4 good reasons why you should go to the goto conference…or any other quality conference

Going to conferences is often considered an expensive form of entertainment and more or less a waste of time, but I think this really misses the point. Conferences are one of the very few activities that help you attain multiple objectives: if you take a course you will just learn a new skill. If you go to meet ups you will just network and meet new people. If you read magazines like wired and blogs like signal vs. noise you may get inspiration and following specific groups on LinkedIn or quora may help you spot some trends, but going to a conference will provide all four things in one experience and more concentrated. It will also be something you will remember years from now (which most of the others aren’t)

Soon I am going to the GoTo conference, so let us take that as an example.

Like most tech conferences Goto conferences have several days devoted purely to training. Here you can keep up to date with the latest techniques like Continuous Delivery, new technologies like AngularJS or more soft areas like usability for mobile devices. This is a really good opportunity because the trainers are usually internationally acclaimed authorities in the field, who are also speaking at the conference. Chances are that training of this calibre is not something you find at your local community college.

Meeting people and expanding your network is always a good idea. First of all you will probably learn something from them, second they may in one way or another lead you to your next venture. Rumour has it that David Heinemeier Hanson, creator of Ruby on Rails and Jason Fried Co-founder of 37 Signals met at a GoTo conference and thereby laid the foundation for a true powerhouse in web development that gave us Basecamp and Highrise. It could also occur that you met a real moron that provoked you to think of something you hadn’t thought about before. Either way growing your network is a good thing at conferences.

Few places offer better chances to get inspired than good conferences. It could be that discussion about Doctor Who after the fifth pint of Guinness in the wee hours of the night, the presentation of a new technology in a booth or overhearing a heated argument about the best distributed database on the market. It obviously could also be a presentation at the actual conference, but inspiration in my opinion comes in unexpected ways and during a conference you are out of your normal (comfort) zone so you are more alert and exposed to new ideas.

Following trends and what is happening can be very difficult if you are not tapping into the right communication lines (and these lines are constantly changing), but at really good conferences you will very quickly spot what the trends are. You can do this by looking at the booths at the conference, listening to the conversations of others and generally looking through the program to find words that are repeated across different presentations and training offerings. These days it seems that Big data and Agile is on top.

So, if you are not going yet then you have four good reasons to convince your boss or yourself to go to the goto conference or other quality conferences.

What’s around the product?

Today and for the last 10-15 years we have seen an increased focus on the product and bringing it to market ever faster. Lean, Scrum and agile methodologies champion this view. But maybe it is better to extend this narrow focus on the product to reflect on what is around the product instead.

This is the point that Steve Johnson is trying to make when we talked to him recently. Steve is the founder of Under 10 Consulting, a product management consulting company based on the belief that minimal processes and simple templates will result in world class products. Steve was educated in computer science and marketing. He started in programming, but moved into product management and later joined Pragmatic Marketing, where he worked for 15 years.

Focus on the product!
Product focus is, according to Steve, a good thing, but there should be more to product management than product. What about the promotion, selling, support, and services? These are all part of the “product” from the customer’s perspective. An example is Lean Startup where the focus is on making changes to the MVP in order to make it more and more attractive to the customer until you achieve product market fit. But, just because the response is not as good as we’d hoped, maybe we don’t need to change the product or add another feature. Maybe the problem is the promotion of the product or the positioning. For example, you could make the best action film with car chases and plenty of explosions and still get bad response from customers if you happened to promote it in a children’s film festival. That doesn’t mean the product is a failure; it doesn’t mean you should pivot.

The MVP is often too minimal

“Lean Startup will take you up to version 1.0, but what is interesting comes after. The MVP is the bare minimum product, but you don’t get joy from that. We saw that with the iPhone. What they did with the first version was clearly minimal. They didn’t deliver every possible feature in a minimal fashion; they delivered a few critical features brilliantly. And it set a new expectation for all phones. We all knew that future releases would include photos and video and more apps”.

According to Steve, today’s obsession about product means that not enough thinking goes into developing the whole product, and how it is promoted and sold.

The history of product focus
Since he is a veteran I asked Steve whether it had always been like this, but that didn’t seem to be the case. Back in the eighties there was plenty of awareness that a product had to be marketed and positioned. There was an understanding that product management involved business understanding. In “Crossing the Chasm” Geoffrey Moore saw the product manager’s role as bringing the product from idea to implementation, and then a product marketing manager took it from implementation to market. In the mid-90s, the team behind Scrum created a great framework for producing software where a product owner was supposed to give guidance on what to build. Unfortunately the product owner role turned into something that was carried out by a junior person or work someone would do in addition to their “real” job. This has had the effect that the product manager has been pushed back to the technical side of the job and the business side is not adequately represented in product development:

“If you ask developers what they need in a product owner role they say they want to understand more about the market and users. Marketing want people bright on technology. Sales want someone who is an expert on the domain. Executives expect someone to run the product as if it were a business. Those are very different views on what product management is.”

Therefore focus comes to be on the product in isolation. The effect is that what gets built is not always an optimal product, not a product that will delight customers. Johnson uses the metaphor of a movie:

“ In a movie the developers are the artists. Similarly programming is an art form. The product manager is like the director. Let’s say he walked around the set and the caterer says to him ‘I would like to have some cute bunny rabbits in the film,’ the producer demands car chases, and the actors put drama into it although it is supposed to be a comedy. The director, who may be straight out of college or doing it half time on his way home to dinner with his family, just lets them have their way. That would probably not end up as a film customers would love.”

It is unfortunately the process followed by many companies today, where product owners and the process by which they work are not highly prioritized. Quality often comes as a third or fourth priority, according to Johnson.

Favorite product
As a final question I asked Steve what his favorite product was.

“My Kensington remote control for presenters. I do presentations often and usually the organizer will bring me a remote that is actually a mouse. I often use some gags as the first few slides, so just taking the remote I have already gone through the first three or four slides by accident. Kensington is great because it is specifically designed for presenting. You can go forward to the next slide or back. That’s it. That is just so simple! It is also relatively heavy. I used to have one that was very light but I often dropped it because I forgot I had it in my hand. Another great feature is that they put 2GB of data on it, so I can bring the presentation within the remote. It just does one thing, but it does it really well. I do wish it had a super bright laser pointer though. That is the only complaint I have with this product.”

If you want to read more about Steve’s ideas and views buy his book “From Fragile to Agile: The business of agile product management.” It is out on Amazon in both ebook and paperback. Definitely worth a read.
You can also read more about his company Under 10 Consulting
Steve will be speaking on “Have we LEAN’d too far” at the Business of Software conference in September 2014.
Photo by flickr user James Willamor

The Secret Sauce of the Goto Experience And What It Will Bring Us In Copenhagen This September

Over the last couple of years I have attended Goto conferences and always thought they were one of a kind. I always came back with a lot of things I didn’t know and a lot of new thoughts on things I already knew. I will of course go again this year. Looking through the program, it struck me that there is actually a basic pattern that goes through all Goto conferences. I think I have deciphered it and unlocked the secret code of the Goto experience.

Like a good recipe you have to start with good raw materials and Goto always have class a speakers from all the most interesting companies. The same is the case here. They have speakers from Netflix, Uber, Pinterest, New York Times. They also have people who invented the stuff and wrote the textbooks, like Martin Fowler, Devlin Kenney, Jez Humble and Tim Bray.

Something provocative
At goto conferences we always find something provocative. This year Tim Bray asks “Does the browser have a future?”. It reminds me about 10 15 years ago when I saw a comedian asking the question “Is TV here to stay or is it just a fad”. We were all laughing our guts out (or ROFL as it would later come to be known) because it was so evident that TV, was here to stay. But asking provocative questions sometimes is an eyeopener. Consider asking the same question today? It could even be the theme of a serious op ed in New York times. No one would be laughing. So, try to control your ROFL and listen to the provocative questions.

Something agile
It is no secret that agile has always been at the heart of the goto experience whether it is continuous delivery, scrum or kanban. In later years much of the agile interest has turned towards the lean start up movement (as I documented a couple of years ago). This is also the case this year where the lean enterprise is in the program.

Something about UX
One thing that I have enjoyed a lot on Goto conferences has been the uncompromising focus on user experience and usability. This year Chris Atherton has an interesting talked called “UX for mobile: It’s all about attention” which I am looking a lot forward to. She combines a software design with cognitive neuroscience, which is another thing you often see at goto conferences: the courage to dig a bit deeper and look at cognitive, physical or neurological foundations of what is a basic computer problem.

Something about massive scaling
There is no denying the geeky heart of goto. One year for example it was about the data collection at CERN. This year we have Architecture at Uber to satisfy quench the scaling thirst.

Something incredibly nerdy about new languages or frameworks
A couple of years ago Anders Hejlsberg chose the goto conference for the international announcement of Typescript. There is always stuff about the most obscure and up-and-coming new languages and frameworks at the goto conference. One example this year is “Idioms for building distributed fault-toleratn applications with Elixir”.

Is Google Glass the Next Segway and What Can We Learn From It?

About a decade ago one of the most hyped products in Tech was the Segway. It promised to revolutionize public transportation. The hype was almost hysterical. It was impossible to get your hands on one, unless you were especially favored and it was overprized. The hype for google glass is similar today, only a select few can get it and it is overprized. Google glass could have a similar fate to the Segway confined to a niche domain like mall cops or tourist excursions, although it has yet to find this niche. This niche could be internet porn, surgery aid or factory repair.

However, the reason is not the overhyping, price or lack of accessibility. It is a much deeper problem. Something as simple as product market fit. Let us look at a couple of reasons for this.

Product market fit
The Segway was by all accounts an impressive innovation and well thought out idea. It was just not thought out for any particular person or problem. It was technology for technology’s sake. It seems that at no point did the product manager/designer/inventor stop to test whether this product actually addressed an existing pain in any significant customer group.

The reports of google glass is similar. We frequently hear that this is cool technology. People ask and are interested in people wearing them. They want to try it. It works very well. But people have a hard time imagining what they would use them for.

“Glasshole” – how one feature can overturn the whole product
Lately google has been catching a lot of bad press around glass due to its camera function. A new term has even appeared already before it has been released, namely “glasshole”. There is actually only one function, which is the reason for this, that is the camera mounted on the glasses.

It appears that people other than the google glass users do not appreciate the possibility of being taped by the glass wearer. This one function is now threatening to take down glass with it. This problem could have been detected much earlier and addressed if someone had bothered to listen to someone other than the over exited test users.

What to do?
A product has to exist in an environment beyond its immediate users. Analysis of this environment and the humans that live in it could have revealed the emotional reactions. The solution by google has been to ban certain types of application of the camera. Which is a good idea, but most people don’t know that and therefore it won’t make much of a difference in perception.

Google could have considered two other options that are even more simple and would have an immediate effect in the environment where the product would be used. Since the basic problem is that people don’t want to feel that they can be monitored covertly, that is, taped without their knowing it. The first option is to introduce a visible light that is turned on when the camera is recording. This would make it possible for people to know when they were being filmed similar to when people with cell phones film. That is not a problem because it is out in the open. You can go to the person and complain.

The second option is to get rid of the camera altogether from the core product. It could be a visible add on, like a go pro camera, that could be taken off at the request of other people or just courtesy. Again it is important that the immediate environment can see that it is there. The problem here is that one controversial feature has been embedded within the product.

With out the camera google glass would still be an impressive product, that could show you the way, notify you of appointments and emails while driving etc. Sometimes taking out a feature may actually increase the market potential.

Anyhow, I love the google glass idea because it shows that somebody out there has the courage to dream and build products that are beyond what we know. I hope that google glass will find its niche faster than the Segway though.

The Most Popular Content Shared on Our Twitter account in March

On our twitter account we post really interesting content all the time, but the most popular content we tweeted was the following three.

So you want to manage a product? By Rohini Vibha

The article is about what people expect product management to be and what it really is. The article chronicles four key insights that deserve to be refreshed:

”You’re not managing a product. You’re managing the problem it solves”. It is easy to loose sight of what you are doing and focusing on creating more new features, but “you will always have too many feature requests and too little time”. The art of the product manager is to make compromises between what is possible to do in a given timeframe and what gives value for your customers.

“You’re product is only as good as a user’s perception of it”. Listening to customers problems with your product and watching them use it may reveal that “What they said “wasn’t working,” really just wasn’t working the way they expected”. These insights are important input to making your product work for the customer.

“Product Managers are neither designers nor engineers”. While a product manager is responsible for many things hi or her expertise is not doing the actual design or code work, it is to tie together the work of experts: “Your designer is the design expert”. Your engineer is the programming expert”

“It’s not about being a star – It’s about managing a universe”. The product manger is not going to single handedly come up with all the best ideas for the product, but rather make sure to get “the right people in the room to foster a deluge of ideas” from which to select the best one.

How to measure value using outcome metrics. By Gabrielle Benefield.

The second most popular content was Gabrielle Benefield’s slideshare presentation of the moebius canvas. The moebius canvas takes inspiration from other canvases like the Business Model Canvas and the lean Canvas. The unique feature of the moebius canvas is that it is a continuous process like a moebius ring that continues indefinitely.

It starts with creating a vision and strategic objectives. This makes way for rapid research and learning. The next step is then to create target outcomes to measure value. Then solutions to achieve these target outcomes are defined. Different options are specified and weighed against each other. The delivery is where the options are realized. It can be about programming an application, changing the layout or doing an experiment. Then measurement of the target outcomes are carried out to see what value was actually created. The final phase is adapting to continuously.

In the moebius canvas teams don’t have to go through the sequence though. They can start and move around where they need. One option for example may demand more research or measurement may prompt an adjustment of the business model.

What product management strategy is right for your start up? By Anders Lisdorf.

The third most popular piece of content was from our own blog. The article takes it’s departure from an insight from Nicholas Nassim Taleb’s book “Antifragile”. A fragile strategy is the classical stock investment or lending money where most likely you will get an ok return, but there is the odd chance that you could loose all your money. An antifragile strategy is counting on loosing money with the odd chance that you could gain a lot. Options trading would be an example. Here the unexpected is your friend.

As a product manager it makes a difference whether you are pursuing a fragile or an antifragile strategy. Are you working on continually improving your product slightly, gaining a bit more customers every month. You should probably use techniques like A/B testing, cohort analysis and all the tricks from the growth hacking playbook.

If you are trying to make a new or disruptive product, it probably doesn’t make much sense. Instead it may make sense to try out as many radically different experiments as possible, all of them likely to fail. Every experiment that you learn from makes your product better. Also you shouldn’t be sad that you don’t see a gradual increase in users because you are set up to be a billionaire.

That concludes the top three of March month on the Sensorsixhq twitter account, if you haven’t already, start following us here.

Picture courtesy of JoshSemans under a CC license. Follow him on twitter https://www.flickr.com/photos/joshsemans/

What product development strategy is right for your start up?

There are two primary product development strategies and multiple ways of executing them, but there is only one that is right for your company. Finding that strategy and understanding the dynamics may be the difference between success and failure. It may also revert your perception of whether you are doing well.

Nicholas Nassim Taleb has an interesting concept of antifragility. Antifragility are strategies that benefit from shock or randomness, where fragility is the opposite.

A fragile strategy is the classical stock investment or lending money where most likely you will get an ok return, but there is the odd chance that you could loose all your money.

An antifragile strategy is counting on loosing money with the odd chance that you could gain a lot. Options trading would be an example. Here the unexpected is your friend.

Product development
I was thinking about how that could translate into product development strategies. Developing a product is similar in that you invest in it and expect to get a return.

The fragile strategy would be to continually try to develop the product so it performs a bit better in the market place. This is the typical way, and we know it from techniques such as A/B testing and constant tweaking to increase performance on some central product parameter. But this is also risky, because suddenly you may wake up and find out that your entire product line is obsolete even though you have continually improved it. This is what happens when companies are disrupted.

So, could an antifragile strategy be the solution and how would it look? I think it would be a strategy where you try a lot of things that are most likely going to fail, with the odd chance that you could hit it big time.

One scenario is launching a lot of products just to try and see. This is what google and Richard Branson do. There is no end to what they launch. A cheaper way to do this is to probe for demand through market research, prototypes or some other way to get input from the customer about the perceived value. The Lean start up movement is the champion of building cheap “fake” products that are good enough to verify a potential demand.

Another scenario is to launch a product in a market that you feel there could be a potential, but where no product has really had any success. Continuing to develop this product is certain to loose money, but something might happen. You may hit the right combination or market conditions could change. You just need to make sure not to make the same mistake twice

Choose the right strategy for you
Choosing one or the other strategy is not not self evident. Whereas the financial system seems to have most people following a fragile strategy it seems that the start up “industry” is following an antifragile, which is great for the very few people who have time, resources and luck enough to stumble upon a product that hits it big time. It seems to me that your choice of strategy should depend on what sort of life you want to live. Is it ok, although very unlikely, to one day not have a product? Can you live with continuing protracted loss? Do you just want a predictable return? or do you want to have the remote possibility to become a billionaire.

Why You Shouldn’t Try to be Like Steve Jobs or Wonder What Google Would Do

There is no end to the inspiration that the most hyped tech giants inspire. Books like “What would google do”, films like “The Social Network” and hundreds of daily blog posts and articles chronicle the amazing exploits of some of the world’s most successful companies. Never the less, you are better off ignoring everything they did if you want to succeed yourself.

Read about these companies as if they were great works of fiction. You may get moral encouragement or emotional energy, but what they did is not a recipe to follow. You would not try to drive like James Bond does or attempt to move things with the power of your mind like Luke Skywalker (I hope). Similarly you should look at the life of Steve Jobs as a great story and don’t try it at home.

In the world of businesses big companies like apple, google, facebook, amazon, twitter etc. are anomalies. They are exceptions to the rule. As Malcolm Gladwell demonstrated in his book “Outliers” extraordinarily successful people are typically more a product of particular circumstances than their own skills. For example it is hardly a coincidence that Bill Gates, Paul Allen, Steve Jobs, Larry Ellison and Sun Microsystem founders Bill Joy and Scott McNealy where all born within a year of each other. To be sure, they were indeed incredibly talented, but above all they were at the right place at the right time.

From another angle Nicholas Nassim Taleb has argued that just by sheer chance you would find superstar investors that appear to have otherworldly qualities in picking the right investments. They have repeatedly placed everything they owned in risky investments and yielded massive returns. But if the strategy is to place everything you own on stupid risky financial bets, chances are that some one by the simple laws of chance will have won the bet several times and made a gazillion dollars. Whereas thousands following the same strategy will have lost the bet at one point and lost everything they owned. Guess who we hear about: naturally it is more interesting to look at the one case where it paid off, but should you copy the investments strategy just because it paid off one time? Off course you shouldn’t.

Anyhow, entrepreneurs and business people get mesmerized by the extraordinary success of a few companies and don’t think of the thousands of companies who did the same thing, but went bankrupt because they weren’t at the right place at the right time or because they just didn’t have the same luck. Consequently, doing what google does or trying to be Steve Jobs might be a bad idea and jeopardise your company’s existence.

Remember that google and facebook are still one hit wonders (but what hits!). Google is still just an advertising network, although they are good at advertising themselves as something else. Facebook is still just a social network, trying to be an advertising network. Apple started that way too and managed to survive long enough for the next fluke. All of them have been able to get away with massive amounts of incompetence and bad decisions that we just don’t notice because of the glare of success. Most “normal” companies could not get away with the same.

So, what we can learn from them is to be just as determined and work just as hard. Not be discouraged that we don’t succeed in quite the same way. And most important of all seek out the right place and time for what we are doing.

From User Interface Design to Virtual Product Design

User interface design is very important for any company who has virtual products, but when more and more people access virtual products through more and more different user interfaces it becomes increasingly important to not design the entire virtual product. Not just the user interfaces.

Not just the user interface

I have been researching how different psychological theories can inform and improve virtual product development. One important idea is the idea of object permanence. Object permanence is a principle from Jean Piaget’s psychology. It describes how children learn that objects continue to exist when they are out of sight (to put it very simply)

The reason this is interesting is that it points to something quite fundamental (if you ask me). Object permanence is a quality of the user interface, but also between user interfaces. When we leave something in a system, like a document in a filing cabinet, we expect it to be the same place when we return to it. We also expect object permanence when it comes to virtual products. A brilliant example of a company built entirely around object permanence is dropbox. When you leave a file in your dropbox it is there in exactly the condition you left it when you return regardless of the device you use to access it.

An example of the difference between when it works and it doesn’t is Netflix and HBO Nordic, which is HBOs experimental online movie streaming competitor to Netflix. When you see a movie on Netflix on your iPad and pause it only later to resume it on your playstation you will find it paused in the same place at the front of your screen. HBO nordic also allows you to watch movies and episodes. But every time you return you have to relocate the content you wanted. You have to find the series you were watching, click to the season, find the episode and then try to find where you left off manually.

Designing in a virtual world
What we need to remember is that, even though the virtual world does not have the same constraints as the physical world, we bring with us the expectations of these very same constraints. This is why we need to stage the virtual products in accordance with our expectations and therefore implement some of the same features that we would find in the physical world. The more the user interfaces live up to our expectations the more natural they feel.

So, what we can learn from this is that we have to broaden our view towards designing a virtual product that has multiple user interfaces instead of just one user interface in multiple versions. We have to think of the product as the same, but accessed from different windows into the virtual world.

Can Prediction Markets be Used to Prevent IT Projects From Failing?

Can the wisdom of crowds help improve the hit rate of IT projects? It is well known that many if not most large IT projects fail. It is also well known that they could have been saved if proper intervention had been undertaken at an earlier point. The question is just how to get an early warning? How will management or the project manager know when things are going wrong?

One way could be prediction markets. Prediction markets are based on the basic assumption that crowds are wiser than any individual even an expert. The obvious question then is, why not just send out a questionnaire on a regular basis to ask how people are feeling about the situation. The problem with questionnaires is that they are more easily distorted.

One example is the past few elections for President of the USA, where the outcome has been more precisely predicted by the bookmakers than the polls. The reason for this is that an opinion in a poll is free, but when you bet you have a stake in it. It is not free.
Prediction markets are modelled on this dynamic. Participants in the market are given a virtual currency to invest in the likelihood of future events. This currency then will eventually be turned into some sort of reward in real life.

The British company qmarkets has developed software that allows companies to use prediciton markets to predict the future*. Companies have used it to predict which new product to invest in or which drug to bring through to clinical trials, or which risks are most likely to occur. If applied properly, prediction markets are the most accurate way to predict uncertain events.

The project portfolio managers challenge
One of the most challenging parts of project portfolio management is to manage the uncertainty in the portfolio. It is inherently uncertain whether a project will be finished in time for the deadline, whether resources are available or whether the quality will be good enough.

Standard textbooks prescribe the use of complicated algorithms and reference class data to determine whether the project is under spending or overspending with regard to the burn-down rate of a project. A project that burns less hours than expected may experience resource bottlenecks or lack of commitment. A project that burns more hours than expected may have underestimated the amount of work. Either way, the likelihood that the project will be on time and on budget is diminished.

The challenge is to be able to say exactly when a project is going off track. This can be done if we know when exactly a project is overspending and when it is underspending. The problem, however, is that all projects are different. Some have a much slower start and explosive finish, others start really energetically and then level off.

I Predict
When traditional ways of detecting when a project is going off track don’t work, prediction markets may offer precisely the solution needed. Prediction markets are good at early detection of sentiments and information that is distributed among a group of people. It could therefore serve as an early warning system.

The prediction market could be implemented as a market where the question of whether any project in the portfolio, or at least the largest of them, would meet their deadline. All employees would be given a pool of virtual money to buy stocks in the project. These stocks can be bought and sold at any time. The stock price therefore reflects the probability of a project meeting its deadline.

The portfolio manager and senior management could therefore, just by monitoring the market, much earlier spot projects that had a high risk of failure. That would allow them to do one of two things: discontinue the project or give it more attention to bring it on track. Either of these options would benefit the company. It would either minimize losses or maximize likelihood of delivering quality on time.

These are the hard benefits, but there are also, soft benefits that would not follow from the traditional method. Since this is a game, it is a way for employees to take the mind of their work for a second and still be doing something relevant, instead of posting links to youtube movies on facebook.

It is also a way to create awareness of all the projects your company is running. Suddenly employees will know what other departments are doing and they may even serendipitously discover synergies or redundant projects

Since it is a game it can be entertaining, which may boost morale.

Further it may create positive incentives to make the real projects finish on time. If you invested in it, you want to protect your investment (this is why it is probably a good idea to disable the possibility for shorting project socks).

Future potential
Unfortunately this solution is not in use anywhere yet. It is only a possibility, but with the market maturing and ideas about collective intelligence becoming more widespread, it is probably only a question of time. the current economic climate calls for solutions that would help you minimize losses and maximize success. The problem is just whether the cultural gap of actively letting employees play and even rewarding them for it is too big for most companies.

The typical risk analysis is inherently flawed. It is only based on the project managers subjective opinion and furthermore it is typically made with a 5 point scale idiosyncratically interpreted. This doesn’t guarantee a good estimate of the future
Furthermore we are natural born optimists. We overestimate the likelihood of something good happening and underestimate the probability of negative events occurring.

* Best Buy used decision markets to find out whether a new product idea would succeed (http://online.wsj.com/article/SB122152452811139909.html). They built a market where it was possible for about 2000 employees to trade imaginary stocks that related to questions about the future. So, if a question was very likely to be true the price of the stock would go up and if it was likely to be false, the price would go down. This means that the price of the imaginary stock would match the probability of the answer being true.

Justin Wolfers and Eric Zitzewitz: “Prediction Markets
James Surowiecki: “The Wisdom of Crowds – Why the Many are Smarter than the Few
Eduardo Miranda: “Running the Successful Hi-Tech Project Office
Photo: thetaxhaven @flickr

“Heat” – How to Train Your Decision Making

In one of the greatest gangster movies of all times,”Heat”, lies hidden deep wisdom for all decision makers big and small. It is not that you should change your business model and start robbing banks, hire Al Pacino or even that you have to grow a moustache and goatee to succeed. But our decision making is clouded by two problems that can be attributed to how our brains work. They can be overcome by heeding the advice of “Heat”.

Cool feature…
Before deciding to do something most people will investigate the possibilities. This is the first place where your decision making could go wrong. People have a tendency to attribute too much importance to the first information they get. This is sometimes called the anchoring bias. The effect is that all subsequent evaluations will be affected by that first thing you see even though that information is irrelevant.

It could be that you are looking to invest in a new Customer Relationship Management system for your company and you hear about a vendor that has close integration with facebook. Again this is a cool feature, but essentially irrelevant. All subsequent CRM systems will be reviewed in the light of whether they have facebook integration.

Jeans suck!
After having seen a couple of alternative solutions to your problem you will start to develop hypotheses based on your gut feeling, for example that products from Germany are inherently more robust. You may have seen two or three examples of this. Here comes the next hurdle: the confirmation bias. The confirmation bias makes you look primarily for confirmatory evidence and attach more importance to it than to contrary evidence.

It could be that in your recruitment process for a new ambitious account manager you encountered two polite applicants from, say, London. This has made you develop the hypothesis that people from London are polite. If an impolite applicant from London comes along, who may forget to shake your hand, you may not attribute his geographical origin any value in your evaluation. Chances are that you will use another hypothesis, for example that people in Jeans are impolite and this is why he is not as polite (at this point you have forgotten that the first applicant from London also wore jeans, but at that time you didn’t pay attention to it). You just made that up on the spot to make sense of the evidence.

Psychologically it just feels a lot nicer to have your hypotheses confirmed, than having them contradicted, even to the point where you make up new ones just to have some confirmation.

30 seconds flat
Flash back to “Heat”. At one of the absolute highlights of the movie the policeman, Vincent Hanna, who hunts the gangster Neil McCauley decides to have coffee and talk with Neil. At the climax of this conversation Neil McCauley says the sentence that has also given the movie its name: “Don’t let yourself get attached to anything you are not willing to walk out on in 30 seconds flat if you spot the heat around the corner.”

This is deep wisdom, because, if applied with sufficient discipline it will eliminate the above named decision problems. You should never get attached to any idea. Period. It doesn’t mean that you should change your opinion or hypotheses incessantly. Rather it means that you should always be psychologically prepared to abandon an idea if you find that evidence does not support it.

This is more difficult than you think. But so is pole vaulting. Yet, pole vaulting can be learned. This is done by training. And train, you can. Teach you, I will: Next time you are making a decision try the following.

  1. Before you start searching for information write down your hypotheses. That way it will be easier to challenge them
  2. When you research your alternatives write down all the new hypothesis you develop
  3. Make sure to continually test your list of hypotheses in your evaluation process
  4. All previously evaluated alternatives should also be checked against the new hypotheses
  5. Every time you find sufficient evidence against an hypothesis. Strike it from the list.

You can train this on everyday decisions like choosing the right restaurant for you wedding anniversary (yes, it’s not enough to bring home Chinese take away), buying a new TV (we all know you need it) or even finding a new boyfriend/girlfriend (I know, not necessarily an everyday decision, but still..)

Photo by Michael Gil, MSVP @flickr