Alberto Savoia is the former director of innovation at Google and the author of The Right It. His father moved to the US after his parent's divorce and always wanted to be an entrepreneur. Alberto kept seeing his father fail with one idea after another. Because he had seen his father fail so many times, he had a bone to pick with failure.
Alberto says that 80% of engineers and product managers in most companies are working on products that will fail when they launch. In this exclusive interview, he unpacks why most ideas and fail and how to make sure yours don't.
Why Most Ideas Fail
Most failures happen not because people don't work hard, not because they're not passionate, not because they don't execute well, but because they're building the wrong product. As I say in the book, make sure you're building the right it before you build it. A lot of failures cannot be attributed to incompetence or lack of desire. You just, people pick the wrong idea.- Alberto Savoia, Unmistakable Creative
If you have the best idea or product in the world, but if nobody wants it, your idea will fail.
A few years ago, my roommate Matt and I were playing video games. He came up with what both of us thought was a brilliant idea that would make us a lot of money: host a writer's retreat to help people write their books.
Because I wrote two books with a publisher, I was qualified to help people solve this problem But we didn't validate our idea with research, we picked the wrong idea, and our writer's retreat was a failure.
The Anatomy of Failure
What is a Failure?
A failure is when your expected results are less than the, are sorry when your actual results are less than the expected results- Alberto Savoia
You need to identify your criteria for success to determine if your idea is a failure. We were expecting 10 people to sign up for our writer's retreat, but only one did. Our actual results were less than the ones we expected. Therefore, our idea was a failure.
Three reasons ideas fail
Alberto says there are three main reasons that ideas fail.
- Failure to Launch Failure to launch occurs when a product doesn't have the visibility to reach an audience. Distribution is a foundational Element of Growth , and lacking it often leads to failure to launch.
- Failure due to operations: When something fails due to operations, the product doesn't work. When a car is a lemon, the food at a restaurant sucks, or the app doesn't work, it fails due to operations.
- Failure Due to Premise: When something fails due to premise, people aren't interested in your product.
To remember this concept, all you have to keep in mind is the acronym: FLOP.
Good Failure Vs. Bad Failures
One of the things that I tell people is that failure is like cholesterol. There is good failure and bad failure. A good failure is, Hey, I have an idea. Let's do an experiment. Let's spend, 20 bucks and a couple of hours or a couple of days to see if anybody's interested in this idea. And if it doesn't work this good failure, you fail fast. As I like to say, you fail Ferrari fast and Fiat cheap.
Our idea for a writer's retreat was a bad failure for several reasons.
- First, we paid a copywriter $1000 to write a sales page before knowing if anybody was interested in the idea.
- Second, we spent a month sending emails and talking to prospective customers.
- Third, we spent money on flights and hotel rooms to meet one client (who lived 45 mins away)
In the end, we broke even, but it was still a bad failure.
What would have made this a good failure?
- First, we could have created a landing page and captured email addresses to see if anyone was interested.
- Second, we would have realized that very few of our potential customers wanted to attend a writer's retreat or write a book in a couple of days.
It would have been good to quote Alberto if we had failed "Ferrari Fast and Fiat Cheap."
Failophobia: An Irrational of Fear of Failure
Failophobia is an irrational fear of failure. So it's such a fear that it keeps you from doing from taking very reasonable risks. And the way to cure fail of phobia is to expose yourself to small failures.
Failure sucks, and nobody ever sets out to fail. But when people fail, they let past results determine the risks they are willing to take in the future and develop an irrational fear of failure.
But taking risks is an inevitable part of getting something you want in every area of your life. Have you ever gotten anything you wanted in life without taking a risk?
If something is worth doing, there's always a possibility that you'll fail. Before you risk failure, ask yourself, what's the worst that could happen?
Most of the time, when you fail, you're probably not going to die, go to jail or go bankrupt. If any of those are potential consequences of your risks, then you're probably making a reckless decision.
Most of the time, the worst-case scenario is that people think your idea sucks. By taking micro-risks or making what Peter Sims calls little bets, you can increase your risk tolerance and overcome an irrational fear of failure.
Three Criteria that Determine Whether Your Idea Will Fail or Succeed
Alberto Savoia says three things that must work out for a product or an idea to succeed.
- Desirability: Do people want your product
- Feasibility: Can you build and deliver your product
- Viability: Can you make a business out of it?
None of these are mutually exclusive.
- If you can build or deliver a product that nobody wants, you'll fail.
- If people want a product and you can build it, but there's no way to make money, your idea will fail.
- If something is viable but not feasible or desirable, you'll fail.
For your ideas to succeed, they need to be desirable, feasible, and viable.
Opinions vs. Data
"I tell people first do not depend on opinions, seek data," says Alberto Savoia. When we depend on opinions instead of data, confirmation bias impacts our decisions, and we seek evidence for what we already believe.
Matt and I believed that my credibility from writing books with a publisher was enough to make our idea successful. And our beliefs came back to bite us in the ass. We didn't just ignore data; we never gathered any.
Two Types of Data
Alberto Savoia says there are two types of data we can collect when we're trying to validate the viability of our ideas.
The first one is OPD. It stands for other people's data is data collected by other people for other purposes for the project may be similar, but these are other people, other purposes, other times with other criteria.
- These might include reports from market research companies or statistics in articles.
- The problem with other people's data is that that context isn't the same as yours.
Just because a macro trend is true, it doesn't mean that trend will be valid for your idea or product.
The second one is YODA: which stands for your data. It has to be specific to your project. And ideally, you have somebody to keep you honest. If it's your idea, you're going to show some confirmation bias in looking at the data.
- Your data might include surveys you send or interviews you conduct with prospective customers.
- Unlike other people's data, you don't base your assumptions on macro trends but focus on specific insight about YOUR customers.
Your data is the key to validating the desirability, viability, and feasibility of your ideas.
Key Criteria for Reliable Data
If the data you use to make decisions doesn't meet these criteria, you will fail to achieve market success.
When data isn't fresh, you're not making an accurate decision about best serving your market. It's one of the reasons we need to gather fresh survey data, and outdated data could lead to the wrong choices.
2. Strong Relevance
If the data you gather is not relevant to the market you're trying to reach; it's useless. For example, collecting data about an industry is less relevant than data about your customers.
3. Known Provenance
You want to make sure this is data you collect about YOUR prospective customers. It would be pointless to get survey data from about someone else's customers.
4. Statistical Significance
When something has statistical significance, a sample size is large enough to develop an accurate hypothesis. One of the biggest causes of failure is that people mistake anecdotal evidence for statistical significance, and as a result, they become susceptible to bullshit.
How to Make Sure Your Ideas Don’t Fail
There are two simple steps anyone can take to reduce the odds that their idea or product will fail.
1. Develop Your XYZ Hypothesis
Once you collect data, you'll want to develop what Alberto calls an XYZ hypothesis.
Using this formula, at least X percent of Y will do Z. Y is your target market and Z is some action with skin in the game, something that they will do. This forces you to take a fuzzy idea and put it into a very clear format.
For example, if you are building an online course, your XYZ hypothesis would be something like this:
5%(X) of people who subscribe to our email list (Y) will purchase a course on personal knowledge management (Z).
Developing your XYZ hypothesis will also help you define your criteria for success.
Test Lots of Ideas
Fall in love with the problem, flirt with the ideas. In other words, test many ideas and find the ones that actually give you good feedback. -Alberto Savoia
Most ideas fail due to a lack of desirability, feasibility, and viability. To make sure yours don't
- Collect your own data
- Develop an XYZ hypothesis for each idea
- Test lots of ideas
If you're going to fail, make sure you do Ferrari fast and fiat cheap.