Over the past 12-18 months, we have established the initial structures for a middle management level within our company. The reason for this was that the number of employees had increased significantly from just under 10 to over 30, which would have resulted in a management depth of around 15 people with only two founders. Given the changing circumstances, including the increasing complexity of the project, the frequency of the meetings, and the varied responsibilities of the departments, it was determined that a change in meeting format was necessary. However, this has also given rise to other challenges.

One of the new challenges is coordinating how new markets are approached and how resources are allocated to the various teams. For instance, certain team leads are eager to move forward and allocate resources to a particular area, such as a new customer group, without consulting the founders. In contrast, others rely heavily on directives from the founders and rarely proactively contribute ideas. We addressed this issue by creating an opportunity solution tree for each of our products and discussing it regularly with team leads from sales, customer success, tech, and product management. However, this has led to new challenges, as the founding team often initiated discussions about initiatives by discussing the “desired outcome.” Team leads, particularly those from sales, expressed a desire to discuss “solutions” and appropriate “assumption tests” in a timely manner. We have received significant input that discussions should not always occur at such a high level. Instead, they should take place in a more granular and context-specific manner based on the newly identified opportunity.

Another challenge with new markets and target groups was that we on the founding team also discussed vision and mission in great detail when evaluating opportunities and risks. As a result, the discussions were frequently less quantitative in nature. Those who took the role of the devil’s advocate often attempted to discredit the target group or the market by presenting random points.

To enhance the productivity of the aforementioned discussions, we have decided to prioritize outcomes related to business and product development. In the following section, I will describe the steps we took and the factors that should be taken into consideration.

Business outcomes vs. product outcomes

To address the conflicts outlined above at various levels, we initially focused on the business outcomes within the founding team. As is often the case, this is due to the necessity for the founding team to be in agreement on the future vision of the company and on the manner in which the interests of the founders will be addressed. In our case, as founders, we held a controlling majority. If this is not the case, majorities must also be sought with investors or other shareholders so that a direction can be formulated that can then be implemented. The business outcomes were of particular importance to us because they primarily define financial key figures, such as total revenue or revenue in specific segments and regions. This discussion also included the timing of exits and the targeted exit amount per founder. The discussion of the following points was essential for establishing a common understanding of our personal objectives for the company and identifying sales targets for the next five years. To this end, we met regularly for 30-60 minutes per week over several weeks and modeled scenarios in Excel. This discussion within the founding team proved to be very valuable because it allowed us to determine what resources we would potentially need to achieve certain goals. In some cases, we also communicate business outcomes, such as revenue targets for the coming years, with the team. This allows everyone to adjust to the company’s expected growth.

However, it is also important to keep in mind that business outcomes have strong limitations. It should be noted that these are naturally lagging indicators. Higher sales only reflect product market fit with a product or product extension. We have therefore exclusively utilized them in the context of product development to estimate the extent to which we can achieve a business outcome with the current or desired product. In our case, for example, our software solution has a total addressable market of a few thousand B2B customers. This resulted in natural limitations for our product. We then used SAM and SOM to model these limitations and determine whether it was necessary to expand the target group for a specific revenue target.

After obtaining clear answers, we collaborated with all relevant stakeholders, including customer success, product management, and technology, to formulate product outcomes. Teresa Torres distinguishes between business outcomes and product outcomes as follows:

“A business outcome is a metric that moves the business forward, while a product outcome is a metric that helps us understand if the product is moving the business forward.”

In the case of product outcomes, we therefore conducted interviews with the product, design, technology, and customer success teams to identify specific problems faced by customers and then derived product outcomes from these. As Teresa Torres explains in the linked article, product outcomes measure human behavior. For example, it is important to note that a new customer segment, such as B2B large customers, is using our application. Additionally, it is crucial to understand that data is transferred via API to relevant applications, rather than being exported via CSV. Formulating product outcomes is a more challenging process than setting business outcomes. Ultimately, each time you place a bet on the outcome that has the potential to yield the desired changes in the future.

Alignment with OKRs

To ensure the effective dissemination of business and product outcomes across the company, we have mapped them in OKRs. It is noteworthy that when we initiated OKRs with a team of less than ten members, our initial approach was to include as many team members as possible in the objectives and associated key results. Over time, this has evolved to the point where there is frequently one objective shared by the sales and marketing teams, one that is also aligned with the priorities of the product, technology, and customer success teams, and one that is applicable to all departments.