Question: What are appropriate goals and objectives for a product manager?
I recently made the move into a product management role after working in several other areas of the business. I really like the role, though the one aspect where I still feel weak is the related to the Goals & Objectives of a PM. I’m working in a company that is following the MBO process, but I would like to know from you which are the more common SMART (Specific, Measurable, Achievable, Relevant and Time-specific) objectives used to evaluated a product manager’s performance?
Answer from Jeff Lash of How To Be A Good Product Manager: It’s great that you are looking to come up with good goals and objectives for your position. The right goals help make sure you are in agreement with your manager about what areas are most important, how you should be spending your time, and what are the areas where you can have the best impact on the organization. Assuming you are doing your job well, good goals and objectives will also help prove your value and success.
There is no standard set of goals for product managers, and it would likely vary as responsibilities vary at different organizations and even sometimes within organizations. For example, in some companies product managers have P&L (profit and loss) responsibility, so they are responsible for financial success of the product; in some companies, product management roles do not have explicit P&L responsibility.
Ultimately, product managers should be measured by the success of their product. A good product manager usually has a successful product, and a bad product manager usually has an unsuccessful product. Of course, this begs the question, “How do you define success of your product?”
In his article Measuring Product Managers, Marty Cagan suggests that the Net Promoter Score (NPS) — a measure of customer satisfaction — is the best metric to use for measuring product success. If I were to pick one single metric to use evaluate a product manager, NPS would probably be the metric to use.
Of course, in some areas, NPS does not as easily apply. What if you manage a product that is still under development? What if you have taken over a product that was performing horribly and have only had a few months to turn it around? What if you manage a product that is only used by internal users who have no choice of other products to use?
Even for products where the NPS does apply, usually management would not want to use a single metric to evaluate product management performance.
Over at Pragmatic Marketing, a few other suggested metrics emerge. In his guest article Pretty Please: A Product Manager’s Wish List, Jacques Murphy has “A Measure of Success” on his wish list:
Product Managers need clear metrics by which to gauge their performance. These can be both hard numbers, such as the percentage increase in profit margin or dollar increase in profit, or softer figures such as the quality of the requirements process. But every Product Manager would wish for goals that are specific, measurable, and attainable via realistic effort.
Meanwhile, Steve Johnson suggests using another metric to incentivize product managers in the article Product management bonus programs:
Visiting the market is the most important activity for product management and an activity that the rest of the company seems to try to prevent. This bonus plan is absolutely under the control of the product manager. She can complain that her schedule was too tight or that she was busy answering emails. But you don’t get bonuses for answering emails; you get bonuses for visiting the market. One shortcoming of the program is that it is activity-based rather than results-based. But the benefits of being objective and being under the control of the product manager overcome the negative.
In his webinar Measure What Matters: Evaluating the effectiveness of product management (PDF slides), Mike Smart recommends determining the metrics for the overall business, and then choosing related product management metrics that align with corporate goals.
So, with all of those different suggestions, what would I recommend? I think product managers should have a small set of appropriate metrics that align with the larger company goals. If your company is small and growing, you may want to focus on revenue growth and customer adoption. If you are large and in a very competitive market, measuring profitability and margins may be more appropriate.
As a baseline list, I’d suggest:
- Customer satisfaction: Measure using the Net Promoter Score or a similar metric.
- Financial: Depending on the organization, this may be best tracked by revenue, profit, margins, or some other financial metric. All products exist to help the organization make money, though, so some financial measure is appropriate.
- Internal/operational: How well the product is operating under the product manager’s leadership can be measured by number of defects, on-time/within-budget delivery of projects, number of customer complaints/questions, and other appropriate operational metrics.
- Product Management duties: The product manager should be performing all the duties expected of the product manager, including conducting customer visits, updating roadmaps, refining product strategy, conducting competitive analysis, delivering quality requirements on time, and communicating to internal stakeholders.
This will not work for every product manager, though hopefully it is a good starting list to use to allow you to customize it to your situation.
One last note — if you’re considering using SMART goals, I highly recommend listing to the podcasts at Manager Tools which cover How to Set Annual Goals. They recommend focusing just on the MT part of SMART, and in the podcasts they discuss why and offer some good sample goals and other recommendations for managers.
Best of luck setting and meeting your goals!