Michael Goitein

Product Managers who take the time to collaborate with their teams on a few simple activities can expand their team’s influence and create a path towards sustainable results

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Image: Mapping a path to success. Photo by charlesdeluvio on Unsplash

The notion of what it means for a team to “deliver value” has radically changed.

Much of the Enterprise has for years been at the mercy of the PMO (“Project Management Organization”), and their factory-worker micromanagement assumptions, closely monitoring hours worked, percentage of time kept busy (“Utilization”), or setting and enforcing “Output” delivery goals like measuring number of lines of code written, or interfaces designed.

Fortunately, Objectives and Key Results offers another way to measure value.

OKRs to the Rescue…?

One of the benefits the Objectives and Key Results framework provides is shifting the emphasis from measuring individual worker outputs to targeting team-focused achievement goals.

Unfortunately, for many organizations, the move to Outcomes frequently gets flipped too far the other way, and teams get handed excessively high-level lagging Business Impact goals.

Directly assigning lagging Business Impact goals to teams is problematic for two reasons:

1. Teams lack the autonomy to own the end-to-end client journey
2. Teams can’t regularly measure progress against them to adjust course

Meet Yogana

To see how this works in practice, let’s use the example of the cross-functional “Red” marketing team responsible for converting free users to full paid users at “Yogana,” a Software as a Service (“SaaS”) Business to Business (“B2B”) product in the Small to Medium-sized Business (“SMB”) space.

The “Yogana” Product

Our fictitious “Yogana” product provides business owners an end-to-end view of their initiatives, tracking their vendor’s tasks, and centralizing important project information, status alerts, and updates across attractive, easy-to-read dashboards.

The “Red” Marketing Team

The cross-functional Red marketing team’s individual and shared expertise produces “Output” that consists of:

• Data analytics specialists who pull lists of existing free users
• Copywriters who write articles, social posts, white papers & other copy
• UX designers who design attractive, functional user interfaces
• Campaign specialists who set up campaigns & create dashboards
• Front-end engineers who code Web and mobile screens & emails
• Led by a Product Manager who creates the content strategy and collaborates with their team to see that the best decisions get made

The Red Team’s Output

In Enterprise settings, experienced professionals involved in the “doing” part of the work are called “Resources.”

Interestingly, this puts them in direct opposition to “The Business,” the people theoretically responsible for the “thinking” part of work. By virtue of being a “Resource,” they’re viewed as “Overhead,” or a “Cost Center,” and the PMO’s goal is to squeeze as many Outputs out of them as efficiently as possible.

This isn’t always a bad thing — Executing and delivering sooner are always positive goals to shoot for.

But what has become increasingly apparent over time is that constantly pushing people to maximize the speed and quantity of their Outputs (Efficiency) in knowledge work frequently leads to diminished quality and ability to deliver Outcomes (Effectiveness).

Let’s see how this legacy mindset plays out for the Red team in Yogana’s new Objective and Key Results implementation.

The Red Team’s Q1 OKR

At the start of the quarter, the marketing Red team is essentially handed their first OKR from leadership:

Objective: Lead the market with the best SMB SaaS value proposition

Key Result 1: Increase current 10,000 quarterly to 50,000 quarterly new incremental paid users

Key Result 2: Increase from $4 million to $6 million in incremental revenue

Key Result 3: Increase client Net Promoter Score (NPS) from 32 to 45

The Red Team’s Business Impact Goals

By implementing the Objectives and Key Results framework, Yogana is shifting their focus from individual worker Outputs to team-focused achievement goals.

As noted earlier, this move to achievement goal-setting seems to have landed the “Red” team with a set of very high-level, lagging Business Impact goals:

So the assumption here is that we can jump straight from the team’s Outputs to delivering the desired Business Impacts:

This uncovers the main weakness behind the classic legacy model where “The Business” dictates to ”Resources” what they need to do, and how they need to do it– the connection between the stuff the “Doers” do and the desired Business Impact is frequently too great a leap to guarantee any results get delivered.

There are simply too many assumptions that seem logical in theory that quickly prove false and fall apart when they come into contact with actual customers in the real world.

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As we’ll see, assigning lagging Business Impact goals to teams is problematic for two reasons:

1. Teams rarely have the autonomy to own the end-to-end client journey
2. Teams can’t regularly measure progress against them to gather feedback and adjust course

1) Owning the Client Journey

Over time, regardless of the size of the company, continuous optimization and reorganization results in no single team retaining full autonomy over any client journey, with anywhere from two to ten or more teams potentially involved in delivering an end-to-end client flow that delivers both client and Business Impact value.

The Free- to Paid-User Client Journey

In the case of the Yogana user’s free-to-paid user journey, the flow might look something like this:

The Red Team’s Client Journey

If we take a step back and highlight the part of the journey specifically within the “Red” team’s control, it’s easy to see their marketing focus only allows them to directly impact the beginning part of the flow, towards the left:

The Red Team can create awareness, and get qualified people to the start of the upgrade conversion flow.

The more skillfully their client lists are chosen, and the more compellingly the offers are crafted, the more likely they’ll increase the odds of users continuing on to start (and, hopefully, complete) the purchase flow.

The Purchase Journey Blue Team’s Flow

It’s important to note the final purchase flow steps to complete the upgrade from free to paid are actually owned by another team, the “Blue” team shown in the blue box to the right below, which owns these three crucial steps:

• Client starts upgrade process
• Client goes through upgrade steps
• Client enters payment details and completes upgrade process

2) The Challenges of Managing Teams with Lagging Metrics

As should be apparent by now, all three of the Red Team’s Key Results are outside their direct area of influence, to the right of the user journey flow diagram:

• Key Result 1: Measures the number of users completing the upgrade from free to paid
• Key Result 2: Measures resulting increase in revenue from newly upgraded users
• Key Result 3: Measures increased client sentiment after upgrading and interacting with the service

In a very practical sense, the real challenge with assigning teams lagging Business Impact metrics is that many of them can’t be measured until weeks or even months after the quarter ends.

For the teams doing the work, yet being held accountable for lagging business results:

• How can they adjust their daily tasks to know what’s positively impacting these desired metrics?
• What might they be actively engaged in that could potentially be negatively impacting their numbers when they’re effectively “flying blind” for the entire quarter?

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Product Management leading with Outcomes provides a way forward

So with these three factors — the Red team’s lack of control over:

• The level at which their OKRs get set
• The end-to-end client journey
• The lack of visibility across the quarter to understand the impacts of their work

Taken together, enormously increase the risk of their ability to take ownership and deliver any meaningful value.

This is crucial because as the above diagrams lay out, both the leadership that assigns the teams these lagging goals, as well as the teams that get saddled with them are working under broken mental models –

• Leaders who believe they can push their teams to “work harder” and produce more Outputs faster.
• Teams who believe they just need to keep following their abstract lagging business goals to somehow magically deliver on them is at best, shortsighted.

But with the right product leadership, and the team pulling together to monitor the right things, they’ll actually have a chance to take control over their destiny.

For the first time, they’ll understand the levers to pull to influence the client journey in meaningful ways, ways that deliver value both to clients, and to the organization.

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Here are three simple approaches Product Managers leading Agile teams can do to regain team agency, and reduce value delivery risks:

1) Identify client Outcomes that ladder up to the desired Business Impacts

2) Set leading Client Behavior Change Key Results

3) Check in regularly & adjust activities accordingly

1) Identify client Outcomes that ladder up to the desired Business Impacts

This is probably the hardest concept to grasp for people who have spent their careers working in legacy Enterprise IT, PMO-driven environments.

It’s a fundamental mindset shift to understand our focus doesn’t end when we complete a task or a project (“Output”), or when our internal stakeholders say they’re happy with our efforts. On the contrary, we need to evolve our understanding of the value our work creates once it’s delivered, and clients have a chance to interact with it.

In other words — targeting Client Behavior Change Outcomes allows teams to frame the specific actions they hope their clients will take with their work that will result in positive Outcomes for them and for our business.

Outcome is a measurable change in human behavior we see when we give the output to our users and customers. Outcome answers the question, “What are people doing differently now that we have delivered the output?” Outcomes are not features. They are metrics. For example, an outcome is not, “we shipped the app.” Instead, an outcome is, “50% of our audience has upgraded to the new app.” Outcomes tell us when we’ve delivered something of value (or not).
–Jeff Gothelf

Output, Outcomes, Impact and KPIs

The first, and most important part of the puzzle is to understand what client behaviors let us know they’re interacting with our software in ways that make both them and us successful.

This will pave the way to understanding not only what Client Behavior Change Outcomes we’re trying to move, but how they will connect to our Business Impacts.

Fortunately, having mapped the user journey back in Figure 3, we have a good sense of the desired client actions we’d like to increase.

If we take that user journey and lay it out bottom to top vertically, it now looks like this:

We can now trace the connection between our Red Team’s Outputs, and through identifying key Client Behavior Change Outcomes we can specifically target, we can now show a clearer bottoms-up connection from the team’s work to our desired Business Impacts:

Outputs, Outcomes, and Business Impacts — Closing the Loop

By filling in this “missing middle,” we can create a workable hypothesis of how the Red team’s Outputs might ladder up through Client Behavior Change Outcomes towards Business Impacts.

In my experience coaching teams, I’ve seen how software teams lacking strong, experienced Product Management tend to purely focus on getting their Outputs, shown in Fig. 1, to “Done.” Their leadership, purely focused on the Business Impact they’re personally accountable for, may have internalized a mental model closer to Fig. 3, where they alone understand and manage the connection between the Outputs the team generates, and the Impacts they’ve tasked the team to drive.

The lesser-understood area of Client Behavior Change Outcomes is ignored because it’s the space where Product Management leads with the higher-level “why” behind the work, overlapping with the UX-focused understanding the client journey, and bringing it together with an experienced Tech viewpoint that can push the envelope within which the team can test assumptions, innovate, and iterate with simple tech solutions to deliver the desired results.

Interestingly, the teams I’ve worked with that have deeper marketing backgrounds tend to be more data-literate, and able to create the connection to moving client Outcomes.

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2) Set leading Client Behavior Change Key Results

Now that we have a sense of the client Outcomes we’re trying to drive, the goal will be to work backwards from these and set actionable Key Results in order to:

• Connect the dots for the team
• Connect the dots for Stakeholders

This is crucial, because once we have a set of numbers the team can manage to, and track, week over week, they are finally in a situation where they can see their numbers move in direct response to specific decisions and actions they’re taking.

The Red Team Product Manager works with their team, and after doing a deep dive on their numbers and much discussion, they agree to set the following three Red Team-level, Outcome-focused Key Results:

• Team-Level Key Result 1: Increase email open rate from 2% to 5%
• Team-Level Key Result 2: Increase article call to action link clicks from 1% to 3%
• Team-Level Key Result 3: Increase clients starting free to paid conversion flow from 20% to 40%

By sharpening their Outputs, and focusing how they impact these three leading metrics, the PM and the team believe they can deliver a higher percentage of better-qualified users to the beginning of the conversion flow, and increase the likelihood of those users continuing on to complete the conversion.

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3) Check in regularly & adjust activities accordingly

Run regular OKR Check-Ins

With their leading Key Results set, the team now has something to keep front and center through every internal team touch point, and every conversation with leadership.

One of the biggest differences that sets Objectives and Key Results apart from “SMART” goals is the regular cadence of check-ins. SMART goals are set once, and perhaps referred back to once in a mid-year review. OKRs, by contrast, are a continuous, critical-thinking discipline.

If you’re not checking in at least every other week on your OKRs, the framework has little opportunity to provide the hoped-for benefits.

Check Confidence

Every check-in is an opportunity for a dose of reality.

It’s absolutely crucial the team take honest stock of where they are with their team-level leading Key Results, and transparently report on their confidence in being able to to deliver them within the quarter. How have things improved? Where have they started to decline?

Having data available is helpful, but it won’t always tell the full story. Sometimes a key member of the team who’s made a huge difference in team effectiveness is headed out on vacation, or having a baby. Can the team continue to deliver their numbers sustainably? These kinds of qualitative factors also need to be factored into the confidence check.

Clarity and transparency are the foundations of creating the muscle of consistent iteration towards goal achievement.

Adjust Activities & Tasks

And finally, if teams have the courage to honestly look at the readiness of their people, their work, and their progress towards their outcome-focused goals, they’ll be able to collaborate together to come up with new ways to innovate and deliver.

The check-ins create mini-breaks to reflect on what they’ve learned, what’s working, and what’s not, to be honest with themselves as a team, and honest with their leadership and management in reflecting their progress towards the goals they’ve set for themselves.

In traditional Enterprise models where Figure 3 describes a leader-dictated, Command-and-Control style of teams simply doing what they’re told, teams are deprived of these small pauses to test, reflect, iterate and innovate in the pursuit of attainable goals within their control.

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In Summary

TL:dr –

Understanding traditional organizational challenges for teams contending with

1. Client Journey ownership
2. Getting assigned lagging metrics

And seeing how Product Management and the Objectives and Key Results disciplines of

1) Identifying client Outcomes that ladder up to the desired Business Impacts

2) Setting leading Client Behavior Change Key Results

3) Checking in regularly & adjust activities accordingly

Can make an enormous difference in reducing risk in the service of sustainable value delivery.