If you’ve ever invested money, you probably know that bonds are generally low-risk and stable and stocks are high-risk, high-reward. The ideal portfolio has a mix of both. Why not look at your business portfolio the same way?
This isn’t just a clever analogy, though; real ROI comes from this way of thinking. This week on Catalyst, Chris and Gina dig into this comparison, discuss the importance of having some high-risk products that lead to transformational change, and talk about the action needed to build your case around these products.
Diversify, diversify, diversify
Financial experts talk about the importance of diversification, and it’s just as important in product development. Enterprises should have a healthy mix of dependable products and innovative ventures. That way, customers get the stability they crave, while the organization has room to grow and adapt.
Experimentation = risk
Working this way makes constant experimentation a must. After all, innovation is a hedge against becoming obsolete – but it’s also a practice of taking calculated risks. In fact, for those leaders with a high risk tolerance, this risk-taking fuels passion and effectiveness.
The careful balance of managing teams, expectations, and risk
When you’re operating cross-functionally – especially in tech – any level of risk comes with a duty to keep teams aligned. Focus on tailoring your message to specific stakeholders’ interests, goals, and concerns. And remember, some stakeholders are “value investors” who are typically risk-averse, and some are “growth investors” who crave the potential of high returns.
It’s important to keep your risk balanced, though, no matter how hungry some stakeholders may be for high-risk rewards. After all, just like in your investment portfolio, asset allocation can change. If one derails a major risk you’re taking, it can damage your long-term growth.
Compound your product growth
The larger your enterprise, the harder it can be to drive innovation. These companies typically have organizational muscle memory that’s rooted in a resistance to change. One path around it? Compound small improvements in your product development instead of introducing one giant sweeping change. Similar to compounding financial assets, once you build momentum, imagination can vastly extend what has been started.
The same theory applies to tech debt; incremental improvements can lead to significant gains over time. Whether you’re alleviating a crucial pain point or taking advantage of a new market opportunity, explain the user benefits of each improvement, including how each following improvement will create significant gains.
As always, don’t forget to subscribe to Catalyst wherever you get your podcasts. We release a new episode every Tuesday, jam-packed with expert advice and actionable insights for creating digital experiences that move millions.
