The 4 Biggest Risks to Your Ideas
Product Management is a bold and risky profession. Some might compare it to gambling, but I think it is more aptly compared to making investments in a stock portfolio. With each idea that you bring to life through development effort, you are investing time and resources into something that is not a sure bet. Just like with stocks, investments in your ideas don’t always pan out. There is a great deal of uncertainty that goes along with any new feature you release in your product. You are betting your team’s resources that an idea will be profitable; that your users will like it, use it, and eventually you will make a profit from it.
Thinking about it in this way helps you to realize the great amount of risk that is present in each decision you make on what to build. Your users may not want the feature you release. They may not be able to figure out how to use it. You perhaps can never unearth and investigate every risk that an idea faces, but you can tackle the most common risks for any idea and by doing so, increase your chances of success tremendously.
The 4 Big Risks
The first risk you should attempt to tackle is Value Risk. This is the risk of whether customers will buy what you’re planning to build or users will choose to use it. It asks the question, is this something that your users need?
Let’s say that you work on a team that has developed an ecommerce store. You have been diligently monitoring your usage data and have noticed that there seem to be quite a few users coming into the site and purchasing the same products every month. You have an idea. These customers are purchasing these products month after month because the products are consumable and the customers are needing to re-up their supplies. These customers might benefit from a subscription service, where they automatically receive their selected products each month.
How can we know for certain that these users will use this service? The most risky way to find this out is by building this feature and seeing if users use it. This approach requires a complete investment in the idea. A better option would be to test the idea. You could take the idea to key reference customers, ones that you know are reordering products today, and get their opinion. If you want to get a larger sample size, you could quickly put a “Subscribe” button in your checkout cart that leads to a page stating, “subscription service coming soon”, then monitor the clicks of that button. You could set up a Wizard-of-Oz type operation where users can subscribe and a staff member will manager their re-ordering, as if the system were performing the tasks. All of these provide a low effort option for testing your idea before making a serious commitment of resources.
The next risk you should attempt to tackle is Usability Risk. This is the risk of whether your users can figure out how to use the solution. Are the click-paths logical to the average user? Do your calls-to-action make sense for the actions you are having the user take?
This can be a challenging risk to test at scale. In our example, you would be attempting to identify if the workflow you are planning to implement, to allow users to sign-up for and manage their subscriptions, will make sense to them. Will they be able to navigate through the process? The best way to test this is to build a low fidelity prototype in a mock-up tool like Adobe XD, Balsamiq, or Figma. This should not take very long. You are not trying to make an exact replica of the experience, just a close enough facsimile that you will be able to have someone click through it and confirm that they would understand how the process would work given the UX cues presented. Once this mock-up is created, you can show it to a few reference customers to seek feedback on if the experience is understandable.
After assessing the Value Risk and the Usability Risk, you should have a clear idea of what you are actually looking to build. At this point, it is time to address the third of the four big risks, the Feasibility Risk. This is the risk of whether your engineers will be able to build what you are looking to implement in the given timeframe, with the combined skills of the team, and within the limitations of the technology being utilized.
This is usually one of the easiest risks to address. You should be talking with your engineers daily, and if you are doing your job right, they are usually involved in the discovery work being done. In our example, you would be looking to see if the engineers will be able to build a subscription service in your platform. Addressing this risk can be, and usually is, as easy as having a conversation with your engineers to determine if the idea is feasible. For more challenging concepts, they may need to go back and perform a bit of research before being able to provide an answer. Usually, they will be able to give you an answer fairly quickly.
Business Viability Risk
The final risk to tackle is the Business Viability Risk. This is the risk of whether your idea also works for all the various areas of your business. Addressing this risk ensures that the solution you are looking to implement falls inside your business’s core competencies and that the entire company will be able to deliver on it at a best-in-class level.
Addressing this risk requires socializing your idea throughout the company. You need to ensure that every key internal stakeholder is made aware of the idea and is able to voice their concerns. In our example, you would be looking to ensure that your accounting team will be able to execute recurring card transactions without the user’s direct action. You will need to check with the legal team to ensure that no part of the process falls outside of applicable laws. You will need to update Marketing to ensure that they will be able to get promotional campaigns together in time for the release. Each area of the business will have its own unique needs to address. You will need to make sure you have relationships in place with all these key groups and communicate your idea clearly, to ensure all Business Viability Risks are addressed.
The Risks Gauntlet
Use these four risks as a gauntlet through which to run your ideas. Projects, ideas, features, initiatives — they all present risk. Everything that you decide to build as a Product Team presents risk. You are betting your team’s resources that an idea will be profitable. It’s hard to uncover every risk that your idea may face, but if you start by addressing the four biggest risks that any idea faces, you’re off to a good start.
by Marty Cagan