At Rangle, our motto is building the right thing, the right way. But if doing that was as easy as saying it, our client companies would never need our help.
Building digital products that truly serve the market is a complex business. Building digital products that can disrupt the market is even harder. However, there is a powerful tool that we often use with our clients to help them find the kind of clarity that leads to building products with a unified vision in mind for their in-market success: The North Star Framework.
The North Star Framework is a model for managing products that identifies a single, crucial metric (the North Star) that, according to Sean Ellis, “best captures the core value that your product delivers to [its] customers.”
With the North Star, businesses and their product teams are empowered to build the right thing with clarity on their product vision, and where its true customer value lies. The North Star also provides a leading indicator of product success and future business outcomes that your company cares about.
Unpacking the North Star metric
The North Star metric (NSM) is a single critical rate, count, or ratio that represents your product strategy. This key piece of the North Star framework defines the relationship between the customer problems that the product team is trying to solve and sustainable, long-term business results.
Why is the North Star metric more powerful than a list of metrics and KPIs for new and existing digital products? The North Star serves three critical purposes:
- It helps prioritize and accelerate informed but decentralized decision-making
- It helps teams align and communicate
- It enables teams to focus on impactful, sustainable, product-led growth
In terms of prioritization, the North Star doesn’t necessarily mean that your teams stop tracking all other metrics that you currently rely on, but that this one metric becomes the top performance indicator. In other words, if there is a decision to be made about the product, all options should be weighed against their ability to deliver on the North Star metric. Having a single metric therefore facilitates better and easier decision making, and it also creates more alignment. With everyone on the team on the same page about how to create value, there are fewer arguments based on opinions, previous experiences, or faulty assumptions. The metric becomes a source of truth.
See also: The role of purpose in digital (Hint: It's everything)
Measuring the North Star metric
In creating a North Star metric for your business, it’s important to understand how it will be measured — and ensure that it is actuallymeasurable. The metric relies on three major inputs to ensure that it’s capturing the reality of your business as well as the value generated for customers:
- Ensuring the metric evaluates sustainable business results
Is it truly a leading indicator of future success rather than a lagging indicator? When the metric improves, you should expect your business results to change accordingly. - Ensuring a good metric is ensuring good inputs
Input metrics are a small set of complementary factors that you believe most directly influence the North Star metric, and that can also be influenced through your product offering. These key inputs are descriptive and actionable. If any of them are performing poorly, your teams can work to improve them. Conversely, if the North Star metric is not improving, looking to these inputs should give you direction on why. - Ensuring the metric is connected to the work
Is the metric connected to tasks like research, design, software development, refactoring, prototyping, testing, and everything else that goes into producing a digital product? No matter how your team operates, the work you do should align to the strategy that’s guided by your North Star. All teams should also be able to connect their work and outputs to the North Star, and prioritize their work by the value it will bring to the metric. This also means prioritizing the tasks that don’t move the needle, creating clarity and reducing the odds of spending cycles on features or functionalities that don’t add meaningful customer value.
As an example, it’s popularly known that Slack’s original NSM was: A user organization sends 2000 messages.
That may sound too basic, but within that simple measure is a full story of the value of Slack. In the early days of the company, 2000 messages could uncover bugs or poor functionality within the tool. It was also enough for individuals within the user organization to get hooked and see the value of the tool. 2000 messages were a strong indicator that the organization would continue using Slack. It provided a strong feedback loop while also indicating success. The success of Slack as a SaaS tool is proof of the power of this small measure to drive outcomes.
Finding your North Star
Landing on this single, powerful measure may sound daunting when your team is used to full dashboards and slide decks of metrics and performance indicators. However, North Star workshops are fairly easy to run, and also provide an opportunity for your product teams and stakeholders to come together and commit to the mission.
When we run a North Star framework workshop with our clients, we dedicate four hours (plus breaks!) to the exercise, ensuring focus and commitment to the task. After all, this is not a vanity exercise — it’s a critical strategy exercise that can affect not only your digital product build, but the overall success of your business.
At the beginning of the session, we do a “room temperature” check, asking all the participants to indicate their mood with emojis. This may seem childish or otherwise skippable, but it’s an important step: Sometimes teams come to this exercise with a lot of animosity. As consultants, we are often called in after original product builds have failed. This can create a tense atmosphere or a feeling of ‘us vs. them’ in the room that will be reported as low mood or low energy. It’s an indication to us that we need to work harder to lighten the mood and bring the team together as one — even if no one has directly acknowledged the problem.
Getting to the nitty gritty of the work, we lead the team through an explanation of what the North Star is and what it is not, and then a discussion of any product strategy materials they may already have, including a product vision canvas, OKRs or KPIs, and their high level product roadmap. This creates both a shared context for the North Star metric work, and also gives us an indication of where any points of contention may lie.
Following this, we take a deeper dive into their product vision statement, workshopping with two examples unrelated to their company. After we evaluate these as a group, the team writes their own, and votes on the top core learnings that could be derived from the statements. This becomes a core value statement, so that the team can easily say (in one sentence) the value their product provides to users.
Now it’s time to really drill down into the key of the North Star: The critical event. This is the point at which the users take an action with or in your product that most closely aligns with its core value proposition. As in Slack’s example, users find the product useful enough to reach a threshold of messages sent. In the case of Spotify (https://rubenugarte.com/north-star-metric/), they measure time spent listening on the platform. This is better than the number of users, for example, because it indicates enjoyment of the product. Thousands or millions of users who aren’t actually doing their listening on Spotify doesn’t help the platform make money, or make their product better. A smaller group of highly engaged users is much more profitable for them than the reverse. Building their product with the intention that users will come back again and again helps them make the right choices for their audience. This understanding is key to creating a successful NSM.
Defining your North Star
From here, we review the monetization model of the product, and do a recap on everything we’ve learned and discussed so far. Now it’s the point in the process to create the North Star metric.
The metric relies on seven key points to ensure its success. First, it expresses value clearly for customers. This is why revenue is a poor indicator of product success. This is value for your business, not your users. Second, the company’s product vision and business strategy must be reflected in the metric. Like navigating by the North Star in the sky, your NSM should lead you where you want to go as an organization. Third, the NSM must always be a leading indicator of success, as mentioned, rather than a reflection of past results. This allows your company to stay ahead of the curve and react to how your users are behaving right now, rather than how they were behaving last quarter. This is tied to the fourth measure: The NSM should be actionable. You can influence it with your business decisions and behavior, and therefore you have to be in-the-know on what value your product is providing to your customers on a daily and weekly basis.
Fifth, and maybe the most important, the NSM is understandable. It’s written in simple language, free of business jargon, so that everyone in the organization (and partners or vendors outside) can understand it and their role in achieving it. This simplicity also guarantees success, as there’s no room for misunderstanding or manipulating inputs to fit loose definitions.
Sixth, the NSM is measurable in a straightforward way, using the inputs mentioned. Tracking it and reporting on it should be easy or even automatic with the existing or available tooling for the organization. Lastly, the NSM is never a vanity metric. Everyone should be confident that when it changes, whether for better or worse, it means there’s something about the product that created that change. This ensures the NSM is a measure of long-term success.
At the end of the North Star workshop, armed with the inputs that will be used to contribute to its measurement, we put it into practice. This includes discussing the mid-to-long-term impacts to be sure it’s truly the best indicator of success for the growth of the business.
Following the North Star
The North Star framework is not just about simplifying the measures of success your organization uses for your digital products. It’s about making your company more agile and product-led. Choosing the North Star puts your customers in the driver’s seat, letting them lead you to better products and a larger market share. Some of the major benefits of the NSM are captured in the table below.
| Product-led Orgs shift from this | To this |
|---|---|
| Delivery requirements | Solve the customer's needs |
| Product as a cost centre | Product as profit/growth centre |
| Specifications and delivery | Missions, experiments, and bets |
| Build MY solution and prove it works | Explore problem, validate solutions |
| Handoffs and silos | Cross-functional collaboration |
| Slower feedback loops/ Guessing | Faster feedback loops/ Informed decisions |
| Page views and clicks | Experience, interactions, behaviours |
Traditional measures of success are for traditional products. For modern, digital-first businesses, finding new ways to measure success is essential to ensure the best products for your customers with the right inputs and outputs to win in a competitive market. The North Star framework provides a way to operationalize your vision to empower your product teams to build truly groundbreaking digital experiences that everyone in the business can be proud of.