Why Tradeoffs Matter in Product Development

When you’re designing, developing, and building a product, you need to think about tradeoffs. You must be able to define what you are willing to give up to move forward.

When you’re designing, developing, and building a product, you need to think about tradeoffs. You must be able to define what you are willing to give up to move forward. I think of tradeoffs like this: you can have it this way; you can have it that way; or you cannot have it at all… writes Bob Moesta.

As innovators and entrepreneurs, we never have enough time, money, or knowledge to make a product perfect. Perfection is the trap, progress is the true measure, and tradeoffs are the way to get there. 

But like everything, knowing how to frame them to get the data and knowledge is the challenge.

It’s Not About Settling

Are tradeoffs really necessary?

To answer that, let me share a real-life scenario with you. I’m working on a dating app. 

During the interview process, I talked to an impressive woman in her early thirties — Harvard law degree, employed at a big Washington, DC law firm — who was struggling to find a partner.

As we talked, I realized what the problem was: she couldn’t make tradeoffs. She saw the dating pool as infinite, and therefore just kept swiping, looking for the perfect match. “I don’t want to settle,” she told me. But she failed to realize that nobody’s perfect; relationships and marriage are about helping each other. They require a set of acceptable compromises.

People struggle with tradeoffs when they view them as settling. Tradeoffs are not about settling; they are about making progress by determining what’s most important.

When you can’t make tradeoffs, you get stuck in decision hell, trying to find the proverbial needle in the haystack. So yes, they’re necessary.

The key is making sure you have all the data. If you do, you can actually frame the tradeoffs so you can make much better decisions. If you know how something works and have the empirical data, you can make the tradeoffs to have it perform better and more consistently at a lower cost.

> Listen to the podcast, identifying and making tradeoffs as a product developer.

Why Tradeoffs Really Matter

As an innovator and entrepreneur, tradeoffs should be one of your most important considerations when developing new products. To further illustrate why, let’s look at a real-life example from Basecamp, which builds and develops project management and team communication software.

When Basecamp first started to think about an app for the phone, they initially tried to put everything in it to replicate their web-based platform. Then they realized that it made the app way too slow on the phone. 

So they asked themselves, “What are the types of things people would do on the phone versus the computer?”

You’re not going to create a new account or a new project on your phone. But you will respond to comments and check your lists. So they stripped the app down to the point where it does only the things you might do while standing in line at the grocery store or taking the train home from work.

When the app was packed full and too slow, people downloaded it but never used it. Now usage has skyrocketed because they managed tradeoffs. They recognized that they couldn’t have everything, so they only kept what was most important. And that made all the difference to its success.

Read more about Basecamp and its application of Jobs to be Done. 

Identifying tradeoffs in product development – it’s all about finding “good enough”

One of my mentors, Dr. Genichi Taguchi, said, “Cost is more important than quality, but quality is the best way to reduce cost.” Tradeoffs are just as much about cost as functionality. 

What’s good enough? Taguchi used to talk about how Mercedes had it easy because they made their specifications so tight; everything fit perfectly. But the reality is, to make it perfect, you’ve got to build 10 parts and throw away nine, dramatically increasing costs. It’s like French cooking: if you use a lot of high-quality ingredients, it’s hard to make a bad thing.

Skilled innovators and entrepreneurs can take a product that’s not perfect and make something great out of it by making the right tradeoffs.

When they do, they can reduce costs while maintaining enough quality. In other words, they can find “good enough.” This helps to solve the prioritization puzzle when it comes to feature development. Just as software company, Hudl, did. Learn how Hudl reduced feature bloat by identifying trade offs.

The Product Development Process Matters

Let me share another story with you; this illustrates why the development process matters when it comes to identifying tradeoffs for a product in development. 

In 1988, I was working full-time at an American car manufacturer under the direction of three of my mentors: Drs. Taguchi, Deming, and Moore. It quickly became apparent that we weren’t keeping up with our Japanese competition, and neither were our American counterparts.

In Japan, industry leaders were creating new cars in half the time — three years from conception to release, compared to our six — and they were also doing this at half the cost, which was kind of amazing. If we wanted to stay competitive in the industry, we’d need to make drastic changes, and fast.

That’s when Deming, a team of executives, and myself went to Japan on a study mission. After a careful analysis, we noticed significant differences between our development process and our Japanese counterparts. Our process started with an early concept design that was readily accepted. The design would be committed to paper, where we would spell out the details — engine, transmission, body, etc.

At this early stage, we’d make only slight modifications. Then each team would break off into their individual silos and begin working on their element. Agreement and common understanding were assumed, and the early process would run relatively smoothly — changes were in the thousands.

But as we got closer and closer to launch, design changes would skyrocket — by almost 100 times. 

Our teams worked in silos that were extremely independent, so they never consulted one another in an in-depth or meaningful fashion as they built out their components. As a result, when we got close to launch and finally started to pull everything together, there would be problems; the car would not connect perfectly.

Adopting a New Approach

From a cost perspective, discovering these conflicts and differences late is disastrous. 

At the beginning of the design, changes are negligible; it’s on paper only. On the backend, however, changes run in the millions. There are custom steel tools that now must be replaced, costing in the millions each. Plus, each change impacts another element, which then must also be adjusted.

Our Japanese competitors, on the other hand, did not start with one readily accepted concept design. Instead, they had multiple prototypes and made tons of changes in the early stages when the design was still on paper — 100 times the prototypes.

Nothing was assumed. In essence, they pushed their product to fail early in the process, before they ever pulled the entire design together, dramatically reducing time and money spent.

In the end, the Japanese manufacturer got to the finish line with a lot less drama. And oh, by the way, their cars actually performed better in the marketplace too. We needed to change our approach.

Look at the Totality

This story is a perfect example of the power in managing tradeoffs well. When I compared the systems of the American design to the Japanese design, the American one was superior on a microscopic level.

Take the exhaust system, for example: each component used to build our version was higher quality, but when I compared the two exhaust systems side by side in their entirety, the Japanese version outperformed, and it did so at half the cost.

Innovators and entrepreneurs skilled at managing tradeoffs understand this complexity. As a result, they frame tradeoffs within the context of the whole system. What’s the economic impact of failure? For instance, one screw falling out is not a big deal. A hundred screws, on the other hand, now that’s a big deal.

Managing tradeoffs is just one of the many ways to ensure cross-functional alignment; ensuring everyone is on the same page is important. 

Tradeoffs are the key to great decision-making. It’s critical to being a good consumer and even more critical to becoming a skilled innovator and entrepreneur. You can’t have it all, so you must look at the totality, understand how it’s interconnected, and determine what’s good enough. 

For more advice on how to manage tradeoffs well, try Bob’s latest book, Learning to Build, on Amazon.