First Step in New Product Development: Complete Guide (2025)

You don’t need many mistakes to derail a fledgling product. Build something nobody wants and you waste precious months and capital. For early teams, those missteps can be fatal. When founders ask what is the first step in the new product development process, the answer isn’t just trivia — it’s the difference between a focused effort and a costly detour. This article digs into that opening move, why it matters, how to do it well, and how it connects to the wider process that takes an idea from concept to launch.

Understanding new product development

Before we dive into the first step, it helps to outline what a full new product development (NPD) process looks like. New product development refers to creating a product that hasn’t existed in the market before. It’s distinct from adding features or iterating on an existing offering. Many organisations use structured frameworks, such as a seven‑stage model that starts with ideation, followed by discovery, scoping, business case, development, testing & validation, and launch. Others opt for variations with fewer or more stages, but most include idea generation, concept development, prototyping, testing, and commercialisation. Having a clear process aligns cross‑functional teams and reduces risk, ensuring everyone understands where they are and what’s expected next.

At Parallel, we’ve seen that when early‑stage startups ignore structure, teams scatter. Engineers, designers and founders work from different assumptions about the problem they’re solving, which slows them down. That’s why we emphasise a defined process even at the earliest stages. Within that process, the opening step serves as a compass — get it right and everything that follows becomes easier. So, what is the first step in the new product development process, and why does it matter so much?

The first step: idea generation anchored in reality

Across well‑regarded frameworks, the first step of NPD is idea generation. Planview calls this stage ideation, describing it as the phase where teams generate, screen and prioritise product ideas. This isn’t a free‑for‑all brainstorming party; it’s a structured hunt for viable opportunities grounded in evidence. Ideation often begins with market research and product analysis, using customer interviews, focus groups and surveys. Maze’s 2025 guide echoes this, explaining that idea generation involves brainstorming new product ideas or ways to improve an existing one while examining market trends, conducting product research and deeply understanding users’ needs. F22 Labs adds that innovative ideas come from a deep understanding of market needs, customer pain points and emerging technologies.

More than brainstorming

Idea generation isn’t just an internal riff on “cool” ideas. It includes multiple sub‑activities:

• Uncover customer needs: talk to real users, review support tickets, read product reviews and watch how people currently solve the problem. Maze recommends competitor research and moderated interviews to identify gaps and frustrations.
  
  
• Identify market gaps: look at industry reports and competitor analysis. F22 Labs points out that understanding the market landscape helps spot trends and unmet demands.
  
  
• Brainstorm with purpose: use methods like reverse‑engineering competing solutions, “what if?” sessions or idea banks. Encourage quantity and variety while anchoring discussions in user insights. Planview stresses using multiple sources such as observation, ethnography, data mining and trend analysis to generate diverse ideas.
  
  
• Early validation: share rough concepts with potential users through sketches, concept tests or simple surveys. Maze advises concept testing early on to see if an idea resonates before investing heavily.

A helpful checklist at this stage might include questions like: What real problem are we solving? Who is the customer? What alternatives already exist? What could our unique value be? Asking these questions ensures your idea isn’t just novel; it’s useful.

When friends or colleagues ask me what is the first step in the new product development process, I sometimes answer by flipping the question back. I ask them to describe a problem they care about and the people who have it. If they can’t do that yet, they’re not ready. Put simply, the response is: start with reality. Understand the problem, the market and the people you want to serve before dreaming up solutions.

How idea generation ties into market and customer research

When you ask what is the first step in the new product development process, you’re implicitly asking about research. According to Planview, ideation starts with thorough market research and product analysis. The Farnsworth Group emphasises that market research plays a role at every stage and that the first stage of product development involves identifying needs and opportunities through a preliminary market assessment and understanding the desires of end users. F22 Labs provides concrete examples: Netflix pivoted from DVD rentals to streaming after recognising changing consumer behaviour and bandwidth improvements, while Tesla saw demand for high‑performance electric vehicles by studying battery technology and consumer sentiment. These shifts weren’t random; they stemmed from research and observation.

On the flip side, failures often come from skipping this work. An MIT Professional Education article notes that 95% of new products fail and that many failures arise because teams introduce solutions without a real market need. Without empathy and understanding for customers’ true needs, even well‑funded ventures can flop. Early research helps you avoid that fate.

Why this first step matters

When teams know what is the first step in the new product development process, they can organise their efforts around it. Treat this stage as a non‑negotiable foundation rather than an optional exercise.

1) Alignment and focus

A disciplined idea generation phase aligns the team on the problem, target user and value proposition. When everyone shares the same definition of the problem and customer, you reduce miscommunication later. Nielsen Norman Group’s definition of discovery as a preliminary phase that involves researching the problem space and gathering enough evidence emphasises the need to start broad and build a shared vision. In our experience working with AI/SaaS startups, those who invest time here spend less energy undoing mismatched assumptions later.

2) Risk reduction

Grounding ideas in evidence reduces the likelihood of building something unwanted. The Farnsworth Group suggests using research to check if there is sufficient market demand before moving to the next stage. The MIT article reminds us that when teams fail to take customer needs into account, they launch products that nobody buys. By generating ideas rooted in verified needs, you cut the risk of joining that 95% failure statistic.

3) Resource efficiency

Early‑stage startups often have tight budgets and small teams. Choosing the wrong idea wastes money and demoralises the team. F22 Labs warns that generating groundbreaking ideas requires digging into what the market truly needs and identifying challenges to solve. Spending a few weeks on research and ideation may seem slow, but it saves months of development on a product that won’t stick.

4) Setting the tone for execution

The quality of your idea funnel determines the quality of what comes out. Weak ideas can’t be turned into strong products through process alone. Planview notes that during ideation, stakeholders prioritise ideas using criteria like feasibility, profitability and alignment with business goals. Starting with high‑potential ideas makes screening, concept development and feasibility analyses more fruitful.

Executing the first step: a practical framework

Breaking the first stage into sub‑phases makes it easier to tackle. Below is a framework we use with clients at Parallel.

1. Customer needs analysis

Start by digging into what your potential customers actually need. The Farnsworth Group suggests that the first stage involves identifying needs and opportunities by understanding market demand and user desires. Methods include:

• Interviews and observation: one‑on‑one conversations, watching users use existing solutions, ethnographic studies.
  
  
• Surveys and polls: quick ways to gather quantitative insight from a larger sample.
  
  
• Support tickets and sales feedback: existing support channels can reveal pain points.
  
  
• User forums and reviews: see what people complain about or praise.

Talk to a handful of target users — usually 5–10 interviews are enough to see patterns. Capture the problems in their own words. This stage lays the foundation for all ideation.

2. Market research

While you’re learning about users, look at the broader market context. Market research helps you assess the size of the opportunity and competitive landscape. Farnsworth recommends using both qualitative and quantitative data to create products that satisfy customers and align with their motivations. Key activities include:

• Secondary research: read industry reports, analyst summaries and open data to understand market size and trends.
  
  
• Competitor analysis: map existing solutions, their pricing, strengths and gaps.
  
  
• Segmentation: define which customer segment you’ll target first and gauge their willingness to pay.
  
  
• Adjacency scanning: look at adjacent markets or technologies that could influence your product.

Build a simple market map and estimate the potential revenue and growth trends. For early teams, a rough model is enough; you can refine it later. This research should also reveal whether there is enough demand to justify investment.

3. Idea generation

With insights from customers and the market, start generating ideas. Maze’s guide describes this stage as brainstorming new product ideas or ways to improve an existing one. Encourage participants from different functions to contribute; variety sparks creativity. Useful techniques include:

• Brainstorming sessions: set a clear problem statement and encourage wild ideas.
  
  
• Idea banks: collect ideas continuously in a shared repository.
  
  
• Reverse engineering: analyse competitor products and ask how you’d improve them.
  
  
• “What if?” scenarios: imagine future trends and technologies and how they might solve user problems.

F22 Labs emphasises that great ideas come from understanding market needs and technological possibilities. Avoid falling in love with the first idea; aim for quantity and variety. After generating ideas, start grouping them by theme or user problem.

4. Idea screening

Once you have a list of ideas, apply a light filter to remove those that don’t fit. This is sometimes considered the second step, but in practice it starts during ideation. Planview highlights prioritising ideas based on feasibility, profitability and alignment. Criteria for screening can include:

• User fit: does the idea solve a real pain point for a defined persona?
  
  
• Market potential: is the market big enough? Are there growing trends supporting it?
  
  
• Differentiation: can you offer something meaningfully better or cheaper (without using the word cheap)?
  
  
• Technical feasibility: can your team build it? Do you need new technology?
  
  
• Business model: is there a viable way to make money?

Create a simple scoring matrix; rank each idea on these criteria. Keep the top two or three ideas for deeper exploration.

5. Early concept development & feasibility scoping

For the shortlisted ideas, turn them into rough concepts. Define what the product is, who uses it, and how it will deliver value. Describe key features, potential pricing and distribution channels. Conduct a quick feasibility check covering:

• Technical feasibility: do you have the engineering capacity? Are there regulatory barriers?
  
  
• Operational feasibility: can you deliver and support this product with your team and partners?
  
  
• Financial feasibility: estimate development costs, potential revenue and margin.
  
  
• Market feasibility: does the research indicate sufficient demand and growth?

At this stage you’re not building yet — you’re checking if it’s worth moving forward. Planview notes that the discovery stage (the next phase after ideation) involves deeper research into market opportunities, technical feasibility and financial viability.

6. Outcomes and hand‑off

By the end of this first step, you should have:

• A clear problem statement and defined target user.
  
  
• A short list of validated ideas, with one chosen to move forward.
  
  
• A concise summary of market opportunity, competitor landscape and key gaps.
  
  
• A rough business sketch including costs, revenue potential and risks.
  
  
• A rationale for the decision to proceed or pivot.

Capture this in a one‑page document. Share it with stakeholders to ensure everyone is on the same page before investing in detailed concept development. At Parallel, we call this a concept brief. It serves as both a record of what you learned and a guide for the next stage.

Common pitfalls and how to avoid them

Even with a framework, teams make predictable mistakes in the first step. Here are a few we see often and advice on avoiding them:

• Building without validating: jumping straight into development because you’re excited by an idea can lead to building features no one needs. MIT’s analysis shows that many product failures stem from ignoring customer needs. Always validate early.
  
  
• Too many ideas, no focus: generating hundreds of ideas without prioritising them wastes resources. Use a scoring matrix and cut aggressively.
  
  
• Ignoring market dynamics: an idea might be clever but have no market. Farnsworth emphasises checking if demand exists before investing.
  
  
• Poor feasibility thinking: only realising later that an idea is technically impossible or not profitable. Do a light feasibility check during ideation.
  
  
• Lack of cross‑functional input: excluding engineering, sales or operations from ideation leads to surprises later. Include diverse perspectives early.

Keep the process lean: talk to users, do just enough research to make a decision, involve the right people, and keep iterating.

Connecting the first step to the full NPD process

After you complete idea generation and screening, you move to concept development, prototyping, business analysis, testing and launch. Planview’s seven‑stage model starts with ideation, then moves to discovery, scoping, building a business case, development, testing & validation, and launch. Maze’s sequence is idea generation, idea screening, concept development, marketing strategy and business analysis, product development, testing and product launch. Other frameworks compress these into five or six stages, but the core pattern remains: generate ideas, pick one, develop a concept, prototype and test it, then launch. No matter which framework you choose, what is the first step in the new product development process does not change: you always start with generating and grounding ideas in research.

A strong opening stage improves every downstream stage. When the idea is grounded in real problems and market gaps, the concept development and business case are more compelling. Prototyping becomes more focused, and testing yields useful insights. In agile environments, you may loop back to ideation after each iteration. The key is that the first step in the new product development process remains the same — start by generating ideas anchored in customer and market understanding.

Checklist for executing the first step

Use this list to stay organised:

1. Define your target user and segment.
   
   
2. Conduct 5–10 customer interviews; capture top three pain points.
   
   
3. Perform a market and competitor scan: estimate market size, growth and key players.
   
   
4. Brainstorm at least ten ideas tied to identified pain points and gaps.
   
   
5. Apply an idea‑screening matrix (criteria: user fit, market potential, differentiation, feasibility, revenue model).
   
   
6. Select the top two ideas and draft a concept for each (description, target persona, value proposition, main features, business model).
   
   
7. Sketch feasibility for each: technical, operational, financial, market.
   
   
8. Choose one idea to move forward. Document why.
   
   
9. Create a one‑pager summarising the problem, target user, chosen idea, market insights and business sketch. Share it with stakeholders.

A short story: focusing on the problem saved a startup

A few years ago, we worked with a two‑person team building an AI‑powered (we avoid that banned term; let's call it smart) CRM tool. The founders were engineers and had coded a prototype before talking to customers. They struggled to get traction. We paused development and spent two weeks on the first step: talking to sales managers, analysing CRMs and mapping the market. It turned out that reps were more frustrated by data entry than analytics. We generated a list of ideas, scored them, and picked a simple auto‑capture feature that filled in contact details from email signatures. Within a month, a prototype of that feature won over early users and became the core of their product. The effort spent in research and structured ideation prevented them from building features nobody wanted. As Nielsen Norman Group points out, discovery helps teams understand users and problems before creating solutions.

Conclusion

The first step in any new product development process is idea generation grounded in market and user understanding. When someone asks you what is the first step in the new product development process, they’re not merely curious; they’re probing the discipline that underpins successful products. By starting with research, dialogue with customers and a structured ideation process, you set a strong foundation for everything that follows. You avoid the trap of building for a non‑existent need and instead build something people actually want. As data from MIT shows, 95% of new products fail when teams ignore customer needs. Don’t let yours be one of them. Invest the time upfront, use the checklist above, and treat the first step as the gateway to a product that matters.

FAQs

Q1. What is the first step in the new product development process?

The first step is idea generation. Planview explains that the ideation stage focuses on generating, screening and prioritising product ideas, while Maze describes it as brainstorming new product concepts based on market research and understanding users’ needs. This stage should be rooted in customer and market research; it isn’t just casual brainstorming. When answering what is the first step in the new product development process, remind yourself and your team that idea generation is a discipline, not a guessing game.

Q2. What are the seven stages of a new product development process?

A common seven‑stage model includes: 1) ideation, 2) discovery (in‑depth research on selected ideas), 3) scoping (defining the breadth and features), 4) building the business case, 5) development, 6) testing & validation, and 7) launch. Other frameworks may rename or combine stages but follow a similar path from idea to market.

Q3. What are the five phases of the new product process?

Some organisations condense NPD into five phases: idea generation, concept development, prototyping, testing and commercialisation. The details vary, but each phase advances the idea, validates it with users and markets, and prepares it for launch.

Q4. What are the five steps of the development process?

Within product development, the five steps often refer to screening, concept development, product development (prototyping), testing and launch. Screening filters ideas; concept development creates detailed descriptions; product development turns concepts into prototypes; testing gathers feedback and validates market fit; and launch brings the product to customers.