Career in Tech

Product Management and Collective Action Problems

Bringing a new product to life, either as a product manager or co-founder, ultimately amounts to solving a collective action problem.

That is a problem that often occurs when a group of people is trying to accomplish something that is in their collective best interest but that none can accomplish alone.

Encyclopedia Britannica has the following to say about this type of problem:

“However, it has long been recognized that individuals often fail to work together to achieve some group goal or common good. The origin of that problem is the fact that, while each individual in any given group may share common interests with every other member, each also has conflicting interests. If taking part in a collective action is costly, then people would sooner not have to take part.”

The result is a set of decisions by individuals to participate or not. If everyone acts then the result can ultimately happen. But if instead, each individual decides not to act, the result can not happen. Managing those individual decisions on a large scale is what determines success or failure.

Apply this to creating a business around a new software product. There are two distinct groups of individuals, builders and commercializers. The former must believe there is revenue potential in order to spend the time to create it and the latter must believe the product is useful in order to spend energy distributing it.

If either stops believing in the other, their actions will reflect it and their doubt will become a self fulfilling prophesy. If all of the individuals stop acting or even just put in a mediocre effort, the result will not be possible.

Conversely a product that sells well will attract the attention of builders who want to be a part of something successful. A product that is built well will garner the attention of distributors who will focus on it, thus increasing the revenue.

Managing the collective action is the difference between a death spiral and a pinwheel. The former in which things get worse every day, the latter in which success begets more success.

There are plenty of instances where an inferior product won because the collective action was better managed. There are plenty of cases where someone had the correct vision but couldn’t make it happen because they couldn’t bring together the right people to make it happen.

Managing collective action is the chief goal of a the person at the center of the new product – the person who is responsible for making sure it succeeds. They must paint the vision for the future, gain the trust of those around them and work to ensure each success begets more success.