Note: I’ve further explored ideas from this post in a new writing, The Fundamental Tension in Product. The content from this post comprises the “reality-orientation loops” section — I’ve expanded the framework to include “transcendent loops” and “vision loops.”
When I received the question on Quora, “What does ‘closing the feedback loop’ mean with regards to product management?”, I found immediate inspiration. It was the middle of a work day, so I chose to crank out an answer and publish. But the question stuck with me. I had the intuition that feedback loops are core to product in a way that my cursory Quora response neglected. To follow the the thread, I set out to express feedback loops in the visual terms of the product management triangle. The result is a new, loopy iteration of the product triangle that expresses the substance of “product” in a way I haven’t done previously.
While each term in the diagram is familiar, the visual structure may be hard to digest. So I’ll unpack it by going through its components separately. Let’s the start with the outer loop…
The outer loop summarizes what we aspire to achieve through product. We’ll use our resources to build a technology. We’ll attract users to our technology by crafting a stellar user experience. People will love or need it so much they’ll pay to use it (or be valuable to advertisers). Then we’ll reinvest our revenue back into enhancing the technology. The loop will repeat, leading to more revenue and glory.
Unfortunately, it’s not so simple to move through these big loops. To do so, we need three intersecting feedback loops. Building and maintaining these feedback loops is where we get into the meat of product — it’s how companies stay oriented while reaching for their vision.
Let’s look at the feedback loop that connects technology and users. No matter how powerful our vision is, even if we’re Apple, we can’t blindly sustain a great user experience. We need insight into the people who use or might use our product. This type of insight exists in qualitative forms like user testing and surveys; and quantitative forms like web analytics and A/B testing. When this feedback loop is broken, you can’t course adjust when the product doesn’t stick. When the loop is healthy, product usage provides strong signal informing product direction.
The terms of the loop connecting users and capital is how we traditionally describe the health of a business. No matter how viral your product is, to grow revenue, you’ll need to invest specifically in acquiring users, whether it’s through traditional or untraditional methods. Even Facebook advertises itself. Industry thinking about how to balance user acquisition and revenue is evolving. The feedback loop is broken when the product is not achieving the intended balance, whatever that may be. If you’re trying to be profitable, the loop is broken when acquired users are not converting to paying customers. If you’re trying to grow, the loop is broken when your pricing strategy introduces too much friction. For an example of a thriving users-capital loop, see this piece on how how Uber used “Capital as a Performance Enhancing Drug.”
Finally, we have the feedback loop connecting capital and tech. Even the most talented engineers shouldn’t build, build, build all day. To ship the right product at minimal cost, teams need to periodically examine their process. Process improvements can be in the form of tweaking project management structure, communication methods, or tools. When the capital-tech loop is broken, teams fail to deliver within business parameters; they ship a flawed product or run out of time/money. When the loop is functioning, the team continuously improves its velocity and the soundness of each release.
To conclude, the process of creating and writing about these diagrams has led me to believe that orientation is a core responsibility of product management. Companies have a vision for where they want to go, but the landscape around a product is filled with surprises, both good and bad. A company faced with a set back can overreact like a government in the wake of a terrorist attack. And new pathways to success can go unobserved. Feedback loops are how we stay oriented. If the product manager can maintain the healthy functioning of loops described above, the company as a whole will understand its own context and act accordingly.