Place Your Product Bets
Making smarter product decisions in an uncertain world
When was the last time you had an idea you were 100% certain would be a success?
Was it actually successful?
If you build products for a living you likely know that scenario rarely happens. The reality of product management is that most of the ideas we try will fail because developing something new involves varying levels of uncertainty.
This is where the idea of a bet comes into play. In the book Thinking in Bets, author Annie Duke states that “a bet is a decision about an uncertain future”. By that definition, any decision about what you or your team should build next is a bet.
Improving Your Odds
One of the key themes shared in the book is that humans are notoriously bad at separating inputs from outputs. When asked if a decision was good or bad we focus on the outcome of that decision rather than the information and factors that were known at the time the decision was made. There may be cases where you make a good decision based on the information available at the time but it ends poorly, like playing a poker hand where you had strong odds to win but end up losing.
This is hard for us to do because our decision-making is clouded with emotion and unconscious biases. There are many of types of biases, but I’ll focus on three common and closely linked types of bias that cloud our ability to make sound judgments:
Attribution bias refers to systematic errors made when evaluating behavior and decisions involving ourselves or others. Attributions may be based on the internal characteristics of the person or external circumstances.
Self-serving bias manifests itself in our tendency to view ourselves in an overly favorable manner. We may view our own success as a result of skill rather than luck or external factors. We may also reject feedback or information that doesn’t match our own view of self-view.
Confirmation bias results in the tendency to seek out and favor information that matches our own beliefs.
By choosing to accept the uncertainties and treating our decisions as explicit bets we can better avoid these traps and withdraw the emotion to find key opportunities to learn and seek the truth. Annie Duke wrote, “we win bets by relentlessly striving to calibrate our beliefs and predictions about the future to more accurately represent the world.”
One method Duke recommends gaining more accuracy in our views is a ‘probabilistic approach’ to exploring and weighing your options. The world is rarely binary and there is a range of potential outcomes based on the decisions we make. Incorporating ranges or percentages of alternative solutions has multiple advantages:
We are more likely to temper our statements and openly acknowledge the risks involved
We are more open to incorporating new info and make adjustments because our self-view isn’t as directly connected to being right or wrong
We are able to work better with others who may be afraid to speak up when we declare something 100% true or false.
Duke argues that by explicitly recognizing that decisions are bets we are more to engage in ‘truth-seeking’ behavior. Truth-seeking forces us to examine and refine our beliefs by considering a wider range of possible alternatives. A truth-seeking group can be very effective in reviewing bet outcomes and incorporating that learning into future decision making. We should strive to promote exploratory thought within our groups to form a more accurate view of the world. Exploratory thought, as opposed to confirmatory thought which amplifies your existing views, promotes open-mindedness, diversity of thought, perspective, and reason.
The better we become at recognizing learning opportunities the better decisions we can make. The cumulative effect of being a little better at decision making has a compounding effect.
Putting Bets into Practice
Here are a few tactics that product managers might take to think about new product ideas as bets.
Use an Opportunity Solution Tree. Popularized by Teresa Torres this tool encourages the exploration of alternative opportunities and solutions. You can even take it one step further by adding probabilities of success for each solution.
Backcasting techniques. Backcasting involves envisioning a successful future outcome and then imagining what was required to achieve that result. Amazon’s ‘Working Backwards’ method of creating a press release before a project begins is a great example of this.
Conduct a pre-mortem. A pre-mortem is similar to backcasting but envisioning a negative future outcome instead. The goal is to identify major risks and potential hazards before a bet is made so you can attempt to mitigate these ahead of time.
Form your own ‘truth-seeking group’. Maybe this is your existing product team or maybe it is a group of peers, but the goal of this group is to foster diverse thinking that can help you explore alternatives and calibrate the outcomes of previous bets.
‘Buy-a-Feature’ prioritization techniques. This is a practice that Pandora used early on during their planning cycles. Each stakeholder is given a budget and each project scope has a $ figure based on engineering time. Stakeholders can then choose to allocate their budget to the projects they want to prioritize.
As always, thank you for reading.
Alex Pedicini (@AlexPedi)