Risk management in products: not conservative and not aggressive

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in the product decision-making process, the way of risk management is not the same as the way of managing the project. in our actual project, we will hear some voices: "if the product version requirements decision is more conservative, repeatedly modifying the hesitant plan is not necessarily much better than the initial plan, but it drags down the time for the version to go online." ”

failure is also an option


THOMAS J. Watson, founder of IBM, once famously said, "If you want to succeed faster, you have to make more mistakes." The modern version of Iron Man Elon Musk also said something similar: "Failure is also a choice." ”

however, there is a part of the human brain called the "lizard brain" that exists at the top of your spine. this part preserves the survival memories and skills that humans have evolved from ancient times, and the whole thing that is considered in this part is to stay away from danger and fill your stomach. if the natural conservative thinking of the "lizard brain" dominates product decision-making, so that we are afraid of failure in the decision-making process of the product, it can only produce mediocre, dull and boring products, and the product risk management ideas that fear failure cannot help us.

there is an example of the previous office chair market: usually only the clerks in the purchasing department or the human resources department care about the specifications and texture of the chair, and these procurement personnel are constantly searching through safe and simple lists. the "product manager" of the chair carefully listens to the opinions of the purchaser and designs the product in the most secure and safe way. this creates a boring and bland market.

And when Herman Mille introduced a $750 Aeron chair to the market in 1994, peers thought they were crazy. This is a product that looks completely different from the previous market. The product manager of the average chair would think it was a huge mistake, and the price of this chair could buy a bunch of other brands of chairs on the market. However, after arriving at the market, because the design of this chair is very unique, everyone who has seen it wants to sit down, and everyone who has sat wants to share it with others. Aeron's product managers knew at the time of design that such an expensive price would not be easily purchased by the average agent, but they still wanted to try to impress another group of people.

In the end, Herman Mille successfully ran the product, allowing people sitting in Aeron chairs to convey a message to the outside world: what is your identity and status, and the company that bought the chair is equivalent to sending a similar message about the company to the outside world. Soon after Aeron came out, the founder of Site Specific immediately bought more than a dozen chairs without thinking after getting his first check for venture capital, and he also appeared on the important section of the Wall Street Journal. Since its introduction in 1994, the chair has sold millions of copies and is also collected by the Museum of Modern Art in the United States.

beyond limited reason

why do we need to be bold in the risk management process of our products, or even "make mistakes"? the reason is that if we are perfectly rational, we don't need to make mistakes or engage in random behaviors in order to learn. however, we are not rational enough, so we need to be brave enough to try and intervene in some random errors in order to succeed.

having the courage to try can help us transcend the finite rationality that creates us:

we are overconfident. many of us don't know the boundaries of our knowledge. at the same time, research shows that professional knowledge does not always protect us, and sometimes it hinders our ability to learn. this is called the curse of knowledge. 

inexperienced decision makers can make a lot of mistakes and learn from them. experienced decision makers, on the other hand, are likely to become so adept at playing with the way they are used to that they can no longer improve significantly. if you reach a bottleneck stage, you need to be brave enough to try, and you may even need to deliberately make mistakes to get out of your comfort zone.

we are afraid to take risks. the self-esteem of our profession depends on the correctness of what we do. employees are rewarded for good performance and penalized for failure, so we spend a lot of time and effort trying not to make mistakes. although the situation is not very bad, the loss is more psychological than the benefit.

we tend to find arguments that support us. when we choose, we always want to be right, not wrong. when we choose, we tend to look for arguments that support our beliefs without asking some opposite questions.

suitable scenario

when this risk management strategy is carried out, we must have a control over the degree, mainly in the following similar scenarios, we will implement this strategy better:

• relative error costs can be hugely rewarding. when the risk of failure of a decision is low, but the benefits of success are high, it is natural to try boldly.
• issues that require repeated decision-making. for example, it's a recurring decision to decide which group of people a credit card product targets to get a higher return, so try it out, even make a mistake, and then find the appropriate group of people based on the data obtained.
• the market environment is constantly changing. if your product is in an environment that is constantly changing and the previous way is no longer effective, you need to use this way to accelerate the learning process.

experience with a problem is limited. if you are unfamiliar with a problem, you should be more open-minded than more conservative when you solve it.


finally, think about what can be changed in the risk management of your own product decisions?