The North Star Framework: How Product Managers Can Build Customer-Centric Products

July 29, 2021

In early 2010, Sean Ellis, author of Hacking Growth, coined the term “North Star Metric.” He was inspired by the star Polaris, which lies directly above the Earth’s Northern pole and has been used as a guiding navigational light for centuries.

The point of a North Star Metric is simple: to give teams a definite direction—to align these teams around a singular goal of growth. The metric, according to Sean, "best captures the core value that your product delivers to customers."

Over the years, the North Star Metric concept has gained popularity in the B2B and B2C worlds. Companies adopt the framework to break down their strategies into more straightforward and more memorable terms for teams to understand and apply.

Amplitude, the product intelligence platform that helps teams run and grow their businesses, is no different. The company adopted the framework to keep customers at the center of its product roadmap. The framework keeps Amplitude (and its customers) on a path of long-term sustainable growth.

So far, Amplitude has helped tens of thousands of teams — at companies like Microsoft, Hubspot, CapitalOne, and NBC — prioritize, communicate, and focus on creating impact and sustainable, product-led growth. It’s little wonder Amplitude is now valued at $4 billion, a substantial jump from its $1 billion valuation in 2020.

In episode 3 of the People Driven Products podcast, we had an insightful chat with Amplitude’s Head of Product Research & Education, John Cutler.

John has worked at Amplitude for three years, and in that time, he has met with over 500 product development teams. Seeing how different teams operate has shaped his perspective on the role of PMs and culture in getting the best from any team.

Together with his team, John developed a unique North Star approach to product development to help teams collaborate better and drive customer and company success. If you want to learn how to solve customer problems, explore product opportunities without churning out more features, and create an impact-driven development process, you’ll want to see how Amplitude does it.

In this article, we’ll explore Amplitude’s North Star Framework—what it is, why it is important, its components, and how these components work together. We’ll show you how to run a successful North Star Workshop to create your product’s North Star Framework. You’ll also learn from John’s unique perspective about a product manager’s role in the process.

Amplitude's North Star Framework: What It Is and Why It Is Important

John defines the North Star Framework as a tree of beliefs that range from leading indicators to lagging indicators—sustainable/differentiated growth for your company.

John and his team take us deeper into the framework in their North Star playbook. They define the North Star Framework as a model for managing products by identifying a single, crucial metric—the North Star Metric.

The framework unites these three perspectives:

  • The language of the customer (their needs, goals, experiences, delight)
  • The language of the product (its features, workflows, releases)
  • The language of the business (its vision, differentiation, revenue, growth)

In other words, it creates balance.

Any team using the framework, regardless of the industry, can identify the North Star Metric and a handful of contributing inputs, John says. Product teams collaborate to influence these inputs, which drive the metric to create the desired results. Put together, the metric and the inputs look like this:

Source

After you have tested the combination of the metric and inputs in the field, your results serve as a guide that reflects your product's and company's essential characteristics. Let's take a quick look at the role each element plays.

Key Elements of Amplitude's North Star Framework

The North Star Metric: According to John, this metric is the heart of the framework. It defines the relationship between the customer problems that the product team prioritizes and sustainable, long-term business results.

North Star Input Metrics: The input metrics are a set of descriptive and actionable factors that directly influence the North Star Metric. These inputs vary by business model, industry, and the product's extraordinary characteristics. The goal is to choose the factors that contribute most to your business's North Star. You can influence these inputs through your unique product offering.

The Work: The work refers to critical tasks such as research, design, software development, refactoring, prototyping, testing, and the like, that bring the North Star Metric and inputs to life. The work you do should always align with the product strategy guided by your North Star.

Mid/Long-Term Results and Customer Value: The North Star Metric is the leading indicator of sustainable business results and customer value. As the metric improves, it also boosts critical business results like customer retention and, ultimately, subscription revenue.

Keep in mind that your product's North Star is different from your roadmap and your prioritization framework. Neither is it a performance management system.

Instead, the framework keeps teams aligned and the company more customer-centric and product-led. Teams can optimize their processes and structure to boost the chances of product success.

Developing Your North Star Framework: Amplitude's Approach

Large enterprise companies with different customer segments and diverse product development departments can have additional North Star Metrics, each with individual inputs. However, a company with a single product development team with a product portfolio that serves a single customer base should have just one North Star Metric and a few corresponding inputs to avoid confusion.

So, how do you choose your North Star?

According to John, a good North Star satisfies some criteria. Use the checklist to evaluate your own candidates for a North Star Metric and inputs:

John shares the Amplitude team’s belief in empowering people to be learners and help their team to work effectively using their product. The product's North Star is learning-driven, providing insights to cross-functional teams. The goal is to help these teams collaborate and drive results. He believes that relying on the North Star as a guide will lead to sustainable differentiated growth if the team does everything right.

Here's what Amplitude's North Star looks like:

The framework is built around a single, critical metric called Weekly Learning Users (WLUs). The team defines WLUs as "the count of active Amplitude users who have shared a learning that at least two other people consumed in the last seven days."

Abbie Kouzmanoff, Senior Product Manager at Amplitude, explains the value of the WLUs North Star in their playbook:

"First, our North Star Metric focuses on customer value and the exchange of value. We experimented with using Weekly or Daily Active Users (WAUs or DAUs), but Active Users doesn’t tell us anything about the exchanged value.

Second, WLUs represent Amplitude’s unique product strategy. It is not generic. And finally, WLUs connect the customer value we are trying to create as a product team with the business impact that the executive team in our company ultimately cares about."

By choosing to use WLUs and their inputs in the North Star Framework, John and his team can assess and prioritize feature requests and deliver a product that satisfies customers and builds Amplitude’s business. The metric has three inputs that activate and encourage users to create and share their insights. These inputs are a critical part of Amplitude's customer-obsessed strategy.

Developing your North Star Framework isn't a one-person effort but a collaborative one. You’ll need to run a North Star Workshop.

How Amplitude Runs a North Star Workshop

The goal of a North Star Workshop is to allow the team to choose viable candidates for your product's North Star Metric.

Here's what Amplitude's 120-minute workshop looks like:

According to John, you can conduct your own North Star Workshop in 1-2 hours. It's essential to keep your team small during the workshop. Focus on selecting key contributors from critical departments to help you get the North Star off the ground.

To get everyone on the same page, Amplitude starts their North Star Workshops with a healthy discussion about the purpose of the session, the problems to be addressed, or the changes the team would like to make.

Here are typical questions Amplitude discusses at the beginning of a workshop:

  • What would it look like if we had a greater sense of impact in our work?
  • Do we all clearly understand our product strategy?
  • What prevents us from having clarity?
  • What does it mean to be product-led?
  • How is our investment in the product now connected to future business performance?
  • What’s the relationship between product work and our financial results?

After establishing clarity and a sense of direction, the next step is identifying what “game” you're playing. Amplitude categorized digital products into three types of games, after researching over 11,000 companies and analyzing three trillion user actions:

Source

If you are playing the Attention Game, you need to understand the challenges your users face. You can start by asking, “How much time are my customers willing to spend on my product?” The amount of time they spend consistently shows whether or not they find your product valuable and satisfying.

For the Productivity Game, you measure your impact according to whether or not your product helps a typical customer get things done efficiently, not how long they spend. So, you can discuss the question, “How efficiently and effectively can someone get their work done?”

If you’re playing the Transaction Game, your primary goal is to help customers identify the right product for their needs, initiate transactions without hassles, and track production and delivery. In this case, you need to ask, “How many transactions do my customers make in my product?” The rate at which they come back to use your product determines how successful your product is.

The goal is to focus on the value your customers get from your product. John advises that if a team isn’t sure which game they’re playing, they should ask themselves which of the three previous questions closely corresponds to your product:

  • How much time are my customers willing to spend on your product? (Attention)
  • How efficiently and effectively can someone get their work done? (Productivity)
  • How many transactions do your customers make in your product? (Transaction)

Everyone on the team should define their own candidate for your North Star Metric and Inputs, John says. At the end of the workshop, collect candidates for your North Star Metric and inputs. Then, pair the different results from each group, share with everyone, and then come to a consensus on which candidate to choose.

How PMs Can Help Cross-Functional Teams Collaborate Effectively

A great product manager guides their team in the right direction.

John describes the product manager as a team facilitator who brings context to situations and guides discussions. His perspective is contrary to the popular belief that the product manager is the mini-CEO of the product.

John says, "The product manager’s role is not to be a mini-CEO or the only decider. Instead, PMs are facilitators who give the team the context they need to succeed."

Since starting his PM journey three years ago, John has met with over 500 teams, and he has observed two types of team culture: individualistic and collectivistic teams.

An individualistic approach to product development would center more on role assignment and efficiency. In other words, specific roles are assigned based on skill, and everyone moves on to get the job done in silos. On the other hand, a Collectivist team collaborates, blending different skills and domain knowledge to create and innovate as a unit.

Each type works in different settings. For instance, John says that the Bay Area engineering teams are individualistic, while those in North Europe are collectivist. Both cultures work well, depending on the operating agreement. However, John favors building a cross-functional team over an individual-oriented one.

Also, to build a decent working relationship with your team, titles and roles matter to some people. It's no news that people desire to feel recognized. They want to take charge of their career.

Cross-functional teams with collectivist culture put the customer at the center of the product development process. Instead of competing for (and wasting) resources, cross-functional teams collaborate to optimize the use of time, money, and energy to boost customer experience while smashing company goals.

Team members don’t go off to work on their “own” thing. Instead, they have a shared sense of purpose, similar expectations, and access to all the information they need to get the job done.

Bottom line?

Have the right team and give them the context they need to make those decisions. That's important. If you set up a framework for team members to make their own decisions, they'll make better decisions. That's more effective than locking yourself in a room and trying to figure it out all by yourself.

Conclusion

"A good framework just gets a lot of the junk out of the way, inspires autonomy, and inspires people to be able to achieve their career goals as well," John says.

As a PM, you can help your team achieve their goals using the North Star framework. With this framework, your team can prioritize, communicate, and focus on creating impact and sustainable, product-led growth.

No framework is perfect. If you are successfully using other methods and techniques, by all means, keep doing what you’re doing. Amplitude's North Star Framework helps teams make better, informed product decisions that benefit customers, the product, and the business.

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