Metadata
- Author: Itamar Gilad
- Full Title:: The Three True-North Metrics that Your Product and Business Need
- Category:: 🗞️Articles
- Document Tags:: Metrics Frameworks, Metrics Frameworks, Metric Trees, Metric Trees,
- URL:: https://itamargilad.com/the-three-true-north-metrics-that-your-product-and-business-need/
- Finished date:: 2024-01-22
Highlights
To build a virtuous value loops around your product you have to first define what value you deliver and what value you wish to capture. Then you have to measure both (View Highlight)
The NSM and the Top KPI are not enemies (View Highlight)
Here’s the biggest source of confusion I see — many people believe you have to pick just one top-level metric and call it the North Star. Given this choice most leadership teams will pick a business KPI (View Highlight)
The NSM is the guiding light for the parts of the org whose job is to deliver value — engineering, product, design, dev-ops, customer support, while the Top business KPI helps guide the teams that are most concerned with capturing value — sales, marketing, business dev, finance etc. Having just one top level metric will leaves a large part of the org disoriented. (View Highlight)
Focusing on just delivered value (typical of engineering-driven orgs) or just captured value (typical of sales-driven orgs) exposes us to an imbalance that is not sustainable long-term. (View Highlight)
Alignment between your top metrics is something you need to build into your product and business model. A good way to test this is to decompose the North Star Metric and top business KPI into their supporting metrics trees and check how much overlap there is. We want to see a good amount of overlap between the two trees, meaning that some part of what the delivery team is doing is directly contributing to the top KPI, while another part is focused on delivering more value to customers. Conversely it’s good if some part of what the business team is doing is directly contributing to growing the north star metric. (View Highlight)
Some people (me included) assumed this to be the same as the north star metric, and started using the terms interchangeably, but actually often that’s not the case. The OMTM isn’t about measuring value delivered or captured, it’s about finding a key metric that enable both to grow. (View Highlight)
The north star metric and top business KPI are usually too high-level, and dependent on too many factors to influence directly. The OMTM is designed to be actionable (View Highlight)
The OMTM brings focus to your tactical execution, while the NSM and top KPI set the strategic goals (View Highlight)
If you want to align the entire company around just one number — use the north star metric — the measurement of total value you deliver to the market (View Highlight)
Often you’re better off giving you business team their own north star in the form of (just one) top business KPI. (View Highlight)
• Still make sure that the two are highly aligned — use the right mission and business models and check how well their metric trees overlap. • Use OMTM to set actionable tactical objectives with high focus. (View Highlight)