“My CEO is a Finance Guy Stuck on ROI…”

  • The CEO job is tremendously tough. Your investors hired him to run the company for long-term value, but still thrash him every month about current revenue. Each VP is lobbying him on some issue. Endless meetings induce ADHD. And you work for him, so in the narrowest sense, he doesn’t have to “buy” your prioritization approach.
  • Most first-time CEOs come from some functional role: sales, finance, marketing, engineering, occasionally product management. (Or they are first-time founders who haven’t done any of these jobs before.) It’s natural for them to apply their familiar mental models to the broader company-wide problem, to “use what they know.” So far, your CEO’s ROI tools have led him to success.
  • A lot of product management is meeting customers and prospects where they are: finding language and benefits and arguments that resonate with an audience. The same applies here: we might try finance analogies to explain product strategy concepts. And then have a dialog about outcomes, rather than ROI spreadsheets.

[1] Engineering “spending” looks a bit like corporate budgeting

  • 50% spent on user-visible functionality, UX and customer requests
  • 20% on hosting, DevOps, analytics, scalability and security
  • 20% on quality, bug fixes, test tools and refactoring
  • 10% on staffing, training, engineering management and long-term research

[2] Short-Term and Long-Term Revenue Goals

  • Upsell current customers. Our offering probably uses feature tiers to segment customers. Bronze is for occasional users (and is priced lowest), Silver has power tools for frequent users (higher price) and Gold adds delegated departmental security. Introducing something cool into our Silver tier may encourage a bunch of Bronze users to upgrade. An incremental $40/month * 5000 users = happier investors.
  • Retention, Churn Reduction, New Users. Subscription customers expect a steady stream of improvements and new toys throughout the year, not just what they got on Day One. And getting new subscribers through our sign-up funnel could be easier. So we have to show our current customers love throughout the year by delivering incremental value that they don’t pay extra for. (We measure their love through reduced churn and higher renewal rates.) Likewise, better onboarding and customer experience will shrink our dropout rate. (Measured via conversion.)
  • New Revenue Sources. Some products are intended to open up entirely new segments or Jobs To Be Done. These should deliver clear incremental revenue. (Our ROI might match the cost of development against two full years of sales forecasts.)

[3] Risk-Reward Portfolios

Osterwalder/Strategyzer: Managing Risk

Sound Byte

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Rich Mironov

Rich Mironov

Tech start-up veteran, smokejumper CPO/product management VP, writer, coach for product leaders, analogy wrangler, product camp founder.