The Study of Product Team Performance 2019
Actuation Consulting in partnership with PDMA and sponsored by Planbox
kHUB post date: May 1, 2020
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Five New Key Performance Indicators
Actuation Consulting conducted the sixth global study* of product teams with the goal of continuously improving our understanding of why some product teams excel while others struggle.
Since 2012*, we have sought to expand our growing knowledge of the factors driving or influencing the best outcomes. We have identified statistically significant elements that consistently correlate with top performance. Not all factors carry the same weight, and our regression analysis of findings has enabled us to develop a weighted scale to help clients prioritize their activities more effectively.
The survey itself is unique in that since its inception eight years ago, it has received support from a constellation of leading industry associations and market players – groups that generally don’t collaborate on such endeavors. This year we are proud to have partnered with the Product Development and Management Association (PDMA) throughout the entire survey and white paper production process. Additionally, our sole sponsor, Planbox, generously underwrote our research.
We designed the 2019 study to further explore the dynamics of high-performing product teams by pursuing three interconnected threads:
- The first thread lays the groundwork with demographic information, helping us understand respondent profiles, spans of responsibility, sizes of companies, and market segments served.
- The second thread focuses on methodologies. We have tracked the rise and fall of product development methodologies and their perceived impact upon company profitability year after year. This year we continue to follow this important influence on team performance.
- In the third and final thread, we more deeply explore several key factors that distinguish high performing teams from all others.
We have continued with our tried and true approaches to distributing surveys and regression analysis and our survey distribution approach remained consistent. Email invitations were sent to our subscriber database, and our sponsors and promotional partners also invited their stakeholders to participate in the survey. Participants were given ample time to complete the survey, and after the survey closed, our statistician conducted regression analysis. This consistency enables longitudinal trending of key performance drivers. Additionally, we continue to use both team productivity and organizational financial outcomes as measures of performance in our regression analysis.
Many of the key findings in The Study of Product Team Performance 2019 center around best practices found in many modern product development teams. This year’s five indicators of high performance continue to build upon our findings from past surveys. Additionally, several new topics were explored this year including innovation management, story sizing, product team stability, a product manager’s role in innovation, and innovation program outcomes.
Through statistical analysis of the responses to this year’s survey, we have identified five factors that correlate with high performing teams that meet their company’s financial objectives:
- Product teams that connect their day-to-day activities to their company’s overarching business strategy are more likely to perform at a high level and achieve the company’s financial objectives. Our latest analysis shows that organizations that have a clear business strategy, which is linked to each product team’s activities, outperform their counterparts in terms of financial success. Conversely, teams that lack awareness of their company’s strategy, or where it is poorly communicated to the product teams, or where the strategy changes too frequently to be useful show a negative correlation: they are unlikely to see financial success or achieve a high level of performance.
- Product teams that are held accountable to customer satisfaction targets perform better than those held accountable to other metrics or no metric at all. In short, we found that survey respondents who reported they closely monitor customer satisfaction were more likely to be on teams that were high performing.
- Companies with mature innovation processes are more likely to outperform their peers. A mature innovation process is one that is aligned with the company strategy and/or focuses upon continuous improvement of its innovation management programs. Organizations with this mindset and rigor are more likely to achieve higher levels of performance.
- Organizations in which product managers spend at least 30% of their time in the field are more likely to achieve higher team and financial performance. The inverse also holds true. Product managers spending less than 30% of time in the field were correlated with suboptimal performance.
- When prioritizing requirements there is a strong correlation between using profitability as a criterion and higher levels of team and financial performance. Teams that emphasize profitability over other requirements prioritization criteria are more likely to deliver high performance.
It is worth noting another interesting factor that surfaced during our statistical analysis. It turns out that product teams that create stories for their entire backlog were strongly correlated with higher levels of team performance. Conversely, teams that had only one or two stories in their backlog were negatively correlated with high performance. While team performance was impacted, there was not a correlation with financial performance. Food for thought.
*The Study of Product Team Performance was not conducted in years 2017 and 2018.