My conference call on PM Metrics with Tom Grant went quite well yesterday. It was a round table discussion with good points made by several participants.
While we did talk about a number of topics, the metrics discussion dominated the first 1/2 of the call.
One of the questions — What metrics should be used to measure the effectiveness of Product Managers? — got me thinking a bit.
My answer on the call was that first the focus should be on metrics for the Product Management organization, and then a breakdown from there on metrics for individuals based on objectives and tasks that support the goals of the organization.
To me that seems like a logical approach, because all other organizations in a company, includes sales, marketing, technical support etc. have metrics defined and measured that way.
So what’s the problem?
So why is it so hard to come up with metrics for the Product Management organization? Well, it goes to the heart of the major issue with hi-tech Product Management today.
And that is that most companies don’t look at Product Management as a holistic function within the company, but rather as a set of individuals or small teams working on a variety of product related tasks.
Look around and see how the focus of Product Management is different in different companies.
Look at how widely the reporting and organizational structures are for Product Management. It is part of Marketing in some companies, part of Engineering in others, a standalone department in others.
Look at the ongoing debates related to when Product Management roles should be defined and introduced in a company.
If you’ve worked in or have been exposed to Product Management in different companies, compare and contrast the tool sets (or lack of them) used by Product Management organizations versus the tools used by other departments to do their jobs.
And if people don’t look at Product Management and it’s objectives in any holistic and standard way, how can they set about defining and measuring key metrics for the Product Management organization?
Metrics should focus on measuring intended outcomes
For Sales organizations, the key metrics (product sales/bookings etc.) are directly tied to the intended outcome of the function: generating sales and revenue. There are numerous secondary metrics that are tracked such as sales breakdown by product/product family, by deal size, by geography, by new vs. existing customer etc.
And don’t forget all the sales funnel metrics that are used to track progress and success, such as average time to close, win/loss ratio etc. The important metrics are clearly tied to the intended outcomes of the activity of the sales organization.
For marketers it’s a bit more complicated because there are different roles in marketing and different intended outcomes. The two primary outcomes that can be applied to marketing are related to lead generation and market/industry awareness.
And from there numerous metrics can be identified related to number of leads, cost per lead, lead quality, lead to prospect conversion ratio etc.
Metrics for awareness are numerous, but basic metrics focus on “mentions” by press, analysts and other influencers in publications, reports, blogs, and via social media such as Facebook and Twitter.
And what of Product Management?
What is the primary objective of Product Management? In a previous article on this blog entitled Product Management Metrics (part 1), I defined the mandate of Product Management as:
To optimize the business at a product, product line or product portfolio level over the product lifecycle.
Don Vendetti of Product Arts, wrote a series of guest posts, entitled Measuring Product Management. In part 3 of his series, he provided his definition of the Product Management mandate:
To deliver measurable business results through product solutions that meet both market needs and company goals.
I like Don’s definition. Both definitions share the same spirit about business focus, but Don’s phrasing is clearer and more explicit than mine. But I do think that mention of the product lifecycle is needed because that has a huge impact on the objectives and the required focus of Product Management.
Don’s use of the words “measurable business results” is crucial to this discussion.
So what are those business results? Well it depends on the business and the company goals.
Those goals depend on the many things. Some companies care about revenue. Others care about market share. Others care about profitability. Others only care about getting acquired. And those goals can change with time.
Some choose to be technology focused, while others are sales, marketing or market focused. Some companies have a single product, while others have portfolios of products.
Depending on the company’s goals, size and level of maturity, the market conditions, it’s financial status and it’s overall strategy, Product Management’s objectives will change and so the metrics to measure Product Management will also change.
I’ll stop here, but I’ll pick up this discussion in an upcoming, and long overdue post that will be entitled Product Management Metrics (part 3).
Make sure you read Part 1 and Part 2.