Connecting Product Outcomes to Business Outcomes
Using Key Performance Indicator (KPI) Trees
This week we talk about product teams and outcomes. Although these are common topics, they were are top of mind recently due to a podcast from The Product Experience. In it, they interview Nacho Bassino, formerly of Spotify, now a product leadership coach. Access the complete pocast, here.
You won’t be surprised to hear me say that we need to move beyond “product management theater,” which is often more project management—managing requests and finding a way forward—than product management.
The role of a product manager is to consider the impact we can have with our team, thinking from a business perspective and focusing on outcomes over output, Bassino argues. To do this, we should draw a clear connection between the team's outcomes and the organization's business outcomes. I agree.
To do this, we must:
Have role clarity. The difference between a product manager and a project manager must be clear. (And clear to everyone, not just the people in those roles)
Avoid letting frameworks like SAFe put the focus exclusively on execution. Instead, we need to provide another way to think about or discuss our work.
Build our storytelling around how a feature or an effort relates to the user and how that user connects to business impact and goals.
Tool: Key Performance Indicator (KPI) tree.
A KPI tree is a tool where you:
Start with the highest-level metric the business wants to impact or move. (Choosing this metric is an important and much larger topic we’ll save for another day.)
Look at which metrics contribute to that business metric, and then what other metrics contribute to that metric, and so on.
This will allow you to see how the work the team is doing contributes or has the potential to contribute to the highest-level business metric.
KPI trees clearly show how pieces of work, for example, features or experiences, are connected to a larger organizational KPI. They also create a visual that is helpful for clarity and aligned conversation.
Get Started: Keep Business Impact at the Heart
Ensure you understand the outcome you’re trying to achieve at the top and throughout the layers.
Add user problems and possible solutions or features that will impact the key performance indicators as you work your way down the tree. These problems or possible solutions are where the teams will focus, and they are how a team can show how they will achieve a business outcome.
Here’s an example that starts with business metrics but gets to opportunities on how to impact a specific KPI and a possible idea to solve for it:
That is just one example. But you can see how areas of improvement can be identified, tackled and results can be measured. Adding in real numbers at each level can also allow for calculating the cost of each possible opportunity or solution in the context of the possible impact towards the business outcomes.
References and Resources:
Paid subscribers, join us in the comments to discuss it further-
NG