Product Discovery In Regulated Environments

Cagan argues that product discovery, the practice of validating ideas with real customers before building, is still essential in heavily regulated industries such as finance and healthcare, even though legal and compliance review can make experiments seem impossible. Teams often give up because lawyers say no, but lawyers are managing legal and reputational risk while discovery manages the separate risk of building products customers don't value. The essay suggests product managers learn the actual regulations, since many constraints are less rigid than assumed, and choose discovery methods that fit within them. It also recommends building trust with stakeholders through regular contact and informal playbooks that streamline approvals.

01Key takeaways

• Do not accept 'legal said no' as the end of the conversation; understand the specific reasons behind the constraint.
• Read the relevant regulations yourself, since many barriers are perceived rather than actual.
• Choose discovery techniques whose risk profile fits the regulatory context, such as qualitative testing instead of landing pages.
• Propose opt-in methods like live-data prototypes or moderated user tests that legal teams are more likely to accept.
• Create an informal playbook that defines approval levels by risk so routine experiments move quickly.
• Maintain regular, non-crisis relationships with stakeholders who can veto decisions to build trust and educate them about discovery.

02Key sections

Discovery matters even in regulated industries

Highly regulated companies face complex approval processes for even small experiments, which leads many teams to skip discovery altogether. Cagan argues this is a mistake because discovery is the best tool for mitigating the risk of building something customers don't want.

Understand the regulations yourself

Saying the lawyers rejected an idea is not sufficient. Product managers should read the relevant rules, because many restrictions are interpreted more narrowly in practice than they first appear.

Match techniques to the constraints

Different discovery methods carry different risks, so a team blocked from one technique, such as a landing page test, may still run qualitative user tests. Opt-in approaches like live-data prototypes and moderated interviews are often acceptable to legal teams.

Streamline approvals with a playbook

If legal still reviews every decision, an informal playbook can categorize experiments by risk level, so low-risk tests need little review and attention focuses on the riskiest ones.

Build ongoing stakeholder relationships

Meeting regularly with anyone who can veto decisions speeds up approvals and gives product teams a chance to explain discovery. Stakeholders share the goal of company success and can become allies.

03From the post

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Summary and takeaways written by PM Atlas; quotes are short excerpts. © the original author.