How to measure innovations using the right metrics

How to measure innovations using the right metrics

In his latest book Scaling Lean, innovation expert Ash Maurya explains why we should abandon traditional metrics in favour of ones that are more suitable for product development.

Product managers often have difficulty measuring their progress correctly. From the book
Lean Startup, we have already become acquainted with the concept of validated learning, which allows progress to be measured before any revenue even starts to be generated. The Lean Innovation process enables business models to be developed that can be directly validated through experiments. These validation experiments are continued until the product-market fit is achieved, i.e. when enough customers buy the product.

Why do we need suitable metrics?
To be able to measure progress, we need the right metrics. However, these days almost everything is measurable and we are at risk of drowning in a sea of irrelevant metrics. As such, it is especially important to define suitable metrics for product innovations, as this is the only way to know for sure whether we are moving in the right direction. Traditional metrics such as revenue, profit and return on investment are usually less helpful, as they are always negative to begin with.

Scaling Lean – choosing the right metrics
In his latest book Scaling Lean, Maurya recommends taking a different approach: what ultimately matters is turning users into satisfied customers. Only if they are satisfied will they be happy to buy a new product and recommend it to others.
To achieve this aim, Maurya suggests a process that he calls Customer Factory Blueprint, whereby each innovation team clarifies the following five issues:

  1. Acquisition: Which product offer can we use to identify the first users?
  2. Activation: How do we interact with users so that they experience our promise as an ‘aha’ moment?
  3. Retention: What motivates users to keep using our product?
  4. Revenue: How is the pricing model structured, and how do we know that we are on the right track to making the customer happy?
  5. Recommendation: How does the product’s recommendation engine work?

This blueprint process can be applied to all industries; only the metrics are adapted to the relevant business and phase.

The book Scaling Lean
Like Ash Maurya’s first book Running Lean, his new Scaling Lean is a useful guide that explains the process to us step by step with the help of many different examples from various industries. The book is now available.

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