Creating a Product Vision and Choosing Your North Star Metric: Connecting the Dots

Creating a Product Vision and Choosing Your North Star Metric: Connecting the Dots

Introduction:
When it comes to creating a product vision, it is essential to view oneself as a facilitator rather than the sole creator. Ideas for the vision can come from various sources, and incorporating input from key individuals is crucial. By outlining a range of ideas, including extreme ones that still align with available data, one can identify the most authentic and impactful vision. This article will explore the process of creating a product vision and delve into the significance of choosing the right North Star Metric.

Creating a Product Vision:
To create a compelling product vision, it is important to gather input from different team members and stakeholders. By seeking feedback and incorporating diverse perspectives, one can refine and update the product strategy effectively. Outlining both conservative and risky ideas allows for exploration of potential gaps and encourages focused feedback. While it is possible to adjust the vision to a more neutral position, starting with extreme ideas helps in identifying necessary trade-offs.

Choosing Your North Star Metric:
A North Star Metric (NSM) is a vital tool for measuring the success and impact of a product. There are six categories of NSMs: revenue, customer growth, consumption growth, engagement growth, growth efficiency, and user experience. Deciding on the ideal NSM depends on factors such as the business model, product growth, and usage patterns.

Different Types of Companies and Their Common NSMs:

1. Marketplaces and Platforms: Consumption growth is the most common NSM for these companies. By focusing on consumption, they can drive the growth flywheel through increased user engagement and content sharing.

2. Paid-growth Driven Businesses: Growth efficiency is the primary NSM for these businesses. Efficient spending and revenue generation play a crucial role in their success.

3. Freemium Team-based B2B Products: Engagement and/or customer growth are the common NSMs for these products. Emphasizing user engagement ensures that the product remains valuable to the team.

4. UGC Subscription-based Products: Consumption is the primary NSM for these products. By measuring consumption, companies can gauge the value users derive from the product.

5. Ad-driven Businesses: Engagement is the most common NSM for these companies. By focusing on user engagement and satisfaction, they can attract more advertisers.

6. Consumer Subscription Products: Engagement or customer growth are the typical NSMs for these companies. By tracking engagement and acquiring new customers, these businesses ensure continued growth.

Unique Considerations for NSM Selection:
Companies often choose multiple NSMs when they have different products or when quality is a significant factor. Spotify, for example, focuses on engagement, customer growth, and consumption due to its subscription-based music and ad-based podcast businesses. Considering the jobs users hire the product to do is another approach to selecting the NSM. The NSM should align with what matters most in fulfilling the user's needs.

Importance of Input Metrics:
Once the NSM is determined, breaking it down into input metrics becomes essential. These input metrics are the levers that can directly impact the NSM. By identifying and focusing on these metrics, teams can generate concrete ideas and align their goals accordingly. It is crucial to calibrate the input metrics to ensure they accurately reflect the desired output.

Actionable Advice:

1. Foster collaboration and gather input from various stakeholders to create a comprehensive product vision.
2. Choose the NSM that aligns with your business model, product growth, and user needs.
3. Break down your NSM into actionable input metrics and focus on optimizing them.

Conclusion:
Creating a product vision and choosing the right North Star Metric are essential steps in building a successful product. By involving key stakeholders, exploring various ideas, and aligning metrics with business goals, companies can set themselves up for growth and success. Remember to continually iterate and refine the vision and metrics as the product evolves.