Company Objectives vs Product Objectives: Spot the Difference

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Company objectives, team objectives, personal objectives, product objectives… So many objectives! One particularly troublesome problem for anyone involved in product development is the confusion between company objectives and product objectives.

We should start by defining what we mean by objectives.

Objectives are outcomes that show you are delivering the strategy that you have defined in order to achieve your vision. This applies for either company objectives or product objectives. And it is also the key difference between product and company objectives. Your company objectives are derived from your company vision and company strategy while your product objectives are derived from your product vision and product strategy.

Product Objectives

So before you arrive at your product objectives you need to start with your product vision and define your strategy. Then can you can come up with product objectives whose outcomes show that you are delivering your product strategy.

Let’s go through an example

Say our product is a smart thermostat for electric heaters (yes, I’m cold). Your vision for the product could be:

“MakeItWarm is to be the smart thermostat that puts the user in secure control of sustainable comfort of their homes or business. This will be achieved by allowing the user to set their comfort zone via multiple devices and will teach them how to provide that most sustainably.”

With the product vision detailed, next you should define a strategy that will allow you to achieve that product vision. A strategy is best defined as a series of outcomes that will indicate you are achieving your vision.

Continuing our example the strategy could be:

“Our strategy to deliver this product vision is to:

• Provide a Wifi/Internet connected thermostat that is easily installed by the user
• Provide a usable interface on multiple devices
• Support multiple forms of heating and cooling
• Partner with renewable and sustainable energy suppliers to provide users with the opportunity to switch supplier depending on demand and need”

These outcomes can be thought of as the strategic objectives. From these strategic objectives come tactical objectives or shorter term goals that help to achieve the strategic objective.

Let’s take the strategic objective of “Provide a usable interface on multiple devices”. This could then have a more tactical objective of:
“Implement a web based UI for the thermostat”
or
“Implement native mobile app for Android and iOS”

Both are objectives that help to achieve the overall strategic objective.

Company Objectives

But how do product objectives fit in with company objectives?

These two types of objectives often end up being used interchangeably, even though they’re not the same. This is particularly common in single product companies. The key to understanding how they fit together is to firmly separate company objectives from product objectives.

Company objectives are derived from the company vision and strategy for building a successful company. Product objectives, on the other hand, are derived from the product strategy and vision. This will be different from the company vision (of course the product vision must support the company vision).

Examples of company objectives are “Increase conversion from basic subscription plan to premium for users who have been with us for one year”, or “Increase margin on each thermostat”. Company objectives can be achieved through the effort other teams in the business – such as sales, marketing and customer success – rather than only through product or service.

Company objectives are focused on company outcomes and product objectives are focused on user outcomes. There is the potential for conflict between the objectives: you can do work that is valuable to the company but detrimental to the user, and also do something valuable for the user that is detrimental to the company.

Company objectives should feed into helping you work out which of the product objectives should be the focus within a specific time period. This helps you to prioritise your roadmap based on the product objectives which are linked to the initiatives or themes on your roadmap.

Achieving Success

If our product strategy is based on achieving objectives, how do we know that it’s successful? That it’s delivering the product vision? For a subscription-based business that is measured by looking at conversion and churn, if the conversion rate is going up and churn rate is going down, then the strategy can confidently be said to be working.

Or can it?

Conversion and churn can be affected by factors other than the product. For example marketing may have found a rich target market which is bringing the right people in or customer success could be actively spotting people likely to churn and helping to prevent this.

This is further complicated because improvements in marketing, sales and product reinforce one another. For example, finding the right target market for a product may result in feedback which improves the product, and makes the marketing more effective. So you can’t simply say x% is due to marketing and y% is due to product.

In reality conversion and churn are representative of the company’s success. They’re not representative of a user’s success with the product, and a user’s success with the product is the measure you need to show that the product strategy is working. Churn and conversion are simply proxy measures that you are solving the user’s problems, although they may represent good company objectives.

You should define up to three metrics that are indicative only of user success. These metrics will need to align with your strategy and objectives in order to be usable. In our smart thermostat example, the metrics that indicate user success are “Energy bill is lower than the same time last year” or “House temperature remained in the comfort zone without user having to manually intervene”.

Untangling product objectives from company objectives is crucial in making sure your product delivers for your end users. The two are often conflated in single product companies but you must work hard to separate them and ensure they remain separated. Start with the product vision, define the strategy and then create your product objectives.

Can you manage a product solely on objectives? Find out in the next in this series of blog posts.

Our product management blog has even more articles on a range of PM topics.