A successful strategy requires aligned KPIs

In this week’s newsletter, I shared an article from Jeff Gothelf that says product strategy should tie back to real revenue numbers. I agree, at the strategy level. But we also need KPIs that go a level deeper. Teresa Torres defines three levels of KPIs: business outcomes (revenue and cost), product outcomes (customer satisfaction, product market fit) and traction metrics (feature usage).

While each of the three are distinct, I prefer the framing of
Effort - hours worked
Output - features built
Outcomes - feature usage (this includes both product outcomes and traction metrics above)
Impact - revenue and cost

Effort and Output are not useful KPIs. While the business ultimately cares about the impact, product teams need to focus on outcomes because it can often be challenging to know how to move impact metrics. Leadership need to convert impact metrics into outcome metrics that teams can use to track progress and react quickly. Once in place teams can move quickly and build awesome products.

This Week’s Updates

Enabling the Team

8 Reasons Why Co-Leaders Fail by Anand Joshi
Co-leaders need to lean into conflict more than others so that they can agree on the boundaries and where each other shines.

Handelsbanken: A Budgetless Banking Pioneer by Joost Minnaar
With over 11,000 employees, Handelsbanken has successfully embraced a budgetless model in the 1970s. Joost explains how this model works.

Product Direction

Aligning KPIs to Ensure Strategy Success by Rory Madden
Culture eats strategy for breakfast. But KPIs drive culture. This article explores how to effectively align KPIs with your product strategy to ensure success.

Why Adding Revenue Numbers Makes Prioritization More Effective (and How To Do It) by Jeff Gothelf
Linking you product strategy to revenue helps with prioritisation and stakeholder buy-in.

Continuous Research

Turn It Up or Turn It Down by Adrian Howard
Rather than asking when things should start and stop, or how long they should take, ask what value that activity is providing and why we’re doing it.

Strategic UX Research Doesn’t Need Fancy Tools by Ed Orozco
Over-relying on tools can become a burden and a blocker. You can get started with very little.

Continuous Design

The Already-Here Future Of Prototyping by Brad Frost
Should designers code? It helps to design better interfaces. Brad shares his process of using AI to test designs.

The Complexity Paradox of ChatGPT, AI and UX by Built For Mars
As the underlying technology improves, interfaces like ChatGPT get harder to use. Does this explain the strategy for Apple Intelligence?

Continuous Delivery

Extreme Programming Meets the Cloud: How Serverless Would Have Been XP's BFF by Piero Bozzolo
XP was big back in the late ‘90s and early 2000s but it's principles are still as relevant today as ever.

The C4 Model by Simon Brown
Software architecture diagrams are difficult to create and interpret because there are no standards. The C4 model outlines 4 different levels of abstraction to create diagrams to improve legibility.

UXDX EMEA:
UXDX EMEA is on this week!

It’s going to be a great few days packed with exciting learnings, inspiration, new connections and a little bit of fun thrown in for good measure.

Hopefully we’ll see you there.

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Video of the Week:
Designing

Discover invaluable insights on navigating leadership and organizational dynamics in this engaging conversation with Mamuna Oladipo, VP of Product at Shopify. With experience leading teams of up to 700 people, Mamuna shares practical strategies for building strong remote team cultures, managing cross-functional teams, and navigating career transitions. Whether you're leading a small startup or a large enterprise, Mamuna’s approach to empathetic leadership and effective communication will inspire you to elevate your management skills. Check it out now👇👇

The Results of Last Week’s Poll

The question: How much context do you have behind strategic decisions?

While 38% of people feel that they have the full understanding of the why behind strategic decisions it means that nearly two-thirds of people working on products don’t fully understand the decisions that are guiding their work.

A strategy is the framework that enables teams to be autonomous. If teams don’t understand why the strategy exists or what areas they should and should not focus on then they are going to make decisions that seem wrong to leadership.

While I think this has been trending in the right direction over the past few years, there is still a lot of work to do.