Driving Clarity and Alignment via Business and Product Objectives
Drive business outcomes by aligning what your product teams are focusing on.
TL;DR
We’re coming up to that time of year again….annual planning. And while the topic of this article is timeless (IMHO), it is MUCH more relevant during annual planning periods. I’ve seen some planning anti-patterns over the years in many companies, and I want to share this article as a way to address some of those anti-patterns. ‘
In short, defining specific, measurable and timebound business and associated product objectives, and tracking their progress is a solid way for executives and product orgs to create alignment and focus across the business (sales, marketing, leadership etc.) and product sides of the house.
It is also a way to get clarity on product strategy and reduce the impact of “shiny objects” diverting attention and resources from what’s really important.
Using objectives as a way to envision (and enact) a better future state for the company is a powerful way to create sustainable competitive advantage and accelerate growth and profitability.
Table of Contents
- The Vision Stack
- What are Objectives?
- Goals vs. Objectives
- Business Objectives
— Beyond Financial Targets - Defining Objectives
- Use Objectives to Imagine the Future
- Product Objectives
— The Role of Strategy
— Product Objectives that Support Business Objectives
— Independent Product Objectives - Benefits of this Approach
- Related Reading
- A Little Feedback Please
One of the biggest challenges many technology executives face is how to align or connect the business and product sides of the house. The following are some common questions that leaders have:
- Is the Product organization building the right things?
- What’s on the roadmap?
- Will that drive the business the company needs?
- How are those roadmap decisions being made?
- How are we setting ourselves up for success next year?
- How can I get more visibility into that process?
- etc.
As a consultant I’ve worked with many companies where this was the case.
In the companies where this wasn’t the case (i.e. the executives had answers to those questions or there was general clarity on those questions), there were two patterns that I saw.
- They were small(er) companies and the Founders/CEOs/Leaders were involved in almost every significant product decision, thus having clear connection between product and business.
- The company (regardless of size) has an operating model (i.e. organizational structure and processes) and communication channels that answered the above questions, and drove alignment between the product and business functions.
The first pattern works (for a while), but doesn’t scale and limits growth as the CEO/Founders/Leaders themselves don’t scale. They can become a bottleneck, both in terms of interactions as well as knowledge and insight.
The second pattern (while far less common) takes more effort to set up, BUT scales well and can drive growth. This pattern creates scalable systems that become part of the company culture, so that as the company grows or when people leave and others replace them, the alignment persists. I described my own experience with that model here:
Article: Product Management: It’s a system for business success, not product features.
I won’t get into defining that entire operating model here, but I will focus on a specific aspect where Product and Business should absolutely meet, and that should help drive of alignment within the company.
And that aspect is defining clear and aligned business and product Objectives.
The Vision Stack
Before digging into Objectives, let’s discuss a framework I call The Vision Stack. This framework is meant to get alignment and focus within a company.
Most people know words like Vision, Objectives, Strategy, Roadmap etc., but they don’t have a cohesive understanding of them, how they work together and reinforce each other and how to use them to maximize business and product impact.
Although the focus of this article is on Objectives, it’s important to understand that those Objectives live in a context of other entities like Vision, Strategy etc. And there are Business and Product versions of these.
The topline direction is set via the Vision. To move towards that vision we define and execute on Objectives that align with that Vision. Objectives that don’t align with the Vision should be avoided. Strategy is the set of choices made to achieve those successive sets of Objectves. The key action items coming out of those strategies become elements of Roadmaps and those are further refined into shorter term Plans.
The flow from top to bottom is structured and clear, IF, teams understand and follow through on this process. One challenging area for many companies is the connection between Business Vision/Objectives/Strategy and Product Vision/Objectives/Strategy. The most important connection to make, and where companies fail the most, is between Business and Product Objectives. The two are distinct but related, and this relationship is not often explicitly understood. Thus the root of the problems.
I can help you with Objectives and Planning
NOTE: If you find this article relevant, and would like guidance in effectively defining Product and Business Objectives, Strategy and Roadmaps, contact me via Linkedin.
I can help you and your teams get moving forward with aligned objectives, strategies and focused roadmaps. Let’s chat.
What are Objectives?
I’m pretty sure you know what objectives are. i.e. things you want to achieve. But when it comes to Business and Product objectives, it helps to be specific.
For me, an Objective is defined as:
Objective: n, a specific, measurable, timebound target or aspiration you wish to achieve.
I use these words with clear intention. Specific, measurable and timebound are attributes of a good objective. If you remove any one of them, the “objective” becomes weaker, ambiguous, or simply a desire.
e.g.
I want to run a marathon.
is not an objective in this context. By when? This year, next year? Some time in my life? Which marathon? How quickly? The answers will drive other activities, such as planning, training and preparation to achieve the objective. On the other hand.
I want to run the Boston Marathon in 2025, ideally in under 4 hours.
is a GREAT objective. It is specific (which marathon), measurable (how fast) and timebound (in 2025).
Now if I truly want to achieve that objective, I can start planning and training for it. I know how long I have to train. I can figure out how much it will cost (flying to Boston, hotel, entrance fees, shoes etc.). I have a clear performance target to work towards — but it’s not a hard commitment given the word “ideally”.
I know that a 4.5 hour marathon would not be a satisfactory result but perhaps something closer to 4 hours (say 4:10) would be good and something under 4 hours (e.g. 3:50) would be amazing!
There are a number of assumptions built into this of course, regarding my current ability to run long distances, overall health etc. but assuming no major impediments, it is an objective I can definitely work toward.
Specificity, measurability, and time boundaries in objectives provide clarity and focus.
We remove ambiguity from what we need to achieve and shine light on what we need to do.
The same is true in business, but it is even more important because unlike a marathon, which is mostly an individual feat, business is a team sport and the stakes (financial and otherwise) are MUCH higher.
We ALL have to have common context and clarity on what we’re trying to achieve, so we can work together in unison to achieve it.
Goals vs. Objectives
Before digging into objectives further, I want to clarify the distinction between Goals and Objectives.
We often hear the words goal and objective used interchangeably. I do it from time to time myself. I want to disambiguate the two here, for the purposes of this discussion.
Above, I’ve defined Objective as:
Objective: n, a specific, measurable, timebound target or aspiration you wish to achieve.
If you look up the dictionary definiton of Goal (vs. Objective), you don’t see much difference. They are effectively synonyms of one another. But to me, in business, a Goal is distinct from an Objective. A goal is a general aspiration you want to achieve. i.e. a non-specific objective.
Goal: n, a general aspiration, aim or result we want to achieve.
The reason I make this distinction is that given the above definition of Objective, we need to have a term for something we want to achieve that does NOT necessarily have the specific, measurable, timebound attributes. This could be something that is later refined into an objective, and also a way to disambiguate the two.
So, using the previous marathon example:
“Running the Boston Marathon in 2025, ideally in under 4 hours” is an Objective.
“Running a marathon” is a Goal.
“Running a marathon in 2025” is a Goal.
“Running the Boston Marathon” is a Goal.
“Running a marathon in under 4 hours” is a Goal.
See the distinction? In each Goal, there are MULTIPLE possibilities for what I’m doing. e.g. “Running the Boston Marathon” could be any year, in any time. It’s not measurable or timebound.
If you gave that same goal to 3 different people, each could interpret it differently and still be correct. That is almost NEVER the case with a well defined Objective.
The reason this is important, as you will see soon, is that Goals passed off as Objectives (i.e. vague or incompletely defined Objectives) are a cause for misalignment and organizational friction or waste.
But, often we can start with a Goal (something more general) that we want to focus on, and then through discovery, discussion, elaboration etc., refine it into a specific, measurable, timebound Objective that we can work on to achieve.
Business Objectives
It’s important to dig into business objectives. I’ve found that poorly defined — i.e. generic, unimaginative, high-level etc. — business objectives are quite common and result in lost potential for companies.
The most common business objectives are tied to revenue or some type of lagging financial achievement. The reason is that EVERY company, no matter how small or large, has some kind of financial target for sales, revenue or growth teams. It’s pretty fundamental to business 😃.
The most common and simple one is a straight forward revenue target. e.g.
Achieve revenue of $6M for Product X in FY 2024.
Depending on the kind of product, this target could be stated in terms of bookings, ARR, a growth number (e.g growth of 25% YoY) or something similar. Let’s assume revenue for Product X was $4M in FY23. So we’re looking at 50% growth year-over-year.
As a Product Manager, I was given these kinds of (revenue) targets for my products in several companies I worked in. And I was asked to come up with a “plan” for how to achieve those targets. In one company — described in this article — it was a formal and well structured process that involved discussion and agreement with executives, finance etc. In others, it was much more adhoc, and quite frankly, ineffective.
Growing from $4M to $6M doesn’t sound like much, but it does represent 50% growth. Depending on how fast the market is growing overall, the price point of the product, the ability of the company to scale marketing (lead generation primarily) and sales capacity, that objective may be easily achieved simply through better execution of whatever was done the previous year.
OR, it may require significant new product capabilities to take to market, new pricing/licensing structures, new GTM actions and new strategy to achieve that growth.
But the main problem with this objective is that it is still only revenue focused and only looking out 1 year into the future.
It encourages a “more of the same” or “more of the same with slight variation” thinking. And it does little if anything to help the company conquer other challenges it may have in order to achieve lasting competitive advantage.
Beyond Financial Targets
But Business Objectives DON’T have to be strictly financial. And in fact they shouldn’t be strictly financial. Financial targets are the most common type because that’s how Sales teams are measured; that’s what is needed for financial statements; that’s what the investors want to see etc. etc.
BUT, financial measures are output metrics — they are the ultimate (lagging) measure of performance — that don’t themselves mean anything on their own. They are the result of other work and achieving other upstream objectives, tied to business vision and strategy.
Business objectives can come from multiple places:
- Company Vision — objectives tied to promoting the overall company or product vision.
- Market or Technology Trends — leveraging supportive trends (i.e. riding tailwinds)
- Internal Directives — Executives may have specific business goals to meet coming from the Board of Directors or investors
- Competitive Forces — Always a source of tension, and often a source of objectives.
- Etc.
If a company has a clear vision (many don’t), and has some overall strategy in terms of moving towards that vision (many don’t), then the company can set objectives to align with that vision/strategy and execute on them.
Additionally, market/technology trends (e.g. the current focus on AI), competitive factors (those pesky competitors are always getting in the way) and anything else that is important to drive the company’s success should be considered as potential business objectives.
In short, business objectives should not strictly be financial, should not strictly be for the current or upcoming year only, but SHOULD be focused on creating conditions for the company to win in the market.
Defining Objectives
To paraphrase a famous saying: the wonderful thing about objectives is that there are so many to choose from. If you’ve worked with OKRs or other frameworks focused on objectives, you may have seen companies with a large numbers of objectives being set. When I say large, I’m thinking 7 or 10 or sometimes more. I’ve seen them.
Even 5 objectives is a lot IMHO. Objectives should be significant or KEY targets that will provide focus for the company and help your company leap forward (towards your vision etc.) in meaningful and impactful ways.
Notice that a revenue objective doesn’t fit this definition, which is why I emphasize that companies should define more aspirational objectives than just revenue targets.
Use Objectives to Imagine the Future
Often people think of objectives in very functional or, dare I say, boring ways. e.g. Financial targets (as above) or customer acquisition targets or product usage targets etc.
But it’s important to think of objectives in bigger, more aspirational ways. Objective setting is a tool to help you imagine a future that you want to see and then work towards achieving it. This may sound like Vision talk, but when thinking this way about Objectives, it’s a way to help drive towards that Vision or other states that shape the market in your favour.
When I say “Imagine the Future”, I’m referring to a method of thinking about a future where:
- your company or product is winning in the market, or
- your customers (current or future) are achieving MUCH better outcomes through the use of your company’s products or services.
Once you’ve imagined that future, start asking “What Do We Know” (WDWK), “What Would Have To Be True?” (WWHTBT) and “How Might We?” (HMW) for that future state to happen. And finally define objectives to achieve that.
Consider this goal, which is a REAL goal I had for a data testing product I worked on.
Reduce the time it takes by 80% over current methods, for our customers to verify that the data transformed by a data integration process is correct.
Then start asking (and answering):
“WDWK, WWHTBT or HMW about the process, problems, challenges in verifying data to reach that target? i.e.
- WDWK about current testing methods?
- WDWK about the bottlenecks?
- WDWK about the common use cases when testing data?
- What kinds of data scenarios are there?
- HMW reduce the time it takes to create the tests?
- HMW reduce the data processing time?
- WWHTBT for customers to see what errors (if any) were in the data
- HMW leverage existing metadata to improve the process?
The answers to these questions (and other questions) are hypotheses or assumptions that you can then investigate further and enact to reach that objective.
If you don’t try to imagine something like this explicitly, then how will you ever achieve it?
Far too many companies NEVER explicitly think this way, or often think very tactically when problems become unavoidable. They move forward year to year with revenue or growth targets etc., growing modestly, but never experiencing that “hockey stick” or breakthrough growth that other companies see. They react to their competitors and (over) focus on technology and incremental improvements and short term tactics that can “move the needle” etc.
And while there can be many reasons for this, one reason I see is that they never EXPLICITLY try to imagine and then implement what WOULD enable them to have that breakout growth.
Companies stop dreaming about changing the world, and simply focus on executing within it.
And this lack of big thinking becomes part of the culture and can be hard to shake. Thinking big with clarity and acting on it is a muscle that needs to be regularly used. It improves over time. It benefits from deep market knowledge and a desire to exploit opportunities and new innovations.
Now I’m not saying that EVERY objective should be a “change the world” level objective, but if NONE of them are, ever, then you have a problem.
For example, consider the following:
Crush <specific competitor> in 2024
This is a great GOAL IMHO. It’s specific (a specific competitor), time-bound (in 2024), but it’s not measurable (yet). How is “crush” measured/defined? But that can be resolved using the 3 questions I stated above:
- “What Do We Know [about that competitor]” (WDWK),
- “What Would Have To Be True [to crush them in 2024]?” (WWHTBT)
- “How Might We [go about making those things true]?” (HMW)
- etc.
Starting with Goals like this is a good way to get to clear and compelling Objectives. i.e. we know that a certain competitor is winning deals from us and is becoming a pain in our side, so let’s put focus on clearly defeating them.
This is not a tactical “let’s win more deals against them” type of activity, but a more holistic “How do we build sustainable competitive advantage over them?” activity.
It’s not just “What features can we add to close the gaps?” thinking, but “How do we position ourselves as the obvious choice in the market?” thinking.
Think of those two questions:
- How do we build sustainable competitive advantage over <specific competitor>?
- How do we position ourselves as the obvious choice in the market?
Think about the discussions you’d have within your company if you asked questions like this? Has that every happened? If yes, what did it result in? If not, why not? And how could you make that happen?
When you elaborate this kind of goal within a company, you can define how to measure “crush”. But you will also open up MANY very interesting lines of thinking that wouldn’t have come up organically, and certainly would NOT have come up through simply discussing revenue targets.
These lines of thinking could be tied to marketing, sales strategy, product capabilities, pricing, licensing, partnering, new use cases, new target market segments and more, all focused on how to crush that competitor.
And what if you don’t explicitly define this kind of objective? What will happen? Likely, you’ll continue the same cycle of REACTING to your competitor that you had the previous year, or positioning against them the same way as you did before. i.e. more of the same.
And what of your competitors?
And just out of curiosity, what if your competitor has an objective to “crush” you? And they execute on it. How do you think that’s going to turn out for you vs. for them?
Here’s another objective that goes beyond simple financial targets:
Identify a new product opportunity that will drive 30% of our expansion revenue in existing customers within 3 years.
Or how about:
Achieve a 20% increase in customer acquisition while maintaining a customer retention rate of at least 90% over the next 12 months.
Or something like:
By the end of March, identify at least 3 areas of improvement within our product development process which could significantly reduce our time to market for new product capabilities
These are just examples, but these are the kind of business objectives that companies should consider. They absolutely need further elaboration, but they are fairly specific in their own right.
Note that the 3rd one is an internal operational objective, but it is still business focused. i.e. to significantly reduce the time it takes to get new capabilities to market.
Each objective helps create a meaningfully better future state for the company to better compete in the market.
Product Objectives
So finally we get to Product Objectives. Product Objectives have the same requirements (i.e. Specific, Measurable, Timebound) as Business Objectives, but are obviously product focused. There are two types of Product Objectives.
- Product Objectives that specifically support Business Objectives
- Independent Product Objectives that focus on or address specific product, customer or market needs.
Let’s look at each one.
Product Objectives that Support Business Objectives
The key problem this article is looking to address is how to get alignment between the business side of the house and the product side. Remember some of the questions executives have?
- Is the Product organization building the right things?
- What’s on the roadmap?
- Will that drive the business the company needs?
- Etc.
By defining clear business objectives and then working out and agreeing to the product objectives that must occur to enable those business objectives, the desired alignment can be had.
This requires Executives and Product Management to work collaboratively on both. This can’t be a top-down or over-the-wall process where objectives are handed to product managers to execute on.
This is a common mistake in many companies, turning Product Management into simply a product delivery organization. Product Management is business management at the product level. Leaders should hire and work with Product Management as people who are focused on driving product success.
Connecting Business and Product Objectives
I wrote about this relationship in this article:
I will excerpt the relevant sections from that article and then elaborate on them below.
The specific Business Objective used in that article is:
Increase our revenue in Mexico by 35% in CY 2024
Note that that is clearly a Business Objective. It is specific (Increase revenue in Mexico), Measurable (by 35%) and Timebound (in 2024).
Context for the Objective
The following is the context laid out in that article. Note that context is important when thinking about objectives. The objective alone encapsulates a lot of assumptions and data, so spelling it out — documenting and discussing it internally — brings better alignment with whomever you are working with.
The company has an existing sales partner in Mexico. The partner has been somewhat active, but it’s clear to the company that the partner cannot simply increase their results by 35% on their own.
Thus, in order to achieve the objective, the company, which sees Mexico as an important market, is going to set up a direct sales office in Mexico and collaborate with the partner to extend reach and penetration into accounts.
Additionally, given analysis done by the partner, onboarding customers to the software is very time consuming for the partner. Thus the company is going to add better onboarding capabilities and content to the product.
Finally, to address pressure from a competitor also selling in Mexico, the company is going to launch an extended marketing effort to raise awareness of their product in key Mexican market segments.
I’ve highlighted a few things in the context.
- set up a direct sales office in Mexico & collaborate with the partner
- add better onboarding capabilities and content to the product
- launch an extended marketing effort
Clearly the 2nd bullet — better onboarding capabilities and content — is a Product Goal that must be met IF this Business Objective is to succeed.
Yes, there are Sales and Marketing Goals as well (though those generally fall under Business), but we’re focusing on the relationship between “the business” and “product”. i.e. how to make that more explicit and aligned.
The onboarding goal should be turned into an objective. Let’s assume that after discussion and elaboration, the Objective is:
Reduce customer onboarding time by 50% by end of Q2 2024.
So we have a relationship that looks like this:
There could be more 0 or more Product Objectives for any Business Objective, but the connection of the WHY for any such Product Objective is clear. We’re focusing on it BECAUSE of the superior Business Objective.
In this example, the “onboarding and content” work could be defined as a single Product Objective. But in some cases, you see more than one. For example, IF the company hadn’t fully localized their product for Mexico, and that was a key factor in helping drive the growth they needed, then that might have created a 2nd Product Objective, under the same Business Objective. e.g.
Complete localization of all software modules by end of Q1 2024
E.g. The objectives could look like:
The point here is to make the connection and then track these together — Business and Product objectives — to completion. Each of these Objectives -Business and Product — could become OKRs and worked on and tracked that way. In that case, there would be Key Results and Actions connected to each. e.g.
For example, if P1 represented the onboarding and content objective, to actually implement those product capabilities, the Product/Business teams would have to agree on what success looks like (Key Results) and then the Product teams could work and define the Actions needed, some of which would include product deliverables, but others might (should) include discovery or other research/investigation into the problems and likely solutions.
As I said in the Plans vs. Roadmaps article:
The details of all of these have not been worked out — a plan or plans need to be created, scoped etc — but the big ticket items are clear and can be decomposed and laid out in a [strategic] roadmap.
The company may have several objectives — i.e. beyond just growth in Mexico. Each of those Objectives should be decomposed into Strategies and Tactics and the combined Tactics (that would include both Business and Product activities) would form a roadmap for the company. The Product parts could (would likely) be published as a Product Roadmap, but the connections back up to Objectives and other related activities should not be lost.
Independent Product Objectives
Not all Product objectives are tied to SPECIFICALLY articulated Business Objectives. i.e. often there are tasks we take on in our products that are based on other factors. In the end, everything we do should be tied to a business reason, but not necessarily a defined business objective.
e.g. even though technical debt is a business problem, there may not be a specific Business Objective that requires a focus on it. In fact, in most cases, there never is. But good software and product development practitioners understand that dealing with technical debt proactively can be a good practice.
i.e. we don’t let our house fall apart before fixing problems, but we strive for ongoing maintenance to ensure our investments in it are maintained.
The same is true for software. So it’s likely that you may create Product Objectives tied to dealing with architecture, underlying technical issues, usability or design problems that have crept up over time.
Or, your company may have made SIGNIFICANT customer commitments that require resources and time, and so you may create an independent Product Objective for that work.
The purpose of creating independent Product Objectives is to raise the visibility of those issues to management and to ensure they are held in the same regard by leadership as they are with Product and Technical teams. i.e. we’re making these visible and will focus on them for clear reasons, and they will contribute to (strategic) roadmap items that will be tracked.
There should NOT be many of these at any given time (3 or less IMHO), but there should be awareness they exist (if they do) and get the appropriate focus. For example you may have 2 or 3 Business Objectives, with some associated Product Objectives and 1 independent Product Objective. It might look something like this.
We have 2 Business Objectives (B1 and B2). There are 3 Product Objectives (P1, P2, P3) associated with those 2 Business Objectives. And we have 1 independent Product Objective (P4).
The Actions for those 4 Product Objectives would end up in a Product Roadmap aligned with associated timeframes as they’re all Timebound in some way.
All of this could be tracked very easily and reviewed at Quarterly Business Reviews or other management meetings
Benefits of this approach
There are multiple benefits to using this approach of defining Business and Product objectives.
- Defining clear objectives (Specific, Measurable, Timebound) is the first step in aligning diverse groups, providing clarity of focus and clear purpose.
- The gap between “the business” and “product” — a problem in many companies — is significantly reduced by removing ambiguity in what must be achieved and by whom.
- The Product Objectives give Product teams clear focus and understanding of how they are contributing to overall business goals.
- There is clarity of purpose for all, in that the work being done is connected to clear business outcomes, and any changes that might be required (e.g. new objectives, shifts in strategy etc.) can be evaluated in relation to existing objectives, and not simply lists of work items or work in progress.
There are likely other benefits but these are the main ones that I see. While all are important, number 3 is an important one because it is often overlooked in companies that start (and end) with revenue based business objectives.
As a Product Manager, with no direct control over GTM activities, it was often VERY frustrating to work in environments where I was measured on an outcome that other people controlled. This elaboration of connected Business and Product objectives helps address that.
Related Reading
This article by Hope Gurion covers some similar ground on Business vs. Product Outcomes. It is a more product delivery focused view of this issue, but it’s worth reading as it does make some good points related to the topic.
A little feedback please
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