When noone takes risks and you wonder why...
...it may be your own fault due to your unrealistic expectations and culture
"Product just doesn't come up with big enough ideas!"
We tend to think that we need to invest more time thinking into high-impact decisions. And that’s somewhat true. Something life or business-altering should be thought through properly.
But the achievable certainty without building something in the first place is decreasing with an increasing upside.
It’s a capitalistic reality that simple things to do (predictable) with a big reward are harder and harder to do. The system rewards it so it gets done. These are very basic market dynamics at their core.
At the same time, we tend to underestimate the difficulty and overestimate the total upside of an opportunity on a regular.
For the difficulty of building something we have this nasty tendency to only account for what we can immediately see. Risks we don’t see get rarely accounted for. Experienced leaders know not always what the risks are but that there will be unforeseen consequences coming up.
It’s never as easy as it seems. And everything takes longer than we plan, even if we plan for that delay.
A good antidote to that is to indeed break things down and make sure 5 times that everyone is aligned on what we’re talking about. This is a tedious exercise and I never heard anyone ever say “We are too aligned on this”.
All of this is part of a good validation, but there are limits. The famous TAM / SAM / SOM exercises that get thrown around are exactly the one thing you have to resort to when things become too difficult otherwise.
If you can’t validate an opportunity from what you have (expanding the product, MvP) then a market sizing exercise is the only thing you’re left with.
We know these are shaky at best. And it sounds crazy to base dozens of millions of investments on them.
While they are better than having no idea at all they have serious limits.
A higher upside means a higher failure rate
In other words, we will fail more often the higher we aim. Obvious. But… are you accounting for this in your team/company?
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