When is it Enough Market Knowledge to Act?
I've been talking with a client recently about the pull-and-tug that goes into deciding whether there's enough market proof to build a new feature, or a launch into a new market. Why does half the team recommend one more survey, and the other half end up frustrated because they wanted to put an MVP out months ago? Is it possible to get the whole team comfortable about going to market, or even into beta? Yes, but only if you address the underlying cause of the problem.
Individuals Have Unique Risk Tolerance
Any decision or action carries some level of risk. As individuals, we all need different levels of information, time to ponder options, and degrees of personal certainty before making any decision. Some people are comfortable taking more risk than others; they'd rather make mistakes and correct them, if necessary, after the fact. Others see that as wasteful; a little more analysis and we'll make fewer mistakes to correct! Besides, why risk failure?
Wherever two people have to make decisions together, it seems like there's one of each. From choosing a parking space to choosing a home, one person wants to mull it over just a bit longer, the other is champing at the bit to go, already.
Now imagine dozens of folks on a product team trying to align on when to act. Is it any wonder that they can look at the same research and have very different comfort levels with what the next step should be? Those different levels of individual risk tolerance can generate all manner of bad things, from extra meetings to outright product sabotage, and they have to be addressed for companies to innovate on purpose.
Teams and Companies Need to Establish a Unified Risk Tolerance
An important baseline for every company to set is its tolerance for risk. In other words, how sure should we be before we take action to innovate?
The bad news is that there's no right or wrong answer to this question. The good news? Whatever you choose (and whatever works for your organization) is right.
Take a look at the example below. Both of these companies are working from the same set of market data and is trying to make the same decision: should they expand their collaboration toolkits for their law firm customers. They've each created a scoring system for the market knowledge they gather, and that system reflects the organizational threshold for action.
Unified Risk Tolerance Aligns Teams; Empowers Action
As you can see, Company #1 will build now, even though their score is lower than Company #2! So, does that mean Company #1 is more nimble? Maybe. Does it mean they'll beat Company #2 in the market? Not necessarily. What it does mean is that the product teams in both companies can more easily align on whether or not they're ready to take action, whatever their personal risk tolerance might be.
They're ready to innovate on purpose.
About the Author
Diane Pierson is the Founder and Principal Market Strategist of Innovate on Purpose, a consultancy enabling successful product innovation for tech companies through strategic focus and powerful go-to-market strategies. Diane is also a visiting instructor at Pragmatic Institute. Contact Diane at firstname.lastname@example.org.