Changes, changes, and more changes, that’s what Odin Enterprises is doing in the hope of avoiding a tragic fate. After passionate and intense discussions between Ivar and Björn, a new team was born: Team Kattegat. Now each team can focus on an audience and help save the business. The question is, will they collaborate, or will they compete against each other?
Lagertha will have to use her experience to set both teams on the track to saving the company while getting full support from business stakeholders. Surprisingly, Ecbert is supporting all decisions and not blocking anything. He is no longer overruling decisions or trying to centralize them with himself. Lagertha is doing her best to teach him a fundamental principle:
Top management empowers product teams to make decisions.
As Ecbert adapts to a new leadership style, he approaches Lagertha. “We’ve defined our business model, value proposition, and changed our teams to focus on specific audiences. Can we now talk about what we should work on next?” Lagertha knew this question was coming and said, “Sure. We’re exactly at this moment. It’s time for us to agree on what to achieve for each team and empower them to figure out how to do it.”
Setting Product Goals
Curiosity and eagerness to get things going was on everyone’s mind. They felt they could overcome the current situation and help Odin Enterprises thrive. Floki, the Scrum Master, was silent until now. When he felt it was time for him to speak up, he had the talent to read the atmosphere and open it up.
Floki: “I can clearly see Björn and Ivar burning to get their hands dirty and help teams Jorvik and Kattegat create value. However, we cannot jump into action without knowing what’s the most important thing at this moment for each team to address.”
Ecbert, who was listening intently, interrupted Floki, “Simple. Team Kattegat will do great things for tourists and Team Jorvik will do amazing things for our partners. I don’t see anything critical here.”
Björn took a stand, and without blinking he said, “Focusing on doing great things will bring us no further than we are. We ought to focus on achieving goals. I want to know from you, who are closer to our customers, what’s the most pressing issue right now?”
Torvi, the most experienced marketing analyst, stood up and decidedly said, “Customer lifetime value is lower than customer acquisition cost. We either increase our customer value or reduce our acquisition costs. Otherwise, we are doomed.”
Haraldson: “Torvi is right, we’re burning money to get new customers, yet we struggle to make even a dime in profits.”
Olaf: “Interesting to hear that. When I look at our NPS (Net Promoter Score), customers rate us quite well. Most of our customers are promoters; it means they’d be willing to recommend us to a friend; maybe here’s an opportunity.”
Ecbert: “Pow! Here’s our Product Goal: Build a feature to allow customers to recommend our services to their friends.”
Lagertha intervened, “Ecbert, that’s not a Product Goal; that’s a solution. A goal should empower the team to define the solution.”
Ecbert: “Why would we need that? The solution is on the table. We just need to implement it.”
Björn: “And here we go again. Do you want us to fail again? Let’s focus on what we know. A solution needs to resonate with our audience. We have a problem with customer lifetime value and customer acquisition costs, and we know we have many satisfied customers. For me, a product goal would be to create a sustainable customer acquisition channel. We will figure out how to get there.”
Ivar: “Björn, as much as I am mad at you, I have to agree with your suggestion. This goal would empower team Kattegat to inspect and adapt continuously. Now, I’m curious to know what Ecbert thinks of it.”
Ecbert: “I can empower you to reach this goal, but it’s still fuzzy to me. How do you define success?”
Before answering this question, Lagertha went to the whiteboard and wrote:
Goal: Create a sustainable customer acquisition channel
Success Metrics: ?
Lagertha: “We’ve got our Product Goal, and now it’s time for us to define what success is and how to measure that.”
Setting Success Metrics
As everyone stared at the whiteboard, wondering how to measure the success of this initiative, Torvi decided to share what was on her mind.
Torvi: “Sustainable customer acquisition channel means that customer lifetime value surpasses our acquisitions costs. It sounds simple, but it can get quite complex, and I’d suggest taking it one step at a time. First, we try out different channels and learn which has the potential to grow; then, we put more time into it.”
Haraldson: “That sounds logical. I’d imagine some metrics like the new channel cost 20% of customer lifetime value. The new channel represents 30% of our customer acquisitions.”
Ecbert: “These metrics sound good to me, and I could see that contributing to our profitability. Björn, can you commit to that?”
Björn: “That’s not very clear, such metrics seem quite long to measure, and I wouldn’t know how to use them daily. In short, many events need to happen until we can learn something. I’m confused.”
Lagertha: “Björn, such metrics would be the ultimate ones. However, you would need to break them now into leading metrics. For example, let’s say you choose to experiment with a referral program. The first metric is the NPS score; the higher it is, the bigger the chance of getting referrals. Then, you could measure recommendation rate, conversation rate, and activation. This would allow you to act faster and adapt. Ultimately, if these metrics go well, the ones suggested by Haraldson will be positively impacted.”
Björn: “Got it. It’s like measuring every step we can and adjusting it according to our learnings. So we start with the end in mind and work backward. I’m sure we can figure that out.”
Lagertha: “Great. So let me write these metrics on the board.”
Björn: “Thanks Lagertha. I still have a question. Our backlog has hundreds of items, and most of them are unrelated to the customer acquisition channel. What should we do?”
Adapting the Product Backlog
As Björn said, you could clearly observe some discomfort among different people. It didn’t take long until someone broke the silence.
Olaf: “Well, I see the importance of a new acquisition channel, but I still have my requests from last quarter open, and I am unwilling to withdraw them.”
Furiously, Björn spoke: “Everyone wants everything. We make compromises to please all of you, and where did it get us? Here in this room, talking about avoiding bankruptcy. Let me be clear, we either remove everything unrelated to the goal and metrics we defined, or we will get nowhere.”
Olaf: “That’s harsh! It cannot be like that; there should be a balance.”
Björn: “Balance? The more unrelated tasks we take, the less collaboration we have, and the more mediocre our results are. We need to focus and avoid distractions. I’m done with compromises; I’d like to agree to disagree and commit as an organization. If customer acquisition cost is burning through our resources, let’s solve this as a team, and then we agree on another product goal—but it has to be one goal at a time.”
Ecbert: “Olaf, I must agree with Björn. We are here because of our lack of direction. We decided to do everything at the same time, and here we are. Let’s slay one monster at a time. We better start finishing and stop starting.”
Lagertha: “I like the direction we’re taking. That’s how great results happen. Can we agree now on removing all unrelated items from our Product Backlog?”
Olaf: “We worked hard on them, we discussed, and removing them sounds like throwing our work into the trash. I am against that.”
Björn: “Keeping them sounds like keeping distraction in front of us and limiting our ability to create value sooner. Olaf, whatever is essential, will come back to us. Please, let’s do it differently this time. We cannot overcome this challenge by sustaining the same old behavior. To get different results, we must act differently.”
Olaf: “Björn, you got me. We must act differently. Let’s do it.”
Björn noted down to do a massive clean-up on the backlog. All items unrelated to the Product Goal would be removed from the backlog to ensure focus on reaching the agreed goal.
Rinse and Repeat
Lagertha ran the same exercise with team Jorvik to ensure they also could focus on the most relevant part for their partners. After an hour of discussions, they came up with the following:
Product Goal: Become an attractive marketplace for partners
Success Metrics: 50% of partners can activate their offerings without talking to anyone
Reduce partner activation time by 70%
As everyone agreed on the goal and metrics, Ivar made a note to clean up the backlog by removing items that didn’t contribute to their current focus. And with that, Lagertha concluded the workshop.
Everyone left the room with a shared understanding of their current challenges and where to focus their energy. Odin Enterprises may have a chance at survival if everyone bonds together and reaches the agreed goals.
Today, an important lesson was learned at Odin Enterprises: First decide on where you want to get to, then how. The approach was clear for everyone:
- Identify a problem worth solving
- Set a Product Goal
- Define Success Metrics
- Define Leading Metrics
- Remove distractions
- Rinse and repeat
After this workshop, many changes happened. Vision and strategy became clear to everyone, but now it’s time to get hands-on and transform their goals into value for end-users and businesses. Will they be able to do it? Odin Enterprises has made a leap of faith, and they may survive.
In the next episode, Björn and Ivar will plan their first Sprint with an outcome orientation and will measure the results.
Will they succeed? It all depends on how business stakeholders support them and how team Kattegat and Jorvik will fight back against the anti-patterns. Time pressures both teams, and they may not have room to fail, yet they try to work differently than they are used to.
The story continues…