Product Transformation - Integrating the idea of Product Risk

Most products fail to meet expectations. The percentage is debated, but could be so high as 95 % according to Clayton Christensen at Harvard Business School. Other sources have estimated it to anywhere between 40 and 80 %, depending on the definition of failure.

Product risk is the risk that we are building the WRONG thing. Something that the market and customers will not be attracted to.

Making it a priority to deal with this risk is one of the most fundamental ideas in the product model.

This idea looks easy to understand at first glance. But in my experience, it is still commonly underestimated and hard to fully grasp by most companies who are trying to transform to the product operating model.

As long as you look at this principle mentally, it looks like a "good idea", but something "we also" need to do. Like something we need to add to what we do.

But typically, once you start acting to focus on driving product risk down in practice, with your own product and your own people, you then fully absorb the deep leverage in this idea.

When you do, you start to treat activities relating to this idea as your primary source of truth, and you start to gravitate and lean on it much more in how you think and value how to operate. You soon start to realize that things you felt were fundamental before, were just crutches that you now need much less of. You start to think of how we should reorient and shift other practices around this idea as well.

This is normal, and natural.

Having seen this develop more than once, I think most product organizations don't realize how much they have conditioned their thinking and culture to value productivity in terms of volume output, and see managing risk as making sure we deliver on time, on budget and on scope. Once we reevaluate this, all the practices that associate with this start to shift as well.

It is not that managing scope, time and money is not important. It is. But managing product risk is more important.

Because if we fail to manage product risk, we will execute building the wrong thing towards certain failure. And by confirming as early as possible that we are solving the right problem by building the right solution, we make it so much easier to succeed in managing scope, time and money as well.

Failure to deal with product risk competently is one of the biggest sources of waste in product organizations worldwide for this reason. The good news is that it is fixable. We just need to start training our organization to start looking for evidence.

Good product companies have the product wisdom to operationalize the management of product risk, rather than treating it as an upfront one-off investment assessment and decision. As with all things highly important for success, we do well integrating it into every level of operation in our organization.