This post begins with an introduction to the fundamental mistakes that organizations make upon creating new products. This introduction also explains how to overcome them with the help of Lean Startup.

In the next chapters, we will tackle the issues which organizations and product teams continue to create. We will explain how to solve them with practical examples.

With this content, we will cover the fundamentals (that are based on our own experiences) to help the learner quickly bring successful products to the market.

Obviously, there is much more. This includes organizational structures or product strategy. But this course contains the foundations on which to become a highly effective product manager. It will provide many references and ideas to help you continue researching and growing in this thrilling profession.

The problem

72% of all new products do not meet their revenue goals.

Most new products (and new companies) fail. The odds are against them. About 75% of new businesses fail, and between 40% and 90% of new products do not achieve significant adoption in the market.

On a smaller scale, the problem is the same. Most ideas do not increase value for customers or businesses. Among companies such as Microsoft, Amazon, or Netflix, the failure rate is between 50% and 70%.

There is so much room for improving those staggering statistics and even more room to improve the odds of creating successful products. But even today, the problem is that many companies make serious mistakes when building products. The solution to those mistakes is to adopt the principles and practices of Lean Startup.

Five Key Mistakes

There are five key mistakes that cause huge delays in time to market and frustration. It can also waste money and human potential. And worst of all, these mistakes can support creating products that nobody wants. The five mistakes are listed below. Each mistake will be discussed in detail within the next few lessons:

  1. Putting the Cart Before the Horse

  2. Build – Build – Build

  3. Cognitive Biases

  4. Measuring the Wrong Things

  5. Wishful Thinking

Lean Startup is the key to avoiding these mistakes and offers incredible customer experiences as quickly as possible while involving everyone in the organization.

The First Mistake

Learn about the first mistake called Putting the Cart Before the Horse.

Putting the cart before the horse

Lean startup is about doing the right thing, doing it to the right extent, and doing it at the right time. Another way to look at it is always to ask yourself one question: What is the minimum experiment I can do to learn the most? Well, asking this question is the opposite of what most established companies do.

One reason for making these mistakes is the large amount of money that big companies have, which prevents them from optimizing for outcomes.

The most common mistake that most companies make is scaling before having objective evidence that the product is something people want and there is a reasonable market for it.

In this context, new products or functionalities generally start from a business objective. They start with an idea or a need. Then, a business plan is created. The process is completely budgeted based on estimates and conjectures about the future. The infrastructure, resources, and people are hired in advance, and then construction begins.

But this is a sure recipe for failure. Instead, approach product development like approaching innovation or startups. Management must act as venture capitalists or investors by using innovation accounting to measure progress until the product-market fit is reached. And then boost growth. For example:

  • You do not need to allocate the budget for the year to projects and products from day one.

  • You do not need a scalable architecture from day one. Your infrastructure must grow along with your customer base.

  • You do not need 15 developers if you have not yet validated the product-market fit.

The Second Mistake

Discover the detriment of building a product without understanding the exact problem.

Just because you can build it

This thinking pattern is based on eagerness to start building without understanding what problems to try to solve in advance, the problems to solve for whom, and if there is a market large enough to develop a profitable and lasting business.

This is the known pattern of waterfall development, and it is also the way many so-called agile companies work. Basically, these companies start building without first understanding the problems they are trying to solve, for whom, and if there is a market big enough that is willing to pay for it.

Questions to ask before building your product

Just because you can build something does not mean you have to build it. Ask yourself useful questions like:

  • What problem is this solving?

  • For whom? How many people?

  • What are the alternatives currently available in the market?

  • What should be the price for it to be profitable?

  • Is our target customer willing to pay that price?

  • What are the technological and operational implications of that price?

Here the problem is an underlying delivery mentality. This is a productivity mindset over results where the measure of success is software running in production regardless of whether it is solving a problem or providing some benefit to the business. These actions are carried out as if product teams are just featured factories.

In this scenario, you do not know if a problem is worth solving and if your solution solves that problem, but you have already begun building.

Given that creating software is the most expensive activity you will do, try to reduce it as much as possible. The agile principle of “working software is the primary measure of progress” does not work. The only measure of progress is validated learning.

Again, it is recommended that you ask yourself this question every time you have to decide: What is the minimum experiment I can do to learn the most?

The Third Mistake

Learn about cognitive biases that can lead to errors in product management.

Cognitive biases

Another key error in product management is to become carried away by cognitive biases in decision making.

About 150 cognitive biases exist, which can cause us to make irrational decisions due to automatisms in our brain.

The only way to prevent these biases from affecting the product development process is to iterateimplement short feedback loops in contact with customers, and use data to inform our decisions.

Most cognitive biases hurt the way companies define their strategy. It also negatively impacts the way companies think of new ideas and implements them. But the most important cognitive biases are:

  • Innovator bias

  • The confirmation bias

  • The sunk costs fallacy

These can be easily avoided by adopting the right processes.

Innovator bias

Innovator bias causes many people to fall in love with the idea or the solution without validating the problem it will solve. It does not validate how many people need it and if there is a viable business model behind it.

It is typical with new technology, an invention, or just a cool idea that you are looking for a problem to solve. But a great idea that appears while taking a shower does not necessarily translate into a growth area for the business. Many interconnected variables must be validated. As Ash Maurya says, you have to fall in love with the problem, not the solution.

Your idea can be excellent. But to avoid innovator bias, take a step back and think about the problems and the unmet needs that are being addressed. Ensure a large enough market to build a profitable business model and try to clearly differentiate yourself from current solutions and competitors with a unique value proposition.

All this must be accomplished, iteratively and incrementally, by adopting the scientific method and continuously testing the riskiest assumptions until market traction can be demonstrated.

Confirmation bias

Confirmation bias is the tendency to search, interpret, and remember information that confirms their beliefs and opinions.

Confirmation bias occurs when people provide more weight to the evidence that confirms their hypothesis rather than providing weight to the evidence that can refute it. When confirmation bias happens, you are working from beliefs and not from the evidence.

Sunk costs fallacy

Sunk cost fallacy is a common bias in all people, but it is a typical problem of traditional companies with project mentality and annual budgets which, due to pressures and politics, continue with a project because money, time, or effort has been invested in it. But canceling the Project would be the right decision from an economic and rational point of view.


The solution to this problem is Lean Startup, metrics, data, and short feedback loops in the product development process.

The Fourth Mistake

Learn about vanity metrics that are not useful in determining the progress of the product.

Measure the wrong things

Eric Ries coined the concept of vanity metrics. These are the metrics that make you feel good but are useless. In the business world, vanity metrics are the equivalent of an athlete measuring the size of their biceps or their percentage of body fat.

At all times, the product manager should know what the key metrics are that determine the progress and success of the product and how their experiments will affect those metrics.

There is a key mistake made by many established companies. These companies measure the success of innovation with the same parameters that measure the normal operation of the business.

The Fifth Mistake

Learn about the wrong assumptions made while making decisions in a company.

Wishful thinking

Wishful or illusory thinking can be seen as making decisions without data or operating blindly. This is a widespread disease among different types of companies and in all strata of the company.

Many investment decisions are made based on 50-page business cases that are full of lies and assumptions. It lacks the framework to decide which projects receive funding or which are withdrawn. And without this framework, you can spend six months efficiently developing a product of excellent quality that nobody wants.