In the last lesson, we discussed two different approaches to Product Leadership: directive leadership and supportive leadership. Directive leaders typically take a prescriptive approach and try to directly control the product outcomes their team delivers. 

New Product Leaders often take a directive approach — they fall back on the habit of managing the product, rather than managing the people who build the product. The directive approach can lead to positive results in the short-term, but is unsustainable in the long-term.

A rising Product Leader simply won't have enough capacity to control all the decisions their team makes as they take on a role of increasing scope and responsibility. 

Instead, strong Product Leaders rely on a supportive leadership approach. They understand that the product role is characterized by considerable ambiguity. They provide the coaching support for their team to wade through that ambiguity, make good decisions, and drive successful outcomes. 

They manage the inputs, not the outcomes.

To do this well, the Product Leader needs to go beyond traditional performance management systems found in most organizations.

In this lesson, we'll discuss the limitations of traditional performance management systems and how to supplement those systems with an approach designed specifically to evaluate and develop PMs. 

We'll also introduce the Exponential Feedback Loop, which goes beyond the traditional system and delivers compounding impacts for Product Leaders.

You're likely familiar with the traditional performance management process. At most companies, this means a formal performance evaluation once or twice a year, which usually includes a generic set of questions and requires the supervisor to summarize performance using a single performance rating. 

This rating can look different depending on the company, but it’s often a numerical rating on a scale of one to five, or a designation of whether an employee did not meet, did meet, or exceeded expectations.

Performance management processes are designed to help organizations make important personnel decisions, like promotions and terminations. But while these systems are a necessary part of the performance management process, they are not sufficient for proactive PM development.

To understand why, let's think about how this approach looks for most Product Leaders.

Product Leaders are busy. You know what it's like—you're pulled in a hundred different directions every day.

So when the performance review cycle comes around, many—if not most—Product Leaders tend to view reviews as yet another item to add to an already long list of priorities. Many product leaders rush to complete them, relying mostly on intuition to come up with a performance rating and provide some quick feedback. 

However, performance reviews aren't just an item to check off the list. They are the single most powerful tool a Product Leader has to level up their team. They provide a critical opportunity to go beyond surface-level evaluation to uncover the causal factors necessary to develop a successful product team.

There are three major problems with this approach to PM performance management:

  • Evaluating on product outcomes vs. root cause
  • Collapsing performance into a single rating that doesn't identify PM strengths and areas for development
  • Confining performance management to the formal performance evaluation

First, most evaluations focus too much on outcomes, and not enough on the behaviors that drove those outcomes. 

But because product management is such an amorphous role, product outcomes are an incomplete proxy for PM performance. 

For example, say you have two PMs that each missed a quarterly OKR. On the surface, you might be tempted to give both a negative performance review. 

But digging deeper, you might find that the first PM missed their OKR because they couldn't persuade engineering to prioritize the work, which suggests a stakeholder management issue. On the other hand, you find that the second PM missed their OKR because the goal was poorly defined by leadership, which is a strategic problem, not a performance problem.

Evaluating both PMs on the outcome misses the root cause. This can lead to misleading or inaccurate feedback and can obscure real performance problems. Product leaders need to move past the "what" of product outcomes and dig into the "why."

Second, while performance ratings are useful for organizations in facilitating decision making, by nature, they collapse all the nuance of performance into a single rating.

In reality, PM performance is complex—it's made up of myriad experiences, skills, strengths, and areas for development. Collapsing that complex picture into a single performance rating is inherently reductive. 

It's hard for a PM to look at a single performance rating and parse out what they should continue doing, what they should double down on, and what they need to improve.

And although the Product Leader should be able to identify and explain these nuances to PMs, they often don't have these answers either. This is because many Product Leaders develop performance ratings based on intuition or a surface-level understanding of outcomes, both of which can conflate distinct aspects of performance. 

As a result, the Product Leader is likely to offer some vague feedback that doesn't clearly distinguish the PM's strengths and areas for development. Without actionable feedback that speaks to strengths and areas for development, it's hard for PMs to know how to develop. 

Third, the evaluation is often one of the only times Product Leaders discuss performance management with PMs.

Many Product Leaders do not follow up on the issues or feedback discussed until it's time to complete another evaluation, missing out on an opportunity to help PMs develop outside of the evaluation discussion. It also means that the most feedback given during an evaluation comes long after the event in question took place. This is a problem, because feedback that is not delivered in a timely manner is much less likely to have an impact.

For example, say you notice that a PM on your team really struggled with a product presentation to leadership, but you don't bring it up until three months later during the review cycle. In the three months that passed, the PM may have forgotten what caused their mistakes, or otherwise may think it's unimportant because it happened so long ago. 

We mentioned before that long-term success for Product Leaders means building a high-performing team. This requires the Product Leader to increase their leverage over time. In other words, they need to get better returns on the time they invest into PMs so that the team continually improves their ability to deliver great product outcomes. 

The traditional performance management process helps Product Leaders increase their leverage in a linear fashion. PMs respond to their evaluations, some push themselves to improve, and over time, the Product Leader slowly adds more and more leverage.

This produces linear returns for Product Leader leverage, but these returns are likely to stagnate—and potentially even decrease—as the Product Leader gets spread so thin that micro-managing all the details is no longer viable.

A better approach is to build a Culture of Exponential Feedback, allowing the Product Leader to proactively invest in the team's performance. A culture of exponential feedback builds on itself by uncovering the root causes of PM performance, evaluating PMs on product-specific competencies, creating actionable development plans, and executing on those development plans with regular feedback. This process creates exponential leverage gains by continually improving your team's ability to deliver great product outcomes.

Discerning eyes will note that this approach does result in a short-term loss of leverage, as it requires Product Leaders to refocus their time on PM performance rather than focusing on directly influencing product work. But proactive performance management is a long-term investment that pays off with greater gains over time.

The long-term investment of proactive performance management starts by building the muscle to deliver feedback that delivers exponential (as opposed to linear) returns for Product Leader leverage. Exponential feedback is the foundation of the virtuous cycle that Product Leaders can follow to build a culture of exponential feedback that performs. We call this cycle the Exponential Feedback Loop. 

The loop has four steps:

  1. Evaluate the PM using the PM Competency Model
  2. Deliver the evaluation
  3. Co-create development plan with PM
  4. Execute on development plan through regular performance feedback

The rest of this section will take you along each part of this loop, including the frameworks and approaches Product Leaders can use to build a culture of exponential feedback.

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