How to use the Value Indicator Chooser
In the previous article, we explored how to identify value assumptions focused on what user behaviours to change. This article switches focus to help you decide how to measure those value assumptions that underpin your product strategy.
If you can measure it, you can manage it
Over this series, we have clarified the key assumptions of your product strategy that will drive value, and we have translated these into behaviours. Teams can understand how they can directly create value. This can have a huge effect on product development impact, but we need to manage and support our teams. To do this, we need to measure progress against the value assumptions.
At this point, it is very tempting for leaders to jump back to the head of the value chain and desire metrics such as "ARR" or "Churn Rate". It is appealing to measure the outcomes at the head of the value chain as they are what matters, and they are probably already measured, so it is easy. But if we want to manage and support executing the product strategy, we have to measure what is happening when the product makes contact with the user. We have to measure the value assumptions, and we need measurements that are leading indicators. Lagging indicators that take time to materialise (normally at the head of the value chain) are important in strategic reviews but useless in execution. Execution needs metrics that provide rapid feedback to inform the next decision. In product development, if a feature is released today, we want feedback tomorrow, not in 3 months.
Unfortunately, our value assumptions are not always easy to align with a leading metric. We have to find indicators which rapidly show the direction of the measure but where granular accuracy is less important.
Using the Value Indicator Chooser
The starting point is to clarify the behavioural change you are measuring and how the customer value it creates can be measured. Then we consider if the customer outcome metric is leading or lagging. If it is leading, you may want to use this as your value indicator. If it is not, then we need to explore other options. There is space to capture ideas you, your teams or stakeholders have to measure the behaviour. For each potential metric, consider if it is something your product impacts and if you can measure it. Finally, you can capture the chosen value indicator.
Hungry for more?
The next article in this series shows how to track your performance against the Product VCP, we call this the Product Value Creation Tracker.
