Product Management Skills - Articulating impact risk
Your work should have a positive impact on the company.
As a product manager, you have to be able to articulate, separate, and define your risks - the potential negative effects of whatever you are trying to do. Articulating them helps you frame and compare them appropriately - ignoring low risks and mitigating higher ones.
These are the levers you use and the plates you balance as a product manager to create and deliver value.
If your work doesn’t have an impact to the company, then it might not be worth doing. Be sure you can articulate the impact you intend to have, keeping in mind company context. Then, when you make changes - monitor KPIs and metrics.
Impact risk
Impact risk is the risk that the work you are doing is not worth doing for your company. That is, it is the risk that what you and your team are working on has little to no value to your company, relative to other opportunities, or even worse - may have negative impact.
Impact is a particular thing to every company and different teams within the same company will gauge their success by different outcomes. Alignment with your company and your leadership is critical to ensuring you are mitigating impact risk by working on impactful items.
This question of whether your work is impactful to the company or not is, unfortunately, extremely context-specific. Every company is different. Every team is different.
Instead of telling you the answer, I’ll tell you how you can find out the answer for your specific context, by answering:
How does your company make money?
What is important to your company?
Where do you and your team’s efforts fit in?
How does your company make money?
Fun fact - companies mostly exist to make money. Even social good companies need money to run and operate, so it’s never not a factor.
As a Product Manager, the more you can tie your work into the company’s bottom line, the more impact you’ll have and the less likely it is you’ll have no or negative impact.
To do this, you need to understand how your company actually makes money:
Ad-supported (eg. social media, search)
Selling products (eg. storefronts, eCommerce)
Take rate (eg. marketplaces, service providers, transaction facilitators)
Subscription fees (eg. SaaS)
Negotiated annual contracts (eg. B2B, enterprise)
Usage-based (eg. PaaS, AI)
Kickbacks (eg. referrals, affiliate marketing)
Other
Once you know how your company makes money, it’s easier to tie your work into it.
What is important to your company?
Different companies prioritize different things at different stages of their lifecycle.
Early-stage startups might optimize getting a product built and finding product market fit. Mid-stage startups might prioritize exponential customer growth or revenue. Later-stage companies might prioritize profitability and cost reductions.
If you don’t know what the company currently views as important, then stop and find out. Talk to your leadership, and then listen to what they say.
I knew a Product Manager who spent an entire quarter working on accessibility improvements - a key pain point from users that the Product Manager took it upon himself to fix. He made a tremendous amount of progress with his team, labeling images, improving screen reader compatibility, text contrast, and keyboard navigation. The efforts genuinely created a lot of user value - the application had a somewhat high number of users that benefited from these improvements.
When the Product Manager asked for a raise that year, he got denied. While his efforts improving accessibility created user value, they didn’t have any meaningful impact to the company, which was at the time prioritizing customer monetization efforts. Because the efforts he and his team worked on had no impact, he couldn’t justify his request for a raise.
Where do you and your team’s efforts fit in?
Product Managers should have a sense of the teams in their company and what areas they are working on, and how their efforts tie into larger company goals. They should important, know what their own team has been tasked to achieve.
Know what you are expected to be working on. Some broad categories might be:
Growth. You’re being given a specific metric outcome to improve, such as increasing transaction take rate by 3%, improve user activation by 15%, or increasing the usage of debit cards for payments by 15%.
Differentiators. You’re being tasked with identifying and developing things that separate you from competitors in your space. Differentiators can be used as talking points in sales organizations or even investors.
Moat. You’re being tasked with keeping competitors out of your space by strengthening your company’s position. Whether that looks like securing exclusivity deals, or becoming an industry-level source of truth - the company wants to not have competitors.
Special interests. Sometimes we do things because someone wants to. Maybe the CEO wants to make a key investor happy, or the CPO has an unvalidated hunch.
Operations. You’re being tasked with keeping the company running, and possible to improve operations efficiency.
Threats. You’re being tasked with addressing a particular threat or risk area the company is facing. Perhaps its keeping an eye on customer sentiment, or maintaining parity with a key competitor.
Activity. You’re tasked with increasing activity in the product. User engagement, transaction volume, etc. are all areas where increased activity can positively impact bottom lines.
Monetization. You’re tasked with improving revenue generated from business. Whether that’s increasing margins or improving take rate.
Innovations. You’re tasked with identifying new areas for the business - whether that’s a new business line, a new product, or moving up/down market.
Know that not everyone is working on the same thing. Companies have areas that they have to or want to pursue. You, as the Product Manager, likely aren’t choosing the area to work in at most companies. If you ignore your assigned space because you want to pursue some other area, then you’re leaving an area your company wants to cover without appropriate coverage, which obviously causes issues to your own longevity at the company. Never pursue new opportunities at the expense of your assigned area without appropriately communicating and securing buy-in from your leadership.
This means if you’re asked to sustain operations, don’t let the day-to-day of the company fall over because you’re busy chasing down revenue opportunities. If you’re tasked with building a moat, don’t get jammed up trying to figure out how to monetize it. If you’re working on a special interest project, don’t change approaches significantly just because you’ve find a better way to grow a related outcome. Do the thing you’re asked to first exceptionally well, and then branch out with the increased credibility and trust you have built.
Articulating the impact of your work
Once you understand your area, you need to understand your problem and solution space, and how that impacts the primary metrics of the area you are responsible for.
As an example, suppose you are working on a project to improve search awareness. How do you answer what the impact is to the company to improve the users’ awareness of search?
Don’t worry about quantification just yet. First - start at the theory. You can construct a sequence of metrics, drivers, and levers back into a top-line revenue goal:
Revenue
Monetization rate of impactful events that drive business outcomes
Impactful events that drive business outcomes
User time spent on impactful events vs. non-impactful events
User efficiency to create more time for impactful events
User time spent on searching for records
Area: Search
Search awareness - User awareness of search feature
Problem: Users use sub-optimal means of locating their records, including paginating through dozens of pages, exporting data, and even calling support
Hypothesis: users are unaware of search capabilities, what they can search for, and whether they can search at
Search capability - Users searching in unsupported ways
Problem: Users are searching with terms we do not currently support, increasing time spent locating records
Hypothesis: by improving search capabilities, we can reduce wasted time
Once you have the theory on how the levers cascade into the company goal, you can then start quantifying each specific area and its relative impact.
List the facts you know, and then start connecting the dots together:
You know each impactful event is worth $25 to your company.
You know you have 10,000 users.
You know that users spend 7 hours of their day doing “impactful events”
You know an average user does 10 impactful events in an hour.
You know that users spend 1 hour of their day searching for records
You believe you have an idea that can reduce time spent searching by 30m.
This means if you successfully deliver on the outcomes of that idea, then you can increase the number of impactful events by a theoretical 5 events / user / day, or an impact of $250,000 / day across all the users.
Comparing impactful things
Once you have a set of problems and levers you can ladder up into a top-level impact, you can start comparing opportunities with each other to identify what the highest impact items are, not just in your ladder but across the entire set of opportunities and problem spaces. This allows you to effective manage your investment portfolio - the solutions and areas you are making bets in to hopefully drive the impact you want to achieve.
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