The key metric for businesses
How a metric can change the way your company thinks
You all have heard at some point in your life leaders say:
This year I want to focus on increasing revenue by X%
But, what does it mean to increase revenue by X%? How are you going to achieve that? Where are you going to focus all your efforts?
This used to be a business decision driven by managing impact, which means it is not specific enough for your team to know what or how to achieve it. These decisions often don’t match your product or customer's reality.
Who also doesn’t listen to top managers say:
We are going to develop this new and awesome functionality I just came up with
If you have encountered this or a similar situation on your company, maybe it’s time to raise your voice and start changing things around.
Like Joshua Seiden wrote in his book “Outcomes over Output”
“How can you figure out what features are important if you aren’t sure which features will deliver value?”
As a product manager, your task should be to move your team and create a specific customer behavior that drives business results. That will allow you to find the right solution and will keep you focused on delivering value. Think about goals that are observable and measurable.
The way you achieve the goal isn’t by finishing the feature but by delivering incremental value to the user.
The idea is very simple and easy to apply and should work iteratively as many times as you and your team need to achieve your goal:
- Know and understand your user and customer behavior.
- Investigate what drives them and how it can help to bring business results.
- Build an MVP or feature to validate your investigation.
- Measure the outcomes.
To help you think about how to measure the progress you can ask yourself:
What new behaviors did your work create that are creating value for the business?
You might be thinking, ok but how this new process would match with my current roadmap?
The answer is it won’t. You will need to change the way you think about roadmaps. In the design world, we use Customer Journey maps to detect pains and gains of the product, in case you have a service we use Blueprint.
With that journey, you and your team can visualize what users do with your product/service and how they behave with it. Analyzing it you can start thinking about which behaviors you want to encourage, which ones you need to eliminate and which ones might be missing.
Once you have identified the outcomes you want, build your roadmap around the hypothesis that links questions with potential answers.
Finally, you need to understand that creating customer behavior outcomes will have a positive impact on your business.
Let’s see an example, imagine that you are the Product Manager of a delivery app and the business wants to increase revenue. As I mentioned at the beginning, this will be a result of improving one or several features on the app but can’t be what drives it. Now, if we apply our new approach and focus on understanding the customer behavior through our journey map, we might see that in the checkout, users are struggling to finish, what it’s costing a checkout leak in the process. Now we have found an outcome the team can work on. Once we fix that constraint, it will help the business improve revenue, along with other outcomes founded in the journey.
To finish, I just want to clarify that this change of mentality it’s not easy. It needs to be done from top to bottom if you want to succeed. I would recommend two books (of thousands you can find) that will help you switch your approach to the product.
- Outcomes over outputs — By Joshua Seiden
- Good strategy/Bad Strategy — Richard Rumelt
Did you like it? Is there anything I missed that you want to tell me? Let's chat on Linkedin :) . See you soon!!!
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