PLAYBOOK

# North Star Playbook

The guide to discovering your product’s North Star

CHAPTER 2

## About the North Star Framework

### In this chapter, you will learn:

1. The definition of the North Star Framework
2. The structure of the North Star Framework
3. The three critical goals of the North Star Framework

## What is the North Star Framework?

The North Star Framework is a model for managing products by identifying a single, crucial metric (the North Star Metric) that, according to Sean Ellis "best captures the core value that your product delivers to [its] customers."

In addition to the metric, the North Star Framework includes a set of key inputs that collectively act as factors that produce the metric. Product teams can directly influence these inputs with their day-to-day work.

This combination of metric and inputs serves three critical purposes in any company:

1. It helps prioritize and accelerate informed but decentralized decision-making.
2. It helps teams align and communicate.
3. It enables teams to focus on impact and sustainable, product-led growth.

Put together, the metric and the inputs look like this:

This simple tree-like framework of a single metric and influencing inputs serves as a scaffold containing assumptions, beliefs, and causal relationships. Once you’ve put it together and tested it in the field, it serves as a sort of formula, an equation that indicates your company’s and product’s fundamental characteristics.

## The Elements of the North Star Framework

### 1. The North Star Metric

The heart of the North Star Framework is the North Star Metric, a single critical rate, count, or ratio that represents your product strategy. This metric is a leading indicator that defines the relationship between the customer problems that the product team is trying to solve and sustainable, long-term business results.

The heart of the North Star Framework is the North Star Metric, a single critical rate, count, or ratio that represents your product strategy.

For example, in 2005, when Netflix was still focused on shipping DVDs, the Netflix product team established a North Star Metric of percentage of customers placing three or more DVDs in their queue during their first session with the service (see North Star in Action: Netflix). The team understood that this key statistic encapsulated Netflix’s differentiation strategy. Increasing this would improve both customer value and key business results—like customer retention and, ultimately, subscription revenue.

### 2. Results and Value

The North Star Metric is a leading indicator of sustainable business results and customer value. As you see it change (ideally improving!), you can expect your business results to change accordingly.

### 3. Inputs

The inputs are just as important as the metric. These are a small set (3-5) of influential, complementary factors that you believe most directly affect the North Star Metric, and that you believe you can influence through your product offering.

North Star inputs are a small set (3-5) of influential, complementary factors that you believe most directly affect the North Star Metric.

For example, Instacart, a same-day grocery delivery and pick-up service, identified four inputs into a North Star Metric of total monthly items received on time. They need (1) lots of customers placing orders. Those orders ideally contain (2) lots of items. Instacart needs to fulfill (3) lots of orders. And (4) the orders need to be delivered on time.

Inputs can vary a great deal by industry, business model, and a product’s unique characteristics. The key is to identify the key factors that contribute to the North Star Metric for your business. We view the North Star Metric as a function of key inputs that are both descriptive and actionable.

### 4. "The Work"

A North Star Metric and inputs should be connected to the tasks of research, design, software development, refactoring, prototyping, testing, and such. We call this "the work." Teams have successfully connected a variety of development methods to their North Star. No matter how your team operates, the work you do should align to the strategy that’s guided by your North Star.

### One North Star

An obvious characteristic of the North Star structure is that it features just one North Star Metric. Certainly, larger enterprises, with multiple divisions, different product management and product development departments, and different customer bases could have different North Star Metrics, each with their own inputs.

But if a team is contributing to a single profit and loss (P&L), with a single product development department, and a single product or even a product portfolio that serves a single customer base, they should strongly consider having a single North Star, comprising one metric and its inputs. For example, it’s unlikely that one product leader should be managing more than one North Star.

See Things to Watch Out For for more information on the trap of multiple North Stars.

## A Real-World Example: Burger King

Burger King’s digital team used the North Star Framework to define a North Star Metric called Digital Transactions Per User with three inputs: new user activation, registration, and frequency. They then mobilized teams (called "squads" in Burger King’s organization) to drive these inputs, as illustrated in the following figure.

The Burger King squads are able to trace the feature work that they prioritize through their development processes first to these inputs, and then to their Digital Transactions Per User North Star Metric. For example, one squad prioritized a "mobile order only coupons" initiative to drive the "frequency" input—a factor in the metric.

Elie Javice, head of technical product management at Burger King, says "[Our North Star Framework] is actually what we use across the teams to drive growth… All of us are aligned to the same goals: we want to drive brand love and sales. But if we set those as goals, we will all go in different directions, without focus. What this framework actually gives us is focus to work on the same things, together."

## Key Concept: Product-Led

The North Star Framework works especially well in organizations that aspire to be more product-led.

Product-led organizations believe their surest path to sustainable growth is through identifying opportunities to solve problems for customers and satisfying those opportunities with their product. A product-led organization optimizes team structures, funding cycles, communication channels, and other processes to ensure the success of its products.

To be clear:Calling an organization "product-led" doesn’t mean it is led by the department or job title called "product management" or, as shorthand, "product." Product-led means being guided by the potential of products and product teams.

## Chapter in Review

• The North Star Framework is a model for managing products by identifying a single, crucial metric (the North Star Metric)
• In addition to the metric, the North Star Framework includes 3-5 inputs to that metric.
The North Star Framework helps teams prioritize, communicate, and focus on impact.
• The North Star Framework can help businesses become more product-led, where they optimize their structures and processes to ensure the success of their products.