Skip to main content

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.

Comments

Popular posts from this blog

Why Spreadsheets Suck for Prioritizing

The Goal As a company executive, you want confidence that your product team (which includes all the people, from all departments, responsible for product success) has a sound basis for deciding which items are on the product roadmap. You also want confidence the team is prioritizing the items in a smart way. What Should We Prioritize? The items the team prioritizes could be features, user stories, epics, market problems, themes, or experiments. Melissa Perri  makes an excellent case for a " problem roadmap ", and, in general, I recommend focusing on the latter types of items. However, the topic of what types of items you should prioritize - and in what situations - is interesting and important but beyond the scope of this blog entry. A Sad but Familiar Story If there is significant controversy about priorities, then almost inevitably, a product manager or other member of the team decides to put together The Spreadsheet. I've done it. Some of the mos...

5 Ways Companies Make Product Decisions

In the last blog entry, we reviewed the  four problems that companies face, or are trying to overcome, as they make product decisions .  Now we'll look at the ways that most companies make their product decisions. Companies that develop, market, and sell products and solutions make strategic and ongoing tactical decisions.  They decide what features to include in their products, what messages they will use to communicate the value of their products, what marketing tactics they will use, what prospective customers they will target, and many day-to-day choices. Whether or not these decisions are deliberate or ad hoc, most companies use some combination of the following ways of making product decisions. (A downloadable "map" that summarizes the product decision landscape is included at the end of this article.) Customer Wants Product decisions based on feature requests, focus groups, and what prospects and customers say they want. Companies are selling products to ...

Is Customer Development Pseudoscience?

The “Science” of Lean Startup Lean startup practitioners embrace the scientific method, seeking the "truth" about what business model and strategy will lead to product success. We do so by: Formulating hypotheses Crafting and running experiments to test them Learning from the experiments Iteratively feeding our learnings back into revised hypotheses Sounds pretty scientific, at least in spirit, doesn't it? Yet this process actually neglects a key ingredient in the scientists' mode of operation. To identify what’s missing, let’s examine “customer development”. Customer Development Steve Blank is one of the pioneers of the lean startup movement. He introduced into the lean startup lexicon the term “customer development”. Customer development consists of sessions and interactions with customers to test hypotheses. For example, a product manager might interview a prospect, asking if she agrees with the product manager’s hypotheses about the problem...