How much are you ready to invest

This article was originally posted as a Bilot blog post 26.5.2020 here

A lot of the time, the biggest challenge in deciding to go forward with a development idea is the unknown between the cost and benefits. 

This is probably still one of the most common reasons why companies prefer a fixed price or a price cap for a development project, over a variable price option (like time & materials). Controlling the cost helps people think they control the risk. 

The sad truth is that this control rarely works, as most fixed-price projects tend to go long and/or over budget. A lot of the time, the reason for this is really simple: this approach does not control the risk of the unknown. All of our eggs are in one basket and there is an assumption that we have all things figured out and the value of the development is guaranteed.

Well what can you do then?

There is a really simple question that I, at times, ask from clients in different phases of a development to open up this problem:

How much are you ready to invest to find out?

The question targets the idea that instead of putting a lot of effort (and money) in trying to figure out a whole solution, we can instead make a hypothesis about the problem we want to solve, and then make an experiment or a prototype to validate that hypothesis. The cost for doing something like this is a fraction of an actual development cost, and it also gives us faster answers that can then be used to develop something actually valuable.

What can you experiment with?

The short answer is: almost anything.

We have done many different experiments based on given hypotheses, from the smallest scale where we A/B tested reporting layouts with a paper prototype, to the other end where we designed complex, high fidelity, interactive prototypes to test and validate full development ideas together with users to ensure that expected benefits can be achieved from doing the actual development.

What if we don’t know what to experiment?

Ask the users!

It is surprising how often business or IT thinks what can solve the users’ problem, but they never actually ask. Asking the users does not mean that you need to do every single thing they think of, but it means that you will most likely find the pain points bothering them… and again you can do a prototype to find the easiest solution to answer those pain points.

Also you don’t need to ask all of them. Start with 3 or 5 and go from there. Again, a small investment can save you a lot of grief at the point where they see it for the first time after all development is done.

Then we can develop everything, right?

What if you wouldn't?

What is the smallest thing you can do and release to get value? Do that first, collect feedback and then do more. Do small things and release often.

Instead of spending e.g. 150K to build an app to do everything you can think of, spend less and release something small that provides clear value and delights the users. It is so much easier to get funding decisions for bigger things when you have a proven track record with the first things.

So innovation is cheap?

Not really. Whatever the thing we want to experiment with is, we use known patterns to do the experimentation. There is a reason why most good web shops, forms and sites are similar. They follow known UI patterns that have been tested and validated countless times.

If you really want to innovate and you are not e.g. Facebook or Amazon with an endless R&D budget, then get ready to have failures and lose some money in the process… But don’t take it as a loss. You have learned something new and have better insight on what to do next.