Forward Fortnightly Archive: The One-Metric-That-Matters
In this article, we're digging into how you can use data to drive growth and align teams.
We'll introduce you to the One-Metric-That-Matters. If you haven't come across the principal, you're in for a treat. It's simple. Powerful. And used by successful founders across the globe to keep their businesses focused, on track and growing as fast as possible.
Surely there's more than one metric that matters?
One-Metric-That-Matters (OMTM) takes discipline and focus, from you as a founder and your team. It's important to understand that this concept, coined by Alistair Croll in his book Lean Analytics, doesn't mean you focus on one single metric all day, every day. It means that at each stage in your startup journey, there will be one metric that should be most important to you and your team, at that specific time. As your business grows, you may find that each team has their own OMTM, but even then, as a business, you should have one metric that is most important to everyone in the business.
Josh Elman, a Product Leader and Investor who led teams at Twitter, LinkedIn and Robinhood once said that your OMTM should answer the question “how many people are really using your product?”. The OMTM will differ depending on which type of business you build. An e-Comm business will differ from a SaaS offering. A free mobile app will differ from a media platform. But, it's important to do the work early on in your journey and ensure that this is effectively communicated to your team.
UserGuiding, a US-based customer onboarding product, secured a $1.1M seed round in 2020. They reference three milestones which helped them achieve the growth they needed to secure the funds. One of the milestones was establishing their OMTM and improving it.
Apply the learning.
⏰ Different metrics will be crucial at different stages of your growth. At the pre-launch stage, you may be trying to build a database of potential customers before your product is publicly available. This could be in the form of an email list or early-adopter sign-ups. At this point in time, your OMTM may be the number of sign-ups or subscribers. Once your product has launched and you move into the product-market fit phase, your focus may change to users or email subscribers who activate their account, pay for your product or performs another important action. This is an example of your OMTM changing at a different stage of growth. You should be prepared for this and you'll find that one metric may lead to important learnings about what should come next.
📊 Don't confuse your OMTM with your KPIs. There are still multiple metrics that you will want to regularly track in order to measure your success. The purpose of the OMTM isn't to replace these. KPIs are important to incentivise your team, excite investors and keep track of multiple teams working on different projects. However you should ask yourself the question, are the KPIs positively impacting your OMTM?
📣 Aligning your team effectively unlocks the true power of OMTM. This principle gives you an opportunity to focus your entire business, which can be powerful if done in the right way. Display your OMTM in your office if you can, reference it first in company all-hands, send a weekly email updating everyone how you are doing against the target. The more you talk about the OMTM, the more your team will think about how they can improve it in their day-to-day.
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