Important lesson for product development

In this Freakonomics podcast, Are Personal Finance Gurus Giving You Bad Advice?, host Steven Dubner compares ideas about personal finance that comes from academic/economics theory and from practical, real world experience.

It provides a good example of what I see in product development in companies, where mangers approach product development with an academic view, ignoring practical experience, and then are surprised when the product flops.

In one case, Dubner compared the sound academic advice of paying off the most expensive debt you have first vs. Dave Ramsey’s Debt Snowball, which encourages you to to pay off smaller debts first.

On paper, the academic approach makes sense. You will spend less money paying down the most expensive debt first and have more money in your pocket when you are done.

But, in the real world, Ramsey’s insight was that removing a smaller debt from your balance sheet sooner gives you a win that makes you feel like you accomplished something and keeps you motivated to continue paying down debt.

This practical insight recognizes something the academic approach misses, sticking with the habit of paying off debt is far more important to success than paying off the debt in an economically efficient manner. Said another way, too often paying off the highest priced debt first results in you not sticking with the program.

Or, as one of the guests said, “What diet works? The diet you stick with.” Sticking with a diet is ~10x more important than picking the optimal diet (that you may not stick with). It’s funny, isn’t it? We overlook the factor that is 10 times more important to success than the factor we think is important.

I believe there is an old saying for this: Penny-wise and pound foolish.

An important step of product development is to simply ask are there factors that we are missing? Like in this case, are we putting too much importance on economic efficiency and not enough on consistency of sticking with the habit?

I’m amazed at how often this important step is not only skipped, but avoided at all costs. It’s almost like the elephant in the room. Folks sort of know it exists, but because groupthink has taken over or this is the leader’s pet project, it doesn’t get addressed. Well, until it flops.

“How do I know what’s right if I can’t trust the news?”

I run into this circular logic quite a bit. It’s circular because it’s used by a person to justify trusting media that even that person is skeptical of trusting.

The logic is, well it’s hard to to do the research myself, and finding the right facts might not be possible anyway because every place has its bias, so, golly gee, I guess I just have to trust the media, what else can I do?

There’s another, tried and true way that was handed down through generations: take everything with a grain of salt.

As Wikipedia defines the phrase: “…view something, specifically claims that may be misleading or unverified, with skepticism or to not interpret something literally.”

And, here’s another important part: be comfortable with that.

Be comfortable with living in a space where you can say, “I know what I heard (or read), but I’m skeptical, rightly so, because stories can be tricky and because I may not see all the tricks. I don’t know the whole story, so I’ll withhold judgement. And, I may never know the whole story.”

I saw a good example of this type trickiness yesterday. The headline read: “[So-and-so] will benefit from a law critics call [Blankity Blank].”

Marketing and journalism students learn in their strategic communications (stratcom) courses that most folks will gloss over ‘critics call’ and just remember the headline as saying: “[So-so] will benefit from the [Blankity Blank] law.”

They especially do this if they already want to believe something negative about the law.

And, for those that don’t yet have an opinion, the headline serves to associate something negative with the law in their minds. Notice, the headline didn’t mention what supporters of the law call it.

If some readers do some research and find out that they disagree with what critics call the law, then accuse the media outlet of a misleading headline, the media outlet will defend itself with, “The headline is accurate. Critics really do call it that. We never said whether that was accurate. That’s for you to decide.”

They are right. The trick here was that folks assume the media outlet validated what critics call it, or they would not have put it in the headline.

But they didn’t need to validate to meet their standard of reporting a fact, because all they reported is what media call it. Readers jumped to the conclusion that was accurate.

In other words, it’s not our fault, it’s yours. Read what we lilterally wrote, not what you thought it said (even though you interpreted it exactly as we hoped!).

And, I agree with them here. This is why you should take everything with a grain of salt and be comfortable with that.