Who would have ever guessed that a big chunk of the art of product management would revolve around your ability to make good guesses? We like to call it estimating; however, at the end of the day it’s really guessing. The cruel fact of life is that he/she who does the best (most accurate) job of guessing wins the raise, promotion, undying gratitude of the big boss, etc.
So just how does one go about learning this black art of estimating? Well back when I was first starting out as a Product Manger I was working with a coworker named Dave. I can clearly remember working until the wee hours of the night trying to pull together the product business plans for the next year. Dave was doing the same thing, but he seemed to be going home on time each evening. I on the other hand was staying and building elaborate Excel models in an attempt to estimate budget, staffing, and time required to complete these business plans.
Dave and I both reported to the same manager who had been around the block countless times. When we turned in our product plans my boss took a look through Dave’s, grunted, and put them down on his desk. Next he looked through mine, didn’t say anything for the longest time, and then finally looked at me and said:
…your estimates are all way too low. Talk about being crushed! On our way back to our desks, I turned to Dave and asked him how he did it. I mean I had put in the time, built the Excel models, and done everything with engineering precision. Yet, somehow I had missed the mark. What was his secret?
Dave then told me something that I have used to this very day. He told me that he really wasn’t very good at estimating anything. However, he had taken the time to study WHY his estimates were wrong. It turns out that his estimates were consistently about 1/2 of what they should have been. How did he solve this problem? Simply by doubling every estimate that he created. Poof – that allowed him to be on the mark every time! I took Dave’s advice, doubled my estimates and took them back to my boss. This time around he grunted and accepted my business plans.
So what does this mean to you – should you just start doubling your estimate? NO! Instead, what you need to do is to pick one or more of your estimates and collect metrics on how that project actually ended up costing. What you’ll find is that you are probably off by the same amount each time (you will always be off!). This is the magic estimate number for you. Some of us estimate high, some low. but we all seem to do it constantly. My friend Dave has stayed with that firm and is now an Executive Director in the Marketing department. I’ve moved on; however, I still use his rule to create accurate estimates.
Does this approach cause chills to run up your spine? Would you be able to create an estimate without a complex Excel spreadsheet to back it up? Speak up and let me know what you think the best way for Product Managers to create estimates is.