Romania and The North Star Metric
For almost a decade now, the marketing and business development worlds have been haunted by a term whose definition may well benefit other fields.
I’m talking about the ubiquitous “growth hacking”, a term that both agencies and self-proclaimed experts peddle with the same disrespect with which they used “360 degrees communication” in the past. However, I will not pester you with my professional frustrations. Unfortunately, in order to understand why this concept is relevant, I will still have to explain what the hell growth hacking is and why you should care about it.
Sean Ellis, a business developer and entrepreneur with significant experience in marketing and sales, coined the term back in 2010. He later published a book on the topic, and you can find plenty of examples on his blog, podcast and LinkedIN profile. He also recently paid us a visit at HowToWeb 2019.
So, how can you “hack” growth? In short, it is about rigorously applying the scientific method in each sector of the organization to achieve a unitary and quantifiable goal of growth. In other words: a solid objective is chosen and all possible ways of reaching it are tested, from modifying the product site, tinkering with the product itself, changing the marketing and sales system, to removing the company mascot’s hat.
I will not go into the details, although this systematic experimentation method does have some basic principles. The first would be choosing the right objective (and its “metric”), followed by understanding the value delivery system, applying constant testing, and eliminating friction at an organizational level. But let’s stop at the first step: choosing the right goal.
This growth target is also called North Star Metric or NSM, and the inventor of the concept insists heavily on its choice. Why? Because this objective should capture the ultimate value that the final customers derive from the product and be an element of orientation. It should be ideal, quantifiable, and able to generate growth. This means that…
If you’ve just started your own company, you cannot have North Star Metrics such as a “high profit” or even more common indicators such as “a large number of users.” Profit can be made by receiving investments and spending little (profit is an ambiguous and codependent value anyway), and one million inactive users have no actual value for the company.
Changing the goal can bring huge changes at a company level. Facebook started by directing all its resources to active monthly visitors. When its North changed to “active daily users”, Facebook changed. The purpose was no longer to bring people in from time to time to find their colleagues on the platform, but for people to visit daily. Users had to be kept around through content.
See where this is heading? This kind of objective guides all your activity, from product development, to how sales people speak and how a junior tech support emplyee says hello. This kind of goal is also the reason why so many companies fail. They choose North Stars that do not actually have an ideal component (an investment is something that a lot of companies receive, for example), are not quantifiable (a “beloved company” does not mean anything at all), and do not generate growth (making “beautiful products” doesn’t mean making “useful products”).
Basically, the NSM must always be thought of in terms of actions and activations: users who come in daily, users who place an order, users who recommend your company… users who solve their problems! Moreover, it must be embedded in the company’s fiber, not just written on a wall and recited with intonation during management meetings.
Well, if this concept has stirred waters in the business world, I have the feeling that it has not yet made its debut in politics. And it’s a shame, because all successful countries use it …
Do you know why Finland has grown steadily, though it has neither Norway’s oil reserves nor Sweden’s financial centers? Because they have a solid education system. Do you know how they built it? By including it in a long-term national program and directing resources to it. Finland needed a strong education system to support its post-independence identity (although the origins of the system ca be found under Swedish leadership) and to reduce rurality and unemployment.
The Finnish education system is based on a few, rather old moral principles, but the way it’s built shows serious growth hacking: teachers are well paid but the barrier of entry is high, children are provided free meals and aren’t compelled to choose any specialty, while parents receive help during the child’s first years, but also books and training later on. Parental leaves and many expenses are borne by the state, and the whole system is centered on “learning to learn” or on “learning, not on being taught.”
In other words, the Finnish North Star objective involves not only a Ministry of Education, but also a Ministry of Labor, a Ministry of Health and a generally favorable attitude towards education. We can say it’s… being adopted at a company level. And yet, what is the North Star in the Finnish story? Is it just „education”?
If you’ve watched any documentaries on the subject, you’d that the aim of Finland is to increase the average level of education, not the system as a whole. The average level of education is an ideal, quantifiable objective (national tests and PISA tests), with serious consequences for the growth of the country: less stressed and depressed people, lower unemployment, and higher specialization, independent of the ambitions of past generations. In other words, it’s a properly chosen North Star Metric.
And now, what would Romania’s North Star be? Since we came out of communism, which had quantifiable, yet squalid goals, I have not heard anything that would convince me, an employee of this country, to participate. GDP growth? It has nothing to do with the level of development of a nation – Saudi Arabia is doing quite well in this area. In addition, it is an objective that can be achieved both by coherent measures (reducing evasion, for example) but also by abusive measures (over taxation).
Increasing pensions and wages? It is irrelevant, especially if VAT and inflation are increasing at the same time. The value of the national currency? It can be adjusted on paper. The number of basic foods that can be purchased with salary? You can subsidize potatoes and it’s solved. In fact, giving more money to education doesn’t mean we would have more educated Romanians, just that we will have more textbooks than open-air toilets. The same is true of motorways built without respecting the investors’ wishes. MORE funds, more highways, more schools, and more hot meals can not be a goal for a nation.
And yet these are the only country goals we have heard for the past couple of years. Money, schools, hospitals, and no strategy. Not even the famous anti-corruption fight, absolutely necessary in Romania, qualifies as a “North Star Metric”. It is quantifiable, but it does not bring growth nor is it an ideal – it is a short-term goal.
Reducing functional illiteracy? Reducing unemployment among young people? Professionally retraining of as many individuals as possible? Increasing the number of higher education graduates working in their specific fields? Here are some goals that are by no means great, but would be a step in the right direction. Ah, you want something that is not related to education?
Let’s just think about “reducing the time spent in contact with the public administration” or about “digitalizing public institutions”. To achieve this kind of objective you need the involvement of 4-5 ministries. This can be an objective – in fact, Estonia has achieved it and is now basing its entire country brand on it. Estonians have stated this as a country goal since 1994 and can still carry on for a while: sure, they are more digitalized than their neighbors, but is there an actual limit to digitalization?
If you “give more money” to some people, you will most probably take them from others. You will get bigger pensions, but smaller budgets and a lot of dissatisfaction. In addition, although money gives you the freedom to evolve, the Romanian role model shows that most people stay exactly the same after a financial gain (maybe just a little richer).
The wrong goals bring forth the wrong measures. So, let’s start with something simple and quantifiable. Maybe with that functional illiteracy conundrum. It would solve a lot of the complaints about education, unemployment, external image and religious fervor. We would unknowingly be doing … “growth hacking”.