part0018

Selecting a goal metric to focus on is hard. Well-chosen metrics motivate your team to ship great products. Poorly chosen metrics can lead to wrong trade-offs that hurt your product, company, and customers. To identify the right goal metric, you need to answer three questions:

A common pitfall is when the goals of your team and your company are not aligned. For example, a feed team for a video site could set interactions (comments, likes, etc.) as their goal metric. This goal could lead to product decisions like always showing expanded comments in feed. But that could easily hurt the overall company metric of minutes watched because the videos themselves will have less visibility .

An even worse pitfall is when the goals of your team and your customers are not aligned. For example, suppose you were in charge of user profiles for a social network. You set a goal to grow profile completeness—that is, the percent of user profiles that have their information filled out (e.g., education, job history). The easiest way to achieve your goal is to ask users questions like: “What job do you have?” “Where did you grow up?” Your completeness metric skyrockets, and you’ve given the social network more data for advertisers to target. But how do your users feel about always being asked for their personal information?

Can you explain this metric to your CEO in less than 30 seconds? If the metric starts declining, can you break it down to figure out why?

A common pitfall is selecting an overly complicated metric. For example, suppose you’re in charge of growing drivers for Uber. You have data showing that 20% of drivers (let’s call them full-time drivers) are responsible for 80% of rides. You see that only 10% of part-time drivers are converting to full time, so you set a goal to double part-time to full-time conversion to 20%. But is a 20% conversion rate good or bad? What happens if you convert riders to full-time drivers, but those riders were never part-time drivers? You could have saved yourself many headaches by setting a simple goal to grow the number of full-time drivers.

Is this metric directly under your team’s control? If you run an experiment, can you show statistically significant results quickly? Is your team excited about growing this metric?

A common pitfall is selecting a metric that your team can’t move directly (talk about demoralizing them!). For example, if you're a video product manager, growing video views could be your goal. But if 90% of your product’s views are coming from feed and the feed team is not aligned, you will have a hard time reaching the goal. Can you find other discovery channels? Or can you convince the feed team that giving videos better discovery also helps their goal metric?

To avoid this pitfall, classify the metrics that you track as outputs and inputs. Outputs are goal metrics that you’ll use to measure success. Inputs are metrics that your team has direct control over that also grow your outputs.

For example, let’s assume that you’re the product manager in charge of sending emails reminding Netflix subscribers to renew their subscriptions. Your output might be retention rate (percent of subscribers who renew each month). Your inputs could include email sends, opens, and clicks on a “renew subscription” button from your e-mail. If you can’t brainstorm clear inputs for your output or if your inputs rely too much on other teams, chances are your team won’t be able to grow your output directly.

You must get your team, your management chain, and any adjacent teams to internalize why you selected this metric for it to be effective. Make sure you have a clear problem statement before trying to pick a metric to grow. Then, walk through the above questions with your team to validate whether the metric is a good fit.

Once you understand the customer problem and your goal metric, you can move on to the “identify” phase of the loop. Start by making sure that your team has a great mission, vision, and strategy.