As founders and managers of growing businesses, it’s easy to fall victim to the ‘shiny object syndrome’– our affinity for the newest technologies, platforms, and tactics. This willingness to try new things is a must-have in the early days of a company, but it can be the very thing that sinks us. The One Metric That Matters (OMTM) is a way to override our tendency to look for the next new thing. It’s often the difference between companies that are haphazardly searching for something that will work, and those that rigorously test the highest-impact areas of their business.
The OMTM is a powerful concept that introduces focus and discipline into the work of building a company. Alistair Croll and Benjamin Yoskovitz, founders of one of the first successful startup accelerator programs, write specifically about the OMTM in Lean Analytics: Use Data to Build a Better Startup Faster, from the Lean Series curated by Eric Ries. At any given time, it is crucial to the development of your business to select and adhere to a metric, the “one metric,” that is related to what you are focusing on at that moment.
This isn’t an excuse to ignore other parts of your business, or to cease efforts to collect all of the important data your business generates. Instead, the one metric is a line you draw in the sand, a commitment you make, for one day, one month, one year, however long you need to optimize your company’s performance based on that metric.
Why it’s important to know your OMTM
According to Croll and Yoskovitz, there are four reasons to focus on one metric:
- To cut through the hundreds of nagging concerns, questions and uncertainties and provide an answer to whatever you’ve deemed the most important question
- To make sure you set goals, which are how you will determine success
- To bring focus to your efforts and your employees efforts
- To promote experimentation by shortcutting feedback related to success and failure against the one metric
The one metric is your beacon for the present moment, the guiding force behind all of your activities. Looking at the one metric gives you the chance to set important goals related to that metric, so you have an easy benchmark for success and know when you are “done” with that one metric or ready to, at least temporarily, redirect your focus.
How to identify your OMTM
There are a two ways you can go about finding your OMTM.
1. Fix where you are worst
If you already have a solid foundation in place, then skip to #2. But if your business is struggling in several areas and you’re trying to fix them all at the same time, then this is a good starting place for you. The idea here is that the areas in your business where you are weakest are often the areas where your time and attention will make the biggest impact on business results. In this post we outline a few common areas where online businesses fall short, and how to tell if these points should be focus areas for you.
2. Business type + stage of your company
Lean Analytics covers two key factors in identifying your OMTM. The first is the business you’re in; for example: SaaS, Ecommerce, or Mobile. The second is what state you’re at in the growth of your business; for example: validating your minimum viable product (MVP), developing new features, or validating your business model. This post is a great resource to get more in-depth on using these factors to identify your OMTM.
Putting your OMTM to work
It’s great if your OMTM is shared by the entire team, but as your business gets bigger, you may want to assign responsibility for particular metrics to different teams or team members. The important thing is that everyone has a beacon to guide their efforts.
The team at Craftsy has adopted this approach and used it to achieve impressive results. Every employee in marketing has their own KPI — social, pay-per-click, affiliate — everyone knows their OMTM. Doing this makes it easy to spot lagging metrics.
Soon after implementing this approach, the social team noticed a problem, they were under their goal. The social group joined forces with the email team to get insight on discounts that worked well for them in the past. Then, they used these discounts to target specific users’ social profiles. The promotion worked. By the end of the quarter the social team exceeded their OMTM, New Buyers, by 77%.
The Craftsy team drew their line in the sand. Sure, things like retweets and shares are good and certainly achievable by the social team, but they they shut out the noise and chose to focus on the OMTM. The One Metric that Matters is a powerful concept that introduces focus and discipline into the work of building a company.