TEI 235: Better decision-making for product managers using the 11 Laws of Trading – with Agustin Lebron

Trading and product management decision-making are more alike than you might think.

Decision-making is part of every product manager’s toolkit. Think about what it would mean to have effective guidelines or laws for better decision-making. You could make simple decisions more quickly and decisively. You could have a more solid defense and reasoning for complicated decisions. You would also have less fatigue and stress related to making decisions.

Those are important benefits of better decision-making. To help you create guidelines, our guest has learned the art and science of decision-making in a variety of high-stress and fast environments. He started as a design engineer and then moved to Wall Street to be a trader. He has placed his insights for decision-making into the book titled, The Laws of Trading, A Trader’s Guide to Better Decision-Making for Everyone.   His laws address issues in several categories, including:

* Risk,

* Edge,

* Costs,

* Technology,

* Alignment, and

* Adaptation.

We discuss several of these.

Summary of some concepts discussed for product managers

[6:03]Risk: “Take only the risk you’re paid to take.”

Let’s say your company is describing a new mobile phone case. Your success is defined by whether the case sells well in the market. The risk you’re being paid to take is understanding the market, but you’re also being exposed to risks like foreign exchange rates. By negotiating in U.S. dollars, you remove that risk from the equation. Once you start examining what risks you’re taking to create that value, you start to look for a way to mitigate those other risks.

[8:05] Edge: “If you can’t explain it in five minutes, you don’t have a good one.”

An edge is something you both know and can do that others in the market don’t know and cannot do. Lots of companies are confused about their edge. They get seduced into thinking that only they can execute the idea or the idea can’t be duplicated. As product managers, we’re so focused on the customer that we sometimes forget about the competition. The world is a competitive place and you need to look beyond the surface level to find the true edge.

[11:55] Costs: “If your costs seem negligible relative to your edge, then you’re wrong about one of them.”

This is another expression of the idea that the world is a competitive place. One of the things I see most often is underestimating costs, whether it’s development cost or cost of customer acquisition. The biggest one, however, is opportunity cost. You always have to be looking for the next big thing. Vision provides guidance in the gaps, but people need to be empowered to make decisions outside of a specified plan.

[15:10] Technology: “If you don’t master technology and data, you’re losing to someone who does.”

The use of data and analytics to drive product development is the biggest story of the past five years and will continue to be for the next five years. Data is not some magical pixie dust to sprinkle over everything. It’s something that should be used to drive decisions. A lot of companies run around gathering whatever data they can, but then don’t create processes to put it together and make use of it. Companies have also swing from respecting a leader’s decisions to doing whatever the data says. What’s become clear is that you need data, but you also need a human brain to analyze it.

[19:00] Alignment: “Working to align everyone’s interests is time well spent.”

This is a huge element for product managers. A big part of our jobs is getting everyone on the same page. Incentives play a huge role here. Are all the teams in your organization (marketing, engineering, etc.