From KPI to OKR, how can high-level product people promote the rapid growth of business

Time:2022-6-20

Introduction: whether it’s the core big goal, O (objectives), Polaris indicator, wonderful equation, etc., the core organization collaboration is required to promote the focus of the whole goal and the landing of the process.

As a product manager, I believe many people have encountered the following soul torture:

The order is expected to increase by 5 times. Do you have any suggestions?

At present, the app has only 10000 new customers. What can we do if we want to achieve 50000 new customers?

The market share needs to be increased from the current 50% to 70%. Is there any way for a product manager?

Even the boss will ask us from the perspective of overall commercialization:

If you want to increase the overall revenue from 1billion to 10billion within three years, what should you do?

KPI vs OKR

These are common growth problems. Once such problems are involved, some students in charge of product business may disassemble KPIs, for example, doubling the KPI for each student in charge of order business, or pulling more traffic based on some channels and finding more channel parties to promote, etc. But can growth really be achieved based on KPIs, channels and traffic?

From KPI to OKR, how can high-level product people promote the rapid growth of business

There are two famous growth flywheels in the history of the Internet, one is Amazon growth flywheel, and the other is Uber growth flywheel. Their base is a typical platform based and product based Internet business.

Take the Amazon growth flywheel as an example. There are two roles on the Amazon platform, one is the seller, and the other is the customer experience. In fact, Amazon’s overall growth strategy is based on how to achieve a lower cost. Because the cost is lower, the price that can be provided to consumers will become lower. When the consumer price drops, the customer experience will rise, and at the same time, the traffic on the entire Amazon platform will continue to rise. When the platform traffic continues to rise, more sellers will join the Amazon platform.

Amazon’s growth flywheel is sustained and systematic. After the experience is optimized, it can run smoothly. In this process, if the cost and price are further compressed, the overall flywheel can also rotate with higher efficiency. However, at present, we often disassemble KPIs based on new channels, business channels, or sales channel organizations or businesses. In fact, it is very dangerous to disassemble KPIs blindly.

KPI has been popular for a long time. In the early days, Alibaba, Tencent and other large Internet companies used KPI at first, but now many companies have gradually completed the transition from KPI to OKR.

What is OKR? In terms of comparative literature and art, it is a process from “looking at the moon” to “building a rocket”. In short, it is a set of management tools and methods for clarifying and tracking objectives and their achievement. The main objective of OKR is to clarify the “objectives” of the company and the team and the measurable “key results” achieved by each objective. Among them, the goal is to set a qualitative time goal (usually a quarter). The key results are presented in the form of quantitative indicators to measure whether the objectives have been achieved at the end of this period.

From KPI to OKR, how can high-level product people promote the rapid growth of business

How to formulate a reasonable OKR

First, choosing OKR will change the thinking mode. When making KPIs, we will only consider the objectives. However, when making OKR, we should focus on the core objectives and at the same time, we should also pay more attention to the implementation path, such as how to start from the user experience or business model to further think about the path that can be achieved and how to achieve the status between a-b.

Second, choosing OKR is more a choice orientation. It encourages us to do the right thing, not just to be slaves to indicators.

Thirdly, OKR is an organizational method to a greater extent. It represents the integration of organizational resources and collaboration, so that team effectiveness can be maximized. On the whole, OKR is the target culture of data-driven and collaborative operations.

From KPI to OKR, how can high-level product people promote the rapid growth of business

So, how to formulate the OKR of the business? The diagnostic trilogy methodology should be mentioned here:

First, Polaris index.

Second, split a wonderful equation based on Polaris indicators, business models, user experience, user journey, etc.

Third, based on data technology, the whole team cooperates.

From KPI to OKR, how can high-level product people promote the rapid growth of business

First, let’s look at the first step: Polaris indicator.

Polaris indicator is the intersection of enterprise business objectives and enterprise user value. For example, many video websites rely on advertising to realize their core. For them, from the perspective of short-term goals, it must be to improve advertising revenue. More often, the short-term goal may be to improve the click through rate of users’ advertising, etc. But by further thinking about the scene value that video websites can provide to users, we will find that for users, their appeal is to have fun. From this perspective, the real Polaris indicator of a video website should be the length of use of the website.

Next, let’s see how to find the Polaris indicator:

Rule a: whether this indicator can reflect the core value obtained by users from the product. For example, users watch video websites for fun, use search engines for effective search results, and use social products to obtain effective social feedback and establish effective social connections. Can these indicators reflect the core values of users?

Rule B: whether it can lay a foundation for the product to achieve long-term business goals. For example, whether the goal of commercial realization, whether it is advertising or order trading, is related to these aspects. When this indicator shows positive growth, whether the commercial foundation can be more solid.

Rule C: can this indicator feed back user activity. For most Internet products, only when users become more active can they further help users explore the core values of the products.

Rule D: when this indicator gets better, whether the whole company is developing in a good direction.

Rule e: whether the indicators are simple, intuitive, easy to obtain, and can also be disassembled.

Rule F: whether the indicator is a leading indicator rather than a lagging indicator.

From KPI to OKR, how can high-level product people promote the rapid growth of business

Step two, the magic equation.

There are many core elements that can affect Polaris indicators. Take the popular community group purchase as an example. The more orders users place on the platform, the more value users get from community group purchase. In addition, community group purchase is also the basis of long-term business value of an enterprise, so Gmv is a measurement standard. For some businesses, they may not have such a very guiding goal as Gmv, but they can also “take the user journey as the main line to improve the wonderful equation”.

From KPI to OKR, how can high-level product people promote the rapid growth of business

The common user journey is the pirate law of aarrr. Obtain users from the market or various channels, and activate these users with operational means or functional design. In this process, some users will be your core users, or they will become retained users after their needs are met. Then, for this part of users, they can obtain some benefits by realizing services and commercial services. Finally, when the needs of these users are met, they will recommend your service to others. The whole process can promote the positive development of products or services and the healthy growth of users.

When the user journey phases are disassembled, we can further find out what the core goals of users in each phase are and what their behavior may be when they want to achieve these goals. At this time, product enterprises can do user portrait analysis based on these, so as to improve customer acquisition efficiency, optimize landing page and purchase process, establish evaluation system, and improve user repurchase mechanism through product recommendation, membership mechanism, etc.

By disassembling a wonderful equation, we can clearly know the user’s goals, user behavior, and what we need to do in this process.

After we have found the Polaris index and wonderful equation, the next step is to land cooperatively based on data technology. Only the landing strategy is a good strategy, otherwise it is just a PPT. Therefore, it is necessary for all teams to carry out organizational collaboration. Based on common goals, each organization should be driven to cooperate through data.

From KPI to OKR, how can high-level product people promote the rapid growth of business

The data foundation is the data quality. Any analysis, decision-making and operation without data quality assurance may not achieve good results. Common data comes from data embedding points and data management. You can ask yourself how many embedding points the company’s data has, whether it is buried correctly, what is in use, what is not in use, and what is abnormal? How often does the team perform data recheck? Does each OKR have a person who is clearly responsible for the Kr? When these questions are discussed clearly, we can better answer the above overall process questions oriented by OKR management.

From KPI to OKR, how can high-level product people promote the rapid growth of business

The core of OKR is to build a set of standardized management by analyzing products, help people monitor their own Polaris indicators and the development of each wonderful equation, and answer the questions that each user should care about in their journey. At this time, based on Kr, we can reach o, Better data assurance can be achieved by improving Polaris indicators based on the wonderful equation.

From KPI to OKR, how can high-level product people promote the rapid growth of business

To achieve OKR, we need to consider the role of embedding points. Because this has a great impact on the long-term development of the business, we need to sort out the needs, design specific events, implement embedding points and verify data, form a standardized management + reliable collection + cross-border unification = sustainable high-quality data assets, and establish a set of sustainable high-quality data assets.

We can focus our attention on managing multiple indicators in one map, and quickly understand the Polaris indicators and all KRS through a large map, and the corresponding progress of each part of the wonderful equation.

Case study: core transformation of air travel app ticket booking business

From KPI to OKR, how can high-level product people promote the rapid growth of business

For the airline travel app ticket reservation business, the core business transformation process is to query tickets – view query results – click reservation – and complete payment at the cashier. This is a very common ticket purchase funnel. In this process, we need to pay attention to several issues: which users have lost? At the same time, we should first define the concept of loss, and when and where these users are lost, why they are lost, what may have happened to cause their loss, how serious the loss is, and whether we should solve these loss problems in a high priority way.

When using Youmeng + to serve customers, we help them build a conversion funnel from search results, click, click to book, to the cashier and final payment. Through the funnel, we can clearly understand the lost customers. And carry out refined operation for corresponding customer groups.

From KPI to OKR, how can high-level product people promote the rapid growth of business

Carry out customer group analysis through actual reservation, information filling and actual experience. The corresponding product leader shall prompt the product interface and optimize the product process according to the analysis results. For example, some new price calendars have been added, and in the product design, a clear distinction has been made between each flight, and a floating layer for selection has been added. In the user process, passengers can be directly added to optimize the overall process. After the process optimization is completed, after a period of monitoring, the overall conversion rate of the travel app has increased to 23.5%, which, combined with the number of new users per day, has increased the revenue of about 700000.

As a product manager, especially as a high-level product person, you must have the ability of insight and analysis to quickly find the crux behind the data representation.

To implement the data-driven OKR strategy, it is very important to take small steps and fast iterations. At present, the needs of most companies are realized through the combination of bi+ data teams. However, some students will feel the same way. They sometimes miss the schedule and may even miss the changes in the current market. Therefore, with the help of Youmeng +, we can quickly mine the factors that affect the change of indicators, and further drill down the core performance of users through the path analysis function.

To sum up, whether it’s the core big goal, O (objectives), Polaris indicator, wonderful equation, etc., it needs the core organization collaboration to promote the focus of the whole goal and the landing of the process.

Author: Youmeng + product expert fanqianyun
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