Product Planning (Stage 1 of product design)

Product design includes five main stages. A super simplified explanation of them are presented below. 

1. Product planning. The company strategically finds market needs, their company strengths, and determines several  potential products that they might develop. Using all this information they form a strategy of which  products that they will design to meet the market needs and company strengths. 
2. Product specification. After a product is generally defined for company planning purposes, the engineers and company managers need to define in some detail what they are attempting to design for a specific product. A long list of requirements that the product must meet is defined. 
3. Conceptual design. The engineers take the requirements and create 1-3 final ideas on how to meet these requirements.
4. Embodiment design. The engineer takes the 1-3 ideas and fleshes them out in much more detail. For a mechanical engineer this normally includes using CAD. As more information about the design is available, the ideas are evaluated and narrowed down to one design for the product. 
5. Detailed design. The product's manufacturing instruction, user manual, and other documentation is finalized. 

At school and generally on the internet, teachers focus on teaching , stage 4, embodiment design. However, all the stages are important. In my experience working as a paid engineer, small companies don't follow these 5 stages of design and the results are horrible. It is easy to have a good idea (which normally means you have a good idea for how to implement something, stage 4), and the company makes a valiant effort to get the idea to work. However, as soon as you include someone else in the design project, then things begin to fall apart because they don't see why your idea is so great and can point out several reasons why it is not great at all. Since you never clearly found out what people want (stage 1), you never defined what exactly you were trying to do (stage 2), and didn't consider alternative methods to solving the overall problem (stage 3), when someone else comes along and ask for justification for your design, you have nothing to show. For me, I was the new person, and I kept on asking "what are we actually trying to make (stage 2)? why are making it (stage 1)? why didn't you try something else (stage 3)?". Unfortunately, I never was given legitimate well documented answer to these questions. 

Recently, I've discovered another facet of product planning (stage 1). Once we have an idea of the product(s) we want to create, then we can create a strategy for how several iterations of the design will progress. In general when starting something new, it is best to keep things simple. The first iteration of a product that is released to  customer's should fulfill the basic requirements without bells and whistles. During product design enough things will go wrong so that creating a product which fulfills its core functionality well will be challenging enough.  

During product planning, the engineers can select core product functionality as the requirements for the first iteration, and then for later iterations incrementally increase the complexity of the product by adding features to it. Hopefully, the product specification for later iterations will also be influenced by customer feedback. 

The key idea I want to communicate is that you should plan out the iterations of your product as the very first step in product design. The first iteration should be as simple as possible. Later iterations should add features that add value. A common mistake is to make your first iteration far to complex with cool ideas. However it is also a mistake to totally forget your cool ideas. Cool ideas (features) can be planned for in later iterations of your product.