In my previous article, I discussed how to improve product features. We will be diving into less is more principle.
If you've studied business or economics, you are familiar with the power of the Pareto Principle or the law of vital few or the principle of factor sparsity, well let's leave grammar, we also call it the 80/20 Rule.
The Man Behind The Concept
Vilfredo Federico Damaso Pareto was born in Italy in 1848. He would go on to become an important philosopher and economist. He thought about wealth and discovered that 80% of the land in Italy was owned by just 20% of the population. He investigated different industries and found that 80% of production typically came from just 20% of the companies. The generalization became:
80% of results will come from just 20% of the action
On a more personal note, you might be able to relate to my unintentional 80/20 habits.
I own at least five amazing jean trousers, but 80% of the time or more I grab my blue, Giorgio Armani with sliver-like studs. (Seriously, how many shoes do you own, and how often do you grab the same 20%?)
On my smartphone, I have 48 different mobile apps installed but 80% of the time I’m only using the eight on my home screen.
Enough of economics and side distractions, let's move to the real business.
The objective of Product Management is to improve the profitability of the product line, across business units, through portfolio management, product consolidation, and cost reduction initiatives.
Many businesses struggle to measure the profitability of products in their portfolio. This is not difficult as even small businesses can use the 80/20 rule to increase the profitability of their product or service lines.
Another well-known 80:20 rule in software is that 80% of users only use 20% of features.
This finding has heavily influenced Agile and Lean development, encouraging people to focus on delivering minimum marketable features or defining a minimum viable product, even in large-scale enterprise projects. Instead of trying to design and plan out all of the features that a system may need, come up with the smallest, tightest possible definition of what people think is important and useful in itself, prioritize the features and deliver in steps as quickly as possible.
Is 80/20 applicable to existing products?
For existing products, we need to evaluate and improve our most used features and try to apply the 80/20 principle by evaluating where the opportunity lies. One of the easiest ways is to follow the Anthony Ullwick algorithm.
Ullwick's opportunity algorithm cleanly identifies the shortcomings in a product, by getting customers to rank (on a scale of 1-10) the jobs they need to do by how important they are, and how satisfied they are currently. The opportunity is then expressed as:
opportunity = importance + (importance – satisfaction)
Another great side of Ullwick's concept is how it often highlights opportunities that would have gone unnoticed. Regularly, the biggest opportunities lie in areas the product manager regards as being “complete” or “bug-free”. A minor improvement on an important task is almost always a larger opportunity than a big improvement on an ancillary one.
There's no right way to prioritize a roadmap, but there are plenty of wrong ones. If there are opportunities in existing product areas, and your roadmap ignores them in favor of new features, then it may be too late. Address your product's shortcomings, or someone else will.
For new products, the 80/20 rule is tricky and can lead product managers astray. The idea that 20% of the features will get you 80% of the value may well be correct, but it also means that on important tasks, you're giving customers a B-grade experience where it matters most. We can evaluate where opportunities lie in our new product features through cost-benefit analysis of features and return on development analysis.
I want to 80/20 my new product, which features to build? Stay tuned it may come your way next!