Linked Better Practices over Stacked Best Practices
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READING TIME
3 min & 09 sec
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Dear es,
Let’s retire the idea that OKRs, North Star Metrics, or KPIs are some sort of mystical construct.
I’ve written about the difference between these approaches to using metrics. But since then, I’ve seen many teams hide behind the theater these different metrics frameworks can create, getting lost in alibi progress.
It’s time to remind ourselves of one universal truth: No matter what you call it or how you use it, in the end, it’s all just metrics—metrics you use in a certain way to get a certain value from them.
A North Star Metric is a metric that helps you align product value and business goals on the highest level.
OKRs consist of metrics that help you measure your progress toward a strategic priority within a certain time frame.
KPIs are metrics you regularly monitor and react to based on their development.
Considering this truth, it’s essential to understand the relationship between a North Star Metric, the financial metrics the business cares about, and the metrics the product team can influence through their everyday work.
That’s why, for example, you don’t need to supplement your OKRs with KPIs. Both are metrics, and your Key Results are SUPPOSED to be valuable metrics on their own. If you have to complement them with more metrics, you'll get lost in metrics theater.
And that’s why, while I love the construct, I think it’s time to stop talking about KPI trees. This term implies a specific usage of the metrics included. It prevents teams from embracing this as a helpful structure for arriving at useful metrics in different shapes and forms. Instead, call it what it is: A Metrics Tree. Because it’s a visual structure to identify metrics you CAN use as North Star Metrics, OKRs, or KPIs.
HOW TO PUT THIS THEORY INTO PRACTICE
- Check what you actually mean when you talk about KPIs. Metrics to keep an eye on, or do you seek more explicit actions?
- North Star Metrics are driven by other metrics. These can be OKRs, but they don't have to be. Call them what they are: Input metrics.
- Stop adding KPIs to your OKRs. If you feel your KRs aren't explicit or measurable enough, change them accordingly instead of adding more metrics baggage to them.
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Thank you for Practicing Product,
Tim
PS: Thanks to Tim Brauser for reviewing an earlier draft of this essay and providing helpful feedback.
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Content I found Practical This Week |
Where Do The Numbers Come From?
One of the hardest parts of writing Key Results is deciding on the specific numerical target. When we start working with numbers, there’s an expectation that we can use math to figure out the right answer. The simple truth is actually a bit unsettling though: there is actually no right answer here. Instead, it’s more accurate to say that there are a range of answers, all imperfect, and you want to find an answer within that range. To do this, you’re going to have to have some conversations, use the data that you’ve got available to you–which will probably be imperfect–and make some smart guesses. In the end, you’ll be able to come up with a good answer.
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Decomposing Big Ideas in OKRs
This decomposition question and process works for big assumptions and hypotheses particularly well, but it works for OKRs too. Say you set the following initial key result: Customer retention increases by 80%. That’s a big goal—a very high-level key result. To find out smaller key results, say for different departments, or to find the leading indicators that will tell you you’re on the right track for that key result, ask the same question. What would have to be true for retention to increase by 80%?
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Selecting the right product metrics
This resolves the typical conflict that arises when executives ask “why isn’t the team more focused on increasing revenue in the next 60 days” while the team insists “other people don’t understand that we’re doing a lot of important work.” Work can—and should—be measured sprint-by-sprint, whereas revenue is a multi-input, lagging indicator of success. The product team is responsible for generating revenue, but it is not the only team or actor contributing to that final result, and a change in the product can take a while to show up in revenue; individual features often cannot be directly linked to revenue at all.
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As a Product Management Coach, I guide Product Teams to measure the progress of their evidence-informed decisions.
I identify and share the patterns among better practices to connect the dots of Product Strategy, Product OKRs, and Product Discovery.
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