What gets measured gets managed!

The title of the blog is a famous quote by Peter Drucker from his 1954 book titled, “The Practice of Management.” The quote has been repeated so many times since then that it has almost become a cliche.

Having said that, this quote is so relevant for a product manager. Why is it relevant? Here are a few interesting points to support my case:

1. In one of my earlier essays (Titled: Separating noise from the signal (Part 1)!), I touched upon multiple sources for your product requirements and one important source (for existing products or consumer-facing products) is Metrics.
2. Imagine, you are trying to build a product to solve a very important problem (always remember: put the problem before the solution) and you know the user groups that will benefit from this problem, how will you measure your success? The answer is Metrics.
3. Now, let’s say you have a product that solves a problem for a specific category of customer (e.g. small enterprises) and you see a good opportunity to scale the product (function & feature-wise) for another type of market (e.g. medium enterprises); do you want to decide that based on your gut/hope or do you want to take a data-driven decision? I am sure the answer is later, the magic word once again is Metrics.

I am sure you will knock out many many examples like the ones detailed above and convince yourself that data-driven product management is the most scientific way of deciding new products, checking out performance of an existing product, deciding new market segments, etc. Does the quote “ What gets measured gets managed!” makes sense now?

Yes, it would be my answer and I am sure you will agree with the same. If you don’t know the method/framework to measure your outcome then there will be challenges as everything conversation will be qualitative in nature (don’t get me wrong, a qualitative conversation is important but it cannot be the only decision-making methodology. Quantitative insight must augment any qualitative perception).

There are different types of metrics and I have listed a few below for your reference:

1. Growth and activation metrics (measures the growth rate, adoption rate of your product): Total new users, New users by source, Number of activations are a few examples.
2. Retention metrics (measures how well you are able to retain or resurrect the users of your product): Returning users, Resurrected users are few examples.
3. Engagement metrics (measures how well your users are engaged with the product or how well they use the more critical functions/features of your product): Time spent on site, Number of messages sent, Number of clicks on content are few examples.
4. User happiness metrics (measures the happiness quotient of your customers/users): Net promoter score, App downloads, Number of net new user recommendations for a few examples.
5. Revenue metrics (is a measurement of entropy in the product that contributes directly to the revenue of your product): Lifetime value of customers/users, Weekly/Monthly recurring revenue, Cost of acquisition are few examples.

Whilst this is not a complete list, it definitely gives you a decent insight into why are metrics important? Why can’t a product manager live without metrics? and Categories (& examples) for metrics. In the next write-up, I shall cover a few interesting frameworks proposed by industry experts to structure the metrics conversation.

More about this topic in future essays!

Originally published at https://www.raghsforte.com on September 19, 2019.