Mental Models That Help Product Managers Make Better Decisions
Product teams often need to make decisions that aren’t easy. Typically, the opportunity or problem at hand isn’t solid black and white, but rather a number of grays mixing together.
With no clear path forward, product teams are tasked with making decisions that can have a lasting impact on the success of their products and business. This is where mental models can help. Mental models provide insights into complex processes through the application of context-specific principles.
These simple expressions can be used to easily share, apply, explore, and even model similar situations in new contexts, allowing product teams to think through their decisions more clearly.
Here’s an example: the Pareto Principle states that roughly 80% of all outputs comes from 20% of the effort.
In the context of product management, the model suggests that instead of trying to create 100% of the customer opportunity, you may want to look for how to do 20% of the effort and solve 80% of the opportunity. Product teams make this trade off all the time, and the results often looks like feature launches where 20% of customers with more complicated use cases aren’t supported.
In this blog I have picked the top 3 for you to put into practice and cultivate on your team — and start making more effective decisions.
It feels like the hundredth time this quarter that you’ve asked your team: How can we acquire more users? You’re asking the same question and getting the same answers, over and over again. Think of the last time you asked yourself this question.
If not, try using mental models to help you flip the problem on its head. While it’s a bit counterintuitive, this approach can help you examine the problem from a new perspective.
For example, say your team is trying to figure out how to acquire more users. You ask them: “How can we acquire more users?” You’ve probably asked this question many times and received similar answers. However, by asking the opposite question — “How could we acquire fewer users and turn users away?” — you may start to identify areas of your process that are leading to these kinds of negative outcomes. This can help you avoid losing customers in the future.
Working backwards helps you ensure that you focus on the most impactful, long term work for the customer because you’re always reverse-engineering from a perfect solution for them.
The five whys
Sometimes, the problem you see is not the problem you should address. If you really want to get to the heart of a problem, ask “why” five times.
This mental model was developed by Sakichi Toyoda, founder of Toyota. He saw every problem as an opportunity for learning and improvement and encouraged his team to explore the root causes of problems by asking why something was happening without any preconceptions about the reasons behind it.
For example, if a customer complains that your product is too expensive, do not immediately jump to lowering the price or offering discounts. Instead, ask why they think it is too expensive. Ask them how they came to that conclusion and what they would consider a fair price instead. From there, you can learn more about their background and their expectations and use that information to make improvements to your product or marketing strategy rather than just adjusting pricing.
As product managers, we always want to make the best decisions. The problem is that the future is inherently unpredictable, which makes decision-making difficult.
One mental model we can use to help make better choices is to assign probabilities to each possible outcome of our decision, and then map out the weighted sums of those outcomes. This gives us a clearer picture of what to expect from our decision, and allows us to compare different options and identify which has the most valuable expected outcome.
For example, let’s say you are faced with the decision of whether or not to invest in a new project for your company. You need to look at all of the possible outcomes and determine how likely they are to occur. This includes considering the possibility that the project takes longer than expected, as well as whether or not it solves the customer’s problem. Then you need to do a probability-weighted sum of these outcomes in order to calculate their return on investment.
This is an incredibly useful mental model for making better decisions about your projects — and it’s one you should keep in mind when deciding on investments for your team!