Doing product discovery? Rely on HOPE, a coaching-led approach to avoiding sunk cost bias

There are two ways to approach product discovery, and two ways to make decisions. The first approach is to act based on how you wish the world was. The second is to act based on how the world is… both approaches have strengths and weaknesses and by combining the approaches you can lead more successful product discovery and innovation.

Pursuing a wish

Gandhi said that we had to be the change we want to see in the world. To make change you need to sustain a determination and continue to make progress, even in the face of setbacks.

Acting based on how you wish the world was can bring about positive change — you maintain a singular focus and work towards creating your idealised future. Innovators and change makers need vision. And having the determination to keep the faith increases the chance of you achieving your goal… but, when we’re too certain or focused on a solution, we sometimes forget what problem we’re trying to solve, or become too focused on our solution and miss the chance to create a better or cheaper alternative.

Pursuing what we wish were true can also lead to sunk cost bias. This is the tendency to continue investing in a project or decision based on the cumulative prior investment (time, money, resources) rather than the current and future potential benefits. Essentially, it’s the irrational commitment to a course of action because of what has already been spent, even if continuing is not the best option. It can happen when we’ve worked on something for a long time, or when we become infatuated with an idea — losing all perspective on its true value.

Reflecting on reality

To bring about change we need to believe in the alternative future we’re working towards. But we also need to be sensible and realistic. Just because we believe in something doesn’t mean it’s correct or has value. Sometimes we become so fixated on our solution that we pursue it to the detriment of ourselves, our teams and our users/customers. This might be the delivery of a pet project, trying to launch a favourite feature that you see in competitors and want to replicate or anything really that you believe in.

We need to be realistic — just because we hope something will work, doesn't mean it will or that it’s automatically the right thing to pursue… but we can use HOPE to help us make decisions and direct product discovery and innovation. HOPE can help us find a balance, forming a dialogue between the signals we can collect in the present and the future we want to create.

HOPE — a framework for realistic change

HOPE is a handy acronym to prompt questions for you and your team. When you’re suggesting a course of action, or at a decision point, it’s useful to reflect. The following questions help you balance your hope with reality.

Hypothesis — frame what you want to be true not as a wish but as a hypothesis. What would need to be true to bring about your desired future?

Opportunity — what is the current evidence for the opportunity you’re pursuing.

Problem — what is currently stopping your desired future from being a reality now.

Experiment — what is the cheapest way to validate your hypothesis, exploiting your opportunity and removing your problems?

Your hypothesis will probably change rarely. You can keep it as a north star or guiding principle — it’s the ambition you hold on to. But the opportunity and problem elements of the equation are likely to change rapidly and often as situations change.

Situational awareness combined with determined focus

When all our attention is focused on an ambition we’ve committed to, we can miss changes in the environment which affect our ability to achieve our objective. Asking yourself about the current opportunity and problem boosts your situational awareness. It also allows you to frame the cheapest experiment to exploit the opportunity, avoiding the problem, to validate your value generating hypothesis. Thinking experimentally focuses you on data and evidence, rather than what you wish were true. It makes it much more likely to avoid sunk cost bias, as it encourages regular reviews of the evidence you have.

When we have an idea, it’s easy to fall in love with it and pursue it beyond reasonable and sensible limits. This “infatuation” driven innovation can lead to costly mistakes and diversions of effort, as we try to defy reality and make something impossible work. We need to be wary of falling into this trap. True innovation will often rely on determination and will sometimes need you to take risks that seem unreasonable. But, by asking the HOPE questions, you can be more certain that you’re balancing reality and ambition.