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Strategy, Pivot and Risk Mitigation

In this post, I’ll talk about how can we facilitate pivot and risk mitigation discussions while pursuing ideas and/or approaches, what methods, tools or techniques are available for pivot and risk mitigation, and what signals we need capture in order to know if we should Persevere, Pivot or Stop.

In the previous post, I talked how to help teams with facilitating investment discussions by finding ways to remove (or at least reduce) subjectivity when we compare, contrast, or debate ideas, approaches, solutions to justify the investment decisions on them.

In this post, I’ll talk about how can we facilitate pivot and risk mitigation discussions while pursuing ideas and/or approaches, what methods, tools or techniques are available for pivot and risk mitigation, and what signals we need capture in order to know if we should Persevere, Pivot or Stop.

TL;DR;

  • Design may enhance performance, but unless there are metrics to gauge that benefit, the difference it makes depends on conjecture and faith.
  • Measurement allows comparison of expected outcomes with actual outcomes and enables you to adjust strategic choices accordingly.
  • Your initial product strategy may contain plenty of assumptions and risks, and you may as well discover that the strategy is wrong and does not work. If that is the case, then you have two choices:
    • Stop and let go of your vision, or
    • stick with the vision and change the strategy, which is also called pivot.
  • Before considering a pivot, remember: be stubborn on vision, but flexible on details.
  • Don’t make the mistake of executing business ideas without evidence; test your ideas throughly, regardless of how great they may seem in theory.
  • You shouldn’t change direction every time you hit a rough patch, nor should you drop what you’re doing to chase each cool new idea you come up with, also known as shiny object syndrome.
  • Pivoting is attractive only if you pivot early, when the cost of changing direction is comparatively low.
  • When product managers, designers and strategists are crafting their strategy or working on discovery phase, the kind of user and customer insights they are looking for are really hard to acquire through quantitative metrics: most insights (especially desirability and satisfaction) would come from preference data.

Design Metrics and Strategy

In a previous post I’ve argued is that we need objective ways to value design solutions to justify the experience investments, and to look at the different points in the strategic planning and execution and identify the discussions that strategists should facilitate around what customers and users perceive as value, while tracking and tracing the implementation of strategy, while informing decisions around pivot and risk mitigation to ensure we are bringing value for both customers and business.

Design is the activity of turning vague ideas, market insights, and evidence into concrete value propositions and solid business models. Good design involves the use of strong business model patterns to maximize returns and compete beyond product, price and technology.

Bland, D. J., & Osterwalder, A., Testing business ideas, (2020)

From that perspective, we need to find ways to:

  • Explore (and preferably test) ideas early
  • Facilitate investment discussions by objectively describe business and user value, establishing priorities
  • Asses risk of pursuing ideas, while capturing signals that indicate if/when to pivot if an idea “doesn’t work”
  • Capture and track progress of strategy implementation
A holistic Quantifying and Qualifying set of tools and frameworks should help teams Pivot & Risk Mitigation Assessing the risk, capturing signals, know when to pivot Visibility and Traceability Capturing and tracking progress  Facilitating Investment Discussions Business /User Value, Priorities, Effort, etc Validating / Testing Ideas Finding objective ways to explore (and preferably test) ideas early
Instead of a single metric to measure ROI, let’s look at the different discussions that need to be facilitated while quantifying and qualifying strategy, namely: Pivot and Risk Mitigation, Facilitating Investment Discussions, Visibility and Traceability, and Validating / Testing Business Ideas.

In another post, I mentioned that I’ve seen a lot of designers make the mistake to look at prioritisation discussion as a zero-sum game: our user centered design tools set may have focused too much on needs of the user, at the expense of business needs and technological constraints. I discussed that to understanding the risk and uncertainty of your idea you need to ask: “What are all the things that need to be true for this idea to work?” This will allow you to identify all three types of hypotheses underlying a business idea: desirabilityfeasibility, and viability (Bland, D. J., & Osterwalder, A., Testing business ideas, 2020).

Now we will talk about how can we quantify and mitigate risk of pursuing ideas and/or approaches, what are methods, tools or techniques are available for pivot and risk mitigation while pursuing an idea or approach, and what signals we need capture in order to know when to pivot.

Pivot and Risk Mitigation

In a previous post, I mentioned that — more often than not — is not for the lack of ideas that teams cannot innovate, but because of all the friction or drag created by not having a shared vision and understanding of what the problems they are trying to solve. It has become a personal rally cry for me to help teams create shared understanding.

Shared understanding is the collective knowledge of the team that builds over time as the team works together. It’s a rich understanding of the space, the product, and the customers.

“Creating Shared Understanding” in Lean UX: Applying lean principles to improve userexperience, Gothelf, J., & Seiden, J. (2021)

It’s been my experience that — left to chance — it’s only natural that teams will stray from vision and goals. Helping teams paddle in the same direction requires not only good vision and goals, but also leadership, and intentional facilitation. All the collaboration that goes into creating shared understanding can help mitigate the risk of teams straying away.

It is crucial that designers and strategist engage with their business stakeholders to understand what objectives and unique positions they want their products to assume in the industry, and the choices that are making in order to achieve such objectives and positions.

Six Strategic Questions, adapted from "Strategy Blueprint" in Mapping Experiences: A Guide to Creating Value through Journeys, Blueprints, and Diagrams (Kalbach, 2020).
Six Strategic Questions, adapted from “Strategy Blueprint” in Mapping Experiences: A Guide to Creating Value through Journeys, Blueprints, and Diagrams (Kalbach, 2020)

That’s why is important that designers engage with stakeholders early and often to make sure we’ve got the right framing of the problem space around the 3 vision-related questions (as per the Six Strategic Questions illustration above):

  • What are our aspirations?
  • What are our challenges?
  • What will we focus on?
beach bench boardwalk bridge as a visual representation of long term vision
Learn more about creating product vision in Strategy and The Importance of Vision (Photo by Pixabay on Pexels.com)

Having a strong shared vision and shared understanding of the problems we are trying to solve will help facilitate Pivot and Risk Mitigation discussions in the sense that — when it comes to decide if we should Persevere, Pivot or Stop — we need to know what to pivot away from and what to pivot towards.

Uncertainty and Risk

Some projects have considerable uncertainty around project requirements and how to fulfill those requirements using current knowledge and technology. These uncertainties can contribute to high rates of change and project complexity. As project uncertainty increases, so too does the risk of rework and the need to use a different approach (Project Management Institute, Agile practice guide, 2017)

Uncertainty and Complexity Model inspired by the Stacey and Complexity Model (Project Management Institute, Agile practice guide, 2017)
Uncertainty and Complexity Model inspired by the Stacey and Complexity Model (Project Management Institute, Agile practice guide, 2017)

To mitigate the impact of risks, teams select life cycles that allow them to tackle projects with high amounts of uncertainty via small increments of work. Teams can verify their work when they use small increments and can change what they do next. When teams deliver small increments, they are better able to understand the true customer requirements faster and more accurately than with a static written specification.

Planning to De-risk

Because collaboration can help with situations where there is a lot of unknowns, it can be helpful to plan for time to investigate and “de-risk” situations, not just create solutions. It’s worth asking (Anderson, G., Mastering Collaboration, 2019):

  • How much risk is there in finding the solution?
  • How possible is it that we’ll develop ideas that fail?
  • If we do fail, how bad are the consequences for users and the company?

Assessing risk requires a solid understanding of the risks and benefits involved. Common problems include information paralysis — the result gathering too much data and overanalyses. Determine how much data is really needed initially, and then fine-tune implementations with more data a a later stage (Kourdi, J., Business Strategy: A guide to effective decision-making, 2015).

To understand the risk and uncertainty of your idea you need to ask: “What are all the things that need to be true for this idea to work?” (Bland, D. J., & Osterwalder, A., Testing business ideas, 2020)

By turning instead to exploring what would have to true, teams go from battling one another to working together to explore ideas. Rather than attempting to bury real disagreements, this approach surfaces differences and resolve them, resulting in more-robust strategies and stronger commitment to them (Lafley, A.G., Martin, R. L., “Shorten Your Odds” in Playing to Win: How Strategy Really Works”, 2013).

Risk Analysis and Assessment

Once risks are identified they can be prioritised according to their potential impact and the likelihood of them occurring. This helps to highlight not only where things might go wrong and what their impact would be, but how, why and where these catalyst might be triggered (Kourdi, J., Business Strategy: A guide to effective decision-making, 2015):

  • Technology. New hardware, software or system configuration can trigger risks, as can new demand on existing information systems and technology.
  • Organisational Change. Risks are triggers by — for example — new management structures or reporting lines, new strategies and commercial agreements.
  • Processes. New product, markets and acquisitions all cause change and can trigger risks.
  • People. New employees, losing key people, poor succession planning, or weak people management can all create dislocation but the main danger is behaviour: everything from laziness to fraud, exhaustion and simple human error can trigger risks.
  • External factors. Change to regulation and political, economic or social developments can all affect strategic decisions by bringing to the surfaces risks that may have lain hidden.

Analyse risks at the start of each iteration (or test); reassess them regularly. For each identified risk, ask yourself (Podeswa, H., “Analyse Risk” in The Business Analyst’s Handbook. 2008):

  • Who owns the risk?
  • What is the likelihood of the risk occurring?
  • What is the impact on the business if it occurs?
  • What is the best strategy for dealing with this risk?
  • Is there anything that can be done to prevent it from happening or to mitigate (lessen) the damage if it does occur?
Risk Map in Mapping Project Risk & Uncertainty (Alkira Consulting, 2021)
Risk Map in Mapping Project Risk & Uncertainty (Alkira Consulting, 2021)

Design strategists should help stakeholders and teams think through:

  • Quantifying and mitigating risk of pursuing ideas / approaches
  • Creating strategies for pivot and risk mitigation while pursuing an idea/approach
  • Identifying what signals they need to capture in order to know when to pivot.

Start by selecting the biggest risks: the uncertainty that must be address now so that you don’t take the product in the wrong direction and experience late failure (e.g.: figuring out a a late stage that you are building a product nobody really wants or needs). Next, determine how you can best address the risks — for instance, by observing target users, interviewing customers, or employing a minimum viable product (MVP). Carry out the necessary work and collect the relevant feedback or data. Then analyse the results and use the newly gained insights to decide if you should persevere, pivot, or stop — if you should stick with your strategy, change it, or no longer pursue your vision and take the appropriate actions accordingly (Pichler, R., Strategize, 2016).

Whether you work for a small start-up or an existing large organization, validate your riskiest assumptions as quickly and cheaply as possible so you don’t waste valuable time and resources toiling away at something that likely will never work.
Riskiest Assumption Canvas in Design a better business: New tools, skills, and mindset for strategy and innovation (Van Der Pijl, P., Lokitz, J., & Solomon, L. K., 2016)

Iteratively reworking the product strategy encourages you to carry out just enough market research just in time to avoid too much or too little research, addressing the biggest risks first so that you can quickly understand which parts of your strategy are working and which are not, thus avoid late failure (Pichler, R., Strategize, 2016).

Pivot over Plans

While you might have done your discovery research and you wrote a great business plan, several thing can go wrong along the path (Olsen, D., The lean product playbook, 2015):

  • One or more of your hypothesis may be incorrect.
  • Or even if your hypothesis are correct, your execution in designing, building , or marketing your product may fall your short
  • If you find that you’re not making progress as you try to iterate, pause and take a step back. Brainstorm with your team about what all the possible problems could be.

When you change one of your main hypothesis, it’s called a pivot. A pivot is larger in magnitude than the change you normally see as you iterate along the path you chosen; it means a significant change in direction.

Olsen, D., The lean product playbook (2015)

So many teams give up on their product vision far too soon. This is usual called a vision pivot, but mostly a sign of weak product organisation. It is never easy, so prepare yourself for that. But also be careful you don’t get attached to details. It is very possible that you may may to adjust course to reach your desired destination. That’s called a discovery pivot, and there’s nothing wrong with that (Cagan, M., Inspired: How to create tech products customers love, 2017).

Vision Pivots

The product vision is not something we give up easily on.  The vision is typically why people join a company or team, and it’s a compelling problem that we all believe is worth solving.  We know it’s hard.  If it was easy, it would not take us several years to solve, and it probably would have been solved already by lots of others (Cagan, M., Vision pivots vs. Discovery pivots, 2013).

Be stubborn on vision, but flexible on details.

Greathouse, J., 5 time-tested success tips from Amazon founder Jeff Bezos, Forbes Magazine (2013)

In a nutshell, the job of the product organization is to make that vision a reality (Cagan, M., Vision pivots vs. Discovery pivots, 2013):

  • We don’t work for a few weeks or even a few months and then just declare it’s not happening and we should do a pivot.  We will typically work hard for many months on a product vision and not even entertain the possibility of giving up.
  • That said, it’s also the job of the product organization to be able to distinguish vision from illusion.  If we determine that the vision itself is the issue, that is when a vision pivot may be in order.  In my experience, this is usually because we find we’re solving something that customers just don’t care enough about.  In other words, there is no real market.
  • Fortunately, we have some very good techniques for quickly validating the market.  In Marty Cagan’s experience, this is not usually the issue.  The problem is that too many teams give up before they can come up with a good solution that meets the needs of this market.

Discovery Pivots

In contrast, while working on making the product vision a reality, during product discovery we will need to try out a great many ideas.  We expect that many of these ideas won’t work, and the ones that do will require several iterations.  So it’s critical in product discovery that we not be wedded to particular solutions or features or approaches (Cagan, M., Vision pivots vs. Discovery pivots, 2013):

  • So long as we find a way to make the product vision come true, we’re good. The reason this is so important is that Marty Cagan has observed too many teams giving up on their product vision too early.
  • In fact, he has gone so far as to say that most of the time — especially with startups — he sees them failing not because their vision was bad, but because they gave up on their vision too soon.
  • This is why it’s so essential that a product team be strong at product discovery.  Product discovery is how we get as many iterations towards our vision as possible.  Our objective of course is to get to product/market fit before we run out of money (or management runs out of patience). And being good at product discovery means being very open to the many forms of discovery pivots.
Designing Interactions / Experiences: Discovery "Mode"
Learn more about how to get better at discovery in my lecture Designing Interactions / Experiences: Discovery “Mode” at the MA Integrated Design at Köln International School of Design

Pivot, Persevere, or Stop

Wasting your life’s savings and your investor’s money, risking your reputation, making false promises to employees and potential partners, and trashing months or work you can never get back is a shame. It’s also a shame to find out you were completely delusional when you thought that everyone needed the product you were working on (Sharon, T., Validating Product Ideas, 2016).

One of the hardest parts of the Lean Product Process can be decid-
ins whether to persevere with the opportunity you are pursuing,
pivot to a new opportunity, or stop altogether. Let’s get that last
one out of the way first. You don’t have all the time in the world to achieve product-market fit-resource constraints usually limit how much time you have. If you don’t achieve product-market fit or make significant progress toward that goal, it can be challenging to raise the next round of investment. Even new product efforts within a successful company have fixed budgets as well as timeframe expectations for making progress (Olsen, D., The lean product playbook, 2015):

You shouldn’t change direction every time you hit a rough patch, nor should you drop what you’re doing to chase each cool new idea you come up with, also known as shiny object syndrome. I like to joke that if you’ve pivoted three times, you’re heading in the opposite direction from where you started.

Olsen, D., The lean product playbook (2015)

So how do you decide whether to persevere or pivot if you still have cash in the bank and time on the clock? You should consider pivoting if you just don’t seem to be achieving gains in product-market fit after several rounds of trying to iterate. If, despite your best efforts, your target customers are only lukewarm on your MVP, you should consider a pivot. Said another way, if you haven’t yet identified a customer archetype that is very excited about your MVP, then you should consider pivoting (Olsen, D., The lean product playbook, 2015).

Once you have collected the relevant feedback or data, reviewed and analysed it, ask yourself if your strategy is still valid: your initial product strategy may contain plenty of assumptions and risks, and you may as well discover that the strategy is wrong and does not work. If that is the case, then you have two choices (Pichler, R., Strategize, 2016):

  • stop and let go of your vision, or
  • stick with the vision and change the strategy, which is also called pivot.

Decision Biases, Pivot and Risk Mitigation

In part, we fail to make good decisions because of glitches in our thinking , including deep-seated biases that produce troubling lapses in logic. Each of us fall prey to these glitches to some degree, no matter how logical or open-minded we believe ourselves to be (Riel, J., & Martin, R. L., Creating great choices. 2017).

One way to avoid such traps is — obviously — beware of such biases and keep asking questions.

turned on pendant lamp
Learn more about how to ask questions that ensure teams are making good decisions in Strategy, Facilitation, and the Art of Asking Questions (Photo by Burak K on Pexels.com)

With regards to biases, here are a few to be aware of (Hammond, et al. The Hidden Traps in Decision Making, 2013):

  • The Anchoring Trap lead us to give disproportionate weight to the first information we receive.
  • The Status-quo Trap biases us towards maintaining the current situation – even when better alternatives exist.
  • The Sunk-Cost Trap inclines us to make choices in the way that justifies past choices, even when these were mistakes.
  • The Confirming-Evidence Trap leads us to seek out information supporting an existing predilection and to discount opposing information.
  • The Framing Trap occurs when we misstate a problem, undermining the entire decision-making process.
  • The Overconfidence Trap makes us overestimate the accuracy of our forecasts.
  • The Prudence Trap leads us to be overcautious when we make estimates about uncertain events.
  • The Recallability Trap prompts us to give undue weight to recent, dramatic events.

The list above are just some of the biases that can get in the way of good problem framing and pivot decisions. I’d be particularly careful with Confirming-Evidence Trap (which might lead you — as you design tests and experiments — to look for or hear only the what you want to hear so that you get the wrong sense that “we are right!”), or Sunk-Cost Trap (which might lead you into persevering just because you’ve already put too much money time and effort, so “we must this through!”)

yellow letter tiles
Learn more about how decisions biases limits our problem solving abilities in Problem Framing for Strategic Design (Photo by Ann H on Pexels.com)

With these biases in mind, you should tigger team discussions before they make any big decision (Kahneman, D., Lovallo, D., & Sibony, O., “The Big Idea: Before You Make That Big Decision” in HBR’s 10 must reads on making smart decisions, 2013).

Testing, Pivot and Risk Mitigation.

Sometimes the best way to pivot becomes relatively clear from your tests. For example, you might find that a less central part of your value proposition is what most resonates with customers. In this case, you should trim the rest and focus your efforts on that part. Or you may discover your target market consists of distinct submarkets and learn that one of those submarkets really loves some aspect of your value proposition (Olsen, D., The lean product playbook, 2015).

Value Proposition Design helps you to  facilitate discussion around Pivot and Risk Mitigation by precisely defining your customer profiles; vsualizing the value you create, and achieving Product-Market fit
Value Proposition Design helps you to precisely define your customer profiles; vsualize the value you create, and achieve Product-Market fit (Osterwalder, A., Pigneur, Y., Bernarda, G., & Smith, A., Value proposition design: How to create products and services customers want, 2015)

In a previous article, I talked at length about how Alignment Diagrams (like Value Proposition Canvas) coordinate insights from the outside world with the teams inside an organization who create products and services to meet market needs. In other words, Alignment diagrams or models serve as a hinge upon we can pivot from the problem space to the solutions space, helping facilitate decisions of what is important (and what is not).

white dry erase board with red diagram
Learn more about Value Proposition Design and other types of Alignment Diagrams in Strategy, Facilitation and Visual Thinking (Photo by Christina Morillo on Pexels.com)

Don’t make the mistake of executing business ideas without evidence; test your ideas throughly, regardless of how great they may seem in theory.

Bland, D. J., & Osterwalder, A., Testing Business Ideas: A Field Guide for Rapid Experimentation, 2019).

To test a big business idea, you break it down into smaller chunks of testable hypotheses. These hypotheses cover three types of risk (Bland, D. J., & Osterwalder, Testing Business Ideas: A Field Guide for Rapid Experimentation, 2019):

  • First, that customers aren’t interested in your idea (desirability).
  • Second, that you can’t build and deliver your idea (feasibility).
  • Third, that you can’t earn enough money from your idea (viability).

From that perspective, decisions about Pivot and Risk Mitigation and tightly coupled with facilitation investment discussions. We will come back to measuring desirability, feasibility and viability later in this post.

Pivot and the Cost of Changing your Mind

My dad was a Civil Engineer, building airports for the Brazilian Air Force back in the 1970s. He would tell me stories about how frustrating (and expensive) it was to figure out that something needed to change in projects, especially after construction has begun. And the closer to the end of the project, the more expensive — or less room for — changes to be.

Paulson, B. (1976), Designing to Reduce Construction Costs in Journal of the Construction Division, ASCE. Proceedings of the American Society of Civil engineers, Vol. 102, Dec: 587-594

There are many projects out there that fail because drastic changes were needed in the last moments, adding a huge strain on the finance of the product. In the world of UX, everybody knows that late changes can break a product design project. It’s all about spending money on decisions that were validated, so change happens quickly and early – while it’s still cheap.

Pivoting is attractive only if you pivot early, when the cost of changing direction is comparatively low.

Pichler, R., Strategize (2016)

You should therefore aim to find out quickly if anything is wrong if your strategy, and if you need to fail, then fail fast. While a late pivot can happen, you should avoid it, because the later it occurs, the more difficult and costly is is likely to be (Pichler, R., Strategize, 2016).

banking business checklist commerce: Learn how to facilitate Pivot and Risk Mitigation decisions in Facilitating Good Decisions (Photo by Pixabay on Pexels.com)
Learn more about the Cost of Changing Your Mind in Facilitating Good Decisions (Photo by Pixabay on Pexels.com)

Pivot and Risk Mitigation with Outcomes

In the old days of engineering, setting project goals wasn’t that hard. How have we historically given teams a goal that they can work on? Mostly, we simply asked teams to build features—but features are the wrong way to go. We often build features that create no value. Instead, we need to give teams an outcome to achieve. (Seiden, J., Outcomes over Output, 2019).

The Project Logic Model, adapted from Kellogg Foundation
“What are the changes in behaviour that drive business results?” in Outcomes over Output, Seiden, J. (2019)

A fixed roadmap communicates false certainty. It says we know these are the right features to build, even though we know from experience their impact will likely fall short. When we manage by outcomes, we give our teams the autonomy, responsibility, and ownership to chart their own path. Instead of asking them to deliver a fixed roadmap full of features by a specific date in time, we are asking them to solve a customer problem or to address a business need. It gives the product trio the latitude they need to explore and pivot when needed. If the product trio finds flaws with their initial solution, they can quickly shift to a new idea, often trying several before they ultimately find what will drive the desired outcome (Torres, T., Continuous Discovery Habits, 2021).

You might be asking, “what you do mean by outcome”. Joshua Seiden defines as outcome “a change in user behaviour that drives business results.”

Using outcomes creates focus and alignment. It eliminates needless work. And it puts the customer at the center of everything you do

Seiden, J., Outcomes over Output (2019)

You can help the team start thinking in terms of outcomes by asking three simple questions (Seiden, J., Outcomes over Output, 2019):

  • What are the user and customer behaviours that drive business results? If the team gets stuck on trying to answer that question, there is a good chance that working on alignment diagrams will help.
  • How do we get people to do more of these things?
  • How do we know we’re right? The easiest (and the hardest) way to answer that question is to design and conduct tests.

Managing by outcomes communicates to the team how they should be measuring success. A clear outcome helps a team align around the work they should be prioritizing, it helps them choose the right customer opportunities to address, and it helps them measure the impact of their experiments. Without a clear outcome, discovery work can be never-ending, fruitless, and frustrating (Torres, T., Continuous Discovery Habits, 2021).

multiracial colleagues shaking hands at work
Learn how to use Jobs to be Done to facilitate two-way negotiations between leadership and product teams that allows for managing by outcomes (Photo by Sora Shimazaki on Pexels.com)

Capturing Signals for Pivot and Risk Mitigation

It’s an old saying that says what gets measured gets done. There is more than a little truth to this. If aspirations are to be achieved, capabilities developed, and management systems created, progress needs to be measured (“Manage What Matters” in Playing to Win: How Strategy Really Works (Lafley, A.G., Martin, R. L., 2013).

Measurement allows comparison of expected outcomes with actual outcomes and enables you to adjust strategic choices accordingly.

“Manage What Matters” in Playing to Win: How Strategy Really Works (Lafley, A.G., Martin, R. L., 2013)

I will refrain from proposing a single metric for signalling pivot for a few reasons:

  • Different organizations have specific strategic choices about winning that uniquely positions in their corresponding industry: these metrics should take in consideration both the goals of users, but also what is the business trying to learn from the study, then design usability studies accordingly.
  • Different organizations are different levels of design maturity: if you’ve never done any kind of usability studies, it’s not only hard to build the capability to run such studies, but also figure out how to feedback the information back into product decisions.
  • Some of these metrics are discovered too late: since some of these metrics are collected either during usability studies or after the product or service is released, it means that — by the time you collect them — a lot of product decisions have already been made. Some of these decisions could be quite expensive to reverse or pivot at that point, so it might be too late for quantifying and qualifying the success of strategy.
  • Beware of how you measure: quantitative metrics are good to explain ‘What’ and ‘How many’ of a given hypothesis; the ‘Why’ are usually better captured through qualitative research methods
  • The world is different now: some of the signals and indicators that worked for measuring success may not work for new products or services you are trying to create.

To understand the risk and uncertainty of your idea you need to ask: “What are all the things that need to be true for this idea to work?” This will allow you to identify all three types of hypotheses underlying a business idea: desirabilityfeasibility, and viability (Bland, D. J., & Osterwalder, A., Testing business ideas, 2020):

  • Desirability (do they want this?) relates to the risk that the market a business is targeting is too small; that too few customers want the value proposition; or that the company can’t reach, acquire, and retain targeted customers.
  • Feasibility (Can we do this?) relates to the risk that a business can’t manage, scale, or get access to key resources (technology, IP, brand, etc.). This is isn’t just technical feasibility; we also look need to look at overall regulatory, policy, and governance that would prevent you from making your solution a success.
  • Viability (Should we do this?) relates to the risk that a business cannot generate more revenue than costs (revenue stream and cost stream). While customers may want your solution (desirable) and you can build it (feasible), perhaps there’s not enough of a market for it or people won’t pay enough for it. 
calculator and pen on table
Learn more about facilitating desirability, viability and feasibility discussions in Facilitating Investment Discussions in Strategy (Photo by Pixabay on Pexels.com)

Considering that you’ve already validated your feasibility hypothesis (let’s face it, that’s how most technology start ups being from: by creating technology, because then can!), then you should be looking for ways to capture signals to validate your desirability and viability hypothesis.

Quantifying Desirability, Value, and Satisfaction

“What people want” is a question that can be asked and answered before a specific product or service even exists. It is a question that affects product marketing and communication more than its design and features. Yes, when you ask people what they want, their answer includes products, features, and services. Yet they have no idea what they are talking about. They sound believable, but they’re not. They’re not bad people, and they are not liars. Basically, they have no clue, but they think they do and want to be helpful. That’s human nature. In order for people to want a product or perceive it as something they need, three things must happen (Sharon, T., Validating Product Ideas, 2016):

  1. They must know about the product. Your marketing and public relations channels must meet your audience.
  2. They must understand the product’s value. Words, images, demos, and videos must communicate the value of the product and make potential customers feel it solves a problem or meets a need they have. The exception is that sometimes, when non-important purchasing decisions are made, people tend to fudge the understanding of the value.
  3. They must agree to the product’s cost. Potential customers must accept the price point and be willing to pay what you ask for the product.

While question #1 is a marketing question, and question #3 is a business development question, question #2 is is the crux of what designers have pursued since the introduction of the first users centred methods. So it’s just a matter for finding metrics to indicate diresability.

When product managers, designers and strategists are crafting their strategy or working on discovery phasethe kind of user and customer insights they are looking for are really hard to acquire through quantitative metrics, either because we cannot derive insights from the existing analytics coming from the product, or because we are creating something new (so there are no numbers to refer to). Most of such insights (especially desirability and satisfaction) would come from preference data.

Preference data consists of the more subjective data that measures a participant’s feelings or opinions of the product.

Rubin, J., & Chisnell, D., Handbook of usability testing: How to plan, design, and conduct effective tests (2011)

Just because preference data is more subjective, it doesn’t meant is less quantifiable: although design and several usability activities are certainly qualitative, the image of good and bad designs can easily be quantified through metrics like perceived satisfactionrecommendations, etc (Sauro, J., & Lewis, J. R., Quantifying the user experience: Practical statistics for user research. 2016).

Preference Data is typically collected via written, oral, or even online questionnaires or through the debriefing session of a test. A rating scale that measure how a participant feels about the product is an example of a preference measure (Rubin, J., & Chisnell, D., Handbook of usability testing, 2011).

measurement-millimeter-centimeter-meter-162500.jpeg
Learn about ways to objectively measure the value of design in The Need for Quantifying and Qualifying Strategy (Photo by Pixabay on Pexels.com)

By building, measuring and learning, designers are able to get closer to great user experiences sooner rather than later (Gothelf, J., & Seiden, J., Lean UX: Applying lean principles to improve user experience, 2021).

From this perspective, Risk Mitigation, Facilitating Investment Discussions and Testing Business Ideas should go hand-in-hand.

Quantifying and Qualifying Viability

Similarly to Feasibility, we need to validate business viability of our ideas during discovery, not after (Cagan, M., Inspired: How to create tech products customers love, 2017).

It’s absolutely critical to ensure that the solution we build will meet the needs of our business — before we talk the time and expense to build out the product.

Cagan, M., Inspired: How to create tech products customers love (2017)

Business viability include financial considerations, marketing (both brand and go-to-market considerations), sales, legal, business development, and senior executives. Few things destroy morale or confidence in the product manager more than finding out after a product has been built that the product manager did not understand some essential aspects of the business (Cagan, M., Inspired: How to create tech products customers love, 2017).

So from that perspective, it is important to agree what are the indicators that can help us understand if our viability hypothesis works: adoption? returning users?

Pirate Metrics (a.k.a. AARRR!) —a term coined by venture capitalist Dave McClure—gets its name from the acronym for five distinct elements of building a successful business. McClure categorizes the metrics a startup needs to watch into acquisition, activation, retention, revenue, and referral—AARRR (Croll, A., & Yoskovitz, B. Lean Analytics. 2013).

Pirate Metrics or AARRR!: acquisition, activation, retention, revenue, and referral
Pirate Metrics or AARRR! in Lean Analytics (Croll, A., & Yoskovitz, B., 2013)

McClure recommends tracking two or three key metrics for each of the five elements of his framework. That is a good idea because your conversion funnel ins’t really just one overall metric; you can track the more details metrics, making a distinction between, the macro-metrics and the micro-metrics that relate to them (Olsen, D. The lean product playbook, 2015).

The Right Time for Pivot and Risk Mitigation

You might be asking yourself “These are all great, but when should I be doing what?”. Without knowing what kind of team set up you have, and what kinds of processes you run in your organization, the best I can do is to map all of the techniques above the the Double Diamond framework.

The Double Diamond Framework

Design Council’s Double Diamond clearly conveys a design process to designers and non-designers alike. The two diamonds represent a process of exploring an issue more widely or deeply (divergent thinking) and then taking focused action (convergent thinking).  

  • Discover. The first diamond helps people understand, rather than simply assume, what the problem is. It involves speaking to and spending time with people who are affected by the issues.
  • Define. The insights gathered from the discovery phase can help you to define the challenge in a different way.
  • Develop. The second diamond encourages people to give different answers to the clearly defined problem, seeking inspiration from elsewhere and co-designing with a range of different people.
  • Deliver. Delivery involves testing out different solutions at small-scale, rejecting those that will not work and improving the ones that will.
Design Council’s framework for innovation also includes the key principles and design methods that designers and non-designers need to take, and the ideal working culture needed, to achieve significant and long-lasting positive change.
A clear, comprehensive and visual description of the design process in What is the framework for innovation? (Design Council, 2015)

Map of Pivot and Risk Mitigation Activities and Methods

Process Awareness characterises a degree to which the participants are informed about the process procedures, rules, requirements, workflow and other details. The higher is process awareness, the more profoundly the participants are engaged into a process, and so the better results they deliver.

In my experience, the biggest disconnect between the work designers need to do and the mindset of every other team member in a team is usually about how quickly we tend — when not facilitated — to jump to solutions instead of contemplate and explore the problem space a little longer.

Map of Pivot and Risk Mitigation Activities in the Double Diamond (Discover, Define, Develop and Deliver)

Knowing when team should be diverging, when they should be exploring, and when they should closing will help ensure they get the best out of their collective brainstorming and multiple perspectives’ power and keep the team engaged.

Pivot and Risk Mitigation Activities during “Discover”

This phase is very divergent in nature, so we need to things that are counterintuitively risky and are usually perceived as “slowing us down”, such as user research, challenge the problem framing, create a shared vision, and test business ideas: the more you “discover” in this phase, the more certainty you create for making informed decisions about Pivot and Risk Mitigation later.

Here are my recommendations for suggested quantifying and qualifying activities and methods:

Pivot and Risk Mitigation Activities during “Define”

While in the previous phase we needed ask ourselves good questions that foster divergent thinking and explore multiple solutions, in this phase we need help teams converge and align on the direction they should go.

Here are my recommendations for suggested quantifying and qualifying activities and methods:

Pivot and Risk Mitigation Activities during “Develop”

In this phase, the we should be starting to capture signals to decide if we should persevere, pivot or stop. Since this is the phase that we can put something that resembles the final product in product of customers and users, we should be focusing as much as possible on capturing both preference and performance data from with concept validation and usability testing.

Here are my recommendations for suggested quantifying and qualifying activities and methods:

Pivot and Risk Mitigation Activities during “Deliver”

In this phase is too late to Pivot and Risk Mitigation. The best you can do is to collect data from real customer usage for visibility and traceability, and make hard choices about pivot, persevere, or stop on next iteration of the product.

On the other hand — since the product is now on the hand os customers and users — we should be able to collect the richest data from live usage that can inform decisions about our viability hypothesis.

Here are my recommendations for suggested quantifying and qualifying activities and methods:

Facilitate Pivot and Risk Mitigation Discussions

I’m of the opinion that designers — instead of complaining that everyone else is jumping too quickly into solutions — should facilitate the discussions and help others raise the awareness around the creative and problem solving process.

I’ll argue for the Need of Facilitation in the sense that — if designers want to influence the decisions that shape strategy — they must step up to the plate and become skilled facilitators that respond, prod, encourage, guide, coach and teach as they guide individuals and groups to make decisions that are critical in the business world though effective processes.

That said, my opinion is that facilitation here does not only means “facilitate workshops”, but facilitate the decisions regardless of what kinds of activities are required.

Learn how to facilitate Pivot and Risk Mitigation discussions in skilled facilitator (photo of people near wooden table)
Learn how to facilitate Pivot and Risk Mitigation discussions in skilled facilitator (Photo by fauxels on Pexels.com)

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Cagan, M. (2017). Inspired: How to create tech products customers love (2nd ed.). Nashville, TN: John Wiley & Sons.

Cagan, M. (2013, February 3). Vision pivots vs. Discovery pivots. Retrieved December 10, 2021, from Svpg.com website: https://svpg.com/vision-pivots-vs-discovery-pivots/

Croll, A., & Yoskovitz, B. (2013). Lean Analytics: Use Data to Build a Better Startup Faster. O’Reilly Media.

Design Council. (2015, March 17). What is the framework for innovation? Design Council’s evolved Double Diamond. Retrieved August 5, 2021, from designcouncil.ork.uk website: https://www.designcouncil.org.uk/news-opinion/what-framework-innovation-design-councils-evolved-double-diamond

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By Itamar Medeiros

Originally from Brazil, Itamar Medeiros currently lives in Germany, where he works as Director of Design Strategy at SAP.

Working in the Information Technology industry since 1998, Itamar has helped truly global companies in several countries (Argentina, Brazil, China, Czech Republic, Germany, India, Mexico, The Netherlands, Poland, The United Arab Emirates, United States, Hong Kong) create great user experience through advocating Design and Innovation principles.

During his 7 years in China, he promoted the User Experience Design discipline as User Experience Manager at Autodesk and Local Coordinator of the Interaction Design Association (IxDA) in Shanghai.

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