Evaluating your effectiveness as a product manager can seem like a complex, and perhaps even elusive, task. You may be intrinsically motivated to evaluate your skills as a product manager. You might wish to present evidence of your superior performance to your employer. Or, you may want to add some clout to your resume before submitting for another position. But where do you start?
Regardless of your motivation, there are succinct and effective strategies, developed by practitioners and authors in our field, to guide you in this task.
Practitioners such as Jock Busuttil, an experienced product management consultant, author and startup mentor, contend that in order to evaluate your success as a product manager, you’ll need to consider your effectiveness in the following areas:
- Idea development
- Roadmapping and planning
These areas form the basis of many product management Key Performance Indicators (KPIs).
Busuttil, along with others including Marty Cagan of the Silicon Valley Product Group, state that it is essential for product managers to recognize the fluidity of their work, and the ways in which product managers work as a sort of ‘oil in the gears’ of an organization, without which the business would ostensibly fail to reach its full potential.
So how much are product managers worth, to their companies?
Nils Davis, a field professional with over 20 years of experience, contends that, “a good product manager is worth between $5 and $10 million in annual product revenue.”
He reached this conclusion by using a formula to determine that the normal ratio of development resources to revenue is approximately one developer per $1 in revenue. The normal ratio of product management to development resources is one product manager per 5-10 developers, Davis said. He posits this as a challenge to product developers, asking, “are you worth $5-410 million a year?”
If you’re not sure how to evaluate your worth in these high terms, Marty Cagan offers an easy to use tool to help determine the answer to Davis’ question, and to help you to improve where necessary. He calls this tool a “product scorecard,” not to be confused with the “Balanced Scorecard” which Cagan argues is somewhat unnecessarily complex for a majority of teams. He suggests that the scorecard can be used to establish the KPIs that product managers, and the organization as a whole, use in decision-making throughout various aspects of production.
Cagan uses an example of a product manager in charge of high-volume seller solutions for an e-commerce company. Though the company strategy may differ, he states for the sake of example that these high-volume sellers bring the majority of the company’s revenue. This company’s scorecard might look something like this, according to Cagan:
1. Average revenue/seller – because we want to encourage sellers to sell more goods
2. Average promotional revenue/listing – because we want to encourage sellers to promote their listings as aggressively as possible
3. Absolute number of high-volume sellers – because we want to grow the number of high-volume sellers
4. NPS of high-volume sellers – because we want the sellers to consider ours their preferred marketplace
So, as Cagan and Busuttil state, though product managers are not in control of certain aspects of the business, it is still the product manager’s responsibility to be invested in every aspect. This means if you’re not satisfied with the customer acquisition strategy, you should work with the marketing department to create a more effective campaign.
Concentrate on the essentials
Cagan’s scorecard can help you to ensure your work is in line with the company’s goals and that you are effectively managing your time concentrating on the essentials. If an idea doesn’t align with a KPI, Cagan suggests taking it off of the list. The KPIs should be adjusted to reflect the natural and necessary changes in the business strategy over time.
The best product managers work diligently, and often intramurally, to tackle problems others may not foresee. They practice anticipatory and meticulously thought-out problem-solving strategies. The success of a product manager can often go unnoticed as much of this work is done behind the scenes, offering dynamic support to various departments and elements of the business. But whether their work is latent or more visible, a successful product manager can have a great deal of positive impact on a company, and be an invaluable asset fiscally and otherwise.
How do you evaluate your own success, and your worth as a product manager? What sorts of KPIs do you consider? Let us know in the comments or you can Tweet us!
The post How Much is a Product Manager Worth? Setting Product Management KPIs appeared first on ProdPad :: Product Management Software.