Product development and gambling – poker or roulette

My brief history of gambling

ME: Hi, my name is Mark, and I’m a gambler.
Group: HI, MARK!

I guess you could say gambling is in my blood. I learned what the ranking of poker hands was as a kid. My grandma and I would play 5 card draw heads up for change she kept in a stainless steel coffee canister. I’d borrow some operating capital at the beginning of the weekend, play poker on and off over the weekend, and before we left to go home, I’d pay back the money I’d started with, plus a little extra to cover the vig.

Years later, knowing a little something about poker, I found the world of online poker and learned the ins and outs of the game. I learned how to calculate my chances of improving to a winning hand, compare that to the amount of money I could win versus the cost of the bet I was facing, and make decisions that should, in the long run, pay off. By studying the game and my past performance, I could find places where my skills needed to improve and patch the holes in my game.

Slot machines, roulette, and other games of chance

Contrast that with the games my father and his mother like to play. They’re happy to sit in front of a slot machine, press a button, and watch the wheels spin while waiting for the big payout. As anyone who knows about slot machines will tell you, the best strategy is to pocket a profit if you win, and go in expecting to lose a fixed amount. It’s all luck. As is roulette. As is craps. As are most “pit” games in the casino. They wouldn’t offer the games if they didn’t know they would profit over the long run.

Roulette wheel from Zdenko Zivkovic on Flickr
Does this resemble your product development method?

What does this have to do with product development?

More than you might think. When developing a product, you want to be like the poker player, not the slot/roulette/craps player. Any new product is going to involve some risk. The key is applying your skill in order to mitigate that risk as much as possible. You want to rely on your skill and not blind luck when developing a product.

Often, our product development ideas come from our clients. They have an itch, and we are willing to scratch it, for the right price, of course. We have quoted machines for measuring the lobe positions of camshafts, for fixturing bicycle frames, and checking consumer appliance components. These were jobs we had the skills to do, and thus were willing to gamble on the results. Other jobs, like machines that were too large, too complex, or compromised some accuracy in exchange for a lower price would have been like gambling on the roulette table. If we were going to sink money into those ventures, we would have done just as well walking into the casino and putting it all on black (thank you, Wesley Snipes in “Passenger 57”).