How to manage & embrace risk in product development
Running a product team can be tricky.
You have to assist in crafting a strategy for the purpose of the product, create a set of goals for building the product, and ensure that everything is completed in a timely fashion.
Along the way, no matter how carefully planned and organized they are, it’s inevitable that you will have to take risks on behalf of your team.
It’s so inevitable, in fact, that the phrase “move fast and break things” has become an old engineering adage.
Until 2014, it was even the motto for Facebook. According to this philosophy, taking risks and making mistakes are all just a natural part of innovation.
To run a product team successfully, you need to understand that risk is unavoidable. It’s time to stop treating it as an obstacle and to learn to embrace it as an opportunity to identify and improve upon the project your team is working on.
Identifying strategic risk
Learning to identify risk is key in your role as a product manager, not just because you’re able to identify potential roadblocks, but because you’re able to also identify (or at least better understand) what’s at the root of an issue and course-correct from there.
Here’s an example.
One of the largest homeownership insurance apps approached our product team because their application wasn’t performing as they anticipated.
The app’s overall purpose was to provide homeowners with tips and reminders for basic home maintenance tasks. The incentive for completing these tasks was a discount when it came time to file an insurance claim on their home.
The problem with this app was that the incentive program provided value to users too late in the game. Moreover, that value arrived during a comparatively unhappy, stressful time: when a user needed to file an insurance claim.
The takeaway in this example is a lesson in both value risk and viability risk, two of longtime product expert Marty Cagan’s Four Big Risks.
Value risk & viability risk
Value risk represents the question of whether or not a product will provide sufficient value to its users.
Viability risk measures whether or not a product will be sufficiently viable from a business perspective.
In the bigger picture, you can combine both value and viability risk under the umbrella of strategic risk. Typically, strategic risk is taken into account during the early stages of product development. It’s the part of the process where you and your team assess whether or not the timing is right for the product you’re building and, conversely, whether or not the product is right for the time you’re building it.
In this example, the insurance company’s product team took a strategic risk that didn’t pan out. More specifically, because the app provided too little value too late to its users, it also wasn’t sufficiently viable for the company’s business.
By identifying the risk associated with the homeownership app’s strategy, they were able to target the root cause of the app’s poor performance and relaunch it with greater success.
Identifying execution risk
Of course, risk goes deeper than strategy when you’re leading a product team.
Executional risk is another umbrella term for the risk that’s encountered in the midst of product development. If strategic risk represents the obstacles encountered while planning a product, think of execution risk as what’s encountered actually building it.
Understanding execution risks can get into the nitty-gritty of the technology for a product, which can make it trickier to identify and pinpoint the nature of the problem you’ll need to correct with your team.
However, we can use the remaining two of Marty Cagan’s Four Big Risks to help understand execution risk more.
Usability risk measures how well (or not well) the product’s users will be able to navigate the product and use it for its intended purpose.
In building a product, usability stands out because it represents an intersection between the engineering side of product development and the design side.
User experience (UX) and user interface (UI) design are the main determining factors when it comes to usability. Something as simple as an “order now” button that’s out of place or that doesn’t stand out can make for a frustrating UX and a less successful product.
Another important aspect of usability is the difference between mobile and desktop navigation design. For example, Patagonia’s mobile UX is highly usable and also emphasizes its brand values.
The values that Patagonia wanted to incorporate were story-based, including initiatives like their Footprint Chronicles and Patagonia Action Works.
While all of these offered valuable insight into the brand’s deep-rooted mission to be a more ethical, sustainable company, they needed to make sure they didn’t conflict with their app’s usability when it came to the overall shopping experience.
Working in collaboration with Patagonia, we created a navigation system for the product that took into account the entire customer journey, organizing content in a clear, logical way that fit the Patagonia brand and incorporating stories where they were the most relevant to help educate users about the products they were viewing.
On paper, incorporating non-traditional elements, like storytelling, into the navigation system is a usability risk. But with proper execution, incorporating storytelling added to the overall mobile Patagonia experience.
Since making this contribution, Patagonia’s mobile revenues have grown by 25%; a clear sign of success in terms of both usability and the overall product experience.
For product managers, in weighing usability risk always think back to the overall purpose of the product and think about how each component feeds into it. Be willing to be creative in how you can utilize the different elements to contribute to that purpose while keeping functionality top of mind.
Risk is an inherent part of product development
Why not embrace it?
As a product manager, by learning to identify specific types of risks you can become better able to diagnose the symptoms of potential roadblocks and course-correct with your product team to create a better product.
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