How to build great digital products using OKRs?

‍We are delighted to welcome Aigerim Zhuankhan from neoverv to our blog. She has been working as a C-level consultant for German and European companies of various sizes for over 8 years. Join us as Aigerim shares her valuable strategies and insights on how to use OKRs to build successful digital products.

Whether you are a start-up, a medium-sized company or a multinational corporation, the success of your digital products and services is often a critical factor in your overall business success. Truly innovative companies can quickly and consistently launch digital products and services, leading to higher profitability (EBITDA +22%) and increased revenues (+11%). To develop products that customers love and get them to market quickly, companies need to be able to set the right goals, respond quickly to user feedback and focus their resources on the same key priorities.

We have developed a framework with four innovation dimensions - namely users, market, operations and technology - and a structured implementation process that helps companies to consider all necessary aspects of successful digital products early in the development process. In this blog article, we will show how OKRs can be used in each stages of digital product development.

OKRs and digital product management

OKRs, or Objectives and Key Results, is an agile management methodology which provides a structured and effective approach to setting, tracking, and achieving goals and can be perfectly applied in developing and scaling digital products and services.

In an era where digital products and services play an increasingly critical role in the success of businesses, the adoption of OKRs is not merely a choice but a necessity. Agile organizations that embrace this modern goal-setting methodology are better equipped to meet the challenges of the digital age and deliver products and services that not only meet user needs but also drive business growth. As technology continues to advance and user expectations evolve, OKRs will remain a valuable tool for achieving excellence in digital product management.

In this article, we explain what makes a great digital product, explain all three phase on innovation and use real-world examples to show how OKRs can also help you build and scale products that customers love. Before we delve more deeply into the application of OKRs in the field of digital product development, let's take a closer look at what is a good digital product and the most important factors.

What makes a great digital product?

Based on our longstanding background as management consultants specialising in digitalisation and innovation, and our extensive experience of working with start-ups, mid-market companies and multinationals, a clear insight has emerged: the triumph of digital products and services depends on the thoughtful implementation of four key "fit" dimensions throughout the entire innovation and development journey. 

These 4 "FITS" are user, market, technology and operations. Let's take a closer look at each dimension:

‍

User dimension

User fit ensures that the digital product is highly attractive to users. User fit can be achieved through a good understanding of the customer, user-centered design, early testing and the continuous collection and implementation of user feedback.

Market dimension

Market fit ensures that a market exists for the digital product, that it has a value proposition that users are willing to pay for and that a business model is developed that allows the digital product to be successfully monetized.

Technology dimension

Technology fit ensures that the digital product has a stable and flexible technological foundation that allows new features and functions to be provided for the product permanently, flexibly, quickly, securely and cost-effectively.

Operations dimension

Operations fit ensures that the digital product can be scaled efficiently. In particular, this means that the product and product team are set up in such a way that costs rise less sharply as the number of users increases. It is an elementary prerequisite for scaling a digital product cost-efficiently and using your resources sensibly.

These four innovation dimensions must already be taken into account in the development process of the digital product and represent important goals on the way to a successful digital product. Find out more about the 4 fit dimensions in our Innovation Playbook for digital product development.

Real-world examples to learn from

Here are some examples that illustrate why a lack of focus on one of the four dimensions can lead to failure or challenges with the entire digital product:

‍

You may remember Google Glass, Google's foray into augmented reality glasses. Unfortunately, it succumbed to user concerns over security and privacy issues, leading to its eventual cancellation. A similar story unfolded with the Amazon Fire phone, which entered the market late in 2014 and lacked a distinctive unique selling proposition (USP) when competing against established industry players such as the iPhone and Samsung. It struggled to carve out a niche and failed to gain traction.

In the technology space, the story of N26 is worth noting. For a long time, they struggled with the security and scalability aspects of their technological infrastructure, even resorting to restricting user access to mitigate risks, which was dangerous for their product development prospects.

Finally, the electric scooter industry experienced a notable case – electric moped scooter service coup. Despite their initial popularity, they were unable to cope with escalating operating costs, eventually forcing them to exit the market or want to be acquired by a competitor.

These cases only serve as illustrative examples. When attempting to build a robust digital product or service, it is imperative to keep all four dimensions in mind. This, in essence, is the overarching goal. The question that remains unanswered is HOW to create digital products that users love - what specific steps are required?

What is a hockey stick and why it matters?

In simple terms, the creation of a new digital product typically involves three phases - development, start and growth - each with different objectives, in the hope of seeing the project through to completion. The journey begins with the development phase, where agility and focus is of the most essence. However, it's important to keep user and market considerations in mind while building a robust and scalable platform. During this development phase, your primary objective is to build the product and then launch it.

Once launched, the focus shifts to user acquisition. The so-called starting phase, in which the main task is to get users to adopt or simply use your product. This involves ongoing development efforts aimed at attracting an ever-growing user base. Ideally, a pivotal point is reached when real user growth is realised. At this point, attention can shift to various OKRs such as acquiring paying users, increasing profitability and maintaining scalability. This briefly encapsulates the digital product development process, which is characterised by changing OKRs at each stage.

If you've ever been involved in innovation projects, it's no secret that goals tend to evolve. For a product team, flexibility is essential. Reflecting on your goals and progress regularly - ideally on a daily or weekly basis - is crucial. This adaptability extends to your ability to change goals as needed. For OKR example, during the development phase, it's important to ensure that you've engaged with a sufficient number of users to foster user-centricity. At the same time, you need to ensure that priority features that are integral to your minimum viable product (MVP) or minimum marketable product (MMP) are developed as planned. The MVP should meet its planned release date, with a focus on driving user engagement and conversion to active users. Then, during the growth phase, attention can turn to OKRs such as number of paid users, platform scalability and profitability – to name a few.

‍

The transition from long linear growth to explosive growth is also known as the „hockey stick“. To achieve this, flexibility, prioritization and a systematic approach to setting goals are crucial. This is where Objectives and Key Results (OKRs) are irreplaceable. They provide a structured framework for navigating the complexities of digital product development and product management team. Remarkably, around 90% of product teams that adopt this approach experience clear benefits. They demonstrate a superior ability to achieve the defined goals and show greater adaptability in response to change. In the rest of the article, we explain the concrete benefits OKRs can bring to digital product development and how you can use OKRs effectively to drive your innovation efforts forward.

Benefits of OKRs in digital product development

Applied consistently, OKRs give teams the ability to set well-defined goals, track their progress, and synchronise their efforts with overarching organisational objectives. However, it is important to emphasize that OKRs are not created in isolation. They must be derived directly from overarching strategic long-term goals such as vision, mission and annual priorities. At the same time, the defined OKRs must be seamlessly integrated into the daily operational workflow and transferred directly to the backlog of concrete measures and initiatives. Through consistent implementation, OKRs effectively close the gap between strategic objectives and daily tasks, ensuring transparency regarding the importance of specific tasks and the overall strategy. The following example illustrates how OKRs act as a link between vision, mission and priorities and concrete operational measures.

‍

Used correctly, OKRs become a catalyst for innovation, increasing customer satisfaction and ensuring that digital products and services remain in line with fast-changing customer demands. To illustrate, let's look at five specific benefits that demonstrate how OKRs can facilitate the creation and expansion of digital products that customers love.

1. Aligning Product Teams and Key Stakeholders

Development of digital product often involves cross-functional teams with diverse skill sets. These cross-functional agile teams may include subject matter experts, UI/UX designers, software developers, SEO specialists, content marketers, product managers, venture architects among others. OKRs help to align the initiatives for these experts and stakeholders and ensure that they are working towards a common goal.

Example:

Objective: We successfully introduce a new e-commerce function for our B2C segment, which helps us to increase sales.

Key Results:

1. Develop the first MVP prototype within one sprint (four weeks).
2. Conduct user testing with at least 30 participants to gather feedback.
3. Launch the feature with an email marketing campaign for the existing customer base.

In this scenario, the software developers, marketing specialists, and UI/UX designers can work together with a shared understanding of their objectives and derive specific measures. The key results provide specific and measurable targets for each expert to focus on, ensuring that their efforts contribute to a the company overall objective of increasing sales.

2. Ultimate Focus on Customers

Successful digital products and services are those that resonate with and cater to the needs of the end-users. OKRs can help maintain a strong customer-centric focus throughout the development process.

Example:

Objective: We improve the user experience for our mobile app users to increase engagement and satisfaction.

Key Results:

1. Reduce app crashes by 20%.
2. Increase the average user rating from 4.0 to 4.5 on app stores.
3. Decrease the app's uninstall rate by 15%.

By setting these key results, the development team is not only prioritizing user satisfaction but also quantifying key result in their success. These measurable outcomes ensure that the user experience remains at the forefront of their efforts.

3. Iterative and Agile Development Process

Agile methodologies (such as Scrum and Kanban) have gained immense popularity in digital product management development due to their flexibility and responsiveness. OKRs align seamlessly with agile practices as they can be set and revised regularly.

Example:

Objective: We optimize the performance of our website to achieve a higher engagement of our online users.

Key Results:

1. Implement A/B testing for the online checkout process.
2. Increase the click-through rate on the call-to-action buttons by 15%.
3. Achieve a 10% improvement in the overall conversion rate.

These key results reflect an agile approach where the development team can continuously assess and adjust their strategy to improve the website's conversion rate.

4. Measuring Success and Ensuring Accountability

Transparent measurement of success is of fundamental importance when developing a digital product. Through weekly / bi-weekly updates and data-based measurement of OKR achievement at the end of each OKR cycle, OKRs provide a rigorous methodology for holding teams accountable for their performance.

Example:

Objective: We introduce a chat bot to help our customers solve software problems and increase user engagement.

Key Results:

1. Achieve 30k downloads within the first month.
2. Maintain a daily active user rate of at least 30% of total downloads.
3. Respond and resolve 90% of reported issues within 24 hours.

These key results not only define success but also ensure that the development and support teams are held accountable for delivering a high-quality gaming experience.

5. Enabling Scaling and Growth

As digital products and services gain traction, organizations often need to flexibly scale their efforts. As the OKRs are redefined and reflected every three months, OKRs can be flexibly adapted to the scaling plans and facilitate coordinated growth throughout the organization.

Example:

Objective: We expand the existing e-learning platform to new markets and make our service available to more customers.

Key Results:

1. Provide the entire course content in three languages.
2. Adapt targeted marketing campaigns for each new market.
3. Achieve a 30% increase in user registrations from the new markets within 3 months.

By cascading these key results to various teams, the organization can ensure that efforts across different departments are aligned toward the objective of expanding to new markets.

Conclusion: OKRs are a constant assistant of digital products

The OKR method alone will not solve all the challenges of building and scaling a digital product, but it is a powerful and, in an ever-changing world, an imperative tool to guide all stages of digital product development, helping to navigate through evolving customer demands and allocate scarce resources wisely. By defining specific Objectives and Key Results, you will be able to maintain clarity of purpose, measure progress, increase commitment from every team member, improve adaptability to change and allow teams to focus on what really matters.

How to get started?

Do you have a digital product idea yourself or would you like to expand your existing business model with innovative digital products? Learn more about the 4 dimensions of successful digital products in our guide to digital products and get to know a structured development process, methods & tools to successfully develop your product idea into an MMP in 6 - 9 months.

About neoverv

We support companies and teams in all phases of the development and scaling of digital products: From idea development and validation, user-centered design, technical product architecture and agile feature development to product launch and successful market scaling.

Would you like to find out more or do you have specific questions? Contact us and arrange a free consultation.