Risky business - why we need to push the boundaries and ride that roller coaster
Risk in business is a wild and complex beast. We know we have to tame it and live together somehow. We want to take risks when developing and marketing a new product or service but it still gets the heart pounding and interrupts a good night’s sleep. Why is risk so fickle, both exciting and terrifying? And most importantly what can you do to minimise risks and maximise experimentation?
We do love to flirt with risk. We are novelty seekers; new and risk are linked. There is a need to take a leap out of our comfort zones to grow but without falling too far. It’s always about the dopamine. “We act differently based on whether the risk is perceived to gain reward or avoid loss – an effect known as framing. Most of us tend to avoid risky rewards – we’d rather not go skydiving – but in the case of an unlikely event with a high payout such as a lottery ticket, we’re happy to take a risk. We also normally seek risk in order to avoid huge losses.” Source: The conversation.
So perhaps we need to reframe risk, less poison pill more multi-vitamin. Why not lean into behavioural science and know our unconscious biases better? What would you do if you weren’t afraid?
According to those smart folks at Harvard Business Review, large corporations quash new ideas in favour of marginal improvements, cost-cutting, and “safe” investments. Companies regularly forgo smart investments because of managers’ aversion to risk as their jobs are effectively on the line. HBR article. Cue the braver startup brigade.
Startups have in theory, the freedom to experiment with different levels of emotional and financial investment. We caught up with co-founder James Lucas, who set up Lunos to help courageous businesses tame risk. They help teams make better products faster, by rapidly testing ideas and assumptions with real customers. Here’s his two penneth on how you can de-risk your brilliant new wunderthing and adopt a test and learn mindset.
That moment when you come up with a fantastic idea or a solution to a problem you’ve been sweating over for a while - you can’t beat it, right? The problem is, at this early stage of an idea is where most of the risk lies. Often we find ourselves jumping into the detail of the solution and then building it before we've really established if it’s actually viable, that anyone will use or pay for it. So why are new ideas so risky and what can we do to reduce this risk whilst creating a level of confidence that it’s worth pursuing?
You should also ensure there’s a solid understanding of who your customer is. This goes beyond a high-level persona and includes their goals or desires, the process they use to try and achieve them and the problems and needs they face along the way.
To do this you’ll need to spend time talking with customers to understand more about their world and the potential opportunities that relate to the solution you're exploring. When talking with customers, remember that it's all about them. Learn about their problems and needs and focus on unearthing details about previous experiences they've had that relate to your solution. Don’t talk about your solution and make sure to not ask questions based on hypothetical future things. Keep it real.
If you're honest with yourself about the idea you came up with there will be layers of assumptions that lie within it. The key is to identify these assumptions, prioritise them and look at ways that you can test these assumptions early with customers.
Think about the full customer lifecycle within your new idea and start to map out any assumptions you're making. Some areas to consider include, how customers will find it, how you’ll onboard them, how they will use it, the experience they go through to get the core value and what will keep them coming back. Once you’ve mapped out all of these assumptions, you can prioritise them to help focus on where the riskiest assumptions are and where you need to start experimenting.
Once you’ve got your core assumptions in order it’s now about looking at ways that you can test these assumptions in the market but focusing on increasing your time to learning (no long development timescales allowed here, uh-uh). Because of this focus it’s important to look at ways to simulate what you’re proposing.
Creating interactive visual prototypes is a great starting point combine this with properly executed user testing you can quickly get valuable insights from customers.
The other classic here is to create a landing page which explores ways to talk about your value proposition, the problem and how you’re looking to solve it. Alongside this you’d also include some form of conversion point which helps you track the performance. Once created, you can drive traffic towards it (either via paid media, remote user testing tools or manually) and look at the results to see if customers are converting.
You can also consider looking at manually run simulations whereby you (or your team) become the technology, this strips things back to their rawest form and helps to ensure the core value exchange you’re proposing is something customers are interested in. For simulations like this it's important to work with small amounts of customers (likely single digits to begin with). However, if you can get valuable feedback and customer buy-in at this level then you know you’re on the right track and you’ll also have the benefit of knowing what you need to build to deliver the value, which arguably may be much less than you first thought! Happy days.
Interesting stuff James. So, why not use some of this marketing gold from all the testing and learning (never assuming) you’ve done on the new brand and distill this down into a compelling brand identity and marketing launch brief? Sweat those insights hard.
Time to make some noise. The easy bit right? Well, getting your brand mission tone and values is one thing (check out our other post on all that jazz here). Before you make the leap and create the next meerkat/drum playing gorilla/Kevin the carrot, let’s pause for a sec and think about all those brave campaigns ideas that didn’t quite land.
ASA recently banned Adidas' new bra collection, the campaign celebrates female diversity no one size fits all here. The poster campaign and tweet showed bare breasts with some tasteful pixelation, however not everyone agreed and 24 complaints to the ASA later, stating that the ads were gratuitous, harmful and offensive and unsuitable to be seen by children the ASA instructed Adidas not to show the ads again. But it did get us talking about Adidas…
Innocent received a bashing from the ASA too for greenwashing, their campaign featured a cartoon singing Otter which all sounds very erm, innocent. The ad implied a direct association between positive environmental impact and purchase of Innocent products and had to be pulled.
So be careful that your claims are compliant, even if they are just on the wild west of the internet. Disrupt and make trouble in a way that’s celebrated by your audience. Channel 4 was ‘born risky’ and celebrating being different is in their DNA. They reflect minorities and majorities in society and are governed by rigorous Ofcom guidelines alongside public opinion. Viewers expect it and it permeates through everything they do. It’s a tightrope worth walking.