The difference between Goals, metrics, and strategy in Product development and how they complement each other
As I said in my previous article, I have been conducting workshops with different startups from different industries. In these workshops, I have been coaching about product health. You can’t talk about product health without talking about metrics. The product health is measured. Through this journey of coaching, I have learned that most people confuse metrics and goals. Others also even confuse the strategy with the metrics. Every time I gave the startups the exercise of setting metrics, I have seen people writing goals and other strategies. That’s why I want to dedicate this article to clarifying the difference and how they complete each other in the cycle of product development.
Goal, strategy, and metrics are the terms that we frequently mention in product development. Each startup has goals and ways they want to achieve goals. Every team defines success differently, which means even the ways of measuring success are very different. Let’s now discuss each of the 3 terms in detail, their differences, and their relationship in building digital products.
Goal
It will be hard for you to find a team or a startup without goals. Goals are set everywhere. I define a goal simply as a desired outcome. Goals can be set on a daily basis, weekly, monthly, quarterly, or even annually. A goal shows what a startup or a team wants to achieve. A goal can be “ Increasing our quarterly revenue by 35%”,“ Hitting a certain number of paid subscribers after one month” or other different outcomes that you and your team can expect in a certain period of time.
The fact that goals need to be measurable, makes it hard for people to differentiate them and metrics. If you set a goal, it should be something that you will know whether you achieved it or not, which means sometimes numbers will be part of the goal, like the examples of goals I gave.
Now let’s say we have an e-commerce store of shoes and our goal is to “increase our quarterly revenue by 35%”. What’s next when the team sets a goal? They start figuring out how they will achieve it. Ways or tactics that can be used to achieve goals. And how they will be measuring their progress towards the goal, because if it’s a goal to be achieved at the end of the quarter, you can’t wait for 3 months to check if you achieved it, you should track your progress so that if your tactics are not working you can change accordingly. This takes us to the second important term which is Strategy.
Strategy
The strategy is simply the way you plan to achieve your goal. Strategy is more of tactics that you plan to use to achieve the goal. Given the example we have of an e-commerce product with the goal of increasing its quarterly revenue by 35%, the question now is how are they going to achieve that goal. They have 3 months of trying different ways. Now let’s say they sit down as a team to find what can help them achieve that, and they realize that people have been complaining about the delivery fees, they might say okay let’s reduce the delivery fees by 30% to see if it can increase the number of sales made at least by 10%. The idea of reducing the delivery fees so that you can increase sales is a strategy. Why is it a strategy? It’s one of the methods that we want to use to achieve our goals. Do you remember the goal? Now that’s one of the strategies to achieve our goal. Have you realized that sometimes strategies can also involve numbers, now that’s where most people fall, when they see a number, automatically they think it’s metric. Not everything with a number is a metric.
Now that we have one of the strategies that can be used to achieve our goal, the next thing we will need is to know the impact of our strategy on our goal. How progressive are we towards the goal? Can we continue with the same strategy or should we change or iterate in one way or another? We can now learn that information only by setting and measuring the right metrics.
Metrics
According to Daniel Miesler’s article, Metrics are standards of measurement that capture the efficacy, performance, or quality of a plan, process, or product. That definition explains it very well. First of all metrics are measurements. Now that we have a goal and a way to achieve that goal, the metrics will be set so that we can measure the efficacy of our strategy, and by measuring it, we will know if we are on the right path or if we should adjust or change something.
For example, if in our plan we think that reducing the delivery fees will increase the number of sales, our metric would be something like “The number of successful deliveries made per day”. If the number of deliveries increases, it means we are now selling more than we did before, which means we will be increasing the revenue. Tracking the number of successful deliveries will show us the status on a daily basis, if our strategy is increasing sales or not, if not we can change or iterate accordingly.
I hope with the examples I shared with you, you can understand the relationship between Goals, strategies, and metrics as well as their differences. When we are in the exercise of setting metrics, and someone comes up with a statement, to identify what it is, we ask the next 3 questions and when we answer them we know if it’s a goal, a strategy, or a metric. The questions are the following: Is this something we want to achieve? Is it something that will help us achieve what we want? Is it something that will help us to know the progress or status? Your statement will have one Yes and 2 NOs. if it’s a yes on the first question, then that might be a goal. If it’s a yes on the second question then it might be a strategy. If it’s a yes on the third question then it might be a metric.
I hope this article helped to shed more light on this topic and if there are still some questions about it, please let me know in the comment section so that we can clarify everything.