Measure product discovery impact: Product vs Process OKRs

In a perfect world, hitting the right product outcomes for product teams would be a left-hand play every other month or quarter.

However, that’s not the case.

The world is not perfect and there are multiple conflating variables that might impact your product discovery success. Think of outliers like Covid-19 lockdowns.

And needless to say, the product discovery process is also an iterative process that improves over time. A high-performing discovery team will hit the right outcomes better than a low-performing team and that performance improves over time as the discovery process itself improves.

As Tim Herbig points out:

Keep in mind that the primary job of a Product Discovery OKR is to make Product Discovery work a visible priority for your team. It doesn’t always need to be the perfect incarnation of existing OKR blueprints.

OKRs, as the tradition goes, are super helpful in structuring your work during Product Discovery.

Understanding Process vs Product OKRs

Product discovery involves two fundamental aspects: refining the process itself and achieving specific product-related objectives.

→ Process OKRs focus on enhancing the efficiency and effectiveness of the product discovery methodologies you adopt.

→ Product OKRs measure the tangible outcomes derived from these efforts, that you can measure after product delivery (And the most important ones for your stakeholders, as well).

In short, teams should be evaluated by both categories of OKRs, i.e. how efficient was their cadence of activities and how they performed against their outcome.

Types of Process OKRs

Product teams certainly spend a significant time in setting up the actual product discovery process, so it makes total sense to make that a visible priority for your team. Setting up OKRs at this stage is a must. Let’s look at a few examples:

Example 1: User Insights

O - Collect 100+ actionable user insights

• KR1 - Run X user interviews within a given timeframe
• KR2 - Have a backlog of Y ideas derived from user feedback

Example 2: Time efficiency

O - Improve the efficiency of product discovery process

• KR1 - Implement a sprint process for design & dev of new features
• KR2 - Reduce time spent on user research by 30% with automated survey tools
• KR3 - Reduce time to validate ideas by 50% with rapid prototyping & testing

Types of Product OKRs

These metrics guide the direction of the product such that it can significantly accelerate the impact of the product on the business. Each product manager can define individual objectives, crafting key results for their product teams spanning design, engineering, and other functional departments. For instance:

Example 1: Customer satisfaction

O - Improve customer satisfaction and retention by Q1

• KR1 - Achieve a minimum score of 8 in NPS
• KR2 - Reduce customer churn by 20%

Example 2: Product adoption

O - Boost product adoption rates by Q2

• KR1 - Increase user engagement by 30% through new releases
• KR2 - Achieve a 25% growth in active user base

Example 3: Business revenue

O -  Achieve $5M ARR by EoY

• KR1 - Develop and launch three new features in the next 1 month
• KR2 - Achieve a 15% increase in average deal size within the next 3 months

Exercise: Make Your Own OKR Dashboard

Here’s a quick exercise to build your own OKR dashboard.

• Define Your Objective: Write a clear and ambitious goal for your product in place of Objective X. Basically, what do you want to achieve in this timeframe (e.g., quarter)?
• Break it Down: In this column, list 2-3 measurable ways you'll know you're achieving your objective. Be specific and use quantifiable metrics (e.g., increase user engagement by 20%).
• Assign, Track & Prioritize: Assign owners for respective KRs, track & update progress, and gauge priorities for each key result so as to consistently meet customer needs on time.

Get access to our template here → https://docs.google.com/spreadsheets/d/1KbUmG42y9pTuxsBtbRar4MoMqDrTrljpnys1EhZSS8g/edit?usp=sharing

Best practices to measure product discovery success

1. Set a single objective for each quarter for the entire product team. Different objectives can be sequenced out across multiple quarters but one single quarter should always be anchored on one common objective. And most importantly, make sure it aligns with the overall business goals.
2. Avoid forcing unproductive objectives just for the sake of setting OKRs, without getting clarity of real customer pain points. For instance, setting an objective of “removing low-used features to improve overall margins” can have a boomerang effect when you find out that the least popular features have been of high value to some of your most valuable customers.
3. Every key result metric should be tracked in terms of current state vs targeted state. For instance, daily active users (DAUs) will give you a concrete no. of users who are actively using your product on a day-to-day basis but not exactly the progress towards “creating more powerful features to improve adoption”.
4. Set achievable OKRs in the first place. If a team has a target and surety that they can achieve 100% of the time, they'll lack motivation to innovate. Conversely, a target achievable only 20% of the time will discourage them. Ideally, OKR targets should be 60-80% achievable, requiring effort to reach full completion.

Summing it up

Measuring product discovery impact requires a healthy balance between optimizing process efficiencies and achieving product-related objectives.

By setting clear process and product OKRs, and leveraging frameworks and real-time data insights, product teams can optimize decision-making and deliver customer-centric solutions that drive growth and satisfaction.