TrekMetrics for Startups — SOSV
What Gets Measured Gets Done
What does the geckoboard on your startup’s co-working wall space measure? Lots of numbers? Numbers that mean something to you personally? Are there numbers missing? Do you like the “how do my customers feel today” score?
Since the landmark Balanced Scorecard was introduced to CEOs in the late ’90s, more holistic sets of metrics, crucially including both lead and lag indicators, have become the norm for captains steering their startup ships.
Most CEOs never read the book — just the Amazon summary — and miss a key takeaway: the scorecard is a process of agreeing and working on what matters — not an imposed static dashboard for board meetings.
It’s also worth noting that set of metrics (targets/goals/KPIs, whatever) in the hands of staff who have nothing to do with their creation, does not deliver world class outcomes.
What the Experts Say
Fast forward to 2007, and Dave McClure gives us his five pirate metrics for startups. http://piratemetrics.com
In 2013, Matrix Partners published recommendations for SaaS startups using Hubspot as example. http://www.forentrepreneurs.com/saas-metrics-2/
In 2014, Forbes makes a splash with its seven metrics for startups. http://www.forbes.com/sites/theyec/2014/06/20/the-seven-startup-metrics-you-must-track
This year, Andreessen Horowitz goes to print with 16 of it’s favourites. http://a16z.com/2015/08/21/16-metrics
Could you be forgiven for thinking more metrics means more success? Probably not.
Introducing TrekMetrics
The writer believes the Star Trek leadership team has much to teach us here: not only about the characteristics of great teams, but also making sure they use a Whole Brain, 360 degree set of navigation instruments, able to track what’s going on, what just went on, and most important, what’s likely to go on next. Let’s call them TrekMetrics.
This proposed model is based on more than just science fiction; grounded as it is in Howard Gardner’s “multiple intelligences” work at Harvard, and the work of Ned Herrmann erstwhile Head of Education at GE and founder of the Hermann Institute. It allows us to track both “right brain” (leadership) and “left brain” (management) metrics, as well as the alignment of long term vision, medium term strategy and daily operations. Ultimately, all a startup has to make itself successful are the combined repertoire of intelligences between its founders ears, so we should probably find a way to track their effective application.
In TrekMetrics, Captain Kirk focuses on vision/mission, Spock on strategy, Scotty on operations, and Dr. McCoy on customer and team.
Because what gets measured gets done, we need to have measures in all areas.
A startup relying on revenue and user data alone risks steering the ship by looking at the wake, because these are “lag” indicators, showing what just went on. 24 of the 30 metrics recommended by our experts (see chart) fall into this category, and the majority of those (21/24) are measures of some kind of “efficiency” or daily operational effectiveness — the kind of thing Scotty would get excited about.
Only six metrics measure activities that tell us more about the future (“lead indicators”) than the past — the kind of things Captain Kirk and Dr McCoy would get excited about.
None of the metrics I came across measure what’s going on in the team, which is arguably the first place to look for a likely startup meltdown, and only one data point (referrals/NPS) looks at the company’s relationship with its customers, which is a lead indicator of the highest order.
A Metric for “Team”
For the more analytical (Spock style) CEO, who too readily dismisses his or her intuition, consider Daniel Pink’s observation that staff need meaning, autonomy and the chance for mastery at work. Have the presence of those elements scored by individuals (anonymously if necessary) on an occasional basis.
TrekMetrics Example
Star Trek management theory shows us Scotty (the engineer) dominates the investor world, although Captain Kirk is more likely to be looking to the horizon from the bridge of the startup ship Enterprise. So at SOSV we use the Hermann Institute’s profiling tool to identify these different mindsets, and teach visionary Kirks to speak operational Scotty, and the emotional Dr McCoys to speak logical Spock.
Experience with over 300 founders shows diverse mindsets increase the chances of success.
So, what would an example look like ?
Imagine you launched an imaginary app that, for example, tracks individual banknotes in real time worldwide — solving the problem of global economic liquidity.
Captain Kirk in this case might measure the number of partner countries with mobile network partnerships signed up, the value of his investor pipeline, and the number of B2B customers in pipeline with a LTV > $1.0m.
Spock measures revenue ($), total individual users.
Scotty maintains a 12 month cashburn plan, and tracks cost of B2C customer acquisition and unit cost of production.
Dr. McCoy tracks ‘team’, social media NPS, and number of incoming emails containing the words “thank you”.
In simple terms, TrekMetrics calls for a combination of ‘lead’ (right) and ‘lag’ (lag) indicators, as well as strategic (top down) and operational (bottom up) indicators.
Originally published at sosv.com on November 25, 2015.
