Chỉ số ta theo đuổi phải là chỉ số về giá trị của sản phẩm đối với người dùng
What should stand out in the definition above are the expressions: “grow this metric” and “driving sustainable growth.” These two simple sentences make it crystal clear what the goal of the NSM should be. What’s less obvious and the part that companies always fail to spot is the “core value that your product delivers to customers.” This is the purpose of the NSM! And yet, as I look around at product teams I’ve worked with, I cannot help but feel that somehow, somewhere we lost our way, following the wrong star.
Chỉ theo đuổi một chỉ số là quá đơn giản
Why the term “North Star Metric” is a terrible metaphor for product success¶
6 min read
Sep 7, 2021
I mean, can anyone event point out the North Star?
Photo by Adrian Pelletier on Unsplash
A good metaphor should capture the essence of that which it attempts to describe.
If you asked a thousand Product Managers why they use the North Star as a metaphor for product success, a large majority would likely tell you it’s because it’s the brightest star in the sky or that it’s directly above you or that it helps to guide you North. For the most part, they would be wrong.
Firstly, you need to be able to identify that which guides you, right? If you don’t know which one is the North star, how are you going to know which direction is North? Secondly, it’s actually the 48th brightest star in the night sky! And finally, it is only directly above you if you’re on the North Pole — Not to mention the North Star is not even visible if you live in the Southern Hemisphere!
I know I am being a bit pedantic, but by the end of this post, I hope you’ll agree that the language we use to describe the world around us can be powerful if used correctly or it can lead us astray if not.
Earlier this year, I was doing some work on success metrics with one of our product teams, and in a swirling sea of metrics, goals and KPIs, I struggled to identify what the team’s one North Star was. In fact, I don’t think they even knew. There were just too many metrics and, like the image above, no one stood out from the rest. In the end, we used a unit economic tree to identify how different metrics in their part of the product laddered up to the next metric, which combined with another metric, laddered up to the next metric and so on until we reached the top of the tree (generic example below).
Image from my blog post on first principles thinking
And that’s when it hit me…
The reason why the “one metric” is called a North Star Metric (NSM) is that, like the real North Star, most people are unable to identify it as it’s surrounded by billions of other shiny objects. One might even argue that a company’s inability to identify its own North Star is precisely what makes the North Star an apt metaphor.
This also wasn’t the first time I had come across an issue with the NSM. I had seen this countless times before at previous companies, and although the problem manifested itself in different ways, a problem almost always existed. The challenges ranged from no clear NSM or too many to choose from all the way to the wrongly chosen NSM (as was the case at Gousto). Even when there was an appropriate one, Product Managers were trying to shoe-horn every feature release into it without realising that they needed to find their own NSM which laddered up to the wider NSM.
As you can see, the metaphor begins to break down causing confusion. I think it is completely appropriate for teams to have their own “one metric” provided they know how it fits into the bigger picture.
Sean Ellis was the first person to coin the term “North Star Metric”, and whilst his intentions were good, I don’t think he accounted for people misinterpreting the metaphor and using it interchangeably with terms like OKRs or KPIs. In an ideal product organisation, your KPIs and OKRs would ladder up to your NSM once you’ve identified it.
What is the NSM?¶
“The North Star Metric is the single metric that best captures the core value that your product delivers to customers. Optimizing your efforts to grow this metric is key to driving sustainable growth across your full customer base” — Sean Ellis (source)
What should stand out in the definition above are the expressions: “grow this metric” and “driving sustainable growth.” These two simple sentences make it crystal clear what the goal of the NSM should be. What’s less obvious and the part that companies always fail to spot is the “core value that your product delivers to customers.” This is the purpose of the NSM! And yet, as I look around at product teams I’ve worked with, I cannot help but feel that somehow, somewhere we lost our way, following the wrong star.
I know I have honed in on a team’s inability to identify their NSM as the main challenge, but actually worse than that is for them to:
- Identify it and still surround it with other shiny objects
- Identify the wrong metric because they don’t understand the purpose of the NSM
The former creates distractions that cause teams to lose sight of the goal, the latter (which is arguably worse) results in a tremendous amount of effort going into the wrong thing. Find the right NSM that delivers value to your customers and don’t place it amongst hundreds of other shiny things!
Frankly, I would much prefer it if we scrapped the term North Star metric and used a metaphor that truly embodied the importance and essence of what we’re trying to describe. I call it the Lighthouse Metric.
Lighthouse Metric¶
“A lighthouse is a tower or building designed to emit light from a system of lamps and lenses and to serve as a beacon for navigational aid… Lighthouses mark dangerous coastlines, hazardous shoals, reefs, rocks, and safe entries to harbors; they also assist in aerial navigation” — Wikipedia
A beacon for navigational aid! If this isn’t the perfect metaphor to describe the importance of your “one metric” then I don’t know what is. Furthermore, “the marking of dangerous coastlines and other hazards” is a great way to describe the risks that product teams face every day: vanity metrics, conflicting priorities, and other distractions/dangers that could be catastrophic. I feel like this is a more complete metaphor describing the purpose and the goal of the “one metric.”
I know I’m just arguing semantics here but at the end of the day, if product teams understood the importance of the North Star (both at work and in the cosmos) I wouldn’t need to write this post, but they don’t; so I am. Renaming the metric will inspire a more appropriate use. A lighthouse is singular, obvious, and clear. You can run workshops to not just identify the Lighthouse Metric but also the hazardous vanity metrics and distractions you should avoid — employ tools and frameworks to help you with this — such as the unit economic tree I mentioned earlier.
Below are examples of some great Lighthouse Metrics (formerly known as North Stars ;)) that I have come across to inspire you to find your own. Use these as starting points during your own metric workshops. Discuss why they are (or aren’t) great metrics.
- Airbnb’s NSM is “nights booked”. This adds value to the guest and the host.
- Before Netflix was the giant it is today, theirs was “% of new members with 3 DVDs in their queue”.
- Facebook use “daily active users”
- For Spotify, it is “Time spent listening to music by subscribers”
- Uber’s is “rides per week”
I wrote an article on why we moved away from Conversion Rate to a metric called Average Orders Per User. Although we didn’t label the term North Star Metric, it is now the go-to metric for product success as it combines order frequency and conversion rate. The metric measures short term success as well as long term retention. It can’t be artificially manipulated like conversion rate and it adds value to both the customer and the company. Our “one metric” didn’t come about through the use of a workshop but rather from us challenging our own assumptions about the metric we were using and the harm it was causing.
Regardless of the metaphor you use, I hope you’re able to find your own one metric that you can commit to and that acts as a guiding light.
Photo by Casey Horner on Unsplash