How do you measure and demonstrate the value and return on investment of your strategy?

As a product manager, a key goal of my job is to define the problem. Doing so requires also quantify the size of the problem. This naturally leads to metrics for success and potential solutions. I've also used the RICE framework to compare value propositions across projects in order to prioritize the team on the biggest ROI.

While the formula for ROI is simple: [ROI = (Net Profit / Investment Cost) x 100], calculating the ROI involves critically thinking about three main topics: (1) Is the strategy generating the desired outcomes and results that are closely aligned with the value proposition of the business? (2) Are the resources invested in the strategy being utilized efficiently? (3) How does the strategy contribute to the organization's financial health and growth?

The OKR framework is highly compatible with an Agile mindset, frameworks, tools and systems. People respond well to direction (what and why) and measurement (how we'll know we're making progress). With that your teams will be empowered to keep focus and remove distractions - ensuring that productivity and morale remains high.

While the SMART framework primarily focuses on setting specific and measurable objectives, the Balanced Scorecard takes a broader perspective by considering multiple dimensions of performance. OKRs, on the other hand, emphasize ambitious objectives and measurable key results to drive alignment and focus. Each approach has its unique features and applications, and organizations may choose to use one or a combination of these frameworks based on their specific needs and objectives.

Data tracking is essential! Demonstrating a clear return on investment (ROI) requires a firm understanding of what outcomes or results will move the needle closer to the desired goal. In my experience, it is most helpful to show how the project or recommendations in isolation have led to key tangible and intangible results. This can be done through methods such as the use of pilots, trending comparative timelines, improved survey results and cost savings. The more specific you can be when it comes to establishing a baseline, setting specific goals, and determining the most desirable outcomes, the easier it will be to demonstrate your value.

Throughout my 20 years of experience as a sales manager, I have witnessed firsthand the transformative power of collecting and analyzing customer feedback data in driving sales success! Today there are very sophisticated tools available for both qualitative and quantitative analysis of data points through each step of the customer journey and lifecycle. A few of the essentials are: 1) Surveys and Feedback Forms 2) Customer Interviews and Focus Groups 3) User Analytics and Behavior Tracking - particularly during onboarding 4) Support and Helpdesk Interactions - for existing customers 5) Social Media Monitoring 6) Customer Advisory Boards Finally, the key element is data integration and analysis across all your systems

Here are some key aspects to consider when communicating your story: 1) Use Clear and Compelling Language 2) Use Visuals and Infographics that are relevant 3) Evidence and Data - Support your claims with evidence and data to establish credibility and demonstrate the impact of your strategy 4) Storytelling Approach: Use narrative techniques, such as setting, characters, and plot, to communicate the challenges, actions taken, and positive outcomes achieved through your strategy 5) Alignment with Vision, Mission, and Values: Clearly articulate how your strategy aligns with your organization's vision, mission, and values 6) Tailor the Message to Different Stakeholders

Only rarely will the first iteration yield the greatest ROI. True success lies in the iterative process and your ability to continuously improve your processes and workflows to achieve the desired outcome. This is one reason why it’s helpful to implement small tests of change before further expansion. Each cycle will help you identify opportunities for improvement that will continue to enhance the quality of the result achieved.

Value Stream Mapping (VSM): Value Stream Mapping is a technique used to visualize and analyze the steps and flow of processes involved in delivering value to customers. It helps identify areas of waste, inefficiency, and bottlenecks within the value stream. By applying VSM specifically to the process of calculating ROI, organizations can uncover opportunities for improvement and optimize the way ROI is determined. For example, by mapping out the steps involved in the current ROI calculation process: Identify all the inputs, calculations, data sources, and stakeholders involved.

Here are a few other considerations: Focus on leading indicators, not just lagging metrics. Track metrics that measure progress towards your strategic goals, not just end results. This will allow you to course correct sooner. Consider both qualitative and quantitative metrics. Hard numbers are useful, but stories, anecdotes, and customer feedback also provide valuable insight into your strategy's impact. Align metrics and reporting with your stakeholders' key priorities. Make it easy for them to see how your strategy is contributing to what matters most to them. Continuously revisit your strategy and value proposition as the business environment changes. Regularly revalidate that your strategy is still creating differentiated value.