Sunday, February 17, 2013

Product Management: What to measure

It's not easy to stay focused when you have a sales person asking for product roadmap presentation, sales engineer asking questions about beta feature capability and support escalating product issues and copying you to get higher priority from engineering team.  These are all too common.  Unless you know what to focus on, it's difficult to stay focus on anything.

We all know that idea of measurement is to fix this problem.  Measurements (also known as Key Performance Indices, KPI), when ideally implemented, should drive behaviors of product managers to focus on the area that the company needs the most.  It is meant to provide feedback to product managers so that we can change our behavior to help boost the key stats.

Easy enough.  But what should be the measurements for product managers?  What would be the most important KPIs for PMs?

It depends on what the company needs.  There is no single KPI that works for all product managers because all companies are in different phases (either product building phase or company building phase).  Depending on where the company is, KPI should change.  Similarly, I found that it also depends on the maturity of each product managers.  Depending on where product manager's skill set, KPIs should be designed to maximize his skills to achieve the maximum benefit for the company.

I personally like the behavior measurements.  Because it is a foundation of being a good product manager.  The idea is simple.  If you want to be a great PM, measure the activities that will make a PM great.

  • # of customers that you are talking to each week
  • # of product changes that you made to address customer feedback
If you are reading this, you probably have heard the importance of talking to customers.  So the first bullet point should not be any surprise to you.  You must communicate with customers as often as you can.  If you don't have customer yet, that means you are in product building phase.  Your KPI will have to be different, but I haven't seen any two or three person startups (which are most often in product building phase) worrying about KPI and measurements.  If your co-founder is talking to you about KPI, I think you have a different problem.

It's important to realize that you don't have to be on the phone or have face-to-face meeting to be speaking to customers.  There are other channels of communications.  Customer support listens to your product issues all the time from customers.  Sales engineering team hears about competitor's name being thrown in to the mix when preparing for product bake off.  Sales shares questions that prospects had when making the pitch.  These are all valuable feedback, and as a good product manager you must be able to leverage these multiple channels when thinking about the next product change.

One thing I like about behavioral KPI is that it's immediate and helps even novice PMs get better at doing product management work.  I've seen other measurements like product revenue growth, cost of sales, product margin, speed-to-market, product adoption, etc.  But the challenges with these measurements is that most PMs do not have enough controls available to influence these outcomes on their own, hence the ownership is lacking.  In addition, it takes too long to provide the feedback to the product managers how well they are doing.

What do you measure in your organization?  What were some lessons that you've learned?

Note that measurement's purpose is to drive the behavior
of the one who's measured.
Sharing them in the open will be counter productive.

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