Just as the Great Conjunction and the actual North Star in the sky will focus stargazers attention, the North Star Metric (NSM) is a metric that a business uses as a focus for their growth.
Here are some examples from familiar companies:
- Amazon: sales
- Facebook: daily active users
- Slack: messages sent within the organization
- Spotify: time spent listening
- Netflix: subscribers watching X hours of content
The North Star Metric is a company-wide metric that matters to everyone and is an indicator of overall growth — so as it grows, so does your business.
Why should you have one?
A NSM can benefit your business in a few different ways:
- Clarity: It’s critical to have crystal clear clarity. Technology has flooded us with new data points and Frankenstein-like scorecards. The North Star Metric gives every person in the business line-of-site to how well the company is achieving growth.
- Focus on Progress: Company’s need focus at the business-level and the team level. This key metric gives the entire company the same focus and allows teams to contribute toward that metric based on their smaller group focuses.
- Accountability: What’s measured gets managed.
Clarity and focus will allow your business to grow more efficiently over the long-term.
The North Star Metric vs. One Metric That Matters
- North Star Metric is the number on which your entire company focuses to achieve long term growth.
- Who: Entire Company
- Timespan: Long term (years to lifetime)
- Focus: Supports Growth Strategy
- Relationship: The Umbrella Goal
- One Metric That Matters is the number on which one team focuses to achieve rapid growth for a short period.
- Who: Single Team or Restaurant
- Timespan: Short Term (1 or 2 quarters)
- Focus: Supports rapid improvement
- Relationship: Sub-focus to the North Star Metric
5 Factors to Identify Your North Star Metric
- The NSM should indicate that your guest experienced the core competitive advantage that your brand offers.
- The measurement should reflect the customers level of engagement and activity.
- The NSM should be the closest proximate to the “one thing” that indicates your business is growing in the right direction.
- It should be easy to understand and communicate across teams.
- The metric doesn’t have to be perfect. Progress over perfection.
Within the Restaurant Industry
While the NSM remains popular with big Software as a Service (SaaS) companies, it remains applicable to high growth restaurant groups as well. Below is an illustration of a North Star tree for a small restaurant group. The tree ties together a dozen or so initiatives into a single framework.
Use Your NSM for Higher Levels of Impact
Using the North Star Metric to drive your growth strategy is a solid investment of time and effort and should lead to higher levels of impact in your business.
