Opportunities are everywhere. Some opportunities are small and don’t require many resources. Others are massive and need further analysis and evaluation.
One of your key responsibilities as a product manager is to evaluate the potential success of those opportunities before investing significant money, time, and resources. A feasibility study, also known as a feasibility assessment or feasibility analysis, is a critical tool that can help product managers determine whether a product idea or opportunity is viable, feasible, and profitable.
So, what is a feasibility analysis? Why should product managers use it? And how do you conduct one?
A feasibility study is a systematic analysis and evaluation of a product opportunity’s potential to succeed. It aims to determine whether a proposed opportunity is financially and technically viable, operationally feasible, and commercially profitable.
A feasibility study typically includes an assessment of a wide range of factors, including the technical requirements of the product, resources needed to develop and launch the product, the potential market gap and demand, the competitive landscape, and economic and financial viability.
Based on the analysis’s findings, the product manager and their product team can decide whether to proceed with the product opportunity, modify its scope, or pursue another opportunity and solve a different problem.
Conducting a feasibility study helps PMs ensure that resources are invested in opportunities that have a high likelihood of success and align with the overall objectives and goals of the product strategy.
Feasibility studies are particularly useful when introducing entirely new products or verticals. Product managers can use the results of a feasibility study to:
The activities involved in conducting a feasibility study differ from one organization to another. Also, the threshold, expectations, and deliverables change from role to role.
For a general set of guidelines to help you get started, here are some basic steps to conduct and report a feasibility study for major product opportunities or features.
Imagine your user base is facing a significant problem that your product doesn’t solve. This is an opportunity. Define the opportunity clearly, support it with data, talk to your stakeholders to understand the opportunity space, and use it to define the objective.
Each opportunity should be coupled with a business objective and should align with your product strategy.
Determine and clearly communicate the business goals and objectives of the opportunity. Align those objectives with company leaders to make sure everyone is on the same page. Lastly, define the scope of what you plan to build.
Now that you have everyone on the same page and the objective and scope of the opportunity clearly defined, gather data and insights on the target market.
Include elements like the total addressable market (TAM), growth potential, competitors’ insights, and deep insight into users’ problems and preferences collected through techniques like interviews, surveys, observation studies, contextual inquiries, and focus groups.
Suppose your market and user research have validated the problem you are trying to solve. The next step should be to, alongside your engineers, assess the technical resources and expertise needed to launch the product to the market.
Dig deeper into the proposed solution and try to comprehend the technical limitations and estimated time required for the product to be in your users’ hands.
If your company hasa product pricing team, work closely with them to determine the willingness to pay (WTP) and devise a monetization strategy for the new feature.
Conduct a comprehensive financial analysis, including the total cost of development, revenue streams, and the expected return on investment (ROI) based on the agreed-upon monetization strategy.
Now that you have almost a complete picture, identify the risks associated with building and launching the opportunity. Risks may include things like regulatory hurdles, technical limitations, and any operational risks.
Based on the steps above, you should end up with a report that can help you decide whether to pursue the opportunity or not. Either way, prepare your findings, including any recommended modifications to the product scope, and present your final findings and recommendations to your stakeholders.
Make sure to prepare an executive summary for your C-suite; they will be the most critical stakeholders and the decision-makers at the end of the meeting.
Imagine you’re a product manager at a digital software company that specializes in building project management tools.
Your team has identified a potential opportunity to expand the product offering by developing a new AI-based feature that can automatically prioritize tasks for users based on their deadlines, workload, and importance.
To assess the viability of this opportunity, you can conduct a feasibility study. Here’s how you might approach it according to the process described above:
The following feasibility study template is designed to help you evaluate the feasibility of a product opportunity and provide a comprehensive report to inform decision-making and guide the development process.
Remember that each study will be unique to your product and market, so you may need to adjust the template to fit your specific needs.
The ultimate challenge that faces most product managers when conducting a feasibility study is managing stakeholders.
Stakeholders may interfere with your analysis, jumping to conclude that your proposed product or feature won’t work and deeming it a waste of resources. They may even try to prioritize your backlog for you.
Here are some tips to help you deal with even the most difficult stakeholders during a feasibility study:
A feasibility study is a critical tool to use right after you identify a significant opportunity. It helps you evaluate the potential success of the opportunity, analyze and identify potential challenges, gaps, and risks in the opportunity, and provides a data-driven approach in the market insights to make an informed decision.
By conducting a feasibility study, product teams can determine whether a product idea is profitable, viable, feasible, and thus worth investing resources into. It is a crucial step in the product development process and when considering investments in significant initiatives such as launching a completely new product or vertical.
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With LogRocket, you can understand the scope of the issues affecting your product and prioritize the changes that need to be made. LogRocket simplifies workflows by allowing Engineering, Product, UX, and Design teams to work from the same data as you, eliminating any confusion about what needs to be done.
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