On KPIs and Building Blocks

Tue 06 October 2015 by yaniv

Few days ago I presented our product vision and roadmap to our R&D group. At the end of my presentation I was asked what gives me confidence that we build the right stuff. I didn't think too much, and answered that our vision and product roadmap define the what. Knowing our partners and users, I added, and listening to their feedback, problems, and goals help us plan the when. That's a typical product guy's answer, yet it's not a satisfactory one.

The truth is that vision and users' feedback alone don't ensure fail-proof products, and you shouldn't rely on them for that. In fact, much of what you build will fail. The trick isn't to make perfect predictions, but to take small risks with possible high return. To that end you should obsess yourself over KPIs and building blocks.

Good KPIs are numeric representation of a vision, and therefore serve as your lighthouse. Build something that advances you toward your vision, and your KPIs will encourage you to scale and keep investing in it. If a feature you built, on the other hand, takes you off-course, your KPIs will signal that you should cut your loses short and kill it immediately.

Building blocks means developing stuff that can be reused. This is crucial if you want to minimize risk while moving fast and experimenting with many new features. You can move fast because when you have enough blocks in your arsenal, introducing new features becomes mere integration of existing components, like playing LEGO. The faster you move, the lower your risk is. This is true not only because you have to invest less time and resources in each features, but also because you incur less sunk costs. Say a new feature doesn't improve your KPIs, you don't throw it all away. You can remove the feature while keeping its components for later use. Your failure becomes a future investment. On the upside, if a new feature turns out to be successful, you can scale it immediately, since it's reusable.

Use KPIs to make sure you're going in the right direction towards your vision. Insist on developing building blocks and you'll get there at the fastest and most efficient way.