It is hard to avoid uncertainty in product development. Those that are seasoned in bringing products to market know that risk is an inevitable part of the development process. Project risks are lurking around every corner during product development. But don’t let that scare you. By taking a proactive approach to risk management during product development you can learn to anticipate risks and reduce time to market.
1. How much are you willing to risk?
The first step is to determine how much the company is truly willing to risk. This is an ominous question that stumps many who struggle with quantifying the answer. A simple method is to approach this question from different angles, such as these two:
- Time to market
It is critical not to miss your product’s market window. In order to make informed decisions during product development you must have a good understanding of the competitive landscape. Once a thorough analysis of the competition is completed you can quantify your market window. Then you will have the tools needed to better assess issues as they come up. It will become more obvious when you can afford to stretch the schedule to get a more feature rich or reliable product or when you must trim the schedule to catch up with or stay ahead of the competition.
- Product feature set
Minimum viable product is a buzz phrase that has been thrown around for the last few years. It defines the product feature set required to be successful in the market without any of those nice to have extras. It is important to understand which of your product requirements truly fall into this must-have category and which are simply nice-to-haves. Then if issues come up during implementation of one of those features you can be sure to move it quickly off the critical path and either bench it for the next generation of the product or develop it on a parallel path in hopes of makingit into this generation.
2. Identify risks early and often
Now that you established how much risk is acceptable, you are ready to identify risks and quantify their effect on the product. Risk analysis must be done early and often. This will provide the best variety of mitigations and minimize the impact to project. Take advantage of the effort completed during the first step and quantify your risks using the same criteria.
For example: You discover that a critical component has a very long lead time with a single supplier. Analyze this issue in the terms identified in the previous step: in this case product feature set and time to market. Maybe this part is not a critical feature and can be cut from the feature set for this product version. Or perhaps now is the time to consider engaging a second supplier as a contingency. By identifying critical components early during architecture definition more mitigation options are available. However, if this issue is discovered months later while deep in the design process, you may be forced to delay time to market.
3. Nothing ventured, nothing gained
Don’t be afraid to choose a risky path - just make sure to have a contingency plan. You don’t have to play it safe to succeed at product development. In fact, playing it safe can delay time to market and cause you to miss the market opportunity. Instead, be smart and make sure to identify a contingency plan. If there is a feature that is causing trouble consider adding another resource to the project to provide the attention it needs. Or consider carving the tricky feature out of the critical path and put together a tiger team to iterate on it quickly until it is ready to be integrated back into the product.
There is no perfect process to eliminate risk entirely from a product development effort, but the approach described here is a good framework for making risk-based decisions throughout the effort. Make sure you look before you leap – understand what’s at stake. If it still makes sense, go ahead and leap.