Guest Post: Measuring Product Management (part 2)


This is part 2 of a series of guest posts by Don Vendetti. Don is the founder of Product Arts, a product management consulting company in Seattle.

NOTE: If you’d like to write a guest post, contact us and let us know about your idea.

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In part 1, I described my conversations with some industry executives on the question:

What is Product Management’s overall value to your company?

The answers were quite interesting. In this part, I’ll look at the following question:

Question #2:  How would you measure success for the group and individuals?

This question generated a few different discussions and in many instances I got the response “they SHOULD be measured on…”, which indicated their expectations and reality are different.

That being said, most respondents were strongly on the side of tying rewards to business results.    These included:

  • (#1 by a wide margin) Meeting product business plans and forecasts for revenue and profitability
  • Achieving key business objectives for the specific period, including meeting delivery milestones for releases and launches
  • Achieving key market metrics – adoption and usage, penetration and market share, customer satisfaction and retention

Only a few mentioned the difficulty of looking at current business results only, such as revenue, while needing the product manager to be focused on producing future business results.

One also recognized there may be multiple product managers on a large product, with revenue difficult to associate to each.

These advocated a more blended set of measurements that included specific assigned metrics or deliverables within a specific period.

Product quality was mentioned a few times, and included measurements such as returned product, trouble tickets submitted, major bugs found and SLA performance.

There were also some who raised the need to include some “intangibles”, specifically around how well the individuals were perceived in the organization.

This included satisfaction ratings of internal stakeholders based on timely and effective support of other functional groups, how well they performed at driving product delivery and resolution of issues, how well they collaborated with others, and in providing general leadership.

To capture the intangibles, a few companies performed peer reviews or 360 degree reviews on a regular basis.

A few highlighted that the metrics used for a B2B company versus a B2C were somewhat different.

In the B2B company, responsiveness and effectiveness in supporting a direct sales team for major accounts was a key need.

In a B2C company, there may be less on-demand support of the sales channel, and a higher emphasis on marketing and usage metrics.   (As with everything else, this is probably highly variable from company to company, but may be worth a whole separate article.)

Specific comments included:

(CEO) “I am sure every company is different, but revenue, customer retention, customer satisfaction, net promoter score, and market share (are the measures of success).”

(VP Biz Dev/PM) “We measure and reward based on a combination of product performance in market and other metrics related to on-time delivery for new products, quality metrics, and other qualitative measures based on the PM’s role in providing timely and effective support to marketing, sales, and other functions.”

(CEO) “The success metric has to be on net contribution.  Given the lifecycle stage of the product, it may even be managing losses during the formative stages, but ultimately, the only goal of any product is to make money.  The market is the best indicator of success. If quality is down, sales will be off or returns high. If the product doesn’t meet needs, there will be no sales.  If the product is a poor value against the competition… you get the idea.”

Take-Away

The key take-away from this section is the expectation level of the senior executives on product management being measured against business results.  These other executives are heavily dependent on product management for making the right product choices to ensure business success, and they believe product managers should be tied to company results, just as the execs are.

With business results emerging as the top priority, I would reorder and rework my previous value list to be:

  • Delivers measurable business results through product solutions that meet both market needs and company goals.
  • This is accomplished through:
    • Creating a shared awareness of the customer and market needs to the internal functions
    • Shaping the product solution and delivery plan
    • Facilitating and supporting cross-functional and external activities required to achieve the planned objectives

So how well does Product Management do at meeting expectations? I’ll get to that in part 3.

Don

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Related Posts

Measuring Product Management (part 1)
Measuring Product Management (part 2)
Measuring Product Management (part 3)

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5 responses to “Guest Post: Measuring Product Management (part 2)

  1. Don – this was a great post. As product management often struggles with credibility and managements desire to measure success, each organization finds a unique way (or no way) to measure. Your point on “the expectation level of the senior executives on product management being measured against business results” has to be the catalyst for real measurement. With “executives heavily dependent on product management for making the right product choices” there’s more pressure on product management to contribute beyond the technical or sales success.

  2. Let’s review what’s happened here, because it’s very interesting.

    The first part of this series on measuring product management described product management’s value to the company. Interestingly, not one of the listed values mentioned revenue, profit, or market share.

    This second part of the series focuses on ways that executives measure product management’s value to the company. It mentions metrics such as revenue, profit, and market share.

    What’s remarkable is the disconnect between product management’s value to the company and the ways of measuring that value.

    Specifically, a product manager could deliver everything listed as valuable, yet the product might still not achieve revenue, profit, or market share goals. Those goals depend not just on the product manager carrying out the responsibilities listed in the first part of the series, but also on other departments (sales, development, marcom) performing their duties competently. I should also note that these people in other departments almost never are part of the product manager’s team, at least not in any formal sense.

    I join Jim in commending this post. I believe it accurately reflects – and exposes – the disconnect between product management’s value and the way many people believe product management should be evaluated.

  3. Pingback: Guest Post: Measuring Product Management (part 3) « On Product Management

  4. Pingback: Guest Post: Measuring Product Management (part 1) « On Product Management

  5. From the author: Thanks Jim and Roger for the comments. I found this to be an enlightening exercise and didn’t know what to expect when I started it.

    One surprise was the high expectation of the strategic output from Product Management, but what I observe in most companies are the product managers are committed 110% to daily tactical activities in supporting other groups or trying to put out fires, which they are also expected to be doing. It’s no wonder product managers struggle with credibility.

    The expectation with regards to rewards being tied to business results was less of a surprise to me, however I don’t see it used as much as might be indicated by this survey. It’s not so straightforward both from measurement and timeframe perspectives to be able to influence business results within a given period, especially quarterly but often even yearly.

    What I hope this exposes is that senior execs EXPECT product managers to be looking out for the same business results that the execs themselves are tied to. Whether this is fair or not, and whether the PMs can execute on this is another matter. The product management team needs to be aware of this and creating an environment and objectives that can deliver on them them some measurable way. Otherwise their credibility, and value, will always be challenged.