Setting measurable goals helps execute your product strategy. The most effective goals are crafted as internal or external customer outcomes (defined as a change in customer behavior). This allows you to shift your measure of success from delivering output to improving your customer’s life – a small but critical point. In other words, what can you try to achieve to make your customer’s life easier?
The primary input for setting measurable goals should be the product strategy. In the previous post, we looked at an example of a product strategy for a ride-sharing company that targets the traffic-dense neighborhoods of the capital cities in the market and wins in the cost leadership aspect of the product. Some goals to help execute the strategy and test it in the market could include:
- Allow customers to save at least 10% when ordering rides through us, compared to amounts spent with competitors x and y.
- Ensure that in traffic-dense capital cities of market x, customers wait no longer than 5 minutes for a ride.
- Give customers the choice to select from 3 different vehicles.
Each of those goals has a quantitative aspect which allows the teams working on the goals to measure progress toward them. Having the numbers clearly stated enables the teams to work in an empirical way. They can use the data as indicators to see whether they are on track to achieve their goals or not. And if the teams realize they are off track, they can adjust their activities as needed. The activities can then be mapped to a roadmap.
The problem with setting outputs as goals is that it’s hard to make a connection between an output and a change in user behavior. That connection is often a big assumption. An example of an output could be Go-live with version 2 of the ride-sharing app. Rather than being a goal that improves your customer’s life, an output describes an activity that teams will carry out. It’s not obvious why this is going to help make the customer’s life easier. A great question to ask teams to go from outputs to outcomes as goals is “Why do we want to carry out this activity?” Some possible answers could include:
- Version 2 of the app contains the ability for users to better manage their current and past rides.
- The teams may want to drive higher user engagement.
- Version 1 of the app has a major bug that doesn’t allow users to select the type of vehicle.
- In addition to getting a higher engagement, going live with version 2 of the app will help with the overall user experience of using an app that doesn’t crash when selecting the vehicle type. This could improve customer retention and reduce churn.
- Version 2 of the app doesn’t show the user how much they are saving per ride.
- As a key part of the strategy is to drive cost-leadership, this could be important to help the user make a decision.
Using any of the answers above, craft an outcome as a goal, similar to the three examples earlier in the article.
When crafting measurable goals, be sure to include both leading and lagging indicators and encourage teams to track their impact with the help of something like a KPI tree. Get into the habit of regularly assessing internal (users inside the company) and external (end users, competitors, and market trends) indicators to drive the type of activities that you should do. Using metrics to drive your activities will help you more accurately validate your strategy and strengthen your conviction to either pivot the current strategy or continue with it.
Let’s continue with the earlier goal of “Allow customers to save at least 10% when ordering rides through us, compared to amounts spent with competitors x and y.” During the first few weeks you may notice that the average cost per customer per a 5-km ride comes down to $8.50 compared to the $10 that your competitors are charging for the same distance. That’s a savings for the customer of over 10%, meaning that you’re on track to hit your goal. A few more weeks in, you notice the churn rate has decreased and the customer retention has slightly increased. These are all great indicators that your product strategy of focusing on targets the traffic-dense neighborhoods of the capital cities in the market and winning in the cost leadership aspect of the product is being validated by the market.
However, after another quarter you may realize that your competitors have noticed your wins and have decided to reduce their operating costs to compete with the prices that your product is offering. As a result, your customers start saving only 5% more (or not at all) compared to when they use your competitor’s product. To not get caught by surprise from this market shift, set leading indicators for your goals (which typically tend to include lagging indicators) to anticipate and adapt accordingly. This is the true definition of product agility. Anticipating and pivoting your goal(s) or strategy slightly based on this market trend will allow you to decide a different way to win or play in a different field altogether to maintain your competitive advantage.
Goal-setting frameworks like MBOs and OKRs do a good job of combining qualitative and quantitative aspects to the goals that organizations set. When working with OKRs, it’s crucial to have as many of the pre-requisites in place to get the most out of the framework. Regardless of the framework or format that is chose, setting goals in a top-down and bottom-up manner while regularly, collaboratively, and empirically assessing those goals against internal and external signals is key to remaining agile as an organization and ensure that the activities downstream of the goals are tackling the right problems. When teams commit to the goals that drive customer and business outcomes, rather than delivering x, y, z projects and tasks at all costs, they are more likely to succeed and refrain from becoming a feature factory.
The next, and last, post of this series will look at the tactics that are needed to try and achieve the measurable goals through product discovery and delivery.
Rahul Bhattacharya 
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