The ONE Number to Measure Product Management Teams?

Net Promoter Score (NPS) is a metric introduced in 2003 by Frederick Reichheld in his popular Harvard Business Review article The One Number You Need to Grow.

NPS is quite popular among executives in multiple industries including high-tech. The biggest advantage of NPS is that it simplifies the objective of a business to creating more “Promoters” and less “Detractors”. This concept is much easier for employees to understand and act upon – compared to complex, hard-to-understand, impossible-to-act-upon metrics.

This Wikipedia article lists more pros and cons of NPS.

The question I’d like to raise today is:

Is there a similar “ONE number” that can be used to measure the performance of Product Management teams?

I believe the answer is “Yes” – read on for my thoughts…

The ONE Number to Measure Product Management Teams

Before I jump into the ONE number – here are some metrics I’ve seen used by some companies, and why I don’t like them.

  • Product Line Revenue
    • PM teams do not control the revenue. Even if they do their jobs extremely well, revenue depends on execution by Marketing & Sales teams – over which PM teams usually have little control, and minimal impact.
    • Variations of “revenue-based” metrics often used include Market Share, Win/Loss %, etc. They suffer from the same negatives.
  • P&L of Product Line
    • I don’t like this due to the same reason as above – PM teams have even less control over Profit & Loss.
  • NPS
    • I like NPS better than the other two metrics above. That said – I’ve personally worked at companies where NPS was determined far more by the Customer Support organization than the PM organization.

I do not like any of these metrics because they measure the performance of a team (PM team) using metrics over which they have little control, and further only a vague idea of how to influence those metrics.

As they say: If you don’t know where you’re going, you’ll probably end up somewhere else! :)

Product Satisfaction Score (PSS)

I believe Product Management teams can be measured quite effectively by the following metric:

  • Product Satisfaction Score
    • PSS focuses on customer satisfaction with just the product.
    • It excludes other factors such as customer support experience, friendliness of sales teams, etc.

My theory behind PSS is that the primary goal of a Product Management team is to understand the wants/needs/desires of customers and to build products that meet them better than competition. PSS is an effective measure of this.

PSS offers the following advantages:

  • Easy for product managers to understand.
  • While PSS does have dependencies on other teams such as Engineering – most PM teams have significant impact on Engineering and hence can influence the outcome.
  • You can measure PSS for each product – and apply it for product managers responsible for that product.
  • As a result, product managers can easily chart the course to achieving higher PSS scores – they control it to a large degree.
  • To use a baseball analogy – my theory is that we should measure a leadoff hitter by a metric such as his batting average or OBP – not by the Win/Loss record of the team, total runs scored by the team, or even his RBI.

I do understand that there is a whole bunch of scenarios where PSS may not make sense – just like NPS doesn’t make sense in a whole bunch of scenarios. But that doesn’t make it any less useful as a metric that can be successfully used in the vast majority of scenarios.

In a future post, I’ll share some practical ways to measure PSS & will further expand on this concept.

Editor’s Note:
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I'm your author, Michael Shrivathsan, an expert in product management with successful experience at several innovative companies in Silicon Valley, USA over the past two decades. I'm also a USPTO patent recipient. For my day job, I'm the VP of Product Management at Accompa, we make the popular requirements management software used by Product Management, Business Analysis, and related teams.

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