We live in the age of quantifiable measurability. Data abounds, analysis is cheap, and numbers are harder to dispute than hunches and feelings. Figuring out which data points matter is the hard part. When you can measure everything, narrowing things down to a few metrics that matter becomes the real challenge. Data-driven organizations use Key Performance Indicators to track their progress and assess how well they’re doing. These KPIs instill tracking and obsessing over statistics while simultaneously driving strategic tweaks and shifts to improve upon them continually. Therefore, your product outcomes need to impact company KPIs (otherwise you’re doing it wrong).
Most companies establish these KPIs at the highest reaches of the organization, and each team must identify how their actions can positively influence them. The sales and marketing organizations adjust their target markets, messaging, and outreach accordingly. Operations identify opportunities to make things faster or more efficient. If these groups aren’t in sync with the master plan, then your KPI’s destiny is to miss targets and underperform.
Your Product Outcomes Need to Impact Company KPIs
However, there’s no team quite as integral to turning KPIs into reality as the product team. What gets prioritized versus what’s left on the shelf can have a significant impact on growth, revenue, usage, churn, and all the other KPIs executives value.
While the product team and its roadmap should be in lockstep with corporate priorities, all too often, there’s a major disconnect between the day-to-day business of product management and the KPIs executives prize. Why is this happening… and how can we fix it?
Your Product is Out of Sync from Company KPIs When…
You’re going through the motions
Backlogs must be refined. According to our 2020 product management survey, 39% of you are doing it at least once per week. Another 32% doing it monthly. When you’re doing something so frequently, it gets repetitive. After you repeat the same activity, creativity and focus give way to laziness and routine.
When KPIs are newly disseminated and fresh, it’s easy and exciting to keep them top of mind as we’re deciding what’s worthy of a coveted slot on the roadmap. At this point, we know what the company cares about. Therefore, we’re going to select the features, enhancements, and upgrades most likely to move that needle.
But after the initial flurry of action, the low-hanging fruit has been picked. Now we’re sifting through the stockpile of ideas and requests hoping something sparks an incremental uptick in a KPI. We’re no longer looking for home runs and are instead settling for singles.
During this phase, it’s easy to start prioritizing some items that—while undoubtedly worthy in their own right—aren’t really going to impact KPIs at all. They might be features you’ve personally been longing to include, or maybe they’re neglected requests from customers or the sales team that you’d love to ship to stop their complaining.
But if your company is still using those KPIs to gauge progress and your roadmap isn’t improving them, you’re doing a disservice to the organization. Those KPIs are the only measure of success that counts.
You’re not staying current
While corporate KPIs shouldn’t change too often, they do usually evolve. When they get adjusted, it’s critical not just to apply them going forward but revisit what you’ve already prioritized on your roadmap.
What once made sense for your roadmap when the company cared most about growth may no longer make sense if the newly prioritized KPIs concentrate on reducing churn or increasing ARPU. Whenever there’s a course correction at the top, it must flow through the rest of the organization.
Reevaluating everything with a new lens informed by the latest and greatest KPIs is a must to maintain stakeholder alignment and deliver a product that matches the current corporate strategy.
Your Product is in Sync with Company KPIs When…
You found your North Star
One way to ensure your roadmap is always pointing in the right direction is by using a North Star Metric to navigate. It identifies the most critical metric, and then every decision can be made by determining what will positively influence it most.
For a North Star Metric to work, the product team must translate the business goals the executive team cherishes into specific customer value that drive the desired behaviors. You can accomplish this by distilling things down to a single particular area (or very small number of areas) the product can influence.
Of course, there’s an inherent danger in settling on a single metric to guide your entire strategy. If this indicator isn’t the magic lever that catapults the company to success, then you’ve devoted a whole lot of energy to moving the wrong needle. You should continually reevaluated and perhaps hedge with some secondary objectives.
Just as important as identifying what will improve the North Star Metric is figuring out what won’t impact it at all. While those items might someday make it into the product, they must be left in the parking lot for now. Instead, divert your attention to the key features and functionality impacting the North Star Metric.
This focus might feel uncomfortable since you’re leaving a lot of good ideas out of the roadmap for now. But if the North Star Metric isn’t improved, those things won’t ever get a chance to see the light of day because the product or company will be history. If it’s not relevant to the North Star, it’s not relevant, period.
You’re OK with OKRs
Sometimes a lone metric can’t do the corporate strategy justice. Particularly for more mature products, the company probably cares about multiple things. Here product teams can take an OKR approach to match up KPIs with their planning.
In this scenario, it’s defining objectives (positively influencing corporate KPIs), identifying roadmap themes to achieve those objectives, then measuring the key results to prove they’re panning out as expected.
When creating OKRs, you can apply a level of abstraction from the actual KPIs. For example, let’s say the KPI is increasing ARPU by 10%.
Most likely, you can do multiple things with the product to increase ARPU. Presumably, each of those will generate its own incremental key result. Continuing with this example, that might mean themes like:
- Simplifying payment (i.e., supporting multiple payment methods, storing payment info)
- Enhancing the shopping experience (i.e., adding a shopping cart, supporting customer reviews)
- Promotions (i.e., highlighting featured products, building support for promo codes)
None of those themes on their own will necessarily increase ARPU 10%, but they would each contribute to the cause. A roadmap based on metric-driven feature decisions keeps the KPIs at the center of it all.
You’re saying no
As we mentioned before, a North Star Metric or similar focus on KPIs gives product managers the freedom to say no more often and to more people. You basically have a built-in excuse to shoot down or back-burner any roadmap candidates not aligned with the KPIs.
This is an incredibly freeing and empowering feeling. It removes emotions and “judgment calls” from the prioritization equation. Instead, it ensures the whole company remains aligned with the overarching goals coming down from on high.
It might require a little more when explaining to customers why they can’t get what they want any time soon. But internally, it can end hours of debate and consternation over what’s more important.
If we knew with certainty that every decision that should influence a KPI would do so, product management would be a lot easier. So much of KPI-driven prioritization is based on promoting the enhancements and changes we think will be most beneficial.
There are very few roadmap items that will 100% guarantee a positive outcome. Unless we’re tied directly to a binding customer contract, this is more about investing in areas most likely to pan out. But the underlying philosophy of concentrating on outcomes versus features is a lesson everyone should learn from.
Breaking the mold and tying your roadmap to KPIs is much easier when you adopt a feature-less roadmap mindset.