Operational risk vs opportunity risk
Ambiguity is real when you’re building a company.
If we knew what to do and what to work on. Everything would be easier.
How much you don’t know can have a pretty large range. From “We have no idea what to do next” to “we’re pretty sure we should go do this thing.”
As you think about what to do next, it’s easy to skip the granularity and just jump over to idea mode. “We should go ship this feature”, “Sales could sell more if we had that feature!”, “a customer wants this!”, “Our competitor did that!”
As you generate all these ideas, you’ll have to compare them against each other.
One common discrepancy that you may come across is blending the ways in which an idea might be risky and assuming they’re equally meaningful. These two ways are what I call operationally risky and opportunistically risky.
Something that’s operationally risky: You know that if you’re able to do it, the result will be incredible. You just don’t know if you can do it.
Something that’s opportunistically risky: You know that you can do it. The question is how much it might matter if you do it.
Taking an easy lens at this problem, it’s simple. You do the thing that might be kind of hard but will work instead of the thing that’s easy but may not matter. The reality is that nothing is absolutely in one of these groups.
So that thing you definitely can do, it may take 3 weeks to build and if it does matter it’s worth 100x any other investment.
The other thing will absolutely work and give you 10x returns but there’s a 50% chance you’ll be able to do it, and it will take you 6 months either way.
Now perhaps it’s less clear.
My suggestion here is that as much as possible you should still do the hard thing that you know will matter if you can do it. There are a couple reasons why.
First - if it’s hard, fewer people are going to do it. You’ll have less competition when you get there, increasing the odds of success and continued success if you get there.
Second - you have control over the variable. You can look at why you might fail, move that up as early as possible in the process, and hire/train/adjust whatever is needed to continually up your odds of operational success.
With the alternative path, you have no control over those odds of success. You will ship something. Hope it works. Then move on to the next hail mary.
So not only can you not change the odds, you cannot improve in your odds over time. The next hail mary is as much a hail mary as the last one. It’s always a dice role.
As you take on operationally more and more difficult thing, every single risk taken operationally becomes that much less risky. You’ve filled your gaps, you’ve upgraded yourself and your team. You’re now able to do more, better.
So, as you face these questions of priority, stay aware of what actual risk you’re assuming, take the operational risk where you can over the opportunity risk, then keep improving.