3 Strategies Product Managers can Transfer from Stock Trading to Optimise Decision-Making and Reduce Product Risk
Stock traders make profits from exploiting uncertainty with calculated decision-making. The higher the uncertainty, the higher the potential profits. Their strategies are useful for Product Managers to optimise the daily decision-making and reduce risk during product development.
(1) Resist committing too early
Uncertainty is psychologically uncomfortable. Conversely, it’s comfortable being certain about what will happen in the future. However, committing too early may result in sub-optimal decisions and regret. People who marry the wrong person may have been trying to remove the uncertainty of not being able to find someone else. Accepting a mediocre job offer may have been for the fear of the uncertainty of not being able to find something better later.
PMs may commit to building a feature for the comfort of the certainty of producing and deploying. Or, committing to a deadline to reduce the uncertainty for dependant teams looking to plan. In all these cases, even if it seems like you only have one option it’s not true. You always have more than one.
(2) Lay out your options and gather lacking information
With each option, there are benefits and risks. When risks are not acknowledged and planned for with mitigations they often drive ‘no’ decisions, potentially eliminating good options.
As a PM look at each option and ask (1) What are the risks (2) How can the risks be mitigated (3) What is the lacking information needed to make a decision. E.g. “One of our options is to ask our stakeholder for x amount of funding to start the POC immediately. (1) We risk not being able to deliver on the POC even with this funding. (2) Delay the funding request for another week so that (3) we can gather information about the effort needed for the finished product integration”.
(3) Delay turning your options into commitments
Once you turn your option into a commitment, you no longer have options. While committing to an option will bring intrinsic value from making use of the option, there is also value in having options. However, there is also value in uncertainty. The more certain something is, the less value there is in it. For example, if you invest in buying real estate in a nice area, the value may go up but not dramatically. However, investing in an area that is run-down and something interesting happens that others didn’t predict, the value may go up dramatically and you make a nice profit.
For PMs it’s about weighing up the cost of taking a risk with some acceptable uncertainty and arriving at a party that’s already crowded. Zoom got to the party early, while other video calling products followed with hope. The key is gathering as much information as possible to make informed hypotheses, often through user research.
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