Saturday, July 09, 2005

Performance = Product Revenue?

Should a company evaluate a product manager's performance in terms of product revenue (i.e. revenue generated by sales of the product)? I don't think so.

Certainly we want to hold a product manager accountable in terms of metrics that are relevant to the company's success. What could be more relevant than product revenue? Unfortunately, you can only hold someone accountable for that over which they have responsibility.

Sales, development, marcom, and customer support all play an integral part in making a product a success. A product manager interacts with all these departments. However, a product manager may perform his job perfectly, yet failure in any of these departments may still lead to low sales. It therefore doesn't make sense to evaluate his performance in terms of product revenue.

I can think of a situation in which it is fair to judge a product manager's performance in terms of product revenue: when the product manager has full managerial control, including hiring and firing authority, over every person working on the product - sales people, developers, and marcom folks. This situation is exceptional.

In a future entry, I'll describe how I believe a company should evaluate a product manager's performance.

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