Today I held a Q&A session on LinkedIn about the North Star Metric in a B2B context. The question, posed by Jacopo, was fascinating: how do you find a metric that measures not only profitability, but also growth?
Question
How do you get a better indicator for a B2B services company that measures not only profitability but also growth?
Answer
The answer lies in the interpretation of growth. For some, it is increased margins; for others, it is growth in staff or revenue. Three key areas come to the rescue: the Business North Star, Product Core Metrics and Profit Core Metrics.
- Business North Star: The number that allows you to predict the success of the organization. For example, in an airline, it might be profit per passenger.
- Product Core Metrics: The numbers that show the product is working, such as the number of passengers or projects completed on time.
- Profit Core Metrics: Growth ambitions from a financial perspective, important to ownership and management.
The North Star Metric must link to the mission, vision and strategy. The Product and Profit Core Metrics describe growth ambitions. This three-column breakdown offers a numerical representation of growth in different nuances, providing a complete picture.
Want to learn more? Follow me on LinkedIn for future Q&A sessions and learn how choosing the right metrics can transform your company’s strategy.
