Metrics-driven product development is hard. This is a sentiment that many teams can relate to, as they often face two primary pathologies: nearsightedness and farsightedness. Nearsightedness occurs when a team is skilled at optimizing metrics in the short term but fails to translate those optimizations into long-term business success. On the other hand, farsightedness happens when a team monitors metrics tied to long-term business success but struggles to see how their work can actually move the metrics that matter.

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Hatched by Glasp

Sep 22, 2023

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Metrics-driven product development is hard. This is a sentiment that many teams can relate to, as they often face two primary pathologies: nearsightedness and farsightedness. Nearsightedness occurs when a team is skilled at optimizing metrics in the short term but fails to translate those optimizations into long-term business success. On the other hand, farsightedness happens when a team monitors metrics tied to long-term business success but struggles to see how their work can actually move the metrics that matter.

To overcome these challenges, teams need to develop "good vision" in the product development sense. This means being able to make short-term bets that compound to create long-term business value. It may seem paradoxical to be both short-term and long-term oriented, but this is what separates the world's top companies from the rest.

The key to achieving this balance lies in understanding the relationship between leading and lagging indicators. Lagging indicators are the KPIs that actually matter for a business, such as revenue and customer retention. However, these indicators are often subject to external forces and can feel out of the control of product teams. On the other hand, leading indicators can be influenced by the work of the team, such as the percentage of users that perform a certain action during a session. While these indicators alone may not equate to business success, they serve as a bridge between the leading and lagging indicators.

This bridge is known as the North Star metric. It acts as an antidote to the challenges of metrics-driven product development by providing a clear connection between the team's work and the metrics that matter. However, it's important to recognize that each link in this graph of relationships between work and metrics is an assumption that can be wrong or go wrong. This means that the map of these relationships must be dynamic and not static, as correlations that exist at one point in time may break in the future.

Metrics-driven product development will always be hard, but there are steps that teams can take to make it easier. Here are three actionable pieces of advice:

  • 1. Foster a culture of experimentation: Encourage your team to constantly test and iterate on their assumptions. This will help uncover new insights and prevent stagnation.
  • 2. Prioritize customer-centric metrics: Instead of solely focusing on internal metrics, prioritize metrics that directly reflect the value being delivered to customers. This will ensure that the team's work is aligned with customer needs and desires.
  • 3. Continuously review and adapt your metrics strategy: As mentioned earlier, the map of relationships between work and metrics must be dynamic. Regularly review and adapt your metrics strategy to reflect changes in the market, customer behavior, and the overall business landscape.

In conclusion, metrics-driven product development is undoubtedly challenging. However, by developing a clear vision, understanding the relationship between leading and lagging indicators, and continuously adapting your metrics strategy, teams can navigate these challenges more effectively. It's a journey that requires constant learning and experimentation, but the rewards are worth it.

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