What is Product owner responsible for?

At the beginning, I should say that it feels like there is no clear definition of who the CPO or product owner is. Perhaps this happens because the concept of "product" is not formalized.

As I see, some companies consider a product owner to be a person, who manages technical team/developers, has technical background or is a "technician". 

Some companies consider a product owner as someone who resembles a project manager. Product owner's job is to listen to what product ideas CEO or someone else announces, and this product owner's job is to implement what is brought in. That usually means that PO has to bring together IT development, marketing, commerce, etc. As a result, the idea that was brought to product owner is to be launched.

In both of these cases time-to-market is mostly the main measure of effectiveness and success. How much money will product feature bring, how will it affect performance - that is something often to be missed in such a concept. Revenue might be considered while prioritizating features, but I have rarely seen companies in such a model to look at what is actually produced and how it affects gross adds, churn, etc. 

In the third case, product owner is a person with a business focus. That is, product's job is to identify customer needs, find insights, close customer pains, but the focus remains on two main KPIs - revenue and customer base. Interaction with development in the case of such a product owner is a necessity for managing priorities only.

I've tried to go from the main goals of a company/CEO and how CPO or product owner can help fulfill them to understand CPO's KPIs.

Usually the main goals of a CEO are to increase the capitalization of his company, increase operating profits and increase company's market share. I tried to break all the goals down to the base level metrics from top to bottom.

Market revenue share depends on revenue. The more revenue and faster growth (slower decline) than competitors you get- the larger share you acquire.

The capitalization of a company can be calculated from value of shares and their volume. But in general, capitalization depends on cash flow, which depends on EBITDA (direct correlation) and CAPEX (inverse correlation).

Operating profit depends directly on revenue and inversely on gross margin costs. Same for EBITDA, adding OPEX here.

The bottom line is that all three top-level goals depend on revenue. And the dependence on variable costs is added. The rest of the indicators are less or not at all affected by product owner.

Revenue is Customer base multiplied by Life time value (how much money a customer brings during lifetime). Customer base is directly dependant on gross adds and inversely related to churn.

Gross adds depend on the sales network, brand health, thrust, the product creates and NPS (net promoter score).

Life time value is life time multiplied by ARPU (average revenue per user).

Life time is inversely related to churn, which is influenced by CSI (customer satisfaction index)

ARPU is in a direct dependence on the consumption and cost per consumption unit. Consumption pattern and cost per unit also affects Gross margin.

In the end it all comes down to a few elementary indicators that product owner needs to work on and be responsible for:

Create - thrust of the product and it's market fit.

Improve - NPS

Grow - CSI

Work - with the consumption model.

Product market fit leads to growth of gross adds, which leads to growth of customer base, which leads to growth of revenue. NPS also increases gross adds, CSI reduces churn, improves life time, which leads to growth of customer base. Consumption model increases ARPU, which affects life time value and revenue.

And then the product decides how to work on these four points: through product portfolio, through analysis and improving UX, through stimulating consumption, increasing application sessions, etc.


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