One of the key factors in prioritizing new product ideas and potential markets is the element of risk. Risk is something we inherently understand—this has more risk than that—but we struggle to quantify it.
When thinking about a new anything—a new problem, product, persona, market, or technology—consider what you know and what you don’t. For any decision, one or more of these five aspects are unknown. The lower the number of unknowns, the lower the risk to your organization.
For example, creating a new feature for an existing product probably has pretty low risk. You know the market and you know the product. Creating a new product for a new market has loads of risk, primarily risk from the unknowns.
What is known and what is unknown? Which hypotheses have been validated and which have not?
A new display or visualization on an existing product has few unknowns. We know the product and technology; we know the market and the personas. You’ll likely want to ensure you’re not building a feature nobody wants by validating it with some current and potential customers of the product, customers that you can reach fairly easily.
When thinking about a new anything—a new problem, product, persona, market, or technology—consider what you know and what you don’t. For any decision, one or more of these five aspects are unknown. The lower the number of unknowns, the lower the risk to your organization.
Problem
Let’s start with a problem. Suppose a customer or colleague has an idea for a feature, adding, “I’m sure everyone will want this.” Will they? Before you begin working on the feature, validate the idea with others in your market.
And try to work backward from the feature to the actual problem you’re solving; the job to be done; the need the customer has. Do you truly understand the problem? Is this feature the right solution? How many have the problem?
No matter the company size, every team has limited resources. We need to place our bets on the problems that matter. Look at problems in this context: is it urgent to the buyer? Important to the user? And viable for your business?
Product
Should this new problem you’ve discovered result in a feature in an existing product or should it be addressed in a whole new product? You want to be careful with adding too many features to one product—people get overwhelmed when a product tries to do too much. Think about some of the enterprise products you’ve seen that are incomprehensible. And perhaps you’ve had the experience of customers requesting a new feature that already exists in the product!
But a whole new product brings a little more risk because there are more unknowns with a new product. You’ll have to create a new product team, perhaps with a new set of skills. Will the new product interest your existing buyers? Or do you need to target new buyers? Will the channel sell it? or must you reach them via a new channel?
A feature focused on a new buyer usually means that you should create a new product. Many products today are trying to do too much for too many buyers. If you are trying to satisfy too many buyers, you probably have too much product in your product.
Persona
And let’s talk about buyers. What I refer to as buyer personas. If you have a product designed for new personas, you’ve introduced more risk. Have you researched this new persona’s pains and gains? Do you know their buying power? Their buying preferences? And do they know you? Do you have the reputation—the authority—to connect with them?
Market
New markets carry even more risk than new personas. In a new market, there are new competitors, new types of buyers, new buying preferences and practices. Not to mention, your organization’s reputation may not carry over to the new market, so there’s risk that no one will think to come to your company for the product and that salespeople cannot even make an appointment.
Technology
Perhaps the item with the most risk is new technology. That is, technology that is new to you. If you’ve never done apps or cloud or blockchain, you’ll need to build up those technical skills. Planning new products built on new technology means you must master the new technology before you get anywhere close to defining a new product.
So there it is: five factors to consider in risk—Problem, Product, Persona, Market, and Technology. The lower the number of unknowns, the lower the risk.
And even the things you know have risk.
“It ain't what you don't know that gets you into trouble. It's what you know for sure that just ain't so.”—Mark Twain
That’s why continuous learning and experimentation are key skills for product managers and technical managers.
You might enjoy reading our free eBook, "Aspire to Your Capabilities." Learn how to assess a product opportunity using your organizational strengths.
