Intro sentence / paragraph
One of the most common difficult tradeoff decisions a Product Manager needs to make is whether to build the thing that creates more user value or the thing that better sells the product. If you look from a high enough altitude, most product backlog ideas are primarily aimed at achieving one of these outcomes or the other.
PLACEHOLDER: IMAGE OF BALANCE WITH USER VALUE AND REVENUE
But it’s tricky to compare apples and oranges — especially for product prioritization decisions where everyone seems to have an opinion. So Product teams often try to avoid having to make these kinds of user value vs. revenue growth decisions. In the short history of how we’ve defined the role of Product Management, the balance has significantly favored user value, often with short-term revenue growth as an afterthought. Some PMs even embrace this leaning, chanting the mantra: “A great product sells itself!”. This is probably why, after years of neglected revenue investments, we have seen a recent popularity in a new flavor of PM that’s referred to as the Growth PM.
The reality is that any for-profit business requires types of product investments both to be successful. A product that doesn’t provide user value can only be sold for so long before customers get wise and leave. And even great products that “sell themselves” still require product work to capture that revenue (for example: how much user value is created by your sign-up flow or billing features?).
In product-focused companies, the Product function with their teammates in Engineering and Design are able to drive huge advancements in both of these areas. So how should they decide where to invest?
The purpose of this post is to provide a framework that shows how these seemingly different alternatives can be considered as apples to apples. It will start off as a more academic explanation but I promise if you stick to the end I’ll wrap up with some practical takeaways.
The value of a mental model / framework is limited by one’s understanding of the model’s limitations.
Let’s begin by discussing the hypothetical revenue that a product could earn.
Let’s start by talking about the concept of user value. For the purpose of this discussion, I’ll define user value as the want to cover is that when we think about investing in user value there are two separate dimensions that ,,,
When you build to add more user value, there are 2 axes that you can expand: average user value and size of market.
PLACEHOLDER: CHART X Y
Every product seeks to solve one or more jobs for users. From the more tangible “my business needs to allow customers to pay by credit card” to the more abstract “I want to be entertained while I relax on the couch”. The extent to which a product solves its problem(s)