Hello Everyone 🌞
Thank you for taking out the time to read my notes, I really appreciate it. 😃
I’d like to take a minute to explain how these notes can aid you learning
experience. We make use of the Pomodoro Technique where we:
1. Set a task to do (for e.g. Reading Week 1’s Lesson Material) 📖
2. Set a timer for 25 minutes and start studying with a undiverted
focus. No distractions, no picking up your phone and no strolling
towards YouTube! 🤳🏻📳
3. We get a break for 5 minutes 🌇
4. We repeat the 25 minute timer, and every 4 timers we get a longer
more relaxing break of 25-30 minutes. 🙌🏻
🍅Fun Fact: Pomodoro actually means tomato in Italian! 🍅
I’ve split Week 1’s Reading Content to not 4 but just 3 Pomodori Timers.
Ps. My Favourite Timer is [Link] It helps me stay on track and
share timers with friends in group study sessions. Yes, yes you can and
should take a nice break after.🦉
So with this info, let’s dive into our notes. Please remember with me on
LinkedIn, I’d love to have a chat. You may also reach out for any doubts,
corrections or feedback you may have.
Timer 1 (25 Mins): Systems Thinking + Vision and Strategy
— Break For 5 Minutes —
Timer 2 (25 Mins): Business Outcomes + KPI Trees
— Break For 5 Mins —
Timer 3 (25 Mins): Product Discovery + Design Thinking
— Longer Break —
For each Timer remember to spend your time 15 minutes reading my
explanation notes and 10 minutes discussing the questions. The
questions are there to make sure you really understand the most
important concepts from the readings.
Happy Studying! 😃💫🫷
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SESSION 1: EXPLANATION (15 MINS)
Explanation: Systems Thinking for Product Managers
(Aligned with Reading Material)
What is Systems Thinking?
Systems thinking is the process of understanding how different parts of a
product or system are interconnected. It helps product managers see the
big picture—how a change in one part of a system can affect other parts,
the users, and even external systems like the economy or society.
Imagine a product like a giant LEGO structure. Each LEGO piece
represents a feature or component, and how you assemble them affects
the overall structure. If you pull one piece out, it might cause the structure
to collapse or change how other pieces fit together. This is how systems
thinking works: it shows you how everything is connected and helps you
think about the second- and third-order consequences of changes you
make to one part of the system.
Why is Systems Thinking Important for Product Managers?
Product managers need to understand systems thinking because modern
products are interconnected systems, where changes in one area can
affect many others. For example:
● A change to an app's notification feature might increase
engagement, but it could also annoy users, leading to higher churn.
● A ride-sharing app like Uber might reduce drunk driving incidents,
but it could also disrupt the taxi industry or change city traffic
patterns.
When product managers ignore these wider impacts, they risk
unintended consequences. Systems thinking helps prevent this by
encouraging product managers to think beyond simple cause-and-effect
relationships.
Understanding Systems:
According to Donella Meadows, a system is:
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1. Components – The individual parts of the system (e.g., product
features).
2. Interactions – How the components work together.
3. Environment – The space or context the system operates in.
4. Functions – The role each component plays in achieving the
system's goal.
5. System’s Objectives – The overall goals or outcomes the system is
designed to achieve.
Let’s use a job search platform as an example:
● Components: Job listings, user profiles, search algorithms.
● Interactions: Users search for jobs, algorithms recommend jobs,
companies post openings.
● Environment: The broader labor market, economic conditions.
● Functions: Matching job seekers with employers.
● Objectives: Help people find jobs, help employers fill positions.
This job platform doesn’t exist in isolation. It’s part of a bigger system (the
labor market) that affects and is affected by government policies,
economic conditions, and technological advancements.
Thinking in Systems:
Product managers must understand that systems thinking goes beyond
linear, step-by-step thinking. Instead of thinking, "If we add this feature,
we’ll get more users," systems thinking makes you ask, "What are the
ripple effects of this feature? How will it impact users, the business, and
even society?"
Creative Analogy: The Domino Effect of Systems
Imagine a line of dominoes. If you push one, it topples the next, and that
one knocks down the next, and so on. This represents a system. Each
domino is a component of the system, and pushing one causes a chain
reaction. If you're not careful, pushing the wrong domino could cause
unintended consequences—like toppling more pieces than you wanted
or triggering reactions further down the line, or pushing an unintended
domino to the left or the right.
Example: A product manager at Airbnb might introduce a feature to make
property bookings easier. But this could cause unforeseen changes—such
as increasing demand for properties, which might drive up rental prices
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and affect local housing markets. Systems thinking helps you predict and
manage these chain reactions.
Why is Systems Thinking Important for Product Managers?
● Products don’t exist in isolation: They are part of broader
ecosystems—economic systems, social systems, and even cultural
systems. For example, a job search platform can impact the labor
market, which in turn affects government policies and economic
indicators.
● Anticipating unintended consequences: When a product manager
makes decisions without considering the wider system, it can lead to
negative unintended consequences. Systems thinking helps identify
these side effects early on.
6 Ways To Think In Systems Thinking
1. Bottlenecks:
A bottleneck is a point in the system where the flow of activity slows down
or gets stuck, reducing the overall system’s efficiency.
In a product flow, a bottleneck is like a point where users get confused or
drop off. For instance, Facebook noticed a bottleneck during their
onboarding process. Users who didn’t connect with at least 7 friends in 10
days would likely abandon the platform. By identifying this bottleneck,
Facebook optimized the user journey to push new users to connect with
friends faster, which improved retention.
Creative Analogy: Think of a bottleneck as a traffic jam on a highway. No
matter how fast the cars are coming, if there’s a bottleneck up ahead,
everything slows down. Fixing that bottleneck (like expanding a lane)
makes the whole system flow better.
2. Feedback Loops:
A feedback loop occurs when the output from one part of the system is fed
back as input, either reinforcing or balancing the system’s behavior.
● Positive feedback loop: Reinforces or amplifies a behavior. Example:
Spotify’s recommendation engine, which suggests songs based on
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what you’ve listened to. The more you listen to a genre (e.g., jazz), the
more the algorithm recommends similar music, reinforcing that
behavior.
● Negative feedback loop: Balances or reduces an effect. Example: A
fitness app could recommend fewer calorie-dense foods if the user’s
activity level decreases, helping to balance overall health outcomes.
Creative Analogy: Imagine a snowball rolling down a hill (positive
feedback). As it rolls, it gathers more snow, getting bigger and bigger.
Without intervention, it will keep growing. Systems thinking helps product
managers recognize these loops and decide if they should amplify or
reduce the effects.
3. The Iceberg Model:
The iceberg model helps product managers dig deeper into the root
causes of problems by looking beyond surface-level events.
● Events: The things we see happening (e.g., users abandoning the
product).
● Patterns: Trends or recurring issues (e.g., users tend to drop off after
failing to complete onboarding).
● Systemic Structures: The underlying reasons for those patterns (e.g.,
a confusing onboarding flow or lack of incentives to complete the
process).
Creative Analogy: Think of the problem like an iceberg. The events are the
part of the iceberg you can see above water, but the real issue is the huge
chunk of the iceberg beneath the surface. Systems thinking helps you look
below the surface to find the real cause of the problem.
4. Interconnectedness:
Every product is connected to other systems—economic, social, cultural,
and environmental. A change in one system often has ripple effects in
another.
Example: Instagram affects social behavior. People use Instagram to post
vacation photos, which can drive travel behaviors and even influence
industries like fitness (people want to look good in their selfies). This
creates a complex web of interactions between Instagram, user behavior,
and external industries.
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Creative Analogy: Think of systems interconnected like a spider web. If
you pull on one strand, the entire web shifts. Product changes are like
that—one tweak can have effects you might not anticipate without
thinking about the bigger picture.
Explanation: Business Vision and Strategy
(Aligned with Reading Material)
Product managers must ensure that any feature or product they develop
aligns with the company's business vision and strategy. This means that
even if a customer need exists, it doesn’t mean the company should
address it unless it fits the company’s goals and direction. For instance:
● Swiggy may have users needing flight bookings, but since their core
business is food delivery, it wouldn't align with their strategy.
● Airbnb users might need access to education, but the company's
focus is on accommodation and travel.
The business vision provides the guardrails that help product teams
prioritize the right problems to solve. It ensures the "why" behind each
product decision is clear, keeping efforts aligned with long-term company
goals.
Aligning Product Decisions with Business Strategy
For product teams, focusing on business strategy means asking the right
questions:
● Does this feature generate business value?
● Does it align with the long-term vision of the company?
● Will this help us grow, reduce churn, or meet a key objective?
Without this alignment, teams risk building features that might solve
customer problems but don't contribute to business growth
Explaining the Product Development Life Cycle
Creative Example: The MVP and the Ice Cream Stand
Imagine you’re opening a new ice cream stand. In the planning phase,
you do research on your customers and the market. You discover that your
town loves unique flavors like lavender honey. So, instead of opening with
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30 different flavors, you build a simple prototype—an MVP (Minimum
Viable Product)—offering just 3 unique flavors.
In the launch phase, you open the stand and track KPIs like how many
people buy each flavor, customer feedback, and what flavor is most
popular. In the measure and learn stages, you notice that while people
love the unique flavors, they keep asking for toppings. So, you iterate by
introducing a toppings bar.
If this small stand succeeds, you could keep iterating by adding more
flavors or expand to new locations (scaling). However, if you notice that
your target customers don’t enjoy unique flavors as much as expected, you
may pivot and switch to classic flavors like vanilla and chocolate.
Product Life Cycle vs. Product Development Life Cycle
● Product Life Cycle: Focuses on the stages a product goes through in
the market, from introduction to growth, maturity, and eventual
decline.
● Product Development Life Cycle: Focuses on the stages involved in
planning, building, and improving the product before and after it
reaches the market.
The Product Development Life Cycle (PDLC) ensures that a product is
built with the right approach and evolves based on user needs and market
feedback. It includes stages like planning, building, launching, and
iterating.
Stages of the Product Development Life Cycle
The PDLC can be broken down into six critical stages:
1. Plan & Discover:
○ Goal: Understand what to build, for whom, and why.
○ Before building any product, a product manager must deeply
understand the business vision and strategy. This includes:
1. Business vision: What is the company trying to achieve?
2. Customer needs: What are the users’ main problems?
3. Market research: What are the market opportunities
and competitors?
○ Product managers involve cross-functional teams (e.g.,
marketing, sales, engineering) to brainstorm solutions.
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2. Build:
○ Goal: Start building a prototype or the first version of the
product.
○ The prototype is created to test feasibility, usability, and value.
It’s not fully operational but serves as a way to validate the
product idea with minimal resources.
○ Prototypes help reduce risks by identifying technical, user, and
business problems early on.
3. Launch:
○ Goal: Release the product into the market.
○ This stage involves introducing the product to users, supported
by marketing and sales efforts. The product team monitors
user interactions, looking for feedback on usability, value, and
potential improvements.
4. Measure:
○ Goal: Track how the product performs.
○ Measurement is done through quantitative research by
tracking key performance indicators (KPIs) like user
acquisition, engagement, and retention. By continuously
monitoring these metrics, the product team can assess
whether the product meets its business goals.
5. Learn:
○ Goal: Analyze customer feedback and data.
○ The team collects user feedback through interviews,
observations, and surveys. This helps the team understand
what is working well and what needs improvement.
6. Iterate, Pivot, or Kill:
○ Goal: Refine, change, or stop development based on insights.
○ Based on the data and feedback collected, the product team
has three options:
1. Iterate: Improve the product based on user feedback
and continue development.
2. Pivot: Change the product strategy if the original
assumptions were incorrect.
3. Kill: If the product continuously fails to meet user needs,
the project may need to be abandoned.
7. Iteration is part of a continuous development process where the
team enhances the product by making incremental improvements
based on user feedback and market changes.
Definitions to Undersand
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1. Product Life Cycle: The journey of a product from its introduction to
the market, through growth, maturity, and eventual decline.
2. Product Development Life Cycle (PDLC): The process of planning,
developing, launching, and iterating on a product to ensure it meets
user needs and business goals.
3. Prototype: A scaled-down version of a product created to test
feasibility, usability, and value before full development.
4. Key Performance Indicators (KPIs): Measurable metrics used to
track the performance of a product, such as user acquisition,
engagement, and retention.
5. Pivot: A significant change in product strategy when the original
assumptions about the product or market are proven incorrect.
6. MVP (Minimum Viable Product) refers to the simplest version of a
product that includes just enough core features to satisfy early
customers and provide feedback for future development.
Deciding on Product Features with Business Strategy in Mind
● Business Value: Does the feature help achieve a business objective,
like increasing revenue or reducing churn?
● Customer Need: Does the feature address a real problem for your
core users?
● Alignment: Does the feature align with the company’s long-term
goals?
In Swiggy’s case, while a flight booking feature might solve a user need, it
doesn’t align with their core business of food delivery. The resources and
effort would be better spent on improving food delivery features.
Final Thoughts
Product teams must always balance between solving customer needs and
generating business value. Without alignment to the company’s strategy,
product efforts can become unfocused and fail to deliver long-term
growth.
SESSION 1: DISCUSSION (10 MINS)
1. What is Systems Thinking and why is it important for Product
Managers?
● Answer: Systems thinking is a way of understanding the
interconnections between different components of a product and
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the broader ecosystem in which it operates. For product managers,
it’s crucial because a change in one part of the system (such as a new
feature) can have ripple effects across other areas—such as user
experience, business outcomes, or societal impacts.
○ Example: Consider a social media platform. Adding a feature to
make it more engaging can increase user time spent, but this
could also contribute to negative effects like addiction or
mental health issues.
2. Why must product managers think beyond first-order effects?
● Answer: First-order effects are the immediate results of an action,
while second- and third-order effects refer to the indirect
consequences that may arise over time. A product manager must
anticipate these broader effects to prevent unintended negative
consequences.
○ Example: If a ride-sharing app like Uber reduces drunk driving
(a positive first-order effect), it may also increase city
congestion (a second-order effect). Product managers should
think about these extended impacts when making decisions.
3. What are feedback loops, and why are they important in systems
thinking?
● Answer: Feedback loops occur when the output of one part of a
system is fed back into the system as input, influencing future
behavior. There are two main types:
1. Positive feedback loops: Amplify behaviors (e.g.,
recommendation algorithms on platforms like Spotify, which
keep reinforcing the types of content users engage with).
2. Negative feedback loops: Dampen or balance out effects (e.g.,
adding features to prevent spamming or overuse).
● Understanding feedback loops helps product managers ensure that
their product features reinforce desired behaviors without creating
unintended consequences.
1. Why is it important to consider business vision and strategy when
developing new features?
● Answer: Business vision and strategy provide the guiding principles
that ensure all product efforts align with the company’s long-term
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goals. Without this alignment, the company risks building features
that may solve customer needs but fail to contribute to business
growth. A clear vision prevents product teams from spreading
resources too thin on features that don’t drive value for the business.
2. How should product teams decide which customer problems to
solve?
● Answer: Product teams must balance solving customer needs with
generating business value. Just because a customer need exists
doesn’t mean the company should solve it. Teams should prioritize
problems that align with the company’s vision, contribute to its
growth strategy, and provide a competitive advantage.
3. What are the risks of building a feature that doesn’t align with the
company’s core strategy?
● Answer: Building features that don’t align with the company’s
strategy can lead to wasted resources, loss of focus, and a diluted
product vision. For example, Swiggy venturing into flight bookings
could pull resources away from enhancing its core food delivery
services, impacting its market position.
4. Why can’t companies address every customer need?
● Answer: Companies have finite resources—time, money, and
manpower. Product teams need to focus on high-impact solutions
that solve both customer needs and business problems. If they
attempt to address every issue, they risk losing focus on what drives
the most value for both the customer and the business.
5. Should companies prioritize features simply because competitors
have them?
● Answer: Not necessarily. While competitive analysis is important, a
feature should only be built if it aligns with your company’s business
goals and adds value. Copying a competitor’s feature just to keep
pace can result in a product that’s bloated with features that don’t
solve core user problems or drive business growth.
1. What is the difference between the Product Life Cycle and the
Product Development Life Cycle?
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● Answer: The Product Life Cycle focuses on the maturity of a
product, showing its growth, saturation, and decline stages. The
Product Development Life Cycle, on the other hand, focuses on the
steps involved in building and improving a product—planning,
developing, launching, measuring, learning, and iterating.
2. Why is the planning and discovery phase crucial in the Product
Development Life Cycle?
● Answer: The planning and discovery phase ensures that the team
understands the business needs, the target market, and the user’s
problems before development begins. Skipping this phase increases
the risk of building a product that doesn't solve real customer
problems or fit the business strategy, leading to potential failure.
3. What should product teams do if user feedback contradicts initial
assumptions during testing?
● Answer: If user feedback shows that the assumptions were incorrect,
the product team should either iterate on the existing solution, pivot
to a different approach, or in some cases, kill the feature altogether.
Testing and learning help reduce the risk of wasting time and
resources on the wrong solution.
4. Why is releasing a Minimum Viable Product (MVP) important?
● Answer: An MVP allows teams to deliver core features quickly, get
feedback, and learn from actual users. It reduces the risk of building
a full product that doesn’t meet user expectations and allows teams
to iterate based on real-world use.
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SESSION 2: EXPLAINATION (10 MINS)
Business Outcomes vs. Product Outcomes
(Aligned With Reading Material)
Let’s imagine your product and business are like a garden. Your business
outcome is the beautiful, thriving garden you want to see—a garden full of
flowers, fruits, and vegetables. Your product outcome is the care you give to the
plants—the watering, the sunlight, the fertilizer. To get that beautiful garden, you
need to focus on taking care of the plants first.
1. Business Outcomes:
○ These are lagging indicators that measure how well the business is
performing. They reflect the end result of various actions taken by
the company and are generally broad, such as growing revenue or
increasing profit.
○ Examples:
■ Grow revenue: An increase in total sales.
■ Grow market share: A larger portion of the market is using
the company’s products.
■ Reduce operating costs: Lowering the cost required to run
the business.
2. Product Outcomes:
○ These are leading indicators that measure specific changes in user
behavior as a result of product features or improvements. They are
more granular and within the control of the product team, driving
the long-term success of business outcomes.
○ Examples:
■ Improve search click-through rate (CTR): More users are
clicking on relevant search results.
■ Improve shopping funnel conversion: More users are
completing their purchases after adding items to the cart.
■ Increase time spent/user: Users spend more time engaging
with the product.
Why Should Product Teams Focus on Product Outcomes?
1. Business Outcomes Are Lagging Indicators:
○ Lagging indicators reflect something that has already happened,
such as revenue or profit, and it’s often too late to take action when
you see these outcomes. By the time you notice a drop in revenue,
the decisions that led to this result were already made.
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○Example: If a company’s revenue has decreased, it’s a result of earlier
decisions like a lack of product improvements or poor customer
retention.
2. Product Outcomes Are Leading Indicators:
○ Leading indicators are changes in human behavior that eventually
lead to business outcomes. Product outcomes are actionable and
directly tied to the user’s behavior with the product.
○ Example: If a product feature improves conversion rates (a product
outcome), this will likely lead to an increase in revenue (a business
outcome) over time.
How Product Outcomes Drive Business Outcomes
Product outcomes are directly tied to changes in human behavior that drive
business results. Here are some examples of how product outcomes can impact
business outcomes:
● Business Outcome: Increase revenue.
○ Product Outcome: Increase the conversion rate of new users
signing up for paid subscriptions.
○ Example: Adding a limited-time offer to create urgency can lead to
users purchasing sooner, which in turn increases revenue faster.
● Business Outcome: Grow profit margins.
○ Product Outcome: Increase the average transaction value per user.
○ Example: Offering cross-sell recommendations (e.g., "users who
bought X also bought Y") can lead users to add more items to their
cart, boosting profit margins.
Connecting the Dots: Mapping Business Outcomes to Product
Outcomes
1. Anticipating Human Behavior:
○ The key to translating business outcomes into product outcomes is
to anticipate how users will behave in response to product
changes.
○ Example: If the business outcome is to grow revenue, a
corresponding product outcome could be to increase the frequency
of user purchases through loyalty programs or personalized
reminders.
2. Focus on Product Outcomes to Influence Business Success:
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○ Product outcomes allow product teams to measure and influence
user behavior in real time, leading to actionable insights that can
drive long-term business success.
○ Example: If you want to increase retention (a product outcome),
offering features that enhance the user experience, like in-app
tutorials or personalized suggestions, can lead to users staying on
the platform longer, which ultimately grows revenue (business
outcome).
KPI Trees
(Aligned With Reading Material)
A KPI Tree (Key Performance Indicator Tree) is a structured, visual representation
used to break down business outcomes into smaller, measurable product
outcomes and the relevant metrics (KPIs) to track progress toward these
outcomes.
Why is a KPI Tree Important?
1. Alignment: It ensures that the work of all teams is aligned with the
business strategy by connecting high-level business goals to specific
product goals.
2. Transparency: It visually represents the relationship between different
outcomes and metrics, helping teams understand how their work
contributes to the company's overall goals.
3. Focus: It prevents teams from being overwhelmed by tracking too many
metrics by prioritizing the ones that matter most for the business's success.
Steps to Build a KPI Tree
1. Start with the Business Outcome:
○ The top of the tree is always a business outcome, such as increasing
revenue or growing market share.
○ Example: If the business goal is to grow profit, the first branch
would split into two sub-goals, like increase product profit or
reduce costs.
2. Break Down the Business Outcome into Product Outcomes:
○ These product outcomes represent how your product directly
contributes to the business goal.
○ Example: If the business goal is revenue growth, a product outcome
might be to increase the number of transactions per user.
3. Visualize the Metrics:
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○Now, you identify the specific KPIs (metrics) that measure these
outcomes.
○ Example: If your product outcome is increasing transactions, you
could measure:
■ Number of customers (new and returning).
■ Average transaction value.
■ Conversion rate (new users to paying customers).
4. Mathematical Breakdown:
○ Think of business outcomes like an equation and break them down
into measurable components.
○ Example: Revenue = Number of customers × Average value per
transaction.
■ This can be further broken down into number of new
customers and number of repeat customers, with metrics
attached to each.
5. Use Hypotheses and Dotted Lines:
○ Not all relationships between metrics are fully understood. Use
dotted lines to show hypotheses that need validation.
○ Example: If you think that improving the onboarding process will
increase the number of repeat users, add this hypothesis to your KPI
tree but track it as something that requires further validation.
Example KPI Tree: Ridesharing App (e.g., Uber)
● Business Outcome: Increase the number of completed trips.
○ Product Outcome 1: Increase daily trip requests.
■ KPI: Number of ride requests per day.
○ Product Outcome 2: Increase daily driver capacity.
■ KPI: Number of active drivers × Available hours per driver.
By using the KPI Tree, the entire organization can see how each product goal (like
increasing driver capacity or trip requests) contributes to the broader business
outcome of completing more trips.
Maxine's Example: Building a KPI Tree for a News App
In the case of Maxine and her team, they built a KPI tree to grow their monthly
active users (MAU), the main business goal. The team broke this down into:
● New users: How many new people are joining the app?
● Returning users: How many existing users are coming back?
● Reactivated users: How many churned users are returning to the app?
By visualizing these outcomes and connecting them to KPIs, such as conversion
rates or user acquisition costs, Maxine’s team was able to focus on key areas for
improvement.
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How a KPI Tree Helps:
1. Clarity: It simplifies complex relationships between business outcomes and
product metrics.
2. Data-Driven Decisions: Teams can prioritize areas that directly impact
business outcomes.
3. Collaboration: By involving different teams (e.g., marketing, product,
engineering), the KPI tree ensures everyone is working towards the same
objectives.
Key Takeaways:
● A KPI tree helps translate business objectives into measurable product
outcomes.
● It connects customer behavior, product performance, and company goals
in a structured way.
● Building a KPI tree requires collaboration across teams and a combination
of mathematical relationships and hypotheses.
SESSION 2: DISCUSSION (15 MINS)
Mathematical Breakdown: Example of KPI Tree
Example: Ridesharing App (Like Uber)
Let’s assume your goal is to increase the number of completed trips per day.
This is a business outcome at the top of your KPI tree. You’ll need to break this
into measurable components (product outcomes), each with their own formula
that leads to the main goal.
Formula 1: Top-Level Business Outcome
Completed Trips/Day = # of Trip Requests/Day × Conversion Rate (Trip
Requests to Completed Trips)
● This formula gives you the total number of completed trips by multiplying
the number of trip requests by the percentage of those requests that
actually result in completed trips.
Now, let’s break it down further.
Formula 2: Breaking Down Trip Requests
We want to increase the number of trip requests. To do that, we need to
understand what factors affect this.
# of Trip Requests/Day = # of Active Users × Average Trips/Active User
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● Here, the number of trip requests is based on how many active users you
have and how frequently they request rides.
Formula 3: Breaking Down Active Users
Next, we can break down the number of active users into new users and
returning users:
# of Active Users = # of New Users + # of Returning Users
We can further break this down into smaller formulas, like new users being a
result of app downloads and conversion rates:
# of New Users = # of App Downloads × App Conversion Rate
This means, to increase new users, we need to increase either the number of app
downloads or improve the conversion rate (i.e., turning app downloaders into
active users).
Mathematical Approach to a KPI Tree
Let’s take a mathematical approach to another KPI tree, focusing on revenue
growth for an e-commerce site.
Top-Level Formula: Revenue
Revenue = # of Customers × Average Revenue/Customer
● This top-level formula is your business outcome: increasing revenue.
Let’s break it down into product outcomes that influence these metrics.
Formula 1: Number of Customers
The number of customers can be broken down into new customers and repeat
customers:
# of Customers = # of New Customers + # of Returning Customers
Formula 2: New Customers
The number of new customers can be influenced by marketing efforts and
conversion rates. Let’s say new customers come from website visits that convert
into customers.
# of New Customers = Website Traffic × Conversion Rate
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Where:
● Website Traffic is driven by factors like ads, SEO, and referrals.
● Conversion Rate is the percentage of website visitors who make a
purchase.
Formula 3: Returning Customers
Returning customers can be increased by improving the retention rate:
# of Returning Customers = # of Existing Customers × Retention Rate
Here, the retention rate refers to the percentage of existing customers who
return to make another purchase.
Branching Out the KPI Tree
Once you have the basic structure, you can continue to branch out each factor in
more detail.
For example, Website Traffic could be broken down into:
Website Traffic = Paid Traffic + Organic Traffic
● Paid Traffic comes from ads, which can be represented by a formula like:
Paid Traffic = Ad Spend × Click-Through Rate (CTR)
● Organic Traffic comes from search engine optimization (SEO), which could
be influenced by your content marketing efforts.
Formula for Average Revenue/Customer
Let’s assume you want to increase the average revenue per customer. You can
break this into two components:
Average Revenue/Customer = Average Order Value × # of Orders/Customer
● Average Order Value can be increased by offering higher-priced products
or encouraging customers to add more items to their cart.
● # of Orders/Customer can be increased by loyalty programs or
personalized recommendations.
KPI Tree for User Retention
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Let’s break down user retention using a mathematical approach in the context of
a subscription-based product.
Top Goal: Retention Rate
The retention rate is a key metric for subscription services and can be expressed
as:
Retention Rate = (Number of Customers Retained/Total Number of
Customers) × 100
To influence the retention rate, you can break down what factors impact whether
users stay subscribed.
Formula 1: Factors Impacting Retention
Retention depends on several factors, such as user engagement and customer
satisfaction:
Retention Rate = Engagement Score × Satisfaction Score
Formula 2: Engagement Score
Engagement might depend on how frequently users interact with the product:
Engagement Score = # of Active Sessions/User × Time Spent/Session
To improve engagement, you could work on improving the user interface (UI),
adding new features, or providing more value to the user during each session.
Putting It All Together
A KPI Tree is essentially a hierarchical breakdown of equations that show how
smaller, trackable metrics (product outcomes) lead to larger, overarching business
goals. By turning each KPI into a mathematical relationship, teams can:
1. Measure progress more accurately.
2. Identify bottlenecks in the process (e.g., low conversion rates).
3. Predict business outcomes by monitoring leading indicators like
conversion rates or engagement levels.
Question 1: Why should product teams focus more on product
outcomes rather than business outcomes?
Answer:
Product teams should focus on product outcomes because they are leading
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indicators of human behavior that can be influenced directly by the team. These
outcomes help measure how the product is affecting users' behavior, and they
give actionable insights before the business outcomes—like revenue or
profit—are impacted.
Question 2: How can business outcomes and product outcomes
be mathematically linked to ensure alignment?
Answer:
Business and product outcomes can be mathematically linked using KPI trees
that break down the business outcome into product-level metrics. Each business
outcome (like increasing revenue) is influenced by product outcomes (like
improving conversion rates), which can be expressed in formulas.
● Business Outcome (Revenue):
○ Revenue = Number of Customers × Average Revenue per
Customer
Breaking it down to Product Outcomes:
1. Number of Customers = New Customers + Returning Customers
2. New Customers = Website Traffic × Conversion Rate
3. Returning Customers = Existing Customers × Retention Rate
Discussion: Business Outcomes vs Product Outcomes
To better understand how business outcomes and product outcomes interact,
here are three critical questions to ask, with answers that provide deeper insights.
Question 1: Why should product teams focus more on product
outcomes rather than business outcomes?
Answer:
Product teams should focus on product outcomes because they are leading
indicators of human behavior that can be influenced directly by the team. These
outcomes help measure how the product is affecting users' behavior, and they
give actionable insights before the business outcomes—like revenue or
profit—are impacted.
For example:
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● Product outcome: Improve click-through rate (CTR) of a search result
(leading indicator).
● Business outcome: Increase revenue from purchases (lagging indicator).
Focusing on product outcomes allows teams to track and optimize real-time user
interactions that eventually lead to improved business metrics like revenue.
Waiting for business outcomes to change means it may be too late to act, as
these are lagging indicators and reflect the results of decisions made earlier in
the product lifecycle.
Question 2: How can business outcomes and product outcomes
be mathematically linked to ensure alignment?
Answer:
Business and product outcomes can be mathematically linked using KPI trees
that break down the business outcome into product-level metrics. Each business
outcome (like increasing revenue) is influenced by product outcomes (like
improving conversion rates), which can be expressed in formulas.
● Business Outcome (Revenue):
○ Revenue = Number of Customers × Average Revenue per
Customer
Breaking it down to Product Outcomes:
1. Number of Customers = New Customers + Returning Customers
2. New Customers = Website Traffic × Conversion Rate
3. Returning Customers = Existing Customers × Retention Rate
Question 3: What is the role of product outcomes as leading
indicators, and how do they predict business outcomes?
Answer:
Product outcomes are leading indicators because they measure immediate
user behavior that precedes and directly impacts business outcomes. For
example, if the product outcome is to increase user engagement, this can lead
to higher retention rates, which then improves overall revenue or profit
(business outcomes).
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SESSION 3: EXPLAINATION (15 MINS)
Explaination: Product Discovery
(Aligned with Reading Material)
What is Product Discovery?
Product discovery is the critical first phase in the product development cycle,
which involves determining what to build. The primary purpose of product
discovery is to reduce uncertainty by focusing on solving real customer problems
and aligning with business outcomes. It's about ensuring that the product or
feature developed is actually needed by the user and will contribute to the
company's strategic goals.
In contrast, product delivery is about building the product right—this is where
the development team focuses on efficiently delivering a high-quality product.
However, before you can deliver, you must ensure that you're building the right
thing through discovery.
Core Idea of Product Discovery:
● Understand and Define: You must deeply understand the user problem
before diving into a solution. Product discovery is about investigating
whether a problem exists and validating that solving it will benefit both
users and the business.
● Mitigate Risks: Marty Cagan identifies four key risks in product
development:
○ Value risk: Are customers going to use or buy this?
○ Usability risk: Can users understand and use it easily?
○ Feasibility risk: Can the engineering team build it with available
resources?
○ Business viability risk: Does this solution align with the company’s
business goals?
Skipping product discovery increases the risk of failure, as seen when products
are built based on assumptions rather than validated user needs.
Why Does Product Discovery Matter?
Let’s compare two scenarios:
1. You build a feature first, then go to users to see how they respond. This is a
risky approach because you might waste time and resources on a feature
that doesn’t meet user needs or business goals.
2. You start by understanding your users, their pain points, and their
problems. Then, you explore what products or features can solve these
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problems. This approach minimizes risk and increases the chances of
success.
In the case study provided in the reading, you join a food delivery startup and
immediately come up with an idea to drive awareness and adoption in Tier 2 and
Tier 3 cities in India. Without conducting product discovery—without
understanding what these users actually need—you build and launch the feature.
But after launch, the feature fails to deliver results because it wasn’t built to
address real user needs.
How Product Discovery Reduces Uncertainty:
Product discovery allows you to research and validate before committing to
development. This is key to avoiding building products that users don’t want or
need, which is a common pitfall in Case 1 above. By focusing more on validating
ideas up front, you’re less likely to build features that go unused.
How Does Product Discovery Work?
The Double Diamond Framework provides a structured approach to product
discovery, which includes four phases:
1. Discover (Understand the Problem): Start by identifying the broad
challenges your product or feature should solve. This stage requires you to
empathize with your users—conduct research through user interviews,
surveys, and data analysis to understand their pain points.
2. Define (Narrow Down the Problem): After understanding the user needs,
you define a clear, focused problem statement. This ensures alignment
within the team and avoids vague or poorly defined problems. A good
problem statement should be specific enough that everyone understands
it, and it should be validated through user feedback.
3. Develop (Ideate Potential Solutions): Once you have a clear
understanding of the problem, brainstorm possible solutions. At this
stage, the focus is on creative problem-solving through ideation
techniques such as storyboarding or design sprints.
4. Deliver (Test and Refine): Build prototypes of the solutions, then test them
with users. This could involve A/B testing, customer interviews, or other
testing methods. The goal here is to validate that the solution actually
solves the user’s problem before full-scale development begins.
Key Points from Product Discovery 101:
1. Reduces Risk: By validating ideas early, you minimize the chances of
building a product that fails.
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2. Involves Continuous Learning: Discovery isn’t just a one-time phase. It’s an
ongoing process where you constantly gather insights from users to refine
and improve the product incrementally.
3. User-Centric: The process puts the user’s needs at the center, ensuring
that the product addresses real-world problems.
Product Discovery and Design Thinking
Product discovery is closely aligned with the Design Thinking process, which also
focuses on understanding users, defining problems, and iterating on solutions.
The Design Thinking framework helps teams stay focused on creating products
that solve real user needs by emphasizing empathy and iterative prototyping.
The 5 stages of Design Thinking align well with the product discovery process:
1. Empathize (Understand the User):
○ This is where you gather deep insights into your users' lives, pain
points, and goals. In product discovery, you would use tools like
customer interviews, surveys, and data analytics to get a holistic
understanding of user challenges.
○ Example: In the case of the food delivery startup, empathizing with
Tier 2 and Tier 3 city users would involve understanding their unique
needs, such as limited internet access or preferences for cash on
delivery.
2. Define (Narrow Down the Problem):
○ Once you have gathered insights, you clearly define the problem.
This stage is critical because it ensures that the entire team is
aligned on the user problem. A poorly defined problem can lead to
confusion and misaligned priorities.
○ Example: A well-defined problem could be: "Users in Tier 2 cities
have trouble paying online due to inconsistent internet connectivity."
3. Ideate (Brainstorm Solutions):
○ In this stage, you generate as many solutions as possible to the
defined problem. Teams use techniques like brainstorming, mind
mapping, and design sprints to come up with creative ideas.
○ Example: In the food delivery case, one solution could be allowing
users to save their payment information when they’re in a strong
internet area, so they can pay later offline or enabling
cash-on-delivery options.
4. Prototype (Build Quick Models):
○ Build simple, inexpensive models of your ideas to test them out
quickly. Prototypes can be anything from sketches to clickable
mockups or low-code MVPs.
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○ Example: The startup could prototype a version of the app where
users can select "Pay Later" or test a beta version of a
cash-on-delivery feature.
5. Test (Validate with Real Users):
○ Testing helps you see how well your solution works. It’s essential to
test prototypes with real users to ensure they address the problem
and work smoothly. You should also gather feedback to make
improvements.
○ Example: Conduct a pilot test in select Tier 2 cities to see how users
respond to cash-on-delivery and offline payment features.
The Importance of Continuous Learning in Product Discovery
Product discovery doesn’t stop after the first round of user research or
prototyping. Instead, it’s a continuous learning process. Every feature launched
should provide new insights about your users. These insights help you keep
refining the product over time.
● Learning Cycles: After each release or test, teams should gather feedback
and adjust the product accordingly. This could mean tweaking the UX
design, adding new features, or even pivoting the direction based on user
feedback.
● Examples:
○ Netflix continuously uses data from user interactions to refine its
recommendation algorithms.
○ Spotify runs regular tests on new features, like playlist
recommendations, to gather real-time data and feedback.
Real-World Example: Swiggy’s Product Discovery
Let’s apply the product discovery process to Swiggy, one of India's top food
delivery platforms, which expanded into Tier 2 and Tier 3 cities. They could have
faced several challenges, such as slow internet speeds, lack of familiarity with
digital payments, and differences in food preferences.
1. Discover: Swiggy understood that users in these areas preferred
cash-on-delivery payments due to unreliable internet connectivity and
lack of trust in online payments.
2. Define: They defined the problem as, "How can we enable users in smaller
cities to make payments easily despite connectivity issues?"
3. Ideate: The team brainstormed solutions like cash-on-delivery, prepaid
wallets, and offline payment modes.
4. Prototype: Swiggy prototyped a cash-on-delivery feature in a few cities
and tested the user response.
5. Test: After positive feedback from users, they rolled out the feature across
other cities.
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By continuously refining their product based on user needs, Swiggy was able to
increase user adoption in smaller cities and grow its market share.
Summary: Connecting Discovery to Business Outcomes
To tie product discovery back to business outcomes, it’s important to ensure that
solving user problems also aligns with strategic goals:
● Business Outcomes: These are high-level goals like increasing revenue,
growing market share, or improving customer retention.
● Product Outcomes: These are specific, measurable results that the product
aims to achieve, like increasing feature adoption rates, reducing churn, or
boosting user satisfaction.
For example, if Swiggy's business outcome is to grow in Tier 2 cities, the product
outcome might be to increase daily orders or reduce payment failure rates. By
solving the real problem of payment issues, they achieve both product and
business outcomes.
What is Design Thinking?
Design thinking is a user-centered approach to solving complex problems.
Unlike traditional problem-solving methods, design thinking focuses on
understanding the user’s needs and challenges deeply before arriving at a
solution. The process is iterative, meaning you constantly refine your ideas and
solutions based on new insights or feedback.
Design thinking is especially valuable when you're dealing with uncertainty or
when a product or solution needs to be deeply empathetic to its users.
The 5 Stages of Design Thinking
The design thinking process can be broken down into five key stages, which you
can think of as a flexible roadmap that helps teams move from identifying
problems to creating actionable solutions:
1. Empathize:
○ The first stage involves deep user research. Your goal is to
understand the emotional, functional, and behavioral needs of
your users.
○ Methods: User interviews, surveys, ethnographic studies, and
observation.
○ Example: AirBnB’s founders, Joe Gebbia and Brian Chesky, realized
that users were hesitant to book rentals due to poor image quality.
They spent time with users, empathizing with their hesitation and
understanding their need for clarity before making a booking.
2. Define:
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○ After gathering insights, you move on to defining a clear problem
statement from the user’s perspective. The problem statement acts
as the foundation for the rest of the process.
○ Example: In AirBnB’s case, the problem statement could be framed
as, “Users are reluctant to book rentals without high-quality images
of the properties.”
3. Ideate:
○ In this stage, the team brainstorms ideas for solving the user’s
problem. The focus is on quantity over quality at first, encouraging
creative thinking and generating as many ideas as possible.
○ Methods: Brainstorming, mind mapping, sketching.
○ Example: AirBnB’s founders ideated that better images could
significantly increase user trust and bookings.
4. Prototype:
○ Prototyping involves creating a tangible representation of your
solution. This could be as simple as a rough sketch or as complex as
a high-fidelity digital model.
○ Example: AirBnB’s prototype was quite literal: they rented a camera,
took better pictures of the properties, and replaced the low-quality
images on their website.
5. Test:
○ In this final stage, you take your prototype and test it with real
users. Testing allows you to gather feedback and insights on how
well your solution addresses the user’s problem.
○ Example: AirBnB tested their new images, and within a week, their
revenue doubled to $400, which proved the solution worked.
How Design Thinking Saved AirBnB
In 2009, AirBnB was struggling, making only $200 per week. The founders, Joe
Gebbia and Brian Chesky, realized that users weren’t booking rentals because the
images of the properties were low-quality and unclear. They empathized with
their users’ need for transparency and trust.
By following the design thinking process, they:
● Empathized: Recognized the user’s need for clear and high-quality images
before booking a place.
● Defined: Framed the problem as "Users don’t trust properties with poor
images."
● Ideated: Came up with the idea of improving the quality of the images.
● Prototyped: Took better photos of the properties in New York.
● Tested: Replaced the old images on their platform and saw an immediate
increase in revenue. The weekly revenue jumped from $200 to $400,
which led to further iterations and, eventually, AirBnB’s rapid growth.
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Why Design Thinking is Iterative
Design thinking is not a linear process; it's iterative. As you move through the
stages, new insights may arise that push you back to a previous stage. For
instance, during the testing phase, you might discover that the prototype doesn’t
fully solve the user’s problem. This sends you back to the ideation or definition
phase to refine your understanding of the problem and solution.
For example, AirBnB didn’t stop with just improving images—they continuously
refined their platform, adding new features based on user feedback and the
iterative nature of design thinking.
Real-World Examples of Design Thinking:
● Apple’s iPhone: Apple used design thinking to create a phone that was not
only functional but also empathetic to user needs—such as the importance
of ease of use and an intuitive user interface.
● UberEats: By empathizing with customers, UberEats designed its platform
to solve pain points like tracking orders in real-time and managing
unpredictable delivery times.
Key Takeaways:
1. User-Centered Approach: Design thinking always begins with deeply
understanding user problems.
2. Iterative Process: Each stage of the process can be revisited based on new
insights.
3. Success through Empathy: By empathizing with their users and solving
real problems, companies like AirBnB have gone from struggling start-ups
to global leaders.
SESSION 3: DISCUSSION (10 MINS)
1. Why is product discovery essential for minimizing risks in product
development?
● Answer: Product discovery focuses on reducing the four key risks outlined
by Marty Cagan:
○ Value Risk: Discovery ensures the product provides value by solving
a real user problem. Without discovery, there’s a risk that users won’t
buy or use the product.
○ Usability Risk: By validating ideas early, discovery helps ensure that
users can easily understand and interact with the product.
○ Feasibility Risk: Discovery considers engineering constraints,
ensuring that solutions can be built with the available resources.
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○ Business Viability Risk: By aligning product solutions with business
objectives, discovery ensures that the product contributes to the
company’s success.
2. How does product discovery directly impact business outcomes?
● Answer: Discovery connects the dots between user needs and business
goals. For example, if the business outcome is to grow in new markets (e.g.,
Tier 2 and Tier 3 cities), product discovery helps ensure that the features
built address the specific needs of these new users. By solving user
problems effectively (e.g., enabling cash-on-delivery), the company can
increase adoption and, consequently, achieve its business outcome of
market expansion.
3. How do you align product outcomes with business outcomes during
discovery?
● Answer: To align product and business outcomes, teams need to clearly
define measurable product outcomes that support the overarching
business goals. For example:
○ Business Outcome: Increase revenue in new markets.
○ Product Outcome: Build features that increase order frequency or
reduce cart abandonment in those markets.
● During discovery, every idea and feature should be validated against both
user needs and the potential to achieve the desired business outcome. If a
feature doesn’t move the needle on a key business metric, it might not be
worth pursuing.
4. What happens if product discovery is skipped or minimized?
● Answer: If product discovery is skipped:
○ There’s a high chance that the team will build something that
doesn’t solve the real problems users face, leading to low adoption.
○ The product might fail to deliver value, resulting in wasted time,
resources, and money.
○ There could be a disconnect between the product and the business
goals, which could lead to the product failing to impact key metrics
like revenue or user growth.
For instance, in the reading example, the product manager jumped straight to
delivery without spending time on discovery. The feature failed because it didn’t
solve the actual user problem in Tier 2 and Tier 3 cities, showing how skipping
discovery can lead to product failure.
5. How does the Double Diamond framework help teams stay focused during
product discovery?
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● Answer: The Double Diamond framework ensures teams focus on the right
steps during product discovery:
○ Discover: Broadly explore user problems using qualitative and
quantitative research to uncover insights.
○ Define: Narrow down the problem and clearly articulate the key user
challenges.
○ Develop: Brainstorm multiple potential solutions to address the
defined problem.
○ Deliver: Build prototypes and test them to ensure they solve the
problem before full development.
By following this framework, teams can avoid jumping to conclusions or
prematurely building solutions that may not be aligned with user needs.
6. How can product discovery create an environment of continuous learning?
● Answer: Product discovery fosters continuous learning by emphasizing
regular user feedback and iteration. After launching a feature, teams
should gather data on how users interact with it and adjust the product
based on that feedback. This iterative loop helps teams continuously refine
the product to better meet user needs and improve the product
incrementally.
For example, Netflix and Spotify are great cases of companies that constantly
gather data on user preferences and behaviors, then iterate on their features to
optimize user experiences and achieve business outcomes like improved
engagement or reduced churn.
7. How can product discovery help in balancing short-term feature
development and long-term strategy?
● Answer: Product discovery ensures that even short-term features are
aligned with long-term business objectives. When teams validate features
early through discovery, they can ensure that these features contribute to
both immediate product outcomes (e.g., increasing engagement or
solving user pain points) and long-term business goals (e.g., expanding
market share or improving retention).
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