Aimlessness is the #1 killer of startups.
So I’m going to give you a simple framework for staying on the right track by translating your startup’s big, hairy, audacious goal (BHAG or “bee-hag”) into the right metric that you can measure today.
Knowing what to measure is one of the greatest predictors of startup performance. It provides a clear plan of action of what to do today, and it provides data to show if that action is successful.
Or, if you prefer: what we measure is what we improve.
Unfortunately, startup measurement is really hard, and it’s just not something we teach founders.
Most startups have crappy goals.
Either they’re unmeasurable: broad, overly-inclusive goals like “finding customers” just aren’t actionable.
Or they measure the wrong things: eyeing revenue before your value prop is tested will almost guarantee missing the mark.
This is a common theme in my coaching.
While I can’t tell you what your startup’s goals should be, I can give you a framework that you can use to create targets that drive results.
It’s called Goals, Signals, Metrics.
And it’s only three steps:
1/ What is the big goal?
The worst way to get where you want to go is to not know where that is.
Every startup needs what Alex Blumberg called a “credible theory of hugeness”:
- It has to have the potential to get really huge
- You need a theory of how you’re going to get there
- That theory has to be credible.
The goal is your hugeness.
What is your startup trying to do? Where are you heading? Why?
It should be big. It should be bold. It should be audacious.
But it might not be immediately measurable — if it’s measurable at all.
2/ What are the signals you’re on the right track?
The problem with a big goal is that it’s big — we can’t just “achieve” it.
Honestly, that’s not a thing. The chasm is too wide to cross.
Think of it like an explorer in the wilderness. There’s a far-off mountain you’re trying to get to, but you can’t just leap there. It’s not a walk; it’s an expedition. It’s dangerous. It takes days or weeks.
You can’t even always see the mountain through the dense forest foliage.
So you have to look for signals that you’re on the right track:
- Is the river bank still to our right?
- Are the stars oriented to our destination?
- When we can see it, is the mountain getting larger?
Your job as an entrepreneur is to find signals that you should be seeing if you’re getting closer to the mountain — to your goal.
But it’s not necessarily one signal.
If you’re looking to hit a revenue target, but you have yet to create demand in the market, then revenue is a lagging indicator of progress.
Here’s a SaaS example:
- You can’t get revenue without customers signing up
- Customers won’t sign up if they don’t hit our landing page
- They won’t hit our landing page if they don’t click on our ad
- They won’t click on our ad if they don’t find it compelling
- They can’t find it compelling if they’re not the customer
They’re a chain of signals that lead toward the ultimate goal.
You might be one step removed from measuring revenue directly — or you might be 5.
Either way, your goal is lagging indicator of what you’re accomplishing today. Focusing on measuring the goal itself will cause you to learn far too late (and far too expensively) that you’re on the wrong track.
Instead, chain these leading indicators together, until you find a signal that you can see immediately — even if that’s just “customers are seeing our message”.
What is the next link in the chain of signals leading to your goal? Which one can you see today?
3/ How do you measure those signals?
Most of the hard work is done. You know what to look for. Now you just have to figure out how to measure that signal.
This is where specificity comes into play — where you make the metric discrete, precise, and targeted.
What’s one thing you can measure that would indicate you’re seeing the signal?
If your signal is “customers are out there”, then it could be ad impressions or LinkedIn messages sent.
If it’s exposure to your value prop, it could be landing page visits, time spent of the site, video watch duration, etc.
What can you measure right now that would show the signal?
With one thing identified, the next step is to get very specific about it.
Document the who, what, when, and how clearly. Measurement is not the time for ambiguity.
If your metric is ad impressions:
- What is the ad/copy?
- Where is it placed?
- How long will it run?
- To whom are you serving the ad?
Without a specific target, data is just noise.
With a measurement clearly defined, you need to specify what success looks like. What is a good value? What’s a bad value?
You want to pick a target that can be unambiguously a success or a failure.
There is a science and art to picking these targets, but the general idea is that you want to base it on the theory of your startup. When you’re wrong, you want to force yourself to ask, “what does this mean?”
I talked about this in a recent blog post.
And that’s it!
The goal is to get to a metric you can measure TODAY, which gives data on the next most important question to ask.
So what’s your next metric? Let me know.