Book Review: “UX Strategy” by Jaime Levy

Do you know the difference between an assumption and a hypothesis? 

An assumption is something that you suppose to be true, such as “Often PMs are engineers.” A hypothesis is also something that you suppose to be true, but it is stated in an unambiguous way so that it can be tested

This is the second edition of the famous book UX Strategy by Jaime Levy. While I wanted to read the first one, that never happened! There are a lot of tactical level details in this book which are omitted, in my view, because of the conciseness of the book, nevertheless it should serve as a good reference point! In short, if you want to give structure to your product development philosophy, you should give this book a try. One important caveat the author makes is that the UX strategy practice she described in the first edition is now synonymous with product strategy. So relax all the product managers out here!

Cover Image of the Book “UX Strategy” by Jaime Levy

I have tried capturing the essence of the book in the following headers

A. On Business Strategy, UX Strategy and Product Vision

A shared product vision means that your team and stakeholders have the same mental model for your future product

A good business strategy is one centered around the customer. This is why you must validate your presumed customer segment and their unmet needs. 

  • User experience (UX) strategy lies at the intersection of UX design and business strategy
  • It’s an empirical process! 
  • Experience strategy is the combination of business strategy and UX strategy. The “user experience,” or “UX,” is how a human experiences a digital product while attempting to accomplish a task or goal
  • A stellar UX strategy is a means to disrupt the marketplace through mental model innovation

As a product matures with a growing user base, it’s crucial to revisit your strategy. Conducting validation experiments to discover new customer segments, marketing channels, and revenue streams is a job that is never done

B. On Components of UX Strategy and Lean Startup

Four tenants of UX strategy are 1. Business strategy 2. Value innovation 3. Validated user research 4. Frictionless UX

The discovery phase is where UX strategy begins. The output of the discovery phase should be based on empirical evidence, such as getting direct input from target users before going straight from an idea to wireframes and development

The business strategy identifies the company’s guiding principles for how it will position itself and still achieve its objectives while beating the competition. For this to happen, the business must continually identify and utilize a competitive advantage

For a more mature company, the strategy is about building on the company’s core value proposition while trying to evolve the company’s infrastructure and internal processes to support that growth, often called digital transformation!

Business Model Canvas—customer segments, channels, value propositions, revenue streams, and customer relationships—are elements that are essential to creating a product’s online and offline experience

Lean startup made conducting validated user research a make-or-break aspect of moving forward on a product’s strategy. Validation is the process of confirming that a specific customer segment finds value in your solution

Lean Startup was proposed by Ash Maurya in 2010. Its components are 

  1. Customer segments 
  2. Problem 
  3. Unique value proposition 
  4. Solution 
  5. Channels 
  6. Revenue streams 
  7. Cost structure 
  8. Key metrics
  9. Unfair advantage

C. On User Research

Research hypotheses are the answer to the question “What are the most important things I need to learn to determine if my solution is desirable and viable?”

Use your research to validate your decisions and ensure that the product vision is aligned with the end user’s needs

  • The purpose of conducting user research is to understand the needs and goals of your target customer in order to inform the product’s value proposition
  • Confronting your target customers is nonnegotiable. We must learn as quickly as possible if the idea we are working on is stupid and worthless
  • Don’t take what your stakeholders or team says at face value. To learn what potential customers want, hunt them down in person
  • It’s contested if you should ask a customer what they would pay for a product. Customers may lowball you or have no idea. however, getting a sense of what customers expect to pay may be helpful for informing marketing and pricing strategies

Customer discovery is about listening and not selling. The customer interview is actually made up of three parts: the introduction, the screener, and the interview. When you ask the money-shot question, just capture the essence of the person’s response and, if appropriate, ask any relevant follow-up questions

Qualitative research relies on the observation and collection of nonnumerical insights such as opinions e.g. focus groups, contextual inquiries, and ethnographic studies.

  • Ethnographic research—the study of people in their natural environment—is all about getting to the deep, dark places, much like the qualitative personas
  • Do not begin interviews with small talk. Be professional!

D. On Value Proposition

A value proposition takes the form of a concise statement that summarizes the unique benefits customers can expect from your product or service i.e. value proposition is what a company promises to deliver to the customer

But value propositions are not valuable if they do not solve a real problem. The followings are the steps to define a value proposition

  • Define your primary customer segment
  • Identify your customer segment’s (biggest) problem
  • Create provisional personas based on your assumptions
  • Conduct customer discovery to validate or invalidate your provisional persona and problem statement
  • Reassess your initial value proposition based on what you have learned!

E. On Customer Segmentation and Value Creation

The customer segment is a group of people with a common need. These segments can be identified by a combination of demographic, psychographic, and behavioral attributes. For B2B products, you should create two personas: one for the person who will be paying for the product (i.e., the CTO) and one for the person who will be using the product

The problem statement should not presuppose a solution until the problem has actually been validated. By having product teams focus on the problem statement, they are more likely to have an open mind when ideating on solutions

Don’t confuse persona archetypes with stereotypes. Because personas provide a precise design target and also serve as a communication tool to the development team, the designers must choose a particular demographic characteristic with care

Because the provisional persona represents a group of people rather than one person, think of a concise, descriptive name to characterize the segment, such as “Gen X Parents in Los Angeles” or “Jewish Expats in Berlin.” It is useful to articulate common demographic denominators. Location is useful because it forces your team to pinpoint where a market for your product might exist instead of targeting the entire world

Motivation and behavior lie at the heart of value creation. Whatever product you are devising, it is crucial to understand what will motivate people to use it

F. On assessing customers’ needs and goals

What are their product-relevant hopes and dreams? What do they need to solve their primary pain point? What specific needs or goals aren’t being satisfied by available solutions or workarounds? What are the limitations they face? What is the job they are trying to get done?

  • This section is particularly important to get right because it will inform your product strategy the most. You want actionable statements that address underlying customer concerns

G. On Competition, its definition and analysis

Direct competitors are companies that offer the same or a very similar value proposition to your current or future customers. Indirect competitors offer a different value proposition, but somehow their solution may satisfy the needs of your target customer

Investigate your competition

  • What are they doing right? What are they doing wrong? Why should customers come to you?
  • Conducting research on the competition is a crucial component of business strategy
  • The most efficient way to do a comprehensive competitive analysis is to collect all of the data in a matrix
  • Scour YouTube and Vimeo for publicly available demonstrations, tutorials, and product reviews. If you need more information than what you can find online, you may need to bring in an outside agency
  • For native mobile apps, you can currently get the last month’s downloads without an account using Sensor Tower
  • One always needs to be on your toes, agile, and ready to scrutinize your competitor’s newest ideas and immediately see how they might affect your product vision
  • By benchmarking the competition, you’ll find opportunities to create value by either innovating or optimizing the best UX and business model practices of other competing products
  • If something looks incomplete or missing, did you or whoever did the research overlook an obvious competitor that needs to be considered?
  • SWOT analysis of a nonexistent product or business moves us into the land of make-believe. This is why it’s more meaningful to use it for evaluating competitors from their perspective

H. On what to build?

Reaching beyond existing demand is a key component of achieving value innovation

To get your idea juices flowing on the key features, ask yourself these questions:

  • What will make your provisional personas (hypothesized customers) love this product?
  • What is the aha moment or part of the user’s journey online or offline that makes this product unique?
  • What is a major pain point that you are trying to solve that is not currently being solved by competitors?
  • What kind of workarounds are your potential customers currently doing to accomplish their goals?
  • What is the core benefit for your customers that is derived from the output or manipulation of either your proprietary algorithm and/or data set?
  • What is the functionality or page/screen layout that needs to be designed from scratch because there is no reference for it in any other digital product?

A product recommendation should answer the following questions

  • Can a specific feature be majorly improved or new technology integrated to help customers do something that currently is too complicated or time-consuming for the existing alternatives?
  • How can you make the product experience more personalized or “smart” to increase adoption and engagement?
  • Is there a new revenue stream or disruptive business model that can be experimented with?
  • How can you achieve a competitive advantage that your competitors can’t easily replicate?

If your analysis reveals that the initial value proposition is facing certain risks, your recommendations may need to suggest a pivot on the targeted customer segment or the specific problem

Your future customers need to want to choose your solution over any other because 

a) it’s significantly more efficient than what’s currently out there, 

b) it solves a pain point they didn’t know they had, and/or 

c) it creates an undeniable desire where none existed before

I. On Prototyping

As we prepare to prototype, we’re finally juggling all four of the tenets at the same time. Don’t burn your time, money, or efforts on a product that has not been tested and validated with target customers

These are the critical questions that we need our prototype to answer:

  1. Does the solution solve the problem or major pain points that the target customer expressed?
  2. Does the target customer find the key features valuable?
  3. Would the target customer pay for the product or use it in a way that can be monetized?

The answers to questions 1 and 2 help us validate our value proposition. The answer to question 3 will help us validate our business model

To keep the long story long, this line from the book has resonated well with me. Sometimes, people have fixed ideas, and no amount of research will change their minds. <Then ask yourself> Will I help this person make their product regardless of the research, or do I walk away?

Tough words, how many of us have the courage to walk the talk?! If you don’t get this part right – costs will have to be borne by the team, company and often careers of the people involved whether or not they realise it at that point. In short, don’t solve wrong problems for your own good!

—–

PS: Pop Quiz for UX Geeks!

Q. Do you know the difference between concierge, Wizard of Oz and mechanical turk? 

A. These are the techniques for conducting value proposition experiments!

  • Unlike concierge, customers don’t know that a human is in the loop in case of Wizard of Oz
  • When someone says they are mechanical-turking a product, it typically means they are building a frontend with a human-powered backend to manually simulate a complex digital product. It’s like a crowdsourced version of Wizard of Oz

Book review: “The making of a Manager” by Julie Zhuo

Finally I got hold of this book “Making of a Manager: What to do when everyone looks to you” by Julie Zhuo, I heard about it from Twitter and got intrigued. I recommend reading this book to all managers, especially the ones newly-minted as well those who want to ensure they are not reinventing learning from wildly successful companies like Facebook where the author has learnt the ropes – rising from an intern to VP of Design. Seeing the recommendations from Silicon Valley stalwarts in the first few pages of this book would probably motivate you to dive into as it did for me!

Cover of the Book: “The making of a Manager” by Julie Zhuo

You would find this book easy to read (can be finished over the weekend), situations relatable and advice quite sensible to put into action immediately. That said, the overall tone of the subject matter is generalist in nature and may not especially cover for the peculiarities that PM managers face. That should however not deter you from imbibing the deep lessons embedded in the short 10 chapters of this book. What follows is my key takeaways in the order in which they appear in the book

A. What is management?

  • A manager’s job is to
    • build a team that works well together,
    • support members in reaching their career goals, and
    • create processes to get work done smoothly and efficiently
  • Your job, as a manager, is to get better outcomes from a group of people working together and therefore if the team’s outcomes are mediocre, you cannot be termed as a great manager
  • Being awesome at the job means playing the long game and building a reputation for excellence
  • Manager’s tasks can be filled into 3 buckets – people, process and purpose (making the team aware of what success looks like and ensure they care about achieving it)
    • Your role as a manager is not to do the work yourself, even if you are the best at it, because that will only take you so far. Role is to improve and process people or the purpose of the team! However if you are in survival mode, do what it takes!
  • How to know if you will be a great manager?
    • Do you find it more motivating to achieve an outcome or play a specific role?
    • Do you like talking to people?
    • Can you provide stability for an emotionally charged situation?
  • While manager is a specific role, leadership is the particular skill of being able to guide and influence other people and therefore in order to be a great manager, one has to be a leader!
    • If you can pinpoint a problem and motivate others to work with you to solve it, then you’re leading
    • Also leadership is not something that can be bestowed. It must be earned. People must want to follow you

B. What to do in the first 3 months as a manager?

The playbook varies depending on whether one is a freshly minted manager (apprentice), founding team member grown into a managerial role, new boss leading the team internally or an external hire or a successor replacing someone

  • To have hard conversations, it is essential to internalise that you own your team’s outcomes
  • To get honest feedback from your reportees, ask how their dream manager looks like
  • You need to proactively invest in building relationships. Being vulnerable sometimes helps in generating trust
  • You will be far more successful aspiring to be the leader you want to be and playing to your strengths than trying to live up to some other ideal

C. How to lead a small team?

  • No matter what work you do or the size of your team, knowing how to diagnose and solve problems with your reports is critical to your shared success
  • Trust is the most important ingredient
  • If the answer to your questions around “How are you” is fine for multiple weeks from a report, take it as a sign to prod further!
  • If you don’t truly respect or care about your team members, you cannot fake it! Managing is caring!
  • Supporting and caring for someone doesn’t mean always agreeing with them. What caring does mean is doing your best to help your report be successful and fulfilled in her work
  • If your report feels that your support and respect are based on her performance, then it will be hard for her to be honest with you when things are not going per expectations
  • If you can remove a barrier, provide a valuable new perspective, or increase their confidence, then you’re enabling them to be more successful
  • Your report should have a clear sense at all times of what your expectations are and where he stands
  • Help people play to their strength. However it does not have to always work since sometimes success is a function of personal and org priorities! 
  • When you decide to let someone go, do it respectfully and directly. Don’t open it up to discussion
    • Change is hard, but trust your instincts. Would you hire this person again if the role were open? If the answer is no, make the move
    • The end goal of management is to get better outcomes. When someone isn’t a great fit for his role, there is a cost
    • The growth mindset has taught us that anyone can get better at anything given the will, hard work, and time. The question is, how long would it take? And how would that affect the team?
  • Don’t tolerate brilliant assholes on your team, it actually is better off when they leave! In general, you should make people moves quickly!

D. How to be a great manager? Art of giving feedback

  • For a leader, giving feedback—both when things are going well and when they aren’t—is one of the most fundamental aspects of the job
  • Four common ways to inspire a change in behavior 
    • Set clear expectations in the beginning
    • Give task specific feedback as quickly as you can
    • Share behavioral feedback thoughtfully and regularly 
    • Collect 360 degrees feedback for maximum objectivity
  • Every major disappointment is failure to set expectations
  • You feedback only counts if it makes things better
  • The best way to give critical feedback is to deliver it directly and dispassionately
  • Own the decision, be firm and don’t open it up for discussion!

E. How to manage yourself better?

  • Being a great manager is a highly personal journey, and if you don’t have a good handle on yourself, you won’t have a good handle on how to best support your team
  • No matter how often imposter syndrome rears its ugly head, it doesn’t have to derail you
  • Be brutally honest with yourself
  • The first part in understanding how you lead is to know your strengths—the things you’re talented at and love to do. This is crucial because great management typically comes from playing to your strengths rather than from fixing your weaknesses
  • Develop a growth mindset i.e. be motivated to seek out the truth and ask for feedback because you know it’s the fastest path to get you where you want to go
  • When a negative story takes hold of you, step back and question 
    • Is your interpretation correct? 
    • Are there alternative views you’re not considering? 
    • What can you do to seek out the truth?
  • To fight self-doubt, visualise success. It is a powerful tool!
  • Maximize on the job learning. Treat your manager as the coach and not as a judge!
  • Take advantage of formal training! Or maybe professional coaching
  • When you invest in your personal learning and growth, you’re not just investing in your own future but also the future of your team

F. How to organise meetings?

  • Analyse efficacy of meetings by their purpose. It could be broadly of 5 types 1. Making a decision 2. Information sharing 3. Providing feedback 4. Generating ideas 5. Strengthening relationships 
  • A great decision making meeting has the following components
    • Gets a decision made
    • Includes the people most directly affected by the decision as well as a clearly designated decision-maker
    • Presents all credible options objectively and with relevant background information, and includes the team’s recommendation if there is one
    • Gives equal airtime to dissenting opinions and makes people feel that they were heard
  • Invite right people to the meeting
  • Give people a chance to come prepared. Float a pre-read if possible 
  • Before concluding the meeting, summarise next steps
  • Make it safe for people to contribute. Sticky notes or having a round-robin around the table are helpful
  • Some meetings don’t need you and be ruthless in culling ineffective meetings
    • If you trust that the right outcomes will happen without you, then you don’t need to be there

G. How to hire well?

  • Hiring doesn’t just matter at scale—even a single great hire can make a big difference in your team’s outcomes.
  • The most important thing to remember about hiring is this: hiring is not a problem to be solved but an opportunity to build the future of your organization
  • Design your team intentionally. Have a thoughtful one-year hiring plan in the beginning. Tweak as you go along
  • Hiring is your responsibility. Align with your recruiter in defining the role, sourcing, the onboarding process and onboarding really closely
  • Describe the role as clearly as possible and deliver an amazing interview experience
  • Examine a candidate’s past experience. They are probably the closest predictor of performance at the job!
  • Hiring is a gamble but do make smart bets! And since it’s a gamble, reject weak hires!
    • If you are going to make a bet, bet on someone who has at least a few passionate advocates in the interviewing panel!
  • References matter the most, contact your common connections towards the same
  • Prepare your interview questions in advance. Take a long term view with top talent!
  • Build a team with diverse perspectives, hire people who are more capable than you!
  • You can’t create great outcomes without consistently attracting talented people and ensuring that they can also hire well
  • Make it clear that building the team is not just one person’s job, it’s everyone’s job!

H. How to make things happen?

  • Start with a concrete vision. An inspiring vision is bold. It doesn’t hedge. You know instantly whether you’ve hit it or not because it’s measurable. And it’s easily repeated, from one person to the next. It doesn’t describe the how, it simply describes what the outcome will be
  • Create a believable game plan i.e. strategy
  • Craft a plan based on your team’s strengths
  • Focus on few things well, prioritise
  • Define who is responsible for what
  • Treat big projects like a series of small projects. Keep in mind the planning fallacy: our natural bias to predict that things will take less time and money than they actually do
  • Choose perfect execution over perfect strategy
  • Good process is ever evolving. A resilient organization isn’t one that never makes mistakes but rather one whose mistakes make it stronger over time

I. How to lead a growing team?

  • Differences between big and small teams
    • People treat you differently. They’re less likely to tell you the ugly truth or challenge you when they think you’re wrong, even if you’d like them to
    • Context switching, everyday
    • You pick and choose your battles i.e. what are the most important topics for you to pay attention to, and where are you going to draw the line
    • At higher levels of management, the job starts to converge regardless of background. Success becomes more and more about mastering a few key skills: hiring exceptional leaders, building self-reliant teams, establishing a clear vision, and communicating well
  • Delegation is an art. It doesn’t mean you walk away!
    • The rule of thumb for delegation goes like this: spend your time and energy on the intersection of 1) what’s most important to the organization and 2) what you’re uniquely able to do better than anyone else
    • Anything your report can do just as well or better than you, you should delegate
  • People trump projects—a great team is a prerequisite for great work.
  • Beyond people, you and your report should be aligned on why you’re doing what you’re doing and what success looks like
  • The act of constantly trying to replace yourself means that you create openings to stretch both your leaders and yourself

J. How to nurture culture?

  • As you manage more and more people, you’ll play a bigger role in shaping culture. Don’t underestimate the influence that you can have
    • Pay attention to your own actions—the little things you say and do—as well as what behaviors you are rewarding or discouraging
  • Make a list of the aspects of culture that you admire about other teams or organizations. Why do you admire them? What downsides does that team tolerate as a result?
  • Never stop talking about what is important
  • If you say something is important to you and you’d like the rest of your team to care about it, be the first person to live that value
  • When a report does something difficult that is in the spirit of your team’s values, recognize them for it
  • Invent traditions. Rituals are powerful

This is a great book, do read and internalise the lessons. Almost all of those are universally applicable across roles!

PS: Additional recommendations from the author for frequent referencing are the book “Crucial Conversations”, articles like High Output Management and How to Win Friends and Influence People

Book Review: “The Psychology of Money” by Morgan Housel

The book “The Psychology of Money” by Morgan Housel has been a rage last year, that aroused my curiosity to read the book. Although this does not strictly fall into the domain of product management, I would cover it here since quite a few principles the book details out are applicable to many situations a PM faces. And it never hurts to get wiser about money matters, right?!

Cover page of the book "The Psychology of Money" by Morgan Housel

Image 1: Book Cover of “The Psychology of Money” by Morgan Housel

The rest of the article is key takeaways in a list format. The book is quite an easy read anyway, and one can start reading it from any chapter

The premise of this book is that doing well with money has a little to do with how smart you are and a lot to do with how you behave. And behavior is hard to teach, even to really smart people. The author calls this soft skill “the psychology of money”

  1. Generations behave differently with respect to their perspectives towards money since their view of money was formed in different worlds. And therefore a view about money that one group of people thinks is outrageous can make perfect sense to another
  2. Another important point that helps explain why money decisions are so difficult, and why there is so much misbehavior, is to recognize how new this topic is, mostly 20-50 year old compared to let’s say a 10,000 year old epoch when one can start discerning some behavior changes in species!
  3. Luck and risk are both the reality that every outcome in life is guided by forces other than individual effort
  4. As much as we recognize the role of luck in success, the role of risk means we should forgive ourselves and leave room for understanding when judging failures. Therefore we should focus less on specific individuals and case studies and more on broad patterns
  5. The hardest financial skill is getting the goalpost to stop moving that is to recognize when one has had enough money
  6. Some invaluable things in life are reputation, freedom and independence, family and friends, being loved by those who you want to love you and happiness. One should protect these things away from harm by knowing when to stop taking risks that could take them away. And knowing when you have enough!
  7. Counterintuitiveness of compounding may be responsible for the majority of disappointing trades, bad strategies, and successful investing attempts. Time is the most important factor here
  8. There’s only one way to stay wealthy: some combination of frugality and paranoia
  9. Applying survival mindset in real life boils down to appreciating three things 1. Be financially unbreakable to stick around long enough so that compounding can work wonders 2. Plan for the plan not going per the script. Having plan B is critical 3. Be optimistic about the future but paranoid about what will prevent you from getting there
  10. Short term paranoia is important for surviving long enough and exploit long term optimism
  11. Tails drive everything. The distribution of success among large public stocks over time is not much different than it is in venture capital
    • By accepting that tails drive everything in business, investing, and finance one would realize that it’s normal for lots of things to go wrong, break, fail, and fall
  12. If there’s a common denominator in happiness, it’s that people want to control their lives. And therefore controlling one’s time is the highest dividend money pays
    • Since controlling time is such a key happiness influencer, people don’t feel much happier now since over generations that control have diminished. One should use money to gain control over time
  13. The single most powerful thing to do better as an investor, is to increase the time horizon!
  14. If respect and admiration are the goals, be careful how one seeks them. Humility, kindness, and empathy will bring more respect than any horsepower ever will
  15. Wealth is financial assets that haven’t yet been converted into the stuff one sees
  16. Building wealth has little to do with income or investment returns, and lots to do with savings rate
  17. The value of wealth is relative to what one needs and therefore past a certain level of income, what one needs is just what sits below the ego
  18. Saving is a hedge against life’s inevitable ability to surprise at the worst possible moment. It is like taking a point in the future that would have been owned by someone else and giving it back to yourself
  19. Flexibility is perhaps one of most important competitive advantages, in the world where intelligence is hypercompetitive and technical skills are getting automated
  20. Do not aim to be coldly rational when making financial decisions. Aim to just be pretty reasonable
  21. Reasonable is more realistic and one has a better chance of sticking with it for the long run, which is what matters most when managing money
    • For example, it may be rational to want a fever if you have an infection. But it’s not reasonable and therefore we want to suppress fever anyhow even when it can be advantageous for us!
  22. The reasonable investors who love their technically imperfect strategies have an edge, because they’re more likely to stick with those strategies
  23. Anything that keeps you in the game has a quantifiable advantage. Become OK with a lot of things going wrong. Be nicer and less flashy!
  24. Acting on investment forecasts is dangerous. However, people try to predict what will happen next year. It’s human nature and is reasonable!
  25. The most important driver of anything tied to money is the stories people tell themselves and the preferences they have for goods and services
  26. Recessions have become more sporadic over time because 1. Maybe Fed is getting better at managing business cycles or extending them 2. Service industries which have dominated last 50 years are less prone to boom-bust cycles that heavy industries

Image 2: Recessions cycles have become more sporadic in the last 50 years. Credit: The Psychology of Money by Morgan Housel

  1. Since economies evolve, recent history is often the best guide to the future, because it’s more likely to include important conditions that are relevant to the future
  2. Unknowns —are an ever-present part of life. The only way to deal with them is by increasing the gap between what you think will happen and what can happen while one manages to survive. The concept of room for error is important. Having a gap between what one can technically endure versus what’s emotionally possible is an overlooked version of room for error
  3. One has to take risks to get ahead, but no risk that can wipe one out is ever worth taking!
  4. The biggest single point of failure with money is a sole reliance on a paycheck to fund short-term spending needs, with no savings to create a gap between current and future expenses
  5. People are poor forecasters of their future selves. Sunk costs—anchoring decisions to past efforts that can’t be refunded—are a harmful in a world where people change over time
  6. Career, relationships and money can take years of planning and decades to grow!
  7. The price of a lot of things is not obvious until you’ve experienced them firsthand, when the bill is overdue
  8. Thinking of market volatility as a fee rather than a fine is an important part of developing the kind of mindset to stick around long enough for investing gains to work wonders
  9. An iron rule of finance is that money chases returns to the greatest extent that it can!
  10. Identify what game you’re playing and what game others are. One should make sure that he actions are not being influenced by people playing a different game
  11. Real optimists don’t believe that everything will be great. That’s complacency. Optimism is a belief that the odds of a good outcome are in one’s favor over time
  12. Money and health are the two topics that will affect everyone’s life whether one is interested in them or not!
  13. In investing one must identify the price of success—volatility and loss amid the long backdrop of growth—and be willing to pay it
  14. The more one wants something to be true, the more likely to believe a story that overestimates the odds of it being true
  15. The illusion of control is more persuasive than the reality of uncertainty so we stick to stories about outcomes being in our control
  16. Respect the power of luck and risk and one will have a better chance of focusing on things one can actually control
  17. Wealth cannot be built unless one can control having fun with the money right now!
  18. “Does this help me sleep at night?” is the best universal guidepost for all financial decisions
  19. Independence, at any income level, is driven by savings rate. And past a certain level of income your savings rate is driven by your ability to keep your lifestyle expectations from running away!
  20. Good decisions aren’t always rational. At some point one has to choose between being happy or being “right”!

The author in the last chapter diverts towards how Americans behave towards money especially the post-War generations. Sharp inequality became a force over the last 35 years, when the Americans have held onto two ideas 1. That you should live a lifestyle similar to most other Americans and that taking on debt to finance that lifestyle is acceptable

The author also prophecies that the current chaotic era of radial expectations that “this is not working any more” may go longer and can get even worse. Two weeks into 2021, I couldn’t agree more!

Book Review: ‘Decoding the Why’ by Nate Andorsky

This book “Decoding the Why: How Behavioral Science is Driving the Next Generation of Product Design” by Nate Andorsky can be summed as the one attempting to bridge the gap between what is loosely known as gamifying the product experience and a typical product development in non-games companies. As you would have observed, even before Covid – product companies were focusing on driving user engagement and retention through non-monetary interventions. In a horizontal product world – everyone trying to do almost everything else – user attention is literally a currency!

Image 1: Book Cover of “Decoding the Why” by Nate Andorsky

In author’s own words, the book is intended to give readers a baseline understanding of how behavioral science integrates into the product design. What now follows is summary of the book in Q&A format

What are the limitations of an archetypal user research oriented product development process?

Basic flaw with user research could be that most of the time, one is asking users to provide explanations of behaviors they don’t truly understand themselves! OTOH, mimicking competitors’ products creates an echo-chamber of product design

Our innovations will only live up to their full potential if they are built on an understanding of the human experience. While context plays a significant role in how our behavior manifests, the underlying mechanisms remain constant and this is where behavior oriented process gives an advantage

How does the human brain function?

Tversky and Kahneman’s seminal paper, “Judgment Under Uncertainty: Heuristics and Biases,” proposed that we attack complex problems using a limited number of heuristic principles—basically shortcuts. The brain typically operates in one of two modes: automatic and reflective, often referred to as System 1 and System 2 thinking. System 1 runs on autopilot and it’s possible for these systematic errors to be understood and “predicted”. System 2 is slower, more methodical, and dedicated to solving complex problems

How does one get started on this new approach? 

The author introduces three kinds of data points one should be cognizant of

  1. SAY data: subjective information collected from users
  2. DO data are the analytics—what users are doing on the website or product
  3. The WHY data. If you understand the WHY data behind the DO and SAY data, it unlocks a world of possibilities

How do we fight inertia wrt current user behavior?

We have a bias toward the present, giving stronger weight to present payoffs than those that will happen in the future. Present Bias ties into another theory, Hyperbolic Discounting, which states that we have time-inconsistent preferences

The way we perceive our future selves is similar to the way that we perceive a stranger. The further out into the future the loss or gain happens, the more heavily we discount it. To offset Present Bias, we must close the gap between our current selves and our future selves

In general users who perceive more personal stability over time tend to behave in a more future-oriented fashion—one that aligns better with their future self. However when the reward is too far off in the distant future, one needs a substitution to fill the void

OTOH users need guidance when they make decisions. Without guidance, they can fall into Barry Schwartz’s paradox of choice i.e. when presented with too many options, we have a hard time making a decision. This is why good on-boarding and product tutorials may be sometimes critical to product adoption!

How do we design for a reward cycle?

It is important to first consider the desired action before one integrates the reward

The fundamental building blocks of a reward cycle are: trigger, action, investment and reward. Nir Eyal notes that the reward should be variable, and there should be an investment component where the user puts something into the product such as time, data, effort, social capital, or money

Dopamine is the high you get from experiencing something new and exciting. The nervous system produces dopamine during the experience of reward, but even more interesting is that the production of dopamine also happens in anticipation of a reward. The closer we get to receiving a reward and missing it, the more likely we are to engage in said behavior again. Overall, rewards and incentives don’t necessarily have to be financial as anyone who has watched Tik Tok’s growth can vouch for!

How to choose between intrinsic and extrinsic motivators?

Daniel Pink, NY Times Best Selling author opines that the three elements he believes make up true motivation are autonomy, mastery, and purpose. Intrinsic motivation drives creative tasks that are open to interpretation.

A good rule of thumb is to leverage external rewards to promote interest in an activity that is easy but may not initially interest a user. If it is a specific, relatively easy task with a concrete outcome, easy to do, and with an endpoint, extrinsic motivators would be a good place to start

Then, if possible, trigger intrinsic motivations to reinforce the action over the long term

How do we get people to keep acting on their intentions?

Commitment devices help us follow through on our intentions. A common form of a commitment device involves a person voluntarily giving up something of value that they can only regain access to by following through on their commitment. It’s more effective to structure a commitment contract where the reward money is theirs to lose rather than gain. Think of an example, of incentivising student participation in class by tying higher participation to a picnic the school will organise later in the year

Commitment contracts don’t always have to come in the form of money. These commitments can be to another person or a group of people. Goals should not be so big or far in the distant future that they feel unattainable

One should not underestimate the power of cues in precipitating an action. Others give us cues regarding what we should do. Even a small subset of a larger group making a confident move can influence the rest of the group. Social norms and the pull of the crowd can help your users follow through on their intentions. The way to drive behavioral change predicatively is by changing norms and changing the rules, effectively changing someone’s environment. Important part is to understand how to change the behavior, and the outcome will follow

Why are goals so powerful?

Regulatory Mode Theory studies the development of goal-pursuit as well as motivation. The theory lays out two main approaches from a social cognition perspective regarding the pursuit of goals: one is assessment, and the other is locomotion. Scoring high on assessment means you evaluate your options before making a decision and while scoring high on locomotion means you need to always be doing something

Streaks are a powerful way to incentivize action. They provide a sense of progress that plays into the natural way we see the world, our desire to avoid loss, and our need for growth and accomplishment

For example, the primary focus of Duolingo is to make the long-term benefits of learning a new language more immediately salient. Winning streak that increases its attractiveness as it lengthens, becoming a self-reinforcing system. On Duolingo, the grouping of these streaks is completely arbitrary. However, streak loss can be demotivating for some participants. Duolingo has countered this by allowing learners the ability to restore a broken streak

In short, people who set goals make more progress!

How do we signal trust?

We have a natural inclination to trust people who look and act like us, a bias called similarity bias. Aribnb used this to build trust between two people who have never met before in the absence of multiple reviews by creating similarity between the renter and rentee. However, if users share too little or too much about themselves, acceptance rates go down

So how did they design for this? Airbnb nudged users to write an introduction of the correct length and to include the right details about themselves. Airbnb also discovered that at a certain point, reviews trumped similarity bias. When a listing accumulated more than ten reviews, everything changed, people started trusting ratings more!

How to retain motivation?

Leaderboards spur competition, but they have weaknesses. Leaderboards can backfire. If a user gets too far ahead or too far behind, they disengage. In games, there are techniques employed like Dynamic game difficulty balancing (DGDB), also known as dynamic difficulty adjustment (DDA) or dynamic game balancing (DGB), which is the process of automatically changing parameters, scenarios, and behaviors in a video game in real-time based on the player’s ability, to avoid making the player bored (easy game!) or frustrated (hard game). Overall, a competition between users is a powerful technique to motivate action

How to leverage loss aversion to our advantage? 

Losses psychologically feel twice as great as an equal gain. Only prospective (future) costs are relevant to a rational decision, but we fall prey to the sunk cost fallacy. IKEA effect which describes the increase in the valuation of self-made products. While the participants weren’t experts, they saw their creation as ones created by experts. The more of a hand we have in creating something, the less likely we are to part with it. Fitness app Noom uses this to its advantage in their onboarding flows

Peanut effect as a way to counter big loss aversion!

The peanuts effect is when we fail to consider the consequences of small losses. In this case, it is a good thing. The peanuts effect is part of the reason slot machines steal all of our money. The decision to save is easier when framed in a way that spreads the potential losses into smaller increments. Momentum leverages the default bias and the peanuts effect to help everyday people close their intention-action gap

How to use emotions?

We process information about one identifiable person differently than information about a group of people. Identifiable Victim Effect, which seeks to understand what moves us to offer help. Think back to a powerful marketing campaign, and it would have revolved around stories. To move people emotionally, tap into layer two and convey the emotional experience to your audience. We are visual machines. The brain can identify images seen for as little as thirteen milliseconds. All types of companies can help users achieve their goals by making them the hero of their own journey – the way Pain Squad does for its users

How to integrate behavioral-first approach while building products?

The process is quite simple and can be summed as a series of steps below

  1. What is the problem you are trying to solve?
  2. Collect the SAY and DO data
  3. Compare SAY and DO data
  4. Identify potential behavioral drivers
  5. Identify potential behavioral solutions
  6. Create interventions
  7. Test interventions
  8. Iterate

As one can see, steps 4 and 5 are the most crucial ones and this is where learning and having an opinion about behavioral theories may help

Overall, we are just getting started in this interesting domain of marrying behavioral insights with product design. Academic understanding of what drives behavior precedes the implementation by about ten to fifteen years. Product managers and designers learn by taking theories and putting them into practice. Hopefully one should be able to discern where assumptions break down and where they start to work and then hypothesize why and fine-tune it!

Book Review: “Strategy Excellence for Product Managers: A Guide to Winning Markets…” by Greg Cohen

This book “Strategy Excellence for Product Managers: A Guide to Winning Markets through Product Strategy” combines practical wisdom with theoretical frameworks we are already familiar with. In that sense, it’s a valuable read. The author Greg Cohen has 2 decades’ experience in the industry and the resultant scars are visible in his writing!

The book is divided into 11 chapters, however one can start reading from any chapter. In the beginning, the author tackles the question most business books tend to understate. The distinction between vision and strategy is that although vision creates a shared picture of the future, it does not take into account the fact that markets are dynamic. The author also opines why relative growth in a competitive scenario is validation of a good strategy 

Rest of this post summarises key learning from each chapter

Chapter 1

The vision inspires the team towards a better future. The roadmap shows how the vision will be achieved over time while the strategy is about positioning ourselves where the most value will be in the long-term. There are five inputs to a product strategy exercise namely customer, market, competition, technology and business strategy

For developing customer understanding, voice of customer research helps while when doing market analysis, the objective is to understand which segments are most important for the product vision. OTOH when analysing how technology impacts product strategy, it’s important to understand capabilities, adoption rates and its cost structure 

As a product manager where often the gaps are noticed is: not realising that the choice of strategy has to be evaluated in relation to the company’s capabilities and culture. So if the company is not investing in cutting-edge tech work, product strategy has to reflect that limitation

In short, the product strategy must incorporate the business outcome a product needs to fulfil for the company and the time horizon to meet that objective

Chapter 2

The product vision is any product’s raison d’etre. It is a high-level articulation that communicates the product’s value, often by painting a picture of the future

Unlike the product strategy, which can be complex and involved, the vision is an easy-to-understand articulation of the most important parts of the plan. The vision keeps three crucial factors

  • the target customer
  • the in-scope problems that the product solves; and 
  • the most important dimensions of the product

Chapter 3

A strategic roadmap distills the product strategy into sets of capabilities that one wants to release in a given sequence over a defined time frame. Strategic roadmaps ultimately answers the questions – why and why now

A strategic roadmap helps focus all stakeholders on the pieces of the product that must be developed to achieve the strategy and the roadmap has to be vetted against the team’s capacity to produce a credible plan

The three steps to developing a strategic roadmap are 

  • Laying out the external environment i.e. tech, regulation, market trend, competitors
  • Adding product plans and strategic objectives
  • Vetting the plan with dependencies and resource constraints

Chapter 4

In this chapter, the author introduces a few frameworks for prioritising product backlogs. These are summarised as below

  1. Return on Investment: quickly understood metric for company-wide projects and also easily “sold” to management. However it can sometimes prioritise short-term over long-term sustenance and that not all decisions are ROI led. Sometimes people also forget that ROI calculations are as good as assumptions gone into them
  2. Voice of Customer (VOC): This provides a good picture into customer pain points and of course VOC is essential component of every other prioritisation method. However sometimes market shifts can be missed if one over-indexes on VoC. Customer cannot quite often tell about new segments or markets to go after
  3. Must, Should, Could, Won’t (MoSoCoW): this is often hard to apply correctly and is not quite suited for innovation-led products. However it can be useful for first-level prioritisation in a release 
  4. Kano Model: It looks at how the inclusion or exclusion of a feature contributes to customer satisfaction and how that satisfaction changes based on the level of the implementation. However it does not include product strategy or cost view. Typically any feature in this framework can be modelled along three curves: Must Haves, Delighters and PerformanceHowever one has to consider that customer expectations change over time and today’s delighters could be Must Have very soon. Besides, customers are not often a monolith – so not all features are equally important in these buckets for all 
Kano Model

Image 1: Kano Model

  1. Prioritisation Matrix: This s a lightweight, fast, and effective tool to help stakeholders make their beliefs explicit. It is also likely the best way to link product roadmap to company’s strategy, however it is subjective and doesn’t include costs 
  2. WSJF Method: Weighted Shortest Job First method prioritises those items which deliver the most value soonest. The key factors when applying WSJF are: value; time sensitivity; risk reduction and opportunity enablement; and duration/effort. However it does not take product strategy or customer perspective into account
  3. Feature Life Cycle Based Prioritisation: essentially this method buckets features into proof of concept, validated learning, minimum marketable feature and polish features. This method however considers cost and risk. And based on the company’s strategy, some risky (POC!) features can be front-loaded
  4. Value, Risk, Cost Matrix: It can help us visualize investment allocation across a “portfolio” of new features. This lens is also useful for evaluating investments across projects. However value is not necessarily connected to product strategy and value and risks assessments are highly subjective 
VRC Matrix for Product Backlog Prioritisation

Image 2: Value, Risk, Cost Matrix: Prioritisation Priorities are indicated

One has to frame prioritization in the context of product goals and corporate strategy. Overall objective with prioritization is to develop a winning plan and get stakeholders to understand the prioritization

Chapter 5

As a product manager, one needs to focus on product growth and how the product is doing relative to the market. The Ansoff Growth matrix highlights broad phases per product lifecycle

Ansoff Market Growth Matrix

Image 3: Ansoff Market Growth Matrix. Product development is a depth strategy

Chapter 6

This chapter focuses on product-market fit. PMF typically requires focusing on 3 areas: problem, product and business model. If one takes business model as constant, we have 4 scenarios which product managers find themselves in

Image 4: Problem-product Solution Mix by Greg Cohen

When the business model itself is uncertain the hardest business models to test are those involving channel distribution. It takes time to grow channel relationships, and further time and effort to get those partners active

A nifty trick author proposes when doing customer research is to probe customers around 5Ws. Probe means asking ‘why’ without sounding like a 5-year old – Whys uttered 5 times! One can use phrases like “Tell me more”, “would you describe the last time that happened”, “what is the implication of that”, “how do you deal with that”, “what do you do next”

Chapter 7

This chapter focuses on purposeful learning. The sooner companies, product teams, and product managers are willing to acknowledge that they don’t always have all the answers, nor will they have the complete set of answers upfront, the better they will do at managing the uncertainties and risks of new product development

The most we can ask of any team is to deliver validated learning at all stages of the development process. To do this, you have to do two things: become a purposeful learner and create a learning plan

Few techniques to become a purposeful learner are 

  • PDCA: Plan, Do, Check, Act. Also known as the Deming cycle.55 This model assumes the scientific method can be applied, and that a statistically significant data set can be acquired. It works very well for web analytics and quantitative studies
  • OODA LOOP — Observe, Orient, Decide, Act: OODA explicitly incorporates cultural context. With the continuous application of the OODA loop, you can navigate an ever changing landscape
  • Build, Measure, Learn. Within all these processes, the core is to describe how one believes the world works and test it frequently

OTOH learning plans have a question and a test. The team should first formulate a question and then generate a hypothesis or prediction for each test

Chapter 8

This chapter focuses on basic strategy frameworks. There are two components to strategy – where to compete and how to compete. There are 3 ways in deciding where to compete: scale, depth and innovation. Whereas in choosing how to compete – there are 3 positions: leadership, value and low cost. Leadership companies (Apple) focus on delivering superior capability or performance at a premium price. Value companies (Amazon, Flipkart) focus on delivering a high value to price ratio, and low-cost companies (Dell) look to compete almost purely on price

Niching is when a company selects to serve a narrow segment of the market with a product that matches that segment’s unique needs and preferences. Author opines that the companies choose niching when they will struggle to succeed in the mainstream market. This can be contested, niching is sometimes quite a viable strategy to outcompete a behemoth. Think classifieds as a business model are still thriving – surviving 2 decades of technology disruption!

Chapter 9

This chapter provides introduction to familiar frameworks for doing industry analysis. Porter’s five forces framework is touched viz. threat of rivals, threat of new entrants, threat of substitutes, bargaining power of suppliers, and bargaining power of customers

  • When threat of new entrants is high, profit potential becomes limited
  • Non-consumption, or doing without, is also a substitute
  • Suppliers also have power if they offer highly differentiated offering or where there are no substitutes. Scale strategies and standardizing inputs allow you to improve your bargaining position with suppliers
  • Depth strategies are a way to gain power with customers
  • Innovation strategies, along with leadership or value differentiation strategies, are a way to avoid pure price competition with rivals. Relative market share is calculated by dividing your market share by your largest competitor’s market share

Porter’s Five Forces analysis allows us to understand the pressures on the different players in the industry

Chapter 10

This chapter can be avoided without much loss of information. This focuses on market Maps – powerful visualization tools to compare companies’ strategies for deciding where to compete

Chapter 11

This chapter focuses on pricing. There are three factors that influence the price one can command for the product: value to customer, competitive intensity, and costs. As an example, airlines successfully charge travelers different prices for the exact same product, a technique known as yield management

There are three basic pricing strategies from which to start: Penetration, Skimming, and Maximization

  • Penetration pricing is when a company prices a product low relative to its value. Jio’s earlier plan in Indian telecom industry is one such example. Freemium pricing strategies are a version of this pricing strategy
  • Skim pricing is when a company targets a segment of the market with a high willingness to pay, favoring high margins over volume. Apple’s pricing strategy in India is one such example 
  • Maximization is when a company focuses on optimizing total profit or revenue. Amazon as company seems to follow this
    • Contribution margin is the money left over after all incremental costs have been subtracted from each additional unit sold. Thus, contribution margin is the money that is available to cover the fixed and sunk costs of the organisationAfter subtracting all these costs, any additional money left over is true profit. To maximize profitability, you maximize contribution margin. This decision is independent of fixed and sunk costs

How you charge for your product is a key pricing strategy decision that is as important, if not more important, than what you charge because it is easier to adjust your price than to change your pricing model

You should not miss reading the appendix of this book where the author explains different kinds of product-business fit challenges through the case study format. Overall this book is a good read for a mid-senior level product professional!