If you were taught how to ride a bike, or to surf, you’ll likely remember an instructor telling you “where you look is where you go”. Look to your right, you’ll go right. Look left, you go left. There’s a lot of power in where you focus your attention.
Focusing attention is also a tenet of high-growth companies. This article dives deep into why some of the world’s most successful companies define a “north star” to focus attention, and how it helps them achieve better results.
“Your North Star Metric is your strategy, and your strategy is your North Star Metric.”Lenny Rachitsky
What is a North Star Metric?
The North Star Metric (NSM) is widely attributed to startup founder, advisor and investor Sean Ellis. It is a single metric which is able to align the entire company around an overarching mission whilst simultaneously reflecting value being delivered to customers.
Let’s look at the mission statements of two of the world’s best known companies, Google and LinkedIn:
Google – “Google’s mission is to organise the world’s information and make it universally accessible and useful”Google | Our Approach
LinkedIn – “Connect the world’s professionals to make them more productive and successful.”LinkedIn | About
The goal of the North Star Metric is to quantify this mission and express it in a way that can be measured and tracked. It is often used as a guiding light for the entire company to rally around – a sort of special key performance indictor (KPI).
Why use a North Star Metric?
The north star is a value-driven metric that creates alignment, enables better communication, and delivers focus and direction across the entire organisation.
A value-driven metric
The core function of the metric is to measure (or approximately measure) the value delivered to your customers. As a customer-led metric it enables everyone in the company to articulate the customer problem(s) you solve and why this matters.
As Lenny Rachitsky discusses, one approach for choosing your north star is to use the Clayton Christensen Jobs to be Done framework and to ask yourself “what jobs are our users hiring our product to do?”.
If the Jobs to be Done framework is used to identify the driver behind a customers usage of your service, the north star framework helps to identify the metric that best represents that job.
Your north star should be the one KPI that is most reflective of the company’s current business objective and strategy. It should be simple, easy to understand, unambiguous and memorable. It should be framed in plain language that anyone can understand and that leaves no room for debate.
Everyone in the company – executives, managers, employees and stakeholders – should understand how their role helps contribute to the north star metric.
Better focus & direction
Whilst employees naturally want to perform well at their job, instinctively this means people set goals in terms of their own (siloed) function which results in everyone pulling in different directions – product managers want more features, engineers want more elegant code, compliance want increased compliance etc. This quickly results in misalignment, confusion, and suboptimal working practises.
The singular focus of a north star metric leads to more cohesive work, better work prioritisation, more alignment and better decision making across the entire organisation.
What is a good North Star Metric?
Which metric, if it were to increase today will accelerate business flywheel?Lenny Rachitsky
Best practises for deciding on a good north star are that the metric should be:
- A quantitative metric
- A leading (not lagging) indicator of success
- Reflective of the value you provide to customers
- Simple, memorable and easily understood
- Relevant across the entire customer journey
- Reflective of the core mission or ambition of the company
What is a bad North Star Metric?
There are also some poor metrics to use as a north star, the most of which is revenue. Below are some characteristics you should aim to avoid when deciding on a north star metric:
- You should avoid lagging indicators, such as revenue, as these tell you what happened in the past, rather than being an early signal of what is likely to happen in the future. Your north star should be a leading indicator of revenue.
- You should avoid metrics that are difficult for individuals in the business to influence directly, or where it is hard for them to understand how their role impacts the metric. This includes metrics that are complex to understand, take time to calculate, or those which are open to debate or ambiguity.
- You should avoid metrics that are not reflective of customer value being delivered. There are many ways to increase revenue, for example, without delivering value to customers – such as price increases and bundling. Your north star should always predict long-term success, avoid choosing a vanity metric.
- Try to avoid choosing a generic metric that does not represent the unique strategy of your business – once again revenue is a good example here.
North Star Metric Examples
Your north star should be unique to your business (or at the least your business niche) and should be an indicator of the problem you solve for customers, and the value provided to them.
Below we have provided examples of north star metrics from many well-known brands. Notice how they are not all perfect, but generally all reflect value delivered to the market. For example, if the number of messages sent through WhatsApp grows year-over-year from 1 billion to 2 billion, the company can say they doubled the amount of value created for customers.
|Company||North Star Metric|
|Daily active users (DAUs)|
|Amazon||Transactions per user|
|Spotify||Time spent listening|
|Slack||Daily active users (DAUs)|
|Hubspot CRM||Weekly active teams|
|eBay||Gross merchandise volume (GMV)|
|Uber||Rides per week|
|Monthly active users (MAUs)|
|Quora||Number of answers to questions|
|Shopify||Merchant gross merchandise volume (GMV)|
|Chargebee||Net retention rate|
|Zoom||Weekly hosted meeting|
Beiersdorf is the largest skincare company in the world, with household names like NIVEA, NIVEA Men, Eucerin, and Aquaphor. Adam Wright, Head of Digital, describes how we thinks about the north star metric for his team:
Before we do anything, we decide what our North Star Metric will be. We defined it as the total number of active myNIVEA members, our loyalty program. That is the number of people that have engaged +3 times with our emails, website, tools, or services in the last 90 days. This is our North Star, because, if this metric grows, all other metrics will be growing too. Such as engagement, acquisition, and sales. We also know that active people in our database spend, on average, 23 pounds more per year on our products than the general population.Adam Wright, Head of Digital / Head of Growth, Beiersdorf
This is our North Star, because, if this metric grows, all other metrics will be growing too. Such as engagement, acquisition, and sales.
We also know that active people in our database spend, on average, 23 pounds more per year on our products than the general population.
North Star Metrics for Growth Marketers
Clearly the north star framework is well aligned with many of the principles behind growth marketing, and setting good growth metrics, in particular being value-led and quantitative in approach.
Growth and growth marketing teams should consider a north star metric for their own business unit. Which one KPI matters more than all others? The role of the growth marketing manager or head of growth is then to constantly communicate this core metric to stakeholders and business partners.
In the same way a north star metric creates alignment, enables better communication, and delivers focus and direction across the entire organisation, it can deliver these same benefits to the marketing organisation and its stakeholders. Marketing ideas, experiments and playbooks should then be aligned with this organisation-level north star, and prioritised and executed accordingly.
The North Star Metric & OKRs
For companies that use the OKR framework, the table below highlights how OKRs and a North Star Metric can work together.
If you consider the company mission statement as the top-level objective of the company, consider the north star metric as one of its key results. The north star can then be considered the highest-level OKR of the company.
|North Star Metric||OKRs|
|Purpose framework||Execution framework|
|Good for direction||Good for goal-setting|
|For the company||For a team|
|Persistent beliefs||Time-based goals|
|Change infrequently (e.g. 1-2 years +)||Change somewhat frequently (e.g. quarterly)|
|Informs OKRs||Informed by North Star Metric|
|Output metrics||Input metrics|
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