to estimate the value that each idea will provide to your business and customers. Then you can better determine which are worth the effort and investment — as well as where they fit within your product plans.
Some organizations make reviewing ideas a performance metric for the product team. This shows your commitment to listening to your customers. And even more importantly, it allows you to uncover problems that your product is uniquely positioned to solve.
If you use idea management software, you can open ideas up to votes and easily keep track of the demand. Seeing the popularity of ideas gives you more clarity on what matters to customers.
Votes and popularity aside, there are additional questions you should ask to validate the organization's commitment to an idea, assess its value and cost, and determine priority. Use this guide to determine which ideas should be promoted to your product backlog or your roadmap.
Align with strategy
Some ideas will garner more internal enthusiasm than others. And while it is tempting to pursue "fun" ideas, company goals need to be your guide. You can make quick decisions when a request does not support your overall product strategy. Respectfully say no and explain to the person who submitted why it does not fit. For ideas that do align with strategy, dig in to understand the potential impact.
Questions to ask:
Does the idea support our goals?
Does the idea align with any current initiatives?
What are the advantages of pursuing the idea?
What are the disadvantages?
Validate the value
You need to separate the "nice to have" ideas from the ones with potential to provide real business value. Develop a hypothesis that states what a measurable impact could be. You do not need to be super precise at this point — make a prediction and explain the reasoning behind it.
Questions to ask:
What is the estimated impact on revenue or profit?
What is the impact to current customers?
In what ways will the idea improve customer loyalty?
In what ways will it improve the Complete Product Experience (CPE)?
How about attracting new customers?
Estimate the effort and cost
Of course, you cannot consider impact alone — each idea will have its own associated costs too (time and effort needed to build and support it). Estimating cost at this stage is high level. You can explore specific details and requirements once ideas are promoted to planned work.
Questions to ask:
What resources and tools would be required to implement?
What is the rough level of time and effort?
Does the team have enough capacity?
Do we have anything similar planned that we could bundle this idea with?
What are the estimated costs for maintaining and supporting the idea?
Promote ideas to your roadmap
When you have a clearer picture of the value of each idea, you can determine which to promote to your product roadmap. Some product teams use a lightweight scorecard to simplify this process.
Idea score = Impact - Effort
Use a consistent scorecard across all ideas to provide a uniform method for comparing value. Assign a score threshold for promoting ideas to the roadmap. Once promoted, you can do a more detailed analysis to decide when to implement the idea.
Depending on the maturity of your product or the number of ideas you receive, this process could become time-intensive. Idea management software streamlines each step — from collecting to evaluating and scoring ideas.