- Sean Kane, Co-Founder F6S and Springboard Accelerator A business model is a combination of things. Like Ben and Alistair, I too share the general tenant around “One Metric That Matters”. When something is correlated, it means that two variables change in similar ways (ice cream and drownings), likely because they are linked to something else. Until reaching product-market fit (before scaling) there will clearly be a more important metric, but from the moment we enter the growth phase there will be some more, although there will always be a hierarchy, and for that reason, frameworks such as OKRs are of utmost importance in the growth phase of a product or organization. Don’t assume a recurring revenue model (like SaaS) works best if your customers don’t like buying like that. Then you write your hypothesis, which basically says “if I do ____, I believe ____ will happen, which will get me ___ outcome.” Drill this hypothesis into your head by writing it down on paper and/or whiteboard so that you’ll look at it everyday. Hey, I'm Neil Patel. You then begin again by finding the next KPI you need to focus on. If you can scale it, then you can move to revenue. The Wall Street Journal calls him a top influencer on the web, Forbes says he is one of the top 10 marketers, and Entrepreneur Magazine says he created one of the 100 most brilliant companies. This is a great tactical approach to iterate towards business success by channeling your team’s energy to attack your opportunity one step at a time. You can also draw a new line/target or try again. It is, in essence, about understanding how to use metrics in a Lean way: What to measure, when, why and how. This means choosing a single metric that is incredibly important for the goal you are currently working on. The Lean Analytics Stages and Gates Having reviewed these frameworks, we needed a model that identified the distinct stages a startup usually goes through, and what the “gating” metrics should be that indicate it’s time to move to the next stage. Once in scale, you focus on growth. Lean Analytics Summary by Alistair Croll and Benjamin Yoskovitz is a guideline that will show you how you can successfully build a startup from the ground up, how you can gather data and express it through effective metrics, that will help you evaluate your current position and help you grow your business. As the Founder & CEO of an 8-year old startup (iLiv.com), I have read, and re-read, all of the best startup and technology business books. We want to create that works for you business size It's an easy quick read but I don't think it will stand the test of time, it's The one metric that matters (OMTM) is the key measurement you need to be be making of your current endeavour. I’ll share my 3 rules to actionable metrics, derived from Lean Startup principles, and specifically focus on what metrics I measure and how I measure them. An analytics model is a simple and repeatable process to use metrics to drive improvements, business decisions or pivots. In general, your LTV should be 3x your CAC, assuming your margins are healthy. The Lean Analytics Cycle: Metrics > Hypothesis > Experiment > Act [from Occam's Razor; written by Avinash Kaushik] Definitely falls under long reads, but it’s a good, detailed approach to setting up analytics beyond the easiest (and often most meaningless) metrics. They took a hit on total users (which is a vanity metric) but ended up getting a much more valuable and engaged user base. Amount of users is useless, percentage of daily active users is better. If you’ve got all these, you can begin to focus on the math and ensuring the economics work. This is where we get into correlation and causality. If you skip straight to scale without first making sure the math works or you have a market for your product, then the foundation will eventually crumble. Exploratory metrics are speculative; they’re used to find unknown insights. By choosing the metrics more effectively, the entrepreneur can navigate through the unknown more effectively. OMTM is of the utmost importance from the beginning, before Product-Market Fit. In the book Lean Analytics they call it One Metric That Matters (OMTM). It is, of course, nonsense to believe that consuming ice cream causes drowning. "Lean Analytics shows you how to move insanely fast by getting your metrics to tell you when you're failing and how to do something about it. To find the metric that matters, you need to look at the stage you’re at and the business you’re in. I recently caught up with Ben Yoskovitz who co-authored Lean Analytics with Alistair Croll.In today’s world where we can measure almost anything we often end up drowning in a sea of numbers. What’s your name? What's your phone number? As they grow and gather more data, they’ll want to discover the leading indicators for their business. Are your conversions increasing? It’s ultimately all about business problems. 2 Applying Lean Analytics to Performance Metrics in M&A Earnouts A case study for SaaS-businesses RasmusAreskoug You then measure your results and see if you moved the needle closer to your target/line in the sand. Comparative; Understandable; Usually a ratio or a rate; Actionable; The Lean Analytics Cycle. As, for example, avoiding premature growth (scaling before product-market fit) or build something that nobody is interested in. He blogs regularly at Instigator Blog and can be followed @byosko.. We all know metrics are important. But you'd be cheating yourself if you thought it only did that. Skip the steps at your own risk. Good metrics change how you behave. You still monitor other metrics, but this establishes your direction and informs your key business decisions. Throughout your process of finding a business model that is sustainable, repeatable and scalable, you will repeat the same process over and over again: Nowadays, digital businesses, such as Game Apps or personal assistants, work with a huge amount of data. LTV means the amount of money you can expect to receive from a customer, and CAC is the cost to acquire a customer. Before we can know what a good metric is, we first need to define what analytics is. You still monitor other metrics, but this establishes your direction and informs your key business decisions. The end result, ideally, is a more effective and agile company. Product Owner vs Product Manager, a supposed dichotomy that is not such a thing. This is more applicable for B2B products. He is the co-founder of NP Digital and Subscribers. Product Managers we four things to find the right metric at all times: The business model is a story of how a product creates, delivers and captures value. This is where Lean Canvas or Business Model Canvas are really important. Analytics Frameworks. Therefore, you set a goal to improve your viral growth. There are a few subcategories within Lean Startup. Finding the Right Metric for Right Now. In the book Lean Analytics, co-authors Alistair Croll and Ben Yoskovitz advocate choosing One Metric That Matters – a single metric that your team will focus on above all others for a time. You’ll know this if they use your product and stick around for a long enough time that it becomes clear you’ve provided value for them. My only question is, will it be yours? What website should we analyze? The Lean Analytics book will be published in March-April 2013. If you find a metric you like but don’t know what to do with it, track it and put it in the back and worry about it later on. Lean Startup and now Lean Analytics can provide an answer to manage the balancing act of giving everything you can without chasing a lost cause. By clicking or navigating the site, you agree to allow our collection of information on and off Aktiasolutions through cookies. As you can see there are many possible Lean metrics. Along with each stage are “gates” that are required to get through for the company to advance to the next stage: In empathy, you want to make sure you’ve found a problem so painful that people are willing to pay you for a solution. If you want my team to just do your marketing for you, click here. The metric should also be a ratio or a rate. Next, pinpoint and optimize only the most important metrics for your business right now. Tons of honest, meaningful advice -- a must read for founders that want to win." Revenue$0 to $3 million$3 to $10 million$10 million to $50 million$50 million to $100 millionAbove $100 million 5. In the book Lean Analytics they call it One Metric That Matters (OMTM). Your first MVP shows promising results, but it’s still far from what you need to show traction. It is equally brilliant. Here’s what the flowchart looks like: Begin by picking a KPI (Key Performance Indicator), draw a line in the sand (or a target), and find a potential improvement. The central idea underpinning Lean Analytics is the following one: If we are clear about our business model and the stage of the product life cycle we are in, we can monitor and optimize the OMTM (One Metric That Matters) for our product at any given moment. The more ice cream people eat, the more drownings there are. This article describes the seven sins of strategy. The core idea behind Lean Analytics is this: by knowing the kind of business you are, and the stage you’re at, you can track and optimize the One Metric That Matters to your startup right now. But with a flood of information available, where do you start? This doesn’t mean you should only track one metric. The approaches for growing a business is unique to each company. Download our Lean Product Management guide and learn how to successfully apply Lean Startup techniques to deliver better products to market faster! Anything below that and they’re doing well, if it goes above they’re having problems and need to investigate. Each business model will have a more detailed analytics model that will allow us to optimize the performance of our business. Actionable metrics are the ones that change your behavior. And, Lean Analytics is what allows us to inform that decision, track progress and success. The book Lean Analytics suggests some metrics for start-up founders to assess their success. If the metric moves and you don’t know why it matters or what to do with it, then it’s a bad number. At Microconf 2013, Yoskovitz gave a talk about the measure part of the loop and some tips for measuring what matters. OMTM changes over time. Rule 1: Measure the “Right” Macro Eric Ries recommends focussing on the macro effect of an experiment (such as sign-ups versus button clicks) but it’s just as important to focus on the right macro. The key task of the Product Manager is to know which metric is the most important at all times and align the entire organization in improving that metric. You need to stick to this and be reminded everyday what you’re trying to accomplish. Presentation on Lean Analytics at MicroConf 2013. If you don’t have a lot of data on how to make an improvement, you make a guess. For example, the typical analytical model for a social network with user-generated content could be the following: Each business model has variables that are interconnected to create the business equation. A 2% conversion rate doesn’t tell you much if you have nothing to compare it to. LEAN ANALYTICS does a very good job of explaining and exampling LEAN metrics. If it doesn’t change how you behave, it’s a bad metric. In our work to help companies transform into product organizations, one of the questions we get... We have been working on identifying the ten characteristics of a good strategy in this article entitled "Decalogue of a Good Strategy. Vanity metrics make you feel good, but don’t change how you act. If you want my team to just do your marketing for you, Using Lean Analytics Principles to Build a Strong Company, You're moments away from growing your traffic, We want to create a plan that works within your budget, We want to create that works for you business size. In our example, it would be the summer months that are causal to ice cream consumption and drowning. Lean Analytics is a part of Lean Startup methodology which consists of three elements – Building, Measuring and Learning. How to Think Like a Data Scientist; Lean Startup and Big Vision; II. Don’t follow the leader. It is the “measure” part of the famous “Build-> Measure-> Learn” cycle of Lean Startup. It is brilliant. Yoskovitz begins this part of his talk by showing a chart showing ice cream consumption correlating with drownings. Ratios and rates are comparative, which help you make better decisions. Lean as a tool for improvement has several goals: Map and specify value stream; Ensure that value “flows” Ensure that customers “pull” the value from the system Lagging tells you something historical, it reports the news. 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