Saturday, March 28, 2009

Is Your Goal Aggressive or Crap?

So you've gone through the process of setting a goal for your product and, based on your forecasting, you've actually assigned a value to it, maybe something similar to:
Increase total qualified leads 50%, from 300k in 2008 to 450k in 2009.
How do you know whether that goal is aggressive or crap, or how your boss is going to read the goal the first time she sees it? First, you need to know what your baseline is (and what your boss expects that it is). The baseline is what your product would do over the period if you sat on your ass and did nothing but keep the lights on. This is your organic growth rate based on existing momentum of the product and the business. While it may be easy to assume your baseline will be the same as the overall business, that's likely not the case. Your product has a life-cycle of its own and you need to know what phase it's in.

If you're setting goals by month, you might be able to quickly swag your baseline by projecting the slope and shape of your existing metric forward through the next period. If you're using years you can see how much air (growth rate) is between this year's and last year's metrics and project that rate forward.

Baseline Growth

In the yearly example above we're running +24% YTD in 2009, +23% for March, and baseline growth would put us +22% for the full year. That means that with the stated goal above we're not committing to growing our feature 50% in 2009, we're really only growing it 38% (50% goal minus 22% baseline growth).

Projected Growth

The graph above shows our baseline growth projection in yellow and our projected growth in turquoise. Knowing the relationship between growth from projects (air between turquoise and yellow lines) and baseline growth (air between yellow and blue lines) is key to knowing whether your goal is aggressive or crap. In this case, there's a good amount of air between projected and baseline growth, indicating the work you plan to do through the year is meaningful.


No comments:

Post a Comment