Product Management Value

As I’ve mentioned in previous installments, I believe that there has to be more to measuring product management performance than only bottom-line financials. A balanced score card has to consist of financials (revenue and profit margin) but must include product planning value (how much do customers love what is being put into the product?) and product marketing value (how easy is it for sales to sell?). Without a balanced view which considers all aspects of the product management contribution, there cannot be a fair reward system put in place for product managers. The financial performance is easy to measure – the figures don’t lie. I think there is a pre-conception that other measures are too difficult to quantify, so companies revert to financials and leave out other important performance measures. I’d like to suggest that with a bit of creativity, any company can develop product management performance metrics which will round out the “score card” and allow product managers to be rewarded appropriately for their valuable contribution.

Product planning performance can be broken down into a number of components which can be measured – feature management metrics (for instance, measure the length of time that a high priority issue languishes in the feature funnel before it gets into a release) and design change request rates (serves as a crude measure of how well a problem was understood and defined before product development was allowed to commence – a high DCR rate may indicate poor requirements definition). Measuring the degree of customer delight with new features should be an integral part of any new product introduction process (surveys, interviews and ride-alongs yield exceptional value).

Product marketing can also be broken into measurable components of value. Is there a gap between product knowledge in the sales channel and the messaging that the product marketing team wanted to communicate? Here’s a novel idea – why not use an old fashioned measure like asking the sales guys to do a written test? Win-loss analysis (if it is done objectively) can serve as the basis for guiding changes to the product marketing process, perhaps more useful than raw revenue numbers – the revenue numbers don’t tell you much about what went wrong or how you can improve the situation.

In summary, I would like to see more “pay for performance” in product management, with a well rounded method of compensating exceptional performance in product management areas of real value. After all, if you are a product-based company, shouldn’t a large part of your performance compensation budget be allocated to the stewards of your products?