If you are starting work on a new product or feature, where should you start? Idea or the Problem?

Before going any further, let me tell you this is a trick question. Both the answers are wrong. You should not start with the problem, and you should definitely not start with the idea. The best place to start with is the customer.

Most common starting point – Idea first

Most of the time people / product teams start with an idea. Typically it may start with someone saying, “Wouldn’t it be cool, if …?” and others chime in and before long you are all excited about building the next cool thing.

In this situation what you typically end up with is a solution, looking for a problem. This is typically a result of Inside out thinking.

Better starting point – Problem first

To avoid the idea-first approach, you may think that maybe you should start with a Problem. A genuine problem that people are trying to solve and would be willing to pay you for solving it.

This would definitely be a big step forward and you would be in a much better position for likelihood of success compared to most products/features that start with the “Idea-first” approach

But still there is a challenge! Many times, even when you end up solving a problem for the customer, you don’t see product adoption, or customer satisfaction improve. Why is that?

It would typically be because you ended up solving the wrong problem. Problem that was not significant enough for the customer.

As a Product Manager you may be doing your best and talking to customers and uncovering details, working with engineering and coming up with the best solution, but the adoption of features would still be lacking if the problem is not worth solving. 

What you are missing is a Significant Problem.

How do you find a Significant Problem

Finding a Significant Problem requires you take a step back from “the problem” and look at the multitude of problems your customer faces.

There’s a few different approaches that you can take to evaluate which problems are worth solving

Size vs Frequency

Des Traynor (co-founder Intercom) talks about the idea of being in a Significant Problem space in his talk on Product Strategy. I do recommend you check it out here – https://www.youtube.com/watch?v=i-498BBUJJE.

He suggests that you need to ask two questions 

• How big is the problem? Big, Small
• How frequently does your customer face it? Frequent, Infrequent

You don’t want to be solving “Small”, “Infrequent” problems and ideally you want to be solving “Big, Frequent” problems.

The product I manage – “Compensation Management” is solving Big and Infrequent problem. Managing merit, bonus, stock planning for your entire employee population is a Big problem, but it typically happens only once a year.

If you think about SAP SuccessFactors overall we solve the “Big, Frequent” problem of helping companies manage their employees.

Importance vs Satisfaction

Another approach that you can use to determine if the Problem is worth solving is based on Importance vs Satisfaction. This is what the Jobs-to-be-done approach uses and Dan Olsen also talks about in his Book – Lean Product Playbook.

As, you may have guessed, the two axis in this approach are Importance and Satisfaction

• You don’t want to touch the problems that are not Important, as you can’t create much value for customers there
• Ideally, you want to be solving a Problem that is High Importance and Low Satisfaction and that is where you have the highest likelihood of success.

Starting with the customer

The challenge of evaluating if a Problem is whether something is Important or not is that it can’t be done in isolation. 

You can’t look at one problem and ask the customer if that is the most important problem for them. It’s like asking your customer – “Would you like this feature?”, then answer invariably would be “Yes, of course”. 

When you have already identified a problem to solve and are focused on it, you are being subject to Focusing Illusion. As Daniel Kahneman puts it – 

“Nothing in life is as important as you think it is while you are thinking about it.”

To find problems that are really important for customers and where the satisfaction levels are low, you need to take a step back and think about all the problems that your customer has, which you have the capability of solving.

Get the feedback from a large number of customers, and then try to stack-rank the list of problems that the customer is facing, and pick which one you would like to attack first.

Jobs-to-be-done provides a formula for calculating the Opportunity Score which is – 

Opportunity Score = Importance + (Importance – Satisfaction)

Benefits of starting customer first

Deep understanding of your target customer is critical, because your business is not about your product or service.

It is also not about the problem, especially in the long run. In the long run, your customer won’t necessarily face the same problem

It is all about the customer. You are in business because you have a customer. 

Acquiring new customers is hard. The cost of acquisition is typically 5-6 times more than the cost of retaining a customer.

If you have done all the hard work of Acquiring the customer, it’ll be a criminal waste to let them go once they have solved their problem. It is much easier to sell something to a customer, who already purchased from you. If you build a deep understanding of all the problems your customer is facing, that not only gives you a better chance of solving that one problem, but also opportunities to expand the product footprint into other areas in future. 

Once you have solved one problem for the customer, you can then go to solving another problem, from the list you already generated. This helps you in increasing the Customer’s lifetime value

• Amazon started by selling Books. Now they sell pretty much everything under the sun.
• SuccessFactors started by selling Performance Management. Now we have a full suite of HXM solutions.

So in summary, don’t start with the idea, don’t start with the problem. Start with the customer. If you are working as a Product Manager, I assume your company has already identified a customer. If you are thinking about starting a new venture and haven’t identified a customer today, I’ll discuss how to choose the right customer in a future post. 

Where do you start your feature development today? Idea-first, Problem-first or Customer-first? Leave a comment.

As part of the Product Management team for Rewarding solutions at SAP SuccessFactors, my colleagues and I tend to spend a lot of time thinking about how to build solutions that help our customers motivate their workforce.

Recently, I revisited the book Drive by Daniel Pink which talks about “Motivation 3.0” based on factors such as autonomy, purpose and mastery. He makes a case that carrot and stick rewards are no longer effective, especially for the creative or conceptual work that many of us engage in. He argues against the If-Then awards, and towards Now-That awards.

You can hear his 2009 TED Talk on the topic here –

Being a smart guy, he is quick to point out that first you need to “take the issue of money off the table” which basically means that these motivators – autonomy, mastery, purpose – only come into the picture once money is no longer a worry for employees. He refers to these kinds of rewards as “Baseline Rewards”.

Let’s try to understand the different types of rewards that he refers and how these can be aligned with your company’s Total Rewards Philosophy.

Baseline Rewards

These are the rewards that Dan Pink is referring to when he says, “take the issue of money off the table”. In the Total Rewards world, these are aligned with an employee’s base salary. To take the issue of money off the table means that employees are being paid sufficiently and fairly.  It means that the employee doesn’t have to worry about meeting the basic needs such as – food, rent, kids education etc. In addition, the employee feels that he or she is paid fairly compared to their peers and the market.

If-Then Rewards –

These awards are pre-defined; if you achieve x goal, then you will get y reward. In the Total Rewards world, these align with classic short term incentive payments. These are the kind of awards that Dan Pink argues against. These awards have also earned a bad name in recent times with an argument that they work well in the manufacturing world when employee output is easily measurable – produce x units, but with more conceptual and creative work these awards may actually have a detrimental effect.  Dan argues that instead of If-Then awards, employers should focus more on basic human motivators – autonomy, mastery and purpose.

This is where I disagree with Dan Pink (with all humility) and here’s why –

The goal of having “If-then Rewards” is not just to motivate employees to create more output. It is also to help everyone in the organization move in the same direction. Even though giving autonomy to employees is great for motivation, having too much autonomy can also be detrimental. Imagine everyone in the company making progress in a different direction. The company as-a-whole doesn’t make progress in any direction. The goal of If-then rewards to align people on the same goals. If the company does well, your bonus payout would be high, and within those constraints if your performance was high, your payout would be even higher.

Dan further qualifies that If-Then rewards can work well given that rewards offer a rationale on why the task is necessary and offer people autonomy on how to execute the task. I think this advice is what organizations can improve on, rather than abandoning the If-Then Rewards entirely.

Now-that rewards

What Dan suggests using instead of If-Then Rewards is Now-that rewards. In the Total Rewards world, these can be aligned to Spot-Awards/just-in-time recognition.

The difference between the two is that for the Now-that rewards there is no up-front expectation from the employees about receiving a reward. The task is not being done for the reward but for the joy of the task itself. The task is being done for the intrinsic motivation that comes from the activity.

Let me try to illustrate the difference with the help of an example – If I wanted to introduce piano to my daughter, I could ask her that complete this lesson or play 1 song and I will get you a gift. This would be an example of If-Then reward. You can imagine that she would learn the song for the reward but not for the joy of playing piano or learning music. Such motivation would be short-lived and it’ll be detrimental towards learning piano in the long-term. Alternatively, if she plays piano and completes a lesson by herself and then I give her a reward for completing a song and working hard towards it, that would be an example of Now-that reward. In this case, there is no detrimental impact on the intrinsic motivation to learn piano because she didn’t have to give up her autonomy in this case for the reward.

Such rewards are an example of Positive Reinforcement, which is among the most powerful and effective methods for shaping good habits and behavior.

Companies can use these rewards to encourage employees to display behaviors that align with company values and shape company culture.

What Dan suggests moving from If-Then rewards to Now-that rewards, is something I think has been happening in the industry as well. As the budgets for base salary increases or bonus payout has stayed flat, we see an increase in the adoption of Recognition (Spot-Award) programs.

We have you covered

I am proud to say that whichever combination of the different rewards types that our customers want to use, we’ve got you covered. As part of the SAP SuccessFactors Rewarding suite of solutions, we offer tools to manage all 3 types of rewards. You can manage your compensation planning (Baseline Rewards), Bonus Planning (If-then rewards), as well as Recognition programs (Now-that rewards) as part of one solution and one license. As far as I am aware, we are the only product to offer this range. Other solutions allow you to manage base and bonus, but require a third-party solution to manage recognition.

Hope you found this post useful, and would love to hear how you think rewards/incentives can be used to motivate people.  

Originally Published at – https://www.linkedin.com/pulse/how-rewards-motivation-play-together-ritesh-chopra/