Why should a Product Manager care about: speeding up decisions?
When grappling there is only one way to make decisions: you feel them. You can feel the persons weight shift, or notice a pattern in their movement so you observe, order and act. You must act, or you will lose. The brain likes this situation, unconsciously we take 40,000 decisions daily. Given a recognisable pattern and despite calling it “gut” feeling, it is actually your brain will help you out and serving you a preferred choice.
However when the brain can’t find a pattern, it will move to a second mode which I scientifically refer to as: “what the heck?” This is where the system usually freezes and I loose the match. After the match I usually ask: “So, what just happened? Can you show me what you did?” And typically we have time to go through my mistake and I learn something new. However, for this to take root it must become a pattern.
Product Management???
So, what does this has to do with Product Management? Well, I recently read a study that showed that if decision latency of a team is reduced from 5 hours to 1 hours, their time to market increases by 30%. Given such round numbers in the study, I am assuming some gut work in their numbers, so I did some investigation.
Pauze please, wasn’t the idea of agile to delay decisions?
Yes and no, techniques like JIT and queue management are definetly valuable , some decisions should be delayed to the last responsible moment, but that is no excuse for procrastination. Let me come back to queues later.
Small projects are more successful than large projects
We know this to be true. The CHAOS report has collected data from 2008 onwards on the impact of project size on project success. It’s also a no brainer, in a complex domain, making things smaller makes it easier to see where we are going. This is why e.g. Scrum works, its the great slicer of projects! But what does decisions speed has to do with it?
Fast decisions are more successful than slow decisions
Of course the debate can be: “What is good latency?” But you know these projects, where the discussions go on and on and on. By the time we have made a decision we reverse it. Which brings us to the second interesting data point:
Better decision making improves project success
So, the more skilful we are, the less often our decisions are reversed, which in turn improves our learning speed.
It’s big projects vs small projects again
When diving deeper in the data I noticed that its actually big vs small projects again. Slow and poor decision making leads to more time to develop the same product, which makes the project bigger and bigger…..
Special snowflake syndrome
“But we are brand XYZ, we are special, we do really complex stuff, we are a bank, we are a carmaker, we build hardware”, there is usually a good reason to delay decisions. But rarely is the cost of these delays calculated and made part of that decision. Imagine you are building a hardware product, decisions are usually delayed because the cost involved in producing electronics for fast moving consumer goods.
Here is a study of 391 teams that designed custom integrated circuits. It shows that frequent and early releases resulted in more errors, but because they used low-cost prototyping technologies, their time and total effort required was significantly better than when one tried to get their design right the first time. By delaying decisions, you are delaying the discovery of critical problems.
It is very similar to the batch-size problem in Kanban: think of it as buying a supply vegetables. If you buy a 4-month supply on a single trip, your transaction cost is low, but most will spoil, increasing your holding cost. If you buy a one-day supply, your spoilage will be low, but your transaction costs will be high. Intuitively, I try to strike a balance between the two, mostly driven by the picky eaters in my household which seem to change their habits on a whim.
So what?
So delayed decisions delay your time to market, apart from increased development cost, why should you care? Well, getting out there quicker gives you significant advantages such as:
- Increased sales and profit margins. The earlier the product reaches the market, the longer the lifespan of that product.
- Larger market share. A quick introduction allows more time to build market share before the product becomes a commodity.
- Greater market responsiveness. You can react more quickly to competitors’ moves or market changes
- Lower operating capital. Think of product development as an investment, faster time to market frees up financial and operating resources for other value-adding activities.
Data from the sdcexec shows that a fast moving consumer product that launches 9 months after a competitor typically yields only 50% of the anticipated revenues. From my own experience, it typically meant that we would have to create something to leapfrog the competitor which is an expensive catchup race.
How to speed up your decision making
So, I hope you are convinced that speeding up decision making is of the utmost importance. “Fine, but how?” You may ask, and I am glad you did, but the detailed answer to that topic is something for another time. There however a couple of steps you may consider:
- Simplify; use smaller iterations, use a single goal for the iteration, define the benefit you want to achieve and how to measure it. Clear goals remove the need for many hour-to-hour decisions on your end.
- Collaborate and inspire; make sure your teams know what they are doing and why. Leverage their collective intellect to let go of the things that “the product owner has to decide”
- Constantly order your Product Backlog to make sure it reflects the most important problems that need to be solved and also make sure that is actually a working increment that you are testing with real users. Evidence speeds up decision making and creates a shared understanding.
- Decentralise ownership; Take a page from Elsa in Frozen and think about what it is that you really need to do yourself and what others can do. Delegate explicitly: “I expect you to take these kinds of decisions.”
Empowered Product Owners
“Delegate to others? I have to get buy in on every decision myself!” Well that is a bad place to be. We already knew that empowerment directly influences success, but now you know why.
In short
Pfiew that was a long story. In short faster decisions are the key to success. Think about:
- Make it small (duh)
- Use an OODA feedback loop (Observe, Orient, Decide, Analyse)
- Empower your Product Owner
- Make faster decisions (see above)
- Make better decisions (see above)
It’s tough but finding the right stance get help you to become more effective as a Product Owner. If you’d like to experience the all-new Professional Scrum Product Owner-Advanced class, go to Scrum.org to find a class in your area. If you’d like to participate in one of our classes, check out our Xebia Academy page for more information or inquire for an in-house class via training@xebia.com.
