Product Discovery In Regulated Environments
Readers of this blog know the importance we place on vetting and refining product ideas through experimentation with real customers. This is called product discovery and every company has its unique circumstances and challenges with how to do it.
We’ve already written about the fact that discovery applies to established companies, not just startups. In this post, I want to explore the special case of running discovery at companies in highly regulated industries (and more broadly, companies with very strong internal governance policies) like financial services and healthcare. These industries have strong consumer and patient protection laws. The laws impact the products that can be put into the market, but they might also affect the discovery process itself. As a result, companies in these industries often have complex approval processes just to run a single experiment.
Unfortunately, too many product managers and their constituent teams simply accept this state of affairs and decide that discovery isn’t worth the effort. The lawyers are in charge.
To be fair, the lawyers are responsible for protecting the company from certain types of business risk like litigation, regulatory fines, and brand reputation. They are doing what they understand is best for the company given their charter, and it’s a vital job. What product managers and teams must realize though is that they are protecting the company from another kind of risk, namely creating products that fail to deliver value to their customers and in the market. Discovery is the by far the best tool they have to mitigate this risk.
So what should you do if you find yourself in this situation?
First, you should realize that simply saying “the lawyers said ‘no’” is never an adequate excuse for foregoing discovery. You must understand the details of why your stakeholders have their positions. This means reading and understanding the relevant regulations yourself so that you can develop an approach that works within the constraints. I’ve noticed that many PM’s find regulatory impediments are more perceived than real once they’ve dived in and understood the situation. Some regulations are prescriptive, but some are open to different interpretations that preserve the spirit of their protections.
You should also remember that not all discovery techniques carry the same level of risk. A product team for a consumer bank may not be able to run a landing page test (where users believe they are signing up for something only to find out later that it doesn’t yet exist), but this doesn’t mean the team can’t run qualitative user tests with a handful of customers or prospects. Once you understand the regulations and the real constraints they provide, there are usually tools or variations that can work.
In dealing with your lawyers, demonstrate to them that you understand the regulatory situation and propose techniques that work within those constraints. Many of the tools of discovery can be run on an “opt-in” basis where customers willingly agree to use a live-data prototype or an in-person interview and user test with a user prototype. While this is not as predictive as a fully-blind A/B test, these techniques will still reveal invaluable insights about your solution. More importantly, they are rarely a problem for the lawyers.
If you’ve done all these things, but your legal department still insists on approving every single decision, you may be able to improve efficiency by agreeing to an informal playbook of how the product team will operate in discovery. The point of this is not to insert more process, but to make the existing process more efficient. Rather than treat each decision the same, the playbook describes different discovery circumstances and corresponding levels of required approval. When done well, many discovery tests require little to no review, while the truly risky ones would get the bulk of the attention.
As a general rule, I always recommend maintaining an ongoing relationship with all your stakeholders; that is to say, with anyone who may veto your product decisions. Find reasons to meet with them regularly, not just when you need something. Not only does it provide a foundation for quicker resolution of approvals, it gives you an opportunity to educate them on the importance of discovery as well as how it’s done. At the end of the day, they are interested in creating a successful company, just like you. If they understand what you’re trying to do with discovery, they can be part of the solution.