Hey, happy Monday,
welcome to the first STRTGY Note of 2021!
The most important lesson of the past year:
any enterprise has transformed into an Experience as a Service enterprise.
This virus has changed the DNA of companies forcing them to adopt new behaviors in the marketplace by redesigning their interactions with their customers to survive in a contactless world.
Products are being designed in the cloud, sold online and delivered as if teleportation already existed. In any industry.
Since March 2020, every enterprise has become a startup: with its business model challenged. Some people have started over and some have had to manage unexpected growth.
Fact is that the ones who have changed forever are us, as people, sometimes producers and sometimes consumers: we no longer need products, we need new experiences.
Home Time = Screen Time
Locked in the house, we spent so much time at the computer that the first to notice it were osteopaths who saw a surge in the treatment of bad posture injuries. Entire days with our heads bent over computers and smartphones so much so that the shape of the spine has changed and a new word has been coined: “tech neck,” the stiff neck from technology.
If for that matter there is also the double chin from technology and it seems to be a real trend ridden by beauty companies like 111Skin which has extended its facelift masks not only to the chin but also to the neck but to the entire back such as The Light Salon That even puts LEDs in it. No more selling creams, but a new beauty salon experience that you can do at home, even on your own, even Live on Instagram.
With customers locked in their homes, each individual brand has engineered itself to recreate an ersatz real experience: of the office, the restaurant, the fast food restaurant, the bar, the wine shop, the movie theater, the live events, of the gym…
They are no longer companies that simply produce a product and put it out, they have become tech companies that design experiences and, more importantly, they own the data and use it to shape their strategy.
Driving strategy with data
Owning data is undoubtedly a great competitive advantage, but only if there are processes in place that not only influence but even guide decisions.
Having to reduce customer contact and having to take full advantage of the potential of digital to deploy meaningful touchpoints in people’s lives, it becomes critical to look at the right numbers.
I have prepared a mini-guide that will help us in this.
Here are my notes, feel free to use them.
- Step 1. How to define Vision and Direction
- Step 2. How to use North Star to design and guide strategy.
- Step 3. How to measure results and make decisions
It would be too long to talk about everything in one email so today I will tell you about the first Step and in the coming Mondays we will cover the other two. Let’s start right away.
Step 1. Define Vision and Direction
Leaders leading great products define and communicate a simple, clear vision by which they make explicit what is important to the whole team.
The question you can ask yourself to write your Vision without getting it wrong is: what is the best version of the world that this product wants to create?
For example, IKEA’s Vision is “To enable anyone to furnish their home with low-cost, all-occasion-of-life, yet well-designed furniture.”
What is your Vision?
A well-defined Vision allows us to identify our North Star Metric (NSM) which is none other than the most important metric that indicates that we are moving in the direction of success.
Technically, the NSM is called a leading metricbecause it anticipates results, which is why it cannot represent turnover itself, which is instead a metric lagging, that is, it comes as a result. What must customers do, repeatedly, in order for them to increase revenue?
The NSM, basically is the guide that connects your Vision with the value generated. That’s the secret.
And it has another characteristic: it is fractal. It is important at all levels and for all teams to contribute aligned so that the company can have sustainable growth.
As you see it is all organically, beautifully, connected.
How to correctly identify the North Star Metric?
Here is a laser checklist.
The first question we need to ask ourselves is: How do we measure that the customer is receiving the value they expect?
It certainly won’t be metrics like the number of followers, likes, or clicks and app opening… it will have to be linked to the core experience of your product.
The second question we need to ask is: Is this metric aligned with the Vision?
The third question is: is the increase in revenue directly related to this metric? It helps you understand: what is the outcome that people get from using the product that is directly related to revenue?
Going back to the IKEA example, what could be a hypothetical NSM?
For example, the # number of purchases per visit.
Let’s see if it passes the test:
- Does it measure value to the customer?
✓ Yes, because if the customer has purchased, it means they have found what they were looking for. - Is it aligned with the Vision?
✓ Yes, because it indicates that the client is furnishing their home on a budget they can afford - Is it related to revenues?
✓ Yes, purchases of course are connected with collection.
Here are other famous examples:
- Airbnb: Booked nights
- Facebook: Active users per day
- Quora: Number of responses per user
- WhatsApp: Number of messages sent per user
Now it’s your turn. What is the North Star Metric of the most important project for you right now?
If you’d like, tell me by replying to this email, along with Vision.
It is important to find it before I send you the next email because we will use it to design and guide your strategy.
Good work!
I remain in listening.
-Antonio
