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Small Bets in Product Decision Making

In today’s digital age with fast-shifting markets and a large number of competitors, it is increasingly difficult to make impactful product decisions that set yourself apart. Analysis paralysis is a very real thing – What decisions can you make about your product that will actually impact your KPIs and provide a meaningful solution to your customers? We don’t know, and neither do you! While research and discovery upfront is integral to your product decision making, every product decision is still a “bet” on whether it will be successful. Product development is expensive, and the cost of making a bad decision can severely hinder your business, so what steps can you take to guarantee success for your product?

Making Small Bets

The reality is that the majority of the ideas we generate will fail. By considering the high probability of failure, you are set up to make smarter, more cost-efficient decisions that go to market faster, and thus give you critical feedback to know what ideas to continue to invest in. The most successful companies determine in advance what they expect to lose, rather than calculating expected gains. For example, Google didn’t start as the tech giant it is today. It began as a project to improve library searches, followed by a series of small discoveries that lead to a revolutionary business model. 

When you are building new features, you don’t have historical usage data to rely on. By breaking big ideas down into small, testable features, we can rely on experimentation and quantitative insights to steer products towards positive growth. These smaller features should be thought of as “bets”, and should be affordable and achievable ways to learn about problems and opportunities. Measuring the effectiveness of these smaller features enables you to make smarter product decisions that provide a bigger return on your investment with more certainty. Furthermore, customer needs and market dynamics are always changing. Spending too much time and resources on a big idea can easily be money down the drain if the market’s needs shift and the idea is not successful. Releasing smaller features allows you to keep up with the speed of changing markets (due to less development time), and additionally gives you the ability to pivot and refine your process of identifying successful ideas. Time is of the essence here.

Small Bets in the Real World 

Let’s dive into a real-world example. In 2007, Procter & Gamble wanted to release a new probiotic to treat IBS, which they named “Align”. In their initial research, they surveyed consumers to determine whether they would buy, try, and use this product. The results that came back suggested it was going to be a relatively small opportunity. Consumers said they would try it, but likely not use the product every single day. Launching the product itself would additionally be an extremely high cost, as launching a new brand is expensive. Despite this analysis, the P&G team questioned whether the behavior consumers thought they would follow would match what they would actually follow once they experienced the benefit of this probiotic. Instead of spending weeks debating back and forth on viability, they opted to ship some of the Align probiotic to market quietly over the web. P&G focused their marketing in 3 cities and used their salesforce to work with local doctors to get them to recommend the line to some consumers. Doing this over the web was significantly cheaper than a full brand launch because it allowed them to have nondescript packaging, and make it a much simpler proposition. By starting to distribute the product, they were able to learn what it would take to really get people to use the product every day. Through their learning, they changed the packaging to be a blister pack with a probiotic supplement pill to take each day of the week. The people who took it complied and used it every single day. With this data, management was confident in their decision to continue to invest and iterate upon the Align probiotic product. The product was launched nationally in 2009. In 2010, they were awarded the Gold Medal for the Edison Best New Product in the “Consumer Packaged Goods, Consumer Drug Segment Category”, and in mid-2012, won a Nielsen Breakthrough Silver Innovation award by generating sustained, two-year cumulative sales between $50-$100 Million.

Learnings

Successful bets should stack upon one another to inform a successful direction of your product. While Procter & Gamble’s “Align” probiotic product is not a digital product, it is a perfect example of how an organization leveraged small bets to prioritize their decision making and guarantee a return on their investment. By making sure that each investment decision is backed by consumer insights each step of the way, your product will continue to see exponential growth.