Questions on Value and Metrics

Ideas on how to measure what matters??Link to complete article?on Substack.

Despite metrics being important to measure they are open to abuse and misuse if not developed in balanced way as evidenced by Wells Fargo performance measurement scandal.

Insights into values and metrics

One thing we can generally agree on is wanting to build products that customers find valuable. So it naturally follows, how can you begin to develop a perspective on knowing what to measure to show value? There are a variety of schools of thought and approaches like Balanced Scorecard Metrics, Key Performance Indicators, Measuring What Matters/OKRs, Flow Metrics?at a macro-level and, Web, Product and Customer Journey Metrics, Lean Product Analytics?at a micro-level.

We need to use metrics linked to customer behaviour to understand value. A metric is a meaningful measurement taken over a period of time that communicates vital information about a process or activity, leading to fact-based decisions. Metrics are usually specialized by a subject area.

We generally measure things when we want to improve against a baseline level of performance. Performance metrics should be constructed to encourage performance improvement, effectiveness, efficiency?and appropriate levels of internal controls.

The challenge today is that we have a lot valuable material that has been developed and shared with respect to metrics like AARRR, HEART + GSM, Customer Goal Attainment?etc. however this content does not explicitly show how it connects to a wider organisational perspective.

Building a value framework with a coherent theory or hypotheses about how you generate value is key to making sure that you focus your organisation’s teams’ time, effort and resources on the most valuable opportunities, problems or challenges.

A value driver tree?is a good way to showcase your mental model of how your organisation generates value. A value driver tree is a way of visualizing a model of a business in a way that links the value metrics (what management or stakeholders care about) to operational drivers (the things that can be influenced to change the value metric). For the below value driver tree you can break it out into more specific parts.

Each part of a value driver tree can be broken out into more specific and contextual parts based on your business, the revenue example below is for an eCommerce site.

Concrete action steps

• Build?Insight Analysis Process?into your way of work by developing a process and structure to be able to move from?Insight to Action to Impact?incorporating fast feedback loops.
• "If you do not instrument to track user behaviour, you will not know what is happening with your product or systems. If you do not know what is going on, you cannot possibly be a great operator. You will not know what to focus on to get the outcomes and impact you desire."
• Despite metrics being important to measure they are open to abuse and misuse if not developed in balanced way as evidenced by Wells Fargo performance measurement scandal.

Link to complete article?on Substack.