How to identify high impact ideas
Why root causes and goal oriented actions rule the game
Most ideas are bad. They steal your time and they don’t bring in results. They leave you feeling like you wasted your time. Frustrating, isn’t it?
Out of that frustration I started to apply a mental framework to assess new ideas. Now I’d like to open a discussion about that framework. And possibly help you improve your decision-making process.
Improving a customer product
When a product is being improved, there are two questions that mainly dictate the impact of the improvement: “How many customers will be affected?” and “What is the size of the effect?”.
The amount of customers affected is important, as it will multiply the value added for a single customer. Making a change for a single customer can make that single customer your best friend, but in the big picture your focus should be steered towards all of your customers.
Just to emphasize the point: If my improvement makes the product better for a single customer, the overall impact of the improvement is smaller than if the improvement would make the product better for two customers.
But, the amount of affected customers alone is not enough to measure the impact. We also have to consider the size of the effect.
The effect can be anything from improved customer experience to increased profit per customer, even a combination of multiple effects. But, it is important that you know which effects you want to achieve. An effect that does not answer to your needs, is not a valuable effect.
Once the aimed effect is known, you need to estimate how big is the effect. Finding that value might not be easy, but good places to start would be from the customer feedback or asking a product expert. You’re not looking for a perfect value, but a reasonable estimate.
With an estimate for the number of customers affected and the size of the effect (per customer), you get a rudimentary value for the impact of the idea.
There is a interesting difficulty with the size of the effect: It depends on the number of times the customer experiences the effect. Improving a part of the product that the customer uses constantly, will make him happier than improvement on a part that he only encounters once.
But it doesn’t take into account the new customers
Yes, the above approach does have limitations for which I have not found reliable fixes.
My main concern is that this thinking does not take into account the possibility that the idea would bring in new customers. If customers would only buy a product for themselves and vanish we could have good idea about their impact to the business. But, customers talk and spread ideas. They bring in new customers. This behavior makes assessing the impact of new customers difficult.
It is possible that a new customer is from a customer segment that finds your product immensely valuable. If that new customer informs other interested people about your product, he might start a chain reaction where every new customer would tell his friends about your product. These kinds of chain reactions can cause your customer base to explode to new records. An exceptional post by Kevin Simpler will surely explain this better. [Paragraph added on 15.1.2020]
Fixing problems
This one is more about finding problems worth fixing.
The most effective way to solve a problem is to fix the cause of the problem. What does this mean? Most often, when we encounter problems, we observe the symptoms of the cause. For example, bad customer feedback, or headache. These are sometimes easy to fix; just eat a painkiller.
However the symptoms are a sign that something is wrong, and numbing the pain will not cure the underlying problem.
To identify the underlying problem, you need to slow down and look at the data available.
Bad ratings from customers?
-> Look at the written feedback your customers are giving you.
Headache?
-> When is the last time you drank a glass of water?
These do not necessarily yield the right causes, but they will give you ideas that you can test. Finding possible causes will require you to put on your detective hat and to theorize. What remains: is to test your hypotheses.
This process will take time, but it often is worth the investment. You see, the causes usually have multiple symptoms. Some of them are just difficult to spot. If your customers are unhappy about your delivery service, it will likely show up on your customer feedback, but likely also on the number of new orders they make.
If you fix the cause, you often fix multiple symptoms.
Parting words
Impact by itself is not enough to assess what you should be working on.
Once you know the impact of the idea it is time to resolve if you should invest time and other resources to making the idea happen. If the time investment is large and the impact is low or moderate, you might be better off waiting for an idea that is higher impact, or one that will require less time.
What about ideas for new products?
For such ideas, I do not have an approach that I would consider reliable.
Make it better!
This piece has touched my personal way of assessing which ideas to pursue. I do not think my process is complete, and I would hope to improve it. That’s why I would love to hear your personal experiences and possible suggestions for improvement. You can get my attention through the comment section, or through the LinkedIn inbox.
