Comparing Metrics, Outcomes, and Flywheels in Product Management

Coming from SAFe background where ART emphasizes continuous delivery and feedback cycles, I was thinking how metrics, outcomes, and flywheels in product management align with the Scaled Agile Framework (SAFe) as they all focus on driving continuous improvement and delivering value. Metrics, outcomes, and flywheels are similar to an Agile Release Train (ART) in SAFe as they all focus on delivering continuous value and alignment across teams. Metrics guide progress, outcomes ensure value delivery, and flywheels create sustained momentum, much like how ARTs synchronize multiple teams to achieve long-term, incremental growth and success of the product.

1. Metrics

Definition: Metrics are quantifiable measures used to track and assess the status of a specific process or activity. They are often used as indicators of performance or progress.

Purpose: The primary purpose of metrics is to provide data-driven insights that help teams make informed decisions. Metrics can be leading indicators (predicting future performance) or lagging indicators (reflecting past performance).

Examples:

• Customer Acquisition Cost (CAC): The total cost of acquiring a new customer, including marketing and sales expenses.
• Monthly Active Users (MAU): The number of unique users who interact with a product within a given month.
• Churn Rate: The percentage of customers who stop using the product during a specific period.

Metrics are essential for tracking the health of a product, but they must be used in the right context. Misinterpreting metrics can lead to incorrect conclusions, so they should be considered alongside outcomes.

2. Outcomes

Definition: Outcomes are the results or impacts achieved as a result of specific actions, strategies, or initiatives. They are the end goals that organizations aim to achieve.

Purpose: Outcomes focus on the value created for the business and its customers. They go beyond metrics to answer the "so what?" question. For instance, an increase in MAU (a metric) is good, but the outcome could be increased revenue or improved customer satisfaction.

Examples:

• Increased Customer Satisfaction: Resulting from product improvements that address user pain points.
• Revenue Growth: Driven by higher conversion rates or upselling existing customers.
• Market Expansion: Entering new geographical regions or demographic segments.

Outcomes are often broader and more strategic than metrics, representing the bigger picture of what the company seeks to achieve.

3. Flywheels

Definition: A flywheel is a self-reinforcing loop that builds momentum over time, making it easier to sustain growth. In a business context, flywheels are systems where outputs are reinvested as inputs, creating a cycle of continuous improvement and growth.

Purpose: Flywheels are designed to create sustainable, long-term growth by capitalizing on the compounding effects of incremental improvements. The more a flywheel spins, the more energy it stores, leading to exponential growth.

Examples:

• Amazon's Customer Experience Flywheel: Amazon’s flywheel begins with a wide selection of products that attract more customers. More customers attract more sellers, which further increases product selection and lowers prices. This enhances the customer experience, leading to more sales, and the cycle continues.

• Content Creation Flywheel (e.g., YouTube): Content creators upload videos, attracting viewers. The more viewers, the more ads are shown, generating revenue. This revenue attracts more creators to the platform, increasing the content available, which attracts more viewers, and the cycle repeats.
• GitHub's Developer Network Flywheel: As more developers use GitHub, more repositories are created. This attracts even more developers to collaborate and contribute, leading to more tools, integrations, and resources, which in turn attracts more users.

Flywheels differ from traditional growth strategies in that they emphasize continuous momentum. Once a flywheel is in motion, it requires less effort to maintain its speed, as each component of the flywheel reinforces the others.

Scenario: Managing Flywheel Squads with Varied Performance

Context

Imagine you’re a Product Manager overseeing a large-scale e-commerce platform. The platform’s success depends on multiple flywheels, each responsible for a critical aspect of the business. The flywheels include:

1. Customer Acquisition Flywheel: Focuses on attracting new users through marketing, SEO, and referral programs.
2. Product Selection Flywheel: Aims to increase the diversity and quality of products available on the platform by onboarding new vendors and optimizing the product catalog.
3. Customer Retention Flywheel: Works on improving customer loyalty and reducing churn through personalized recommendations, loyalty programs, and excellent customer support.

Each of these flywheels is managed by a different squad. Over time, you observe that some squads are performing better than others. For instance, the Customer Acquisition Squad is driving impressive results, significantly increasing user numbers. However, the Product Selection Squad is struggling to onboard new vendors at the expected rate, and the Customer Retention Squad is facing challenges in reducing churn.

Approach to Addressing Varied Squad Performance

1. Diagnose the Issues

Start by conducting a thorough analysis to understand why certain squads are underperforming:

• Product Selection Squad: Is there a bottleneck in the vendor onboarding process? Are the tools or strategies they use outdated or inefficient? Are they facing issues with vendor relationships or competition?
• Customer Retention Squad: Are they using the right data to personalize recommendations? Is there a gap in the customer feedback loop? Are they dealing with resource constraints?

Conducting retrospectives and stakeholder interviews can provide insights into the root causes of these issues.

2. Foster Cross-Squad Collaboration

Encourage high-performing squads to share best practices with struggling squads. For example:

• The Customer Acquisition Squad could share insights on effective user segmentation and targeting, which might help the Customer Retention Squad improve their personalization strategies.
• The Product Selection Squad could learn from the acquisition techniques of the Customer Acquisition Squad to attract new vendors similarly to how new customers are attracted.

Facilitating regular knowledge-sharing sessions and collaborative workshops can break down silos and foster a culture of mutual support.

3. Reevaluate and Adjust Objectives

Reassess the goals and KPIs for each squad. Sometimes, underperformance might stem from unrealistic targets or misaligned objectives. For instance:

• Adjust the Product Selection Squad’s focus from quantity to quality of vendors, emphasizing long-term relationships over sheer numbers.
• Modify the Customer Retention Squad’s objectives to focus on specific churn drivers, like improving user experience during critical customer journey stages.

Realigning objectives can provide clarity and a renewed sense of purpose for the squads.

4. Provide Targeted Support and Resources

Once you’ve identified specific challenges, provide the necessary support:

• Training and Development: Offer targeted training programs or workshops to upskill squads in areas where they lack expertise.
• Tools and Technology: Ensure that the squads have access to the latest tools, analytics, and technology to perform their tasks effectively.
• Mentorship and Coaching: Pair struggling squads with mentors from high-performing squads or bring in external experts to guide them.

Tailoring support to the specific needs of each squad can help address their unique challenges.

5. Monitor Progress and Iterate

Implement a system of continuous monitoring and feedback:

• Regularly track the performance of each squad using specific metrics relevant to their flywheel.
• Hold bi-weekly check-ins to discuss progress, challenges, and opportunities for improvement.

If a squad’s performance doesn’t improve after implementing changes, consider reorganizing the team, reallocating resources, or even rethinking the structure of the flywheel itself.

Conclusion

Understanding the differences between metrics, outcomes, and flywheels is crucial for effective product management. Metrics provide the data needed to track progress, outcomes reflect the success of strategies in delivering value, and flywheels ensure sustainable, long-term growth. By leveraging these concepts together, product managers can drive their products to new heights and achieve lasting success.

However, when managing squads assigned to different flywheels, it’s essential to take a proactive, supportive, and iterative approach. By diagnosing the issues, fostering cross-squad collaboration, reevaluating objectives, providing targeted support, and continuously monitoring progress, you can help underperforming squads catch up and contribute to the overall success of the business.