Digital Economy represents a departure from traditional service business model to shared value creation and deliver value continuously. As we are talking about creating transformative moments of success in Digital Economy, Product Management Mindset is a differentiator factor in Value Creation, Innovation, and Delivery.
Already reflected with the success of many product companies, organizations working with the Product Mindset are resilient, nimble, and attuned to newer technologies. At Qentelli, I work as a Product Manager to help our clients imbibe Product Management approach in their engineering processes.
I am writing a three-article series on Product Management to explain various layers of Product Management.
This is my first article in the series that talks about Vision, Strategy, and Metrics for setting up a Product Management Mindset in your organization.
Often, as a Product Manager, I have been asked about the relation between Digital Innovation Strategy and Product Framework. Organizations miss the tangible part of Digital Innovation. Product Management brings in the tangible aspects of Digital Ambitions.
For a successful Product Management Program, I’ve linked the Product Framework to Digital Innovation strategy. Digital Innovation strategy linked to Product management can extract the planned value from the transformation efforts.
Digital Innovation and Product Management
From my experience, the Product Management framework of Vision, Strategy, and Metrics have a bi-directional relationship. Product Vision funnels down to the Product Strategy, and from there, Metrics and Goals are created and monitored. We, as a Product team, assess the strategy periodically to ensure operational and technical details are in place or needs revisiting.
Working with various companies, we often ensure metrics are aligned with strategy and strategy with the product vision, that’s why it is a bi-directional relationship.
Bi-directional relationship of Vision, Strategy, and Metrics
Clearly defining the vision leads to product innovation. Jeff Bezos understands this very well. One of Amazon’s leadership principle is “Invent and Simplify.” Jeff expanded on this leadership principle in a speech to the shareholders by saying, “At Amazon we invent and simplify on behalf of the customers of the future.” It is words like these that have given birth to Modern Product Thought Leadership and have allowed teams to be creative in their approach.
Amazon’s vision statement clearly states their intention, “to be Earth’s most customer centric company...” This is a continuously pursued aspiration throughout the organization on all levels. During my time at Amazon, most of Amazon’s Fulfilment Centers and corporate locations have signs throughout these facilities echoing the words of the vision statemen, not to mention it is clearly reviewed during new hire orientation of each employee. It is not uncommon for management in Amazon to hold quarterly or monthly meetings to discuss its vision and how it impacts their individual performance. This is all done to drive a culture that believes in its path.
At Qentelli, we approach Digital Transformation projects with a phased approach by establishing Product Vision, outlining the Product Governing strategy on a team and organizational level, and agreeing on Metrics to measure the strategy effectiveness in achieving the overarching goal.
So, what do you think can be some general attributes essential in the vision, strategy and metrics area of Product Management? Let’s dig deeper to understand how to establish Product Vision, Strategy and Metrics:
1. Establish a Product Management Vision (Where)
In my 5 years of Product Management experience, I have worked with product teams of different shapes and sizes. To establish the best Product Management vision, work with the balanced strategy of top-down and bottom-up approach. For any Product Manager, I will recommend getting your C-suite out of the 'Flight-Syndrome' and help them communicate the business vision to all employees with a two-way communication for more inflow of ideas. The following bullet points help in making a good Product Vision :
- A good vision should establish what is the future of product or service
- A Vision provides clarity, and a shared understanding within the organization across all levels
- All members within the product team share the vision and view it as a North Star reference. Product leadership strategize how their respective functions will contribute towards this Vision
2. Product Management Strategies (How)
When I've worked with several clients, we’ve established a shared understanding of the vision, the next step is to create the Product Management Strategy/Strategies. This piece is oriented to leverage your resources better to build an awesome product strategy – knowing what you want to achieve, and how you’ll apply those strategies to your Product Vision. These tips will help organizations and Product Managers to build specific strategy/strategies and change course if required.
- A good strategy gives guidance on how your product team will achieve its vision
- Strategies are more detailed than a Vision statement. It should outline how your organization wants to pursue its plan within an agreed period e.g. Quarterly, or Yearly
- Make sure your Product strategies consider market size, growth, profit margins, trends, competitors, expertise and economies of scale
- Assemble a product inventory by assessing the capabilities and shortcomings of the current product
- Strategies evaluate the service it provides and the historical performance of that service to create future goals
3. Establish Measurable Product Management Metrics
I often tell clients having a strategy without goals is incomplete. This is where organizations are wagering bets. Goals should be quantifiable and actionable. Meeting or not meeting goal expectations should be viewed as a learning experience to adjust or set a benchmark. Goals will help cross-functional teams to work together to get across the same finish line. We recommend our clients to create these goals before engineers are developing to minimize ambiguity across different teams.
- In addition to goals, make sure you measure Key results, Key Performance Indicators, and Performance Metrics for analysing overall effectiveness of the strategy
- Performance against goals should be analysed regularly to determine the accuracy and speed. This helps in comparing the achieved versus expected outcomes by following the Product Strategy
Deciding on the metrics can be a tricky part. Dave McClure’s start-up metrics can be a good place to start with. Building off Dave McClure’s start-up metrics, product metrics can be broken down into further details to measure the performance of a service. For example, measuring acquisition for a social media platform could be in the form of measuring the amount of unique first-time registration to the application. Therefore, if your organizational goal is to increase acquisition of new users to increase new member revenue, one key product metric can be measuring Monthly Registration. If registration is down for the quarter, there is a good chance acquisition of new customers will be down as well. Activation is all about getting a user to register or signup for a service on your social media platform. For example, a service within a social media application like a marketplace or a job search can be utilized by already acquired users; however, getting them to utilize the service would require an activation from the user for that service. One method of measuring activation like stated previously could be to measure the number of users that fully register for a service. This can be done in several ways either by filling out a form or completing their profile.
Retention is about getting the user to use the service often. If a user is activated for a marketplace service using a social media application, one product key performance indicator to track whether there is an increase or decrease in retention is user activity or engagement of that service. If a user is buying and selling in total 10 times per month, this is an indicator that the user is engaged in the service and finds value. Retention is all about perceived value for the user.
Referral is a critical metric to track. Amazon went almost 20 years without paid advertisement on a television network. Most of Amazon's marketing in the early days came from word of mouth. Organizations use Net Promoter Score to measure user or customer satisfaction. A satisfied customer will refer the product or service to someone they know and as a result lead to net new business for the organization. A high Net Promoter Score is an indicator of whether your clients will refer your business.
Revenue is often viewed as one of the most important metrics for business owners. However, revenue is a lagging indicator of success or failure. Keeping that in mind, revenue goals should still be pursued. Some key performance metrics (depending on the business model) could be average revenue per user, lifetime value per user, and customer acquisition cost.
We wanted to put all of this together to show how the vision, strategy and metrics interact. As a result, we did a simple exercise by taking LinkedIn’s Vision Statement to understand how Vision can drive the overall strategy for any organization.
Vision: LinkedIn’s Vision is "Create economic opportunity for every member of the global workforce."
Challenge: As we understand the Vision, LinkedIn wants people to create economic opportunities for professionals in the workplace through its platform. Let us hypothetically take one of the biggest challenge LinkedIn has, and that is to convince professionals to utilize their platform for job search.
Job search is a free service for job seekers (we will not address the premium version in this example) who have an account with LinkedIn. It is a paid service for recruiters offering to post jobs. The idea is more job seekers will entice recruiters to utilize LinkedIn to fill their vacant roles.
This is the Challenge: Increase activation for job search for existing users by 25% by the next quarter. The increase in job seekers on the platform will allow LinkedIn to charge a higher premium for the following quarter for its service to recruiters.
Target Condition: As a Product Manager, one must think of different ways to increase user activation for the job search service. The problem in this case might be that existing users are not registered for the job search service due to their incomplete profile.
Our goal for our team should be measurable and achievable, something like: We want to register at least 25% of users to the job search service by end of Q2. This will lead to an increase in activation and a marginal increase in revenue from recruiters.
Product Managers will look for creative ways to drive users to complete their profiles and raise awareness of job opportunities on LinkedIn. This can be done by matching and alerting users based on their complete profiles of job opportunities. This will also improve the quality of candidates and decrease the time a role is vacant.
Vision is irreplaceable
Ultimately, having a strong Vision offers an irreplaceable benefit: When technology and process fails, Vision is all that binds the human assets together to tweak the strategy and start the exercise again. Even the best technology will become obsolete without a strategic Product Vision. The billions spent on teams, hiring, and technology will not guarantee success in the Innovation age. We recommend that organizations should start with this exercise of putting Product Vision, Strategy, and Metrics together.
In our next articles, we will talk about Opportunities and Personas (users) and creating a User Journey Map as a critical nexus of Product Vision and achieving it.