Product outcomes vs business outcomes
Often teams choose to pursue business outcomes, but that makes it much harder to actually create value for the business and its users.
Product teams should prioritize product outcomes over business outcomes because they are more closely tied to the user experience and can ultimately lead to long-term business success. Business outcomes, such as revenue or market share, are often used as the primary measure of success for a product. But they are lagging indicators that do not necessarily reflect the value a product delivers to its users.
There are several reasons why product teams shouldn’t pursue business outcomes:
- Business outcomes are lagging indicators: Business outcomes, such as revenue or market share, are metrics that measure the success of a business. However, by the time a product team sees these outcomes, it is often too late to take corrective action. The team has already made the choices that led to the current situation.
- Business outcomes are too broad: it’s hard to focus a team’s effort if they can do literally anything. Business outcomes, like revenue, are complex.
- It’s hard to isolate the impact outside of the product team: Many factors outside of the product team, such as marketing and sales efforts, can impact business outcomes. This makes it difficult for the product team to accurately gauge the impact of their work on these metrics.
Product outcomes, on the other hand, are metrics that measure the impact a product has on its users. They map closely to what users do and how they get value from the product. A few examples of product outcomes:
- % of users who play a song in the first 7 days
- Average # of minutes watched
- % of users who invited a contact
By focusing on product outcomes, product teams can create products that truly solve problems for their users and drive customer loyalty and retention, leading to increased revenue and market share in the long run. Because if you want to increase, for example, average number of minutes watched in a streaming service, you have to understand why users are not watching more and solve those issues.
In summary, while business outcomes are important (crucial!), product teams should focus on leading indicators of business success: product outcomes. They are a proxy of user success, which makes for truly loveble products.
Want to know more about product discovery and idea validation?
Check my online course Product Discovery Using the Opportunity Solution Tree.
