THE MALLORCA THEORY
A simple experiment to prove you are doing the right thing at the right time.
A few years ago most of our product owners were sitting at a beautiful, large concrete table in the yard of a finca in Mallorca. We were discussing the current state of the company and the product we were working on. Everyone was pretty happy with the metrics they saw. The trend went upwards. More revenue, more customers, more employees and a positive outlook. Every participant was happy and proud of themselves, until one weird idea appeared that changed everything.
If everyone had left the company after launching our product to hang out at the beach in Mallorca, all the results would look pretty much the same.
Today we call this idea “The Mallorca Theory”
We were shocked. We had no way to prove or disprove the theory. No one had ever made sure the things we did to improve our product had an immediate effect on our bottomline or a measurable effect on our customers happiness.
Books like “The Lean Startup” and “Lean Analytics” that surfaced in the last couple of years had showed ways to build products with continuous, measurable improvement as the primary driver for innovation. The development of our product had been different. We locked ourselves in the office for two years and just built what we thought people would like. We were very lucky they did.
All the work we had done since our launch would have had no value at all. This was the worst case scenario for a company that strives to be number driven and focused on customer value. When we asked ourselves how to prove the theory wrong, we realized that we would not be able to do just that. Well, we once raised our prices, but that might have lead to less signups afterwards. Although we did not see a drop in the signup rate we had no way to prove that — if we had not raised the prices — signup numbers would not have gone up incidentally.
When evaluating your business decisions there are two types of data you can look at:
- Vanity metrics are metrics that can not be acted against. These metrics do not help you make decisions and they are no indicator of any single successful actions in the past.
- Actionable metrics are metrics that have an immediate effect on how you run your product or company, a change in actionable metrics shows a clear path to follow not just in the future, but right now.
If we had used actionable metrics between launch of our star product and the invention of the Mallorca Theory the impact of single actions would have been clear. We would have been able to quantify the impact of all our moves and to prove that we spent our time improving our product. Our decisions would have been batter in the first place and we would have lost less time on the way (we still don’t know for sure if those four years were completely wasted).
- Find out what you are doing right now. What project, story or task are you working on?
Start with the task. What impact will finishing this task have?
Let’s pretend the task is to prepare a meeting with John, Phil and Mike and Steve. All of them need to participate. The meeting is in two days, so you need 100% participation in 48 hours. Measuring participation in 48 hours is a vanity metric. It’s not the worst vanity metric we could get. At least it shows us if we were successful or not.
But we want a leading indicator. We need to take action before it’s too late. Let’s say we need 50% participation in 24 hours, 75% participation in 36 hours and because we know that this might not scale well 100% participation in 44 hours. This gives us time to act early. Did not reach one of your measuring points in time? Call the missing people and ask them to accept the invitation.