Creating and using key performance indicators (KPIs) should foster the adoption of data-driven decision making. But, what is the role of tech CEOs in creating insightful KPIs to achieve product success?
“Tech CEOs should provide guidance to product managers to develop better KPIs, those that go beyond a simple readout of past performance,” says Michael Porowski, Senior Principal Analyst, Gartner.
To create more useful and insightful metrics, follow a four-step roadmap
Tech CEOs need to act as stewards and sponsors to product management leadership as performance measures are created. “If they don’t do so, KPIs are likely to fail at driving product success that is fully aligned with company strategy,” says Porowski.
To create more useful and insightful metrics, follow a four-step roadmap. “At the beginning and end of each step, product management leadership must review accomplishments. Every step should be iterative and flexible to reflect changes in company strategy, priority shift and the availability of new data,” he says.
Step 1: Align product strategy with business strategy
Tech CEOs don’t have time to take the lead on the creation of product strategy. Instead, they should provide leadership and vision on how to align product strategy with business strategy to deliver product success. Tech CEOs should have product management teams work on product strategy by developing five key initiatives surrounding product planning, product development, product introduction, product leadership and product life cycle management.
Step 2: Identify activities and responsibilities that are core to product manager success
Focus on identifying the actions, activities, tasks and behaviors needed to execute product strategy developed in Step 1. Delegate this responsibility to a project lead, who should involve associates from the product management organization to brainstorm ideas and input that drives product management success. Focus on no more than 10 core areas.
Step 3: Create performance metrics and targets
The goal of this step is to create specific ways to measure the most important activities included in Step 2. Provide visible support so that the product management team receives quality assistance from across the organization.
The product management team needs to find the appropriate data to support performance metrics and then quantify the relationship between the metric and strategic product goals. The next task is to set performance measurement targets that will motive product managers to improve. And finally, document assumptions that support metric targets so that targets can be revised as challenges arise.
Step 4: Revisit, challenge, redefine
Business strategy changes and evolves. As a result, the metrics used to establish goals also need to evolve.
Ask the product management team to revisit performance metrics at least annually, checking that the metrics are driving decision making. Review metric target ranges and examine whether the actions, activities, tasks and behaviors desired are driving improved performance.