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How to ensure robust decisionmaking

December 5, 2020 by Luke Szyrmer Leave a Comment

The Toyota Prius was a fascinating car from a marketing perspective. At the time of launch, it was the first mass marketed electric hybrid car. It was initially aimed at the green and eco-friendly crowd: people keen on minimizing their carbon footprint. As a result, the marketing leaned heavily into using the ethical angle. They deployed guilt to reach eco-hipsters.

Photographer: Raivis Razgals | Source: Unsplash

It was like this for a few years, often with “manly man” types ridiculing both Priuses and their owners. Then, at one point, Uber took off in popularity. At the time, when we lived in London, it seemed that every time I hailed an Uber, the Prius was the most common car used. At first, I almost missed it. Eventually, I asked one of my drivers why he was driving a Prius. And he said:

“it’s actually the most economical car possible, in terms of running costs, because I get twice the mileage on the same tank of petrol.”

The Prius appealed to these drivers on a completely different business level. If your livelihood depended on your cost structure, you became more competitive. To some extent, the typical London-based Uber customers may have preferred taking a Prius because of the original eco-hipster argument. A hybrid car was not only cheaper but also better for the environment. So in addition to the cost angle, there was an indirect marketing upside for the drivers.

This is an excellent example of promoting social change through rational arguments. For an ethical argument to go “mass-market”, an innovation needs to appeal to the pragmatists, as per Geoffrey Moore’s classic book Crossing the Chasm. For this to happen, it needs to overcome a lot of skepticism. And it needs to have clear practical implications, in order to be a “common sense” choice. Even for an ethically superior product, most buyers need a practical rationale. Only then, it can spread and stick among the majority of people.

The practical argument for diversity

For years, I was looking for something similar in the context of diversity. I’ve been looking for hard evidence of the benefits of diversity. As an idea, diversity itself always resonated with me. Especially as a bootstrapping serial immigrant, I often felt out of place and disadvantaged relative to my peers. I felt empathy for minorities and outsiders. And often including them benefitted everyone. Yes, I acknowledge I did have it easier–growing up in the US as a white male. There were lots of pressures related to skin color, which I never felt.

This year, #BlackLivesMatter and racial unrest in the US has sped up this social change. Other minorities have also made progress. Women, in particular, which have been a “minority” despite being half the population. The conversation has already shifted, and the denial has stopped.

I still believe these changes will be to everyone’s benefit. The main reason is that we all benefit from a clash of different perspectives. The more homogenous a group of people, the more they will be subject to bias and blind spots. The more variety you have, the greater the chance of reducing those distortions when making group decisions. It’s worth considering the impact of diversity. Include more perspectives and achieve a more robust outcome.

Opinions are like stocks

As a shorthand mental model, you can view diversity in organizations analogous to modern portfolio theory. In an investment context, owning a larger number of uncorrelated financial assets leads to better overall outcomes. There is a quantifiable benefit from this. The more stocks you have, the less you are exposed to company-specific risk. To some extent, the same is true with industries. If the travel sector gets hit hard by a pandemic, if you have some technology stocks, you’ll come out ok.

In a management decision making context, the same holds true for uncorrelated opinions. Having a number of uncorrelated opinions helps a group come up with a more robust view.

remove individual bias with diversity of opinion

There are many ways to benefit from this. One way I’ve seen this done explicitly is using personality assessment tools like DISC, Myers-Briggs, or Kolbe. Everyone is different. You can baseline how much natural preferences might skew the team perspective. Different people notice different details. It’s worth being mindful of potentially missing yet complementary perspectives. For example, in IT there tend to be a lot of data-driven logical people. Having someone who is more relational or “heart-driven” participate can incorporate more intuition into a decision.

Also, personal background, race, or orientation can also provide useful angles which a homogenous group of proverbial old white men could miss. Many businesses started to serve minorities, which the “white establishment” thought wasn’t viable. For example, Black Entertainment Television. Or major podcasts aimed at the Latino community.

Implications for managers

In the context of a specific company, we also often deal with people from different departments. They have different backgrounds, a different personal network, and often different goals. All of these would additionally influence their perspective. Converging onto a shared company-wide perspective helps create a common understanding of what best.

Often problems or challenges go unresolved, simply because we aren’t aware of them. Or we don’t see the full importance of resolving the problem, because we underestimate the full implications.

You can also go too far, according to the picture above. If you start to gather too many opinions, it stops adding that much extra value. The incremental value of a 201st opinion will be much smaller than a third one. You will have heard most of what’s worth taking into account much earlier than 201 interview earlier. There may be patterns in the data.

But you don’t have much risk of missing something obvious due to your own blind spots and “unknown unknowns”. With any decision, there will always be some risk which you can’t diversify away. Regardless of how many opinions you gather or who you ask, you still have to live with it. At minimum, you’ll achieve the main benefit of diversity in opinion: more robust outcomes. Ones that take into account all facts and which are less subjective.

If you’d like to read more, the above is an excerpt from my book Align Remotely. Bringing together diverse remote teams is an art, one you need to master if you want them to achieve high performance. Read on over here.

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How to check if you have the “right” message, if you are in a solution-aware market

October 30, 2020 by Luke Szyrmer Leave a Comment

One of the key factors in getting a message right is making sure you pre-empt the question “why should I buy from you right now?” For sales of expensive enough products, i.e. more than a candy bar or a book, that is the key question.

When you need that helping hand!
Photographer: Neil Thomas | Source: Unsplash

In markets that are “solution aware”, the focus of traditional copywriting is often around articulating benefits to justify features. But within your market category, your direct competitors will offer the same benefits. So the real question at that stage is why a prospect should buy–specifically from you. Why your product, service, or solution will uniquely address the customer’s need. This is a really hard question, because it requires self awareness in addition to all of the work you are already doing, to be able to answer it successfully.

There’s three aspects to this:

1. It’s clear to you how your product differs from alternatives in the marketplace, both competitors as well as alternate ways of addressing the problem

2. You communicate it clearly and falsifiably.

3. You can effectively articulate why a transaction should happen right now.

Let’s dig in, shall we?

1. Differing clearly from Alternatives

A Launch Tomorrow client had developed a sonar based device to identify cancer cells, in order to aid physicians during surgery. As medical device experts, the founding team were struggling to describe their invention. When I started working with them, founders were largely marketing their efforts via technical papers in medical journals.

As a result of working together, one co-founder discovered the product is uniquely positioned as the only audio-based technology relevant for ovarian cancer surgeons. It could be used with all existing tools to significantly improve patient outcomes, reduce the amount of cutting required, as well as time required to recover. This meant that by focusing on this one group, he potentially had first mover advantage in a lucrative niche using a very narrow message.

I got this corner of the market…cornered.

Essentially, he discovered his invention had little competition in a slice of the multi-billion dollar cancer treatment market. But the slice was billions of dollars in size. He previously missed this, because he was so focused on developing a working technology. Once he had this positioning insight, it was just a matter of deploying it in every sales and marketing interaction going forwards.

It could be as simple as being able to introduce the product with one sentence, which immediately helped sidestep the difficulties they were facing when trying to describe the product.

2. Falsifiable marketing

Falsifiable is a big and fancy word that serves as a gold standard with respect to messaging. This term originally comes from Karl Popper and his thoughts on the scientific method, but it has a quite practical application to persuasion. Essentially, you make a bold and surprising claim using a number or time frame. Then invite the customer to to prove you wrong. To try for themselves if you are right.

Here is a classic commercial where it was used qualitatively, to pull the customer in, entertain a bit, and also subtly point out the point of difference Wendy’s was trying to stress:

This makes it pretty clear that Wendy claims to have more meat in their burger, compared to competitors. So that was the clear answer to why the customer should buy from them.

Ideally this is numeric. As a result, either your claim is true or it’s false. There is no gray area. And it’s quite objective. The hackneyed example here is the “30 minutes or less, or you get it free” delivery for Domino’s Pizza. If you called to order a pizza, the clock started ticking. Either the pizza arrived in less than 30 minutes or not. At the time, it was a differentiator. Customers were used to waiting up to an hour for a pizza to be delivered, often receiving it cold. And the message carried a clear additional benefit, if it took longer than 30 minutes. In this case, the short message embedded a guarantee .

3. Establishing urgency

Finally, the time sensitivity is the last part which helps cement a good positioning message, even though this is quite different for B2B and B2C. On the B2C side, there are a long list of standard copywriting techniques around limiting availability, digging into fear of missing out, like “time is running out…” to communicate or sometimes even manufacture urgency. Take a look at the swiped.co archive of famous salesletters using urgency effectively.

Trying to do this in B2B, for example in B2B enterprise software sales, could end up blowing up in your face though. This is better left out of the positioning, but explicitly included into the sales cycle. Sales consultant John Paul Mendocha advocates the use of what he calls the “calendar close”. On an in person basis, you pull out a physical calendar, and ask when they need the solution by. That way, you can have an open discussion about when it would need to start. And you get a clear indication of whether or not the sale is urgent for this particular prospect.

Here’s a quick example of repositioning a tech product

MargenTech invented a VR system to help train ship captains by simulating difficult situations and making sure they engrained the right habits under pressure. But they were having trouble marketing it. The conversation usually died down, after the novelty factor of using VR wore off.

Emre Ucan, co-founder and COO, realized during our discovery process that in fact he was selling the wrong thing. Instead of selling a VR training system, he could use the same technology when selling "insurance" against accidents to oil shipping companies. As one oil tanker carries about $1bln in inventory, accidents can be extremely costly to shipping companies (not to mention the ecological damage). This new positioning opened up a completely different pricing strategy, and ultimately helped him attract a potential strategic buyer for the entire business.

Next steps

If you’d like some help with positioning your product effectively, reach out to Launch Tomorrow and book a discovery call to explore options that might work for you.

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How to balance working on growth with searching for product-market fit

May 29, 2020 by LaunchTomorrow Leave a Comment

Here’s Marc Andreesen’s take in the original article which coined the term “product-market fit”:

The only thing that matters is getting to product/market fit.Product/market fit means being in a good market with a product that can satisfy that market. You can always feel when product/market fit isn’t happening. The customers aren’t quite getting value out of the product, word of mouth isn’t spreading, usage isn’t growing that fast, press reviews are kind of “blah”, the sales cycle takes too long, and lots of deals never close.And you can always feel product/market fit when it’s happening. The customers are buying the product just as fast as you can make it — or usage is growing just as fast as you can add more servers. Money from customers is piling up in your company checking account. You’re hiring sales and customer support staff as fast as you can. Reporters are calling because they’ve heard about your hot new thing and they want to talk to you about it. You start getting entrepreneur of the year awards from Harvard Business School. Investment bankers are staking out your house. You could eat free for a year at Buck’s.Lots of startups fail before product/market fit ever happens.My contention, in fact, is that they fail because they never get to product/market fit.

He goes on to say that you can pretty much ignore everything else until you have product market fit, because that’s the only thing that matters to the business.

up and to the right: how we like our curves

Once you genuinely have product market fit, you stop working on it. So there is no balance.

Or to be even more precise: first get product market fit. Then work on scaling. Any time you spend on trying to scale a product that doesn’t have product market fit is kind of a waste of time.

The style of working also changes once you begin to scale. For example, Brian Chesky of AirBnb says:

At scale, you have to learn how to move from intuition to data. When you are first starting a company — data is not the most important thing. Pre-product market fit — data wasn’t important for us — it was much more about the person-to person interactions with customers.

Be ready for a totally different challenge once you begin to scale. But it doesn’t make sense to prepare for it or start early, because you might be scaling a product turd. Or not have the right team. Just because it might be tempting to jump to scaling, heading to the quantitative stage before you have exactly the right product for your market is just premature optimization. And a waste of resources—(your) time.

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Filed Under: uncategorized Tagged With: minimum viable product, product market fit

The Kindergarten, the Construction site, and the Assembly Line

December 18, 2019 by LaunchTomorrow 1 Comment

Last night, I went to a local meetup where we played Legos. It was an event organised by Krzysztof Niewinski. In particular, it was a simulation workshop of large scale product development using alternative organizational structures. But there were lots of colored bricks involved. And the specs were pictures of the end products that needed to be built.

Without getting into too much detail, we covered 3 alternatives with the same group of 20 something people: component teams, cross functional teams of specialists, and finally “T-shaped” interdisciplinary teams where everyone could do everything. In short, we were experimenting with output using alternative ways of working. Each round took roughly 10 minutes.

Here’s what happened

In the first round, we had specialized component teams each dedicated to working with only two different lego colors, a supply team, an integration team, a quality team, and 8 different product managers who wandered from table to table. Sound familiar? Kind of like a massive construction site with lots of project managers. Or in a large company developing and installing software. Most of the building teams sat around doing very little in practice. There were lots of bottlenecks and confusion around getting supplies and exact requirements. I had a chance to engage in chitchat with my table mates. And a stressed out senior executive that walked around and yelled at anyone for not doing anything.

The second round, we continued to have individual performers who were specialists, but they worked together, which resulted in a lean assembly line. The time required to first output went down almost 50%. But there was less top down control. And more legos on the table, relative to the previous round.

And finally–the last round–everyone pitched in and contributed how they could. There were still some constraints, in that people working outside of their expertise could only use their left hand. Despite that, it only took a minute to get the first outcome, so almost 9 times faster. But there were lots of extraneous legos on the table. It was lots of fun, and it was a very tactile learning experience for everyone who pitched in. Just like kindergarten.

What does this mean

This boils down to control, profitability, and speed. This is just as true for startups as it is for large companies. Most of the conflicts among co-founding teams boil down to differences how founders value control and money, according to Harvard professor and researcher Noam Wasserman in Founders’ Dilemmas. In big companies, any larger product development program will implictly or explicitly make a call on these three, based on how the work is organized. It depends on what you optimize for, as Krzysztof the facilitator pointed out.

The construction site was optimized for control, especially of costs. There were enough people to do the work, and enough legos could be procured if you were willing to wait. But the level of resource scarcity locked up the system, relatively speaking. And it took a long time to finish anything.

The assembly line required a slightly larger up front investment but the speed at which things happened increased dramatically. Even though the constraints on each individual were exactly the same. As an expert in yellow and green bricks, I was still only allowed to touch these, even though the configuration was completely different.

The kindergarten required even less top down control and more resources, as well as trust that the teams will get on with it. There was be a higher use of resources (lego blocks laying on the table). At any given moment, you won’t know exactly what is going on, because everyone is contributing and collaborating. The teams were releasing stuff like crazy. So at that point, does it really matter that you need a bit more money up front? If they are releasing stuff so quickly, presumably this translates into revenue, which keeps the kindergarten afloat and then some.

Choosing the metaphor works that best for your company

The way you organize the work matters. And it feeds into culture. Larman said “Culture follows structure“. In a software context, it means you want to allow for chaos and experimentation. And not really just squeezing features out of development teams.

As a company scales from a successful startup to a larger company, the trick is to keep enough of that “kindergarten juice” in the culture and in how the work is organized, in order to allow your company to continue innovating. If the emphasis on control changes as a product matures, you can introduce more of that as needed. But do so consciously, and watch your output and outcomes like a hawk.

By micromanaging the process, even as an assembly line in a feature factory, you’re still missing out on pretty big upside (assuming you care about having lots of new products released).

That said, even a kindergarten needs boundaries. So that the teams don’t cut corners in quality for example. That’s kind of the point. There are a handful of non-negotiables around safety, health, and security in a kindergarten, and everything else is optimized for discovery.

So for a bunch of interested strangers on a random school night, who dug into a few alternative structures and held everything else constant, it was clear that there could be very large differences at play. 14x faster, not 14% faster. These would be results any agile or digital transformation program would love to achieve. That said, it wasn’t clear if these differences came from structure only, or the culture around it. And if culture is involved, that could be what’s preventing the massive change in the first place.

Key Takeaways

  • The way you organize work matters, and it feeds into the culture, particularly in a larger company.
  • By organizing work, you will be making choices about tradeoffs among variables that matter.
  • Control, in particular, seems to be inversely related with learning and speed.

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Disproved: Most successful products are launched exactly the way they are envisioned

December 11, 2019 by LaunchTomorrow 2 Comments

Icarus and his father Daedalus, the architect of the Labirynth, attempt to escape by air from Crete. Daedalus had become a political refugee. He had helped Theseus, an enemy, break into the Labirynth to kill the Minotaur.

Icarus falls, assuming the plan so good he doesn’t need to watch himself implement it

Daedalus then constructed wings from feathers and wax. Icarus’ father warns him first of complacency and then of hubris. Daedalus asked that Icarus fly neither too low nor too high. The sea’s dampness could clog his wings. The sun’s heat could melt the wax. Icarus ultimately ignored his father’s latter instruction. He flew too close to the sun. When the wax melted, Icarus tumbled out of the sky, fell into the sea, and drowned.

How is this relevant when launching new products?

Entrepreneurs have a strong sense of vision, particularly when creating something new and magical like the wings in the legend above. That’s why we love them. Working alone or as a small team, they execute. They see something no one else does, and they pursue it relentlessly, until it happens. In one form or another.

He dreamed  about a stargazing and slowly getting there.
Photographer: Rahul Bhosale | Source: Unsplash

Conversely, corporate innovators often have to plan a lot up front, to align across multiple departments and stakeholders. Which means that detailed planning results from significant negotiations. And that any change often requires re-negotiation. But there is a great deal of vision and planning required to create something out of nothing.

These two scenarios have more in common with one another. Vision and planning is crucial, but having too much of an attachment to any plan is counterproductive.

Believing too much in the initial plan is clingy (and can feel unproductive)

For years, I was curious about whether there was any data to back that up. If you want to create a successful product, usually you want high growth as an ultimate metric of success. Recently, I found that data point.

In The Origin and Evolution of New Businesses, professor Amar Bhide of Harvard interviewed the founders of an entire year’s-worth of Inc 500 companies in the late 1980s, a ranking of high growth startups. This is independent of sectors and also not influenced by any of the more recent lean startup/small batch thinking. At the time, most startups needed to raise a significant amount of money to launch anything new. From a funding & risk perspective, the success criteria were close to that of corporate product development today.

Bhide reported that approximately 2/3 of the founders he spoke to pivoted away from their original concept:

More than one third of the Inc 500 founders we interviewed significantly altered their initial concepts, and another third reported moderate changes.

The majority of the founders shifted away from their original vision. Was it out of necessity? Or is being both willing and able to adapt is actually a requirement for new product success. One third of the founders were lucky to have guessed exactly what their customers wanted. But most needed to adapt and pivot to the best possible business model.

Plans are worthless but planning is everything –Eisenhower

In other words, the most helpful mindset & approach is to:

  1. assume that you will be wrong about something when launching a new product
  2. make sure you have the option to pivot
  3. often, this happens once you collect data that challenges your assumptions…so collect data first!

This is how innovators work. This is also how “search” for a new business model differs from executing a known business model and aiming for efficiencies only.

This post is part of my “7 Lies of Innovation” email course. Click here to sign up if you’d like to know when the common wisdom around innovation doesn’t actually hold up in the data.

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    Luke Szyrmer is an innovation and remote work expert. He’s the bestselling author of #1 bestseller Launch Tomorrow. He mentors early stage tech founders and innovators in established companies. Read More…

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