Aligning Product Goals with Business Objectives for Maximum Impact

Ensuring that your product goals are aligned with overarching business objectives is crucial for driving success. This alignment facilitates a cohesive strategy that propels both product and business performance. Let’s explore how to align product goals with business objectives, supported by real-world examples from Amazon and Lyft.

Understanding Business Outcomes

Definition: Business outcomes are essential, measurable goals set by the executive team, such as Monthly Recurring Revenue (MRR), Quarterly Profits, and Net Promoter Scores (NPS).

• Ownership: Executive team

• Examples:

  • Amazon:

    • Increase Prime memberships to enhance customer retention and sales.

    • Maximize third-party sales to boost marketplace revenue.

    • Improve customer service to elevate NPS scores and build loyalty.

  • Lyft:

    • Increase ride frequency per user to drive revenue growth.

    • Reduce operational costs to enhance profitability.

    • Improve rider and driver satisfaction to raise NPS scores.

Defining Product Outcomes

Definition: Product outcomes are tangible changes in user behavior resulting from interaction with your product. These outcomes are tracked using product-specific KPIs, such as Daily Active Users (DAUs), feature utilization rates, and the frequency of return visits.

• Examples:

  • Amazon:

    • Track the number of daily active users on the Amazon app and website.

    • Measure the utilization rate of the one-click purchase feature.

    • Monitor the frequency of return visits by customers to the Amazon platform.

  • Lyft:

    • Measure the number of daily ride requests on the platform.

    • Track the adoption rate of new features like Lyft Line.

    • Monitor the frequency of rides per user over a specified period.

Creating Outputs

Definition: Outputs are the features and updates that your product team(product managers, developers, UX, DevOps, QA) creates. These outputs are designed to influence user behavior, ultimately driving product and business outcomes.

• Examples:

  • Amazon:

    • Implementing one-click purchase to streamline the buying process.

    • Launching personalized recommendations to enhance the shopping experience.

    • Introducing Prime Video content to increase Prime memberships.

  • Lyft:

    • Introducing scheduled rides to cater to user convenience.

    • Developing a loyalty program to reward frequent riders.

    • Launching in-app safety features to improve user trust and satisfaction.

The Process of Aligning Product Goals with Business Objectives

1. Identify Business Objectives: Begin by understanding the key business outcomes your executive team is focused on. For example, Amazon’s objective to increase Prime memberships or Lyft’s goal to boost ride frequency.

2. Define Relevant Product Outcomes: Determine the product outcomes that can directly impact these business objectives. For Amazon, this might involve increasing the number of daily active users on the platform, while for Lyft, it could be about tracking the number of rides per user.

3. Develop Outputs to Influence Outcomes: Create specific product features designed to achieve the desired product outcomes. Amazon’s implementation of one-click purchase to enhance user convenience and Lyft’s introduction of scheduled rides are prime examples.

4. Measure and Iterate: Use KPIs to track the effectiveness of your outputs. For instance, Amazon can measure the increase in daily active users or Prime memberships, while Lyft can monitor the adoption rate of new features like Lyft Line.

5. Align with OKRs: Utilize Objectives and Key Results (OKRs) to ensure that every team member is aligned and focused on delivering meaningful outcomes. OKRs help in setting ambitious but measurable goals, making it easier to track progress.

The Role of OKRs in Aligning Outputs with Outcomes

Objectives and Key Results (OKRs) are a powerful tool for linking ambition to reality, ensuring alignment from top to bottom within an organization. Originally implemented by Intel's founder, Andy Grove, OKRs shift the focus from merely shipping features to delivering meaningful outcomes.

Objective

An objective is a qualitative statement that outlines what you aim to accomplish. It should be inspirational and motivate the team.

• Example: "Climb the mountain" – a statement that conveys a challenging but achievable endpoint.

Key Results

Key Results are quantitative metrics that help track progress towards achieving the objective. They are measurable milestones that indicate success.

• Example: "Increase Prime membership renewals by 15% in Q3" or "Boost DAUs of Lyft app by 20% in six months."

Conclusion

By ensuring your product goals align with business objectives, you can drive significant impact. The successful implementation of outputs, measurement of product outcomes, and alignment through OKRs can transform how your team perceives and achieves success.

As a product manager, always aim to shift conversations from delivering outputs to driving outcomes. Regularly review the outcomes of your recent releases, understand their impact on business goals, and continue to ask critical questions about what success looks like for your business. Emulate industry leaders like Amazon and Lyft to guide your strategic decisions and foster a culture focused on results.