Demand Curve - The Growth Newsletter #173

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The Growth Newsletter #173

Frameworks to decide how to move the needle: From RICE to DRICE

Today, we talk about one of the most important startup topics: choosing where to focus your precious time, attention, and resources.

Two companies with the same product could either wither and die or become the next unicorn pure based on their ability to generate creative ideas and prioritize them.

Let's dive into RICE and DRICE.

– Neal

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Decide where to focus to move the needle:
From RICE to DRICE

Insight from Darius Contractor and Alexey Komissarouk in Lenny’s Newsletter.

What you don’t do is as important as what you do.

1 person businesses up to $1 trillion businesses have to decide what to focus on.

The smaller you are, the more important it is to spend precious resources on what matters. The larger you are, the more important it is to prevent a horde of people from doing a lot of the wrong things.

Many startups use the RICE prioritization framework, in which you rank each initiative on four factors (Reach, Impact, Confidence, and Effort) and combine them into a score. Then, you prioritize the ones with the highest score.

Let's dive into the parts of RICE:

#1. Reach: How many customers would see the change (product), or how many new potential customers would it reach (marketing)?

How to rank it:

• The exact # of people you expect (50, 1k, 50k). You’d need to assume “per year” or “per month” for all your answers.
• Or something like this:
  • Most/All = 10
  • About half = 5
  • A fraction = 2

#2. Impact: How much would it affect the business if it worked?

For example, how much more revenue this year?

How to rank it:

• A 1-3 or a 1-5 scale
• Or something like this:
  • S (<5%) = 3
  • M (5-10%) = 5
  • L (10-20%) = 10
  • XL (>20%) = 20

#3. Confidence: How likely is it to work?

How to rank it:

• A percentage confidence like 10%, 25%, 50%, and 80%

#4. Effort: How much time, money, or energy it takes. This is the only “negative” factor. You want this to be as low as possible.

How to rank it:

• A 1-5 scale
• The number of hours, days, or number of person-weeks or person-months
• Or something like this:
  • Trivial (XS) = 1
  • Few Days (S) = 2
  • 1-2 weeks (M) = 5
  • 1 month+ (L) = 20
  • Quarter+ (XL) = 60

Note: Everyone does the scoring and calculation differently depending on how they want to weigh the different things. Some do Low, Medium, and High on each. Some do more complicated ones. The “Or something like this” values above are from this template made by Alexey Komissarouk, which I recommend.

An example

For example, if you want to decide between re-doing your drip email campaign for new subscribers to promote your product and adding a blurb to your weekly newsletter, everyone would have various opinions about which is better.

But let’s RICE it (using the template above):

Based on this scoring, even though the drip email rewrite would have a greater impact at a higher confidence level, it’s still worth doing the newsletter blurb first because it requires minimal effort and reaches more people.

Now, the team can objectively agree to prioritize that.

This becomes even more important when there are 100+ different ideas rather than just two. It makes it far easier and more objective to choose.

As important, however,  is that everyone on the team can throw ideas to the list, and you can go through and RICE each one and choose the winners. Everyone can feel their ideas are heard, and they can understand why they aren’t chosen.

It becomes objective rather than subjective or personal.

And if people feel comfortable submitting ideas, they’re more likely to do so, especially when the ideas are a bit crazy. You’ll not only be better at prioritizing ideas, but you’ll also have a team that’s better at generating interesting ideas.

And interesting ideas are the ones that often move the needle in a big way.

Get the whole team involved. There is no bad idea. Just put it in the table and RICE it.

Again, I recommend this template.

If you want to go even deeper

RICE is great, but the 30 seconds of evaluation are often guesswork.

So, for larger, more sophisticated companies that have already picked all the low-hanging fruit, you should do an even deeper analysis. This is what Darius and Alexey call the DRICE framework—a Detailed RICE.

Here are the components:

• Hypothesis: Briefly explain the idea with justifications for its effectiveness.
• Impact estimate: A bottom-up financial model estimating the idea's impact. For example, Darius and Alexey’s article provides a more detailed impact estimate.
• Cost estimate: Roughly break down the idea into smaller tasks and estimate the number of hours/days/weeks expected from the team for each (with a buffer) plus additional costs like production or legal costs.

The same components as RICE, just more detailed. You might discover that the impact or cost is significantly different than you first anticipated.

Check out Darius and Alexey’s article for more detail :)

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Neal O'Grady

Justin Setzer