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Product strategy, objectives and key results (OKRs), and key performance indicators (KPIs) are three distinct frameworks. When applied properly, they reinforce each other, as Figure 1 shows.
The product strategy in Figure 1 describes the approach chosen to make a product successful. It forms the basis for selecting the right objectives, and the OKRs state how the strategy will be implemented. Strategy and objectives help choose the right indicators. The metrics then help determine if the strategy is working and the objectives are met. Let’s look at the three frameworks and their relationships in more detail.
The product strategy is essentially a decision-making framework. You can think of it as a consistent set of choices that guide product discovery and delivery by answering the following four questions:
What a product strategy is not, at least in my mind, is a set of objectives. While you may want to capture user and customer needs, as well as business goals, in your strategy, these are usually not measurable and time-bound.[1] For example, the need, which a healthy-eating app addresses, might be to reduce the risk of developing type 2 diabetes. To put it differently, a product strategy is more than a collection of OKRs. It provides the basis for discovering the right objectives.
If you are looking for a tool to capture the product strategy, try my Product Vision Board, shown in Figure 2. You can download it, together with a handy checklist, from my website, and you can find guidance on how to use it in the article The Product Vision Board.
Objectives and key results, or OKRs for short, are a goal-setting method originally developed at Intel in the 1970s. The objective describes what you want to achieve. The key results state the criteria that have to be fulfilled to meet the objective. OKRs are great to capture product goals, the specific outcomes a product should create. For instance, an objective for the first version of an app that reduces the risk of developing type-2 diabetes might be to help users understand their eating habits and acquire an initial user base.[2]
As this example shows, product-related OKRs can help you state how you intend to execute the strategy. In other words, an objective should be a step towards meeting the needs and business goals. Conversely, if you lack an effective product strategy, you will struggle to discover the right objectives and key results. As mentioned before, the strategy is the basis for setting the right product-related OKRs.
Therefore, don’t blindly accept objectives put forward by senior stakeholders. Use the product strategy to determine which ones you should pursue and which ones you should discard—at least for the time being.
If you work with a product roadmap, you can include your OKRs in the plan. Figure 3 illustrates how this can be done.
Figure 3 shows the elements of the GO Product Roadmap, an outcome-based roadmap which I have developed and which you can download for free from my website. The goal corresponds to the objective, and the date or time frame, features, and metrics can be regarded as key results, as I explain in more detail in the article OKRs and Product Roadmaps.
Does this mean that you should or even have to use OKRs to successfully manage your product? No, it doesn’t. What you should use are outcome-based goals that state the specific benefits your product should create or the problems it should address. If OKRs help you with this, that’s great. If they don’t, don’t worry.
Key performance indicators, finally, are metrics that measure how much value a product is creating. Examples of common KPIs include monthly recurring revenue (MRR), customer satisfaction score (CSAT), and daily active users (DAU).
Note that KPIs are different from OKRs. As mentioned before, the latter state the outcomes you want to create with your product. The indicators are measurements that help you determine if you are on track to realise the desired value. In practice, KPIs sometimes contain a target, for instance, a CAST of 80%. If that’s the case for you, that’s fine. But be aware that you are combining the objective and its metric.
To ensure that you select the right KPIs and collect the right data, use the product strategy and OKRs to guide you. Ask yourself how you can measure progress towards meeting the needs and business goals in the strategy, and how you can tell if an objective has been achieved.
Equally, don’t use KPIs if they don’t help you measure and improve value creation. Don’t fall for vanity metrics that make a product look good but don’t mean much. Avoid what I call appeasement metrics. These are measurements you use to please a powerful stakeholder, not because they help you assess value creation. Collecting irrelevant data creates more work than necessary, and in the worst case, leads to wrong decisions, as I explain in more detail in the article 10 Tips for Using Key Performance Indicators.
While KPIs depend on the strategy and OKRs, the relationship between them is bidirectional. Strategy and objectives assist you in selecting the right indicators, and the metrics help you determine if the strategy is working and if you are meeting the objectives.
The following table shows how product strategy, OKRs, and KPIs differ and relate.
Out of the three frameworks, the product strategy is the most fundamental one. Without an effective strategy, you will struggle to determine the right OKRs and select the right KPIs. You should therefore ensure that you have the right strategy practices in place and spend enough time on product strategy discovery and continuous strategizing.
[1] An effective product strategy often describes a time frame of one to two years for digital products. For hardware-based ones, this period usually has to be extended.
[2] I find that quarterly objectives/product goals work well in product management, especially when they are based on a validated product strategy.
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