Many Product Managers have asked me how I am able to maintain a balance between big changes in a product and the big risks associated with those big changes. A good Product Manager must know how to balance these because once you learn how to make better decisions, you get lucky more often.
Trying to solve such a situation when you are either in the process of prioritizing backlog items or are building a new product can be befuddling. Start by answering how do you know that you are building the right thing!
Here is what I do, I try to reduce the associated risk that comes with a proposed feature or enhancement by quickly testing the biggest underlying assumptions. The idea is to discover and validate business value to reduce the uncertainty of a product’s or feature’s performance out there.
More specifically, as a Product Manager this is what you would want to do:
1. Disintegration Identification
If you are building a new product, then structure the product like a well-written book, whereas if you are prioritizing a backlog item or adding a new feature, then visualize where it fits in the whole product. Once you have structured your idea well, no matter how counter-intuitive or intimidating it may sound, start with breaking down the idea into its not-that-easy-to-demystify components that could be due to:
a. Risks associated with the product’s demand
b. Risks associated with the product’s supply
c. Risks associated with the product itself or the aspects of the product that are responsible for creating value.
The process is very similar to SWOT analysis only that this methodology leads to measurable outcomes. You may think of it as applying Porter’s 5 forces in the context of big risk products or features. The key characteristic here is being mindful of who the intended users are, throughout this phase.
2. Risk Vectorization
Once you have identified the risks and are able to categorize them as accurately as possible, assign a risk factor to each of the risks that were determined in the first step. Each risk factor associated with the risk should be tied to the bigger picture that could either be the product’s vision or the firm’s operational goals. The recommended approach is being mindful of both micro-view as well as macro-view. Since the success of every product is directly correlated with customer satisfaction, the Customer Purchase Decision-Making Process is instrumental in modeling optimal risk vectors.
The key point here to keep in mind is that any associated risk, whether big or small, directly impacts the bigger picture and therefore should be addressed effectively. Risk factors thus should be assigned based on their potential impact.
3. Feature Demystification
After risk discovery, the next important step is to identify the risk mitigation techniques and the cost associated with each technique before the risks are actually addressed. Some of these techniques could be:
a. gathering more data: the more data we have, the easier it is to make an informed decision
b. conducting a few quick cheap tests: success/failure of cheap tests ensure that our thinking is aligned with the larger product’s vision
c. doing more secondary/primary research: gathering more information and using it without any preconceived biases is a fail-safe way to build an awesome product
d. discussing with your peers: it is always beneficial to bounce your ideas off of friends, colleagues, or close network who you trust will provide logical feedback
The above approach that emphasizes the ability to perceive a situation from multiple perspectives is very handy in formulating ultraprecise risk mitigation techniques, assessing how much risky each ‘component’ is, and accordingly assigning a cost to each. Essentially then, the cost is primarily a function of riskiness of the component and findings to address the risks.
4. Final Transformation
Most of the hard work is done. Now all you need to do is select that component that has the highest ratio of risk-factor to the cost associated with it. Once this source of uncertainty is palliated using the risk mitigation techniques identified earlier, iterate through the list of other components starting from those with the highest ratio (risk factor to cost) to the lowest.
Phew, now you know what to do next! Yes, you guessed it right, reintegrate the revamped components to get the all-new and vibrant product/feature that has been eagerly waiting to be deployed into production.
For the more geeky folks among you, the process can be easily visualized as an Encoding-Decoding Approximation.
Hurray! The product/feature is now good to go into the development phase, eventually making its way to production, finally resulting in higher reliability, better user adaptability and more $$$.
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