Fit For Purpose, Metrics and Indicators, Product.Management

An Overview of Fit For Purpose (F4P) Framework

The 1st edition of Fit for Purpose: How Modern Businesses Find, Satisfy, and Keep Customers from David J Anderson and Alexei Zheglov was published...

Written by Kaveh Kalnatar H. · 8 min read >
Fit For Purpose Framework - F4P

The 1st edition of Fit for Purpose: How Modern Businesses Find, Satisfy, and Keep Customers from David J Anderson and Alexei Zheglov was published in Nov 2017. They wrote the first edition in 7 weeks during summer 2017. I had a chance to provide feedback to them as they were writing and editing their chapters.

The book basically talks about what products and services are made up of, how customers measure a product or a service, and what metrics company managers must apply at different levels to be always fit for customer purposes (the Why’s of the customer). If I want to summarise the book in one statement, it would be like: Align your business to how your customers measure your product and service today and in the future. 

When I was reading the chapters, four guys came to my mind: Peter Drucker, Jack Trout, Eliyahu M. Goldratt, and Clayton Christenson.

The book reminded me of Peter Drucker; because he once made a profound observation that has been forgotten by many, his observation goes like this: “Because the purpose of business is to create a customer, the business enterprise has two — and only two — basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs. Marketing is the distinguishing, unique function of the business.” F4P gives you the tools to not only identify your “right” customer but also helps you to innovate through insights you gather from those customers.

Jack Trout; because he was for me the master of marketing strategy and positioning. I learned a lot from him and his writings. His work is very much centered around customer perception (how and what customers think and believe about your product, service, and brand), and how you can change that perception by applying different strategies, and how you can position yourself at the right spot in the customer’s mind so you maintain your differentiation. According to Jack Trout, To survive one has to find inspiration down at the front, in the ebb and flow of the great marketing battles taking place in the mind of the prospect. F4P emphasizes working with your frontline employees to gather insight so you keep your business fit for purpose at all times, or in other words maintain your positioning. F4P gives you the tools and techniques to do exactly that.

Eliyahu M. Goldratt; because he once wrote “Tell me how you measure me and I will tell you how I will behave. If you measure me in an illogical way… do not complain about illogical behavior…” How to discover the right metrics, how to use them across your organization and between business units and department (or services) is in my opinion the most powerful idea of David’s and Alexie’s book. And it all starts from how customers measure you and how that should be linked to all other metrics in the organization. F4P shows you how to define the right metrics, how to link them, and how to transition from one to another at the right time. This single technique can have a huge impact on your business. (I will go in more details later in this post)

Finally, it reminded me of Clayton Christenson, because the customer purpose is very much similar to Customer’s Job. He once wrote: “ Most companies segment their markets by customer demographics or product characteristics and differentiate their offerings by adding features and functions. But the consumer has a different view of the marketplace. He simply has a job to be done and is seeking to “hire” the best product or service to do it. Marketers must adopt that perspective. “ F4P Framework helps you segment your customers based on purposes and needs and connects that to the rest of your activities in the organization.

It is important to mention that, Outcome-based driven innovation (ODI) of Tony Ulwick reminded me of Fitness Criteria from F4P Framework, Where you quantify customers’ needs and use it as your performance metric and segmentation, or as Alexie and David suggest your KEY performance indicators.

What you do not find in Peter Drucker’s, Jack Trout’s, Eliyahu M. Goldratt’s, Clayton Christenson’s and Tony Ulwick’s materials are practical evidence-based approach on how to find the right and key metrics for your organization, how to measure and monitor them, how to connect them to other metrics within the organization, how to use those metrics to change behavior and cause improvement.

Another important fact is that the F4P framework can be used for external customers as well as internal customers (something that all other authors mentioned here missed.)

I recommend you to read Fit for Purpose: How Modern Businesses Find, Satisfy, & Keep Customers, But let me also tell you how I used F4P and how my colleagues and I experiment with it.

Collecting Feedback after training

In the F4P book, authors introduce a simple form for collecting insights from customers who used your service or product. They give an example from their training business and how students who fill out the form help them make strategic decisions about their market segment and marketing message. You can read about this more in the book, but here is a link to David’s earlier post: https://anderson.leankanban.com/fitness-for-purpose-score/

I do use this form after each training I give whether it is on Risk Management, Kanban method or product management, or any other training, whether it is for external customers or my internal ones (colleagues). I always find interesting insight from the answers, and most of the time adjust my delivery to be more fit for the audience’s purpose.

One of the training I provide is a 6 hours introduction to risk management. I usually provide this to the company’s internal audience (maybe one day I will make it a public class). Over the years, I have modified the training to fit my main audience (technical people, software developers, Agile Coaches, and Scrum Masters). Recently I have provided the newest version of my training for a group of programmers and my Fitness Box Score was like 0/0/37 (37) 15/15 Which means:

Out of 15 people who got the training, I collected 15 results, and 37 purposes (or needs), and the audience scored those needs like 4 or 5 in all cases, this means that I either met their expectations fully or exceeded it. I now know that this training is a good fit for programmers who work together at one project or product.

David and Alexie give more examples of fitness box score and scoring techniques in their book.

Defining metrics for internal company teams

What I like the most about the F4P framework is how it defines metrics and their interdependencies. I think this is the strength and differentiator of the F4P framework and also a market need. The fact that every metric is a KPI in today’s world shows the problem that exists in organizations. Most Managers talk about KPIs, and when you ask them what are your KPIs? They usually list all financial metrics they collect. Once I have heard a senior manager saying that his KPI is for his unit to be break-even at all times. That company is not in good shape, and that manager was let go.

F4P framework shows you how to define metrics that matter, and how to stop using metrics that do not matter. It starts by understanding customers, and what they care about, and how they measure your service (or product).

For example, in the case of my Risk Management training class, one of the common purposes (needs) was: to learn about risk management, so I can apply it immediately. Therefore, I designed the class in a way that the audience works on real risks from the start. They start to work with risks that they face today at their work, they analyze them, plan countermeasure and etc. They all get out of the class with their learning already put into action to solve their current and real risks. On top of that, the class is tailored to software engineering risks and how to understand and handle them.

For me, the main KPI is students’ learning — if students can use the concepts immediately after the class. In fact, this is how they measure the training too.

F4P shows that KPIs are only what customers care about.

Revenue is not KPI, the Market share is not KPI, Operating Cost is not KPI unless your customer measures his/her satisfaction with your product and service delivery based on your Revenue, Market share, and Operating Cost. Do you have a customer who measures his satisfaction with using your product based on how much revenue you have earned this quarter? the higher revenue you earn the more satisfied he becomes?!

According to F4P, you have Fitness Criteria metrics (or KPIs, metrics that customers measure you based on), Health Indicators, Improvement Drivers, and Vanity Metrics. Here is the beauty of this framework. Your Health Indicator can change to Improvement Driver and then change back to Health Indicator again. And your Health Indicator can be linked to your Fitness Criteria (or KPI, what customers care about).

 

Your Health Indicators measure and monitor the health of your system. When you see a Health Indicator out of its defined normal range, then you want to upgrade that metric to an Improvement Metric with a specific target. When you reach that target, you can decide to downgrade it to Health Indicator again and set the range or keep on improving.

This is where F4P influences behaviors (recall what Eliyahu M. Goldratt said?), F4P help you to choose the right Health and Improvement metrics. Linking Health Indicators to Fitness Criteria make sure that your changes (drives from Improvement Metrics) will have a positive effect on your product and service delivery.

So far we discussed external customers, the beauty of the F4P framework is that it works for internal customers too. But, first, you should review: what is Service, and what are Service Delivery principles?

 

What is the service? — Picture form Travis Birch, @xroadstree 

 

I was about to write what is service, but this picture explains what is Service very well. If you look at any sizeable organization, you realize that it is an ecosystem of interdependent services, the Kanban method recognizes this and introduces three Service Delivery principles:

1) Understand and focus on serving customers’ needs and expectations (internal customer as well as external)

2) Manage the work; let people self-organize around it

3) Evolve policies to improve service customer and business outcomes

For example, your HR provides certain service to the rest of the organization; your Accounting Office provides certain service; Your QA, Development, Product Management units/departments/teams provide certain service to the rest of the organization. Individuals also provide service to their teams or unit. For example, a manager may provide decision-making services for certain topics. But, how do you measure these internal services?

That is where F4P can help. HR can monitor its service delivery with fitness criteria of the internal customer (employees) and also discover new services it can provide, monitors the health of its services, and makes improvements to services. And it all can link to not only internal but also external customers.

I was working with a project-based company a few years ago. At one point we created stable but fluid project-client teams. The idea was that teams move between projects instead of managers allocate resources to a new project every time. However, one challenge arose: Sometimes one team did not have knowledge about a specific technology, or it needed to increase capacity for a short period of time to handle unplanned and irrefutable work. Instead of allocating resources for these teams in need, we defined a service mechanism. So, teams could provide service to each other based on their unique capability. So, one team could be fully dedicated to one project, but also be available to help other teams should the need arises (I will write another article about the mechanism that the work can travel between these teams without interruption). All these interactions could use Fitness Criteria (KPI), Improvement Metrics, Heath Indicators to keep each service provider fit for its customer purpose.

Employees satisfaction and ideas to improve the company

Another area that I experiment with F4P a little bit was on employee satisfaction. In his book, The Alliance: Managing Talent in the Networked Age, LinkedIn founder Reid Hoffman discusses a framework that companies should use for today’s world of shorter-term company-employee relationship. In nutshell, both company and employee should agree on the value they create for each other for the next, let’s say 2–3 years. In other words, what services employees provide and what services the company (or manager) provides to the employee. Such a two-ways service relationship can use F4P. First, there is a threshold that both parties must be aware of in regards to their fitness criteria, then they can monitor that with health indicators and whenever needed transition to improvement metrics.

After explaining this concept to my direct reports, I then asked them to write what they want the company to provide them with. Some common answers were: Be Better at what I do, learn new concepts, increase my experience in XYZ area, gain ABC credentials, increase my market value by X%.

Then, we worked together to draft a plan and agreement for that service delivery and monitored the performance by frequent feedback. I left that company and did not finish this experiment, but soon I will explore more.

This post is getting longer and heavier than I originally intended, so I am not going to make it even more complicated. But, one other area that I tried F4P is during Product Customer discovery for obvious reasons, especially in getting insights from customers of competing product category.

In the follow-up articles, I will dive into each area that I referred to in this article. So, stay tuned. 

Conclusion, Read Fit for Purpose bookEnjoy it and share your findings! 

Update: the 3rd edition is releasing soon. 

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