If you want stuff done, start measuring it.
This is the advice often quoted in business books. The theory goes that if you want product managers to do something, start measuring it and they’ll start delivering.
And most product managers have an annual appraisal. They are reviewed against a set of objectives agreed the previous year. Tools such as 360 feedback* and competency frameworks are used to get a sense of how they are performing.
But because an appraisal only happens once a year, you often find the business has changed so much that the original objectives just don’t make sense! So this blog focuses on things that can be tracked on a monthly or quarterly basis.
But what should you measure for a role that has such broad responsibilities?
One approach is to select metrics that focus on outcomes. Revenue targets, profitability and customer satisfaction all come up in our annual survey of product managers. The problem is that they’re all lagging indicators. They measure the results of actions that the product manager (or their predecessor) took months or years earlier. We learn too late when things are going wrong. That can mean an endless cycle of fixing and fire-fighting that takes time away from good planning and strategy implementation.
One way to avoid this is to work out which product management activities will help the business hit its objectives in the future and to start measuring these leading activities.
What you choose to measure depends on the nature of the product management role. Is it primarily a strategic role – scanning the market and guiding the direction of the product? Or is it a more operational role – dealing with day-to-day issues and handling queries? Most roles will be a combination of the two.
A typical leading metric for product managers with a strategic role is to make sure they do monthly reviews of the product roadmap. This keeps their focus on future planning and responding to market changes. Another good one in B2B is that they have at least one meeting a month with a key customer. This ensures they get a regular flow of feedback and insights. Finally, getting product managers to present at conferences or internal sessions once a quarter also makes sure they are ‘on top of their game’.
For the product manager with a more operational role, leading metrics will typically be based on improving efficiency, effectiveness, quality or speed. Metrics might include making sure they spend time each quarter training the support and sales teams to help them stay ‘on message’ when talking to customers. Measuring bug levels once a month can track software quality which has a knock-on effect on customer satisfaction. Checking each quarter on the number of customers actively engaged in testing, pilots and trials make sure there is sufficient customer involvement in the development process.
Another useful leading metric in B2B is the proportion of customers taking the standard proposition rather than a customized solution. Customized solutions tend to be more costly to support and therefore less profitable. And also, if customers are choosing the standard proposition it shows the product manager has a good grasp of what the market wants.
There is no cast-iron guarantee that focusing on leading metrics will result in success but if you pick the right ones, they are more likely to drive successful outcomes more quickly.
One question that comes up in any discussion on metrics is “How many should we have?” On our training courses, we’ve had delegates who have none (“My boss knows if I’m doing a good job”) to more than 30 (“We’re a multi-national business with complex processes”).
In our experience, it’s best to have 2-5 Key Metrics against which performance is measured. If you have more than this product managers tend to lose focus on what’s important. If necessary, roll-up others into these key metrics. And don’t be afraid to change them. If a product manager is doing well in one area, swap in a metric for another area that is underperforming. You can still track the previous one through discussion and anecdotal feedback.
To return to our opening question, how do you measure a product manager?
It depends on their role and your context. You need to understand the goals for your business to work out what product managers have to do in order to deliver. But you will almost always want a mix of leading and lagging metrics to complement the annual appraisal.
Director, Product Focus
* 360 feedback is a process where peers, subordinates and colleagues from other parts of the business are all invited to give feedback about a product manager’s performance. The feedback is then combined together to build a full and rounded picture of how the product manager is performing.