How to measure the progress of

Product Goals before it's too late

Published: Jan 7, 2021

Reviewing goals in hindsight to see whether you have succeeded is a common practice amongst product teams. But what if you would not just use your goals to judge results of the past but prioritize your actions along the way?

After all, building products is about learning and iterating. That kind of ongoing iteration and course-correction requires setting and measuring metrics that lead you towards the ultimate goal—Instead of creating a lag between your actions and measuring success.

Ideally, Product Goals help express what you want to achieve, instead of only listing what you want to do.

That kind of achievement is derived from your Product Strategy and serves as a bridge to inform your actions performed during Product Discovery and Delivery activities. Naturally, most product teams focus on metrics that capture the ultimate success from one of the most important strategic themes, like monetization, user engagement, growth, satisfaction, or process quality.

But the point of setting goals shouldn’t just be to measure success at the end of a goal cycle or fiscal year. Instead, the most significant benefit comes from regularly checking-in on the progress towards goals and adjusting your actions accordingly.

Leading and Lagging Indicators in Product Management - Product Goals Cycle

But to experience these benefits, product teams need to rely on metrics that respond to their actions as directly as possible, instead of just reflecting on results of the past.

How to measure the progress of your work before it's too late

A common observation regarding a product teams’ goals is how important they are on a company level, but how little chance of actually “moving the needle” an individual team has.

This leads to the problem that the pace at which these goals change creates a lag in how product teams can receive and act on feedback regarding their work’s impact.

By the time metrics like company revenue or user growth have changed significantly, you can’t tie these lagging indicators to one of your last efforts and are probably already working on the next one.

On the other side, there are (probably) plenty of metrics an individual team can more directly influence. At least in theory.

To adjust actions based on continuously measured progress, teams need metrics that lead them toward creating and measuring success. This is why these are called leading indicators.

To adjust actions based on continuously measured progress, teams need metrics that lead them toward creating and measuring success. This is why these are called leading indicators.

Typical examples could be “number of marketing emails sent,” “page views of product detail pages,” or “CTR of homepage banner.”

In a nutshell, the key differences between leading and lagging indicators can be summarized like this:

Leading and Lagging Indicators in Product Management Definition

But, as so often in Product Management, there’s lots of grey in this seemingly black-and-white perspective on leading and lagging indicators.

Let’s unpack it.

Leading and Lagging Indicators in Product Management Practice

Imagine you’re part of the product team that works on an email service platform’s integrations part. And, for the sake of example, let’s say your whole company cares about subscription revenue during a given goal cycle.

Naturally, an increase in revenue results from winning new customers, upselling users because they are particularly active, or reducing churn. And all three of those drivers will only change significantly through contributions from multiple teams, working in different departments, at the end of a quarter or even a year.

Leading and Lagging Indicators in Product Management - Levels and Cadence

Working on the integrations feature within one of the departments, you now face two distinct challenges:

  1. While you know where your department’s goals fit in with the bigger picture of the company, they still only allow you to review your actions’ impact in hindsight—at the end of the quarter.
  2. And while you could develop more responsive metrics on a team-level, these wouldn’t provide such substantial causation for the company or department priorities.

That’s one of the main challenges to deal with when identifying leading indicators for a team to act on: Trading certainty about how causing an indicator is at a company level, for responsiveness to team priorities.

That’s one of the main challenges to deal with when identifying leading indicators: Trading certainty about how causing an indicator is at a company level, for responsiveness to team actions.

Causation and Correlation of Leading Indicators

While lagging indicators like revenue come with the downside of being difficult to change and slow to act on, they also come with a substantial upside: Certainty.

Because lagging indicators are a definitive result of the past, focussing on changing them comes with high certainty that you’re working on the right priorities. Tying actions to lagging indicators means that you are more likely to prove the direct causation of your efforts to a change in those lagging indicators, even if this proof can only happen in hindsight.

By nature, leading indicators are more “distant” from those lagging indicators. Because they represent more tactical changes that are easier to detect, they can only be treated as assumed predictors of those lagging indicators’ future success.

In our example, the integrations team might arrive at leading indicators they could use to prioritize their day to day work that look like this.

Leading and Lagging Indicators in Product Management - Examples

But how did they get there?

How to identify the right leading indicators for your product

Swapping more certain lagging indicators for harder-to-measure but easier-to-respond-to leading indicators is crucial to avoid a dragging long “build” cycle instead of building things based on detectable changes.

But those detectable changes don’t always have to be metrics within your product. Using a set of guiding questions to identify leading indicators can help you move in the right direction as a product team.

Leading and Lagging Indicators in Product Management - Guiding Questions

A crucial mind shift is to look beyond changes to cause for your users. Especially when you work on a product with insufficient quantitative data, considering actions and behaviors from stakeholders or team members can produce ideas for leading indicators much more quickly.

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