Pirate Metrics


We're used to looking at financial statements to monitor the progress of established businesses but when you're a startup that may not generate revenue for some time this is less useful. If we consider a startup as essentially (in the words of Steve Blank) 'an organization built to search for a repeatable and scalable business model', then what is most important in the early stages is acquiring learning. So solely using revenue as a measure of success can be distracting and less than helpful. Traditional accounting methodologies can stifle innovation since they are more suited to established products or services - standard accounting practices like cash flow analysis or financial ratios can put early stage products or businesses in an unfairly adverse light.

So we need Innovation Accounting, in which we use metrics that measure the true progress of innovation - things like customer acquisition, retention, user activity and so on. One of my favourite models for doing this is Dave McClure's Pirate Metrics which defines a set of macro metrics that can be used to model the customer lifecycle. Whilst revenue may be one of them, it’s not the only one. 

Pirate Metrics is a 5 metric-model (A-A-R-R-R...geddit?) designed to represent all of the key behaviors of customers - how many users you are acquiring, how many of them are active users, whether they come back and use it again, whether they tell others about it, and how much money you are able to derive from them. 


It’s easy to guess where problems with a new product may lie, or to act on hunches, or to work off flawed assumptions, but analysing and monitoring these 5 metrics can give you a pretty good idea of where you might have potential issues, or where you need to focus improvements, or where the opportunities for optimisation lie.

Revenue is of-course important, but it's not the only thing. These help to define and measure customer value before you actually start capturing some of that value back. In other words they are leading indicators to revenue before actual revenues are realised. And in this sense they can also be used to hold entrepreneurs, and the leaders of innovation projects, accountable. It's a simple model, yet shows the need for flexibility right across an organisation if innovation is to succeed. And that's why I like it.

On The End of Apps (as we know them)


A while back Tom Goodwin wrote a great Techcrunch piece (the one with that opening line about Uber, Facebook, Alibaba and AirBnB that has been so frequently copied/quoted ever since), talking about how our relationship is increasingly shifting from the creators of products and even services to software interfaces that have become the new mediators.  A new breed of rapidly growing company (like those mentioned above) that are 'indescribably thin layers that sit on top of vast supply systems (where the costs are) and interface with a huge number of people (where the money is)'.  This means, says Tom, a non-stop battle for the interface, for the best customer experience, to leap ahead as the gateway of choice, and to gain scale and breadth in this context.

I think a good example of the kind of shift that Tom is talking about is the change that is starting to happen in how we interact with mobile apps. As Android and iOS develop, more and more interaction is happening in the notifications layer rather than in the apps themselves, increasingly removing the need to open up apps at all. Paul Adams described this trend nicely in his post on the end of apps as we know them:

'How we experience content via connected devices – laptops, phones, tablets, wearables – is undergoing a dramatic change. The idea of an app as an independent destination is becoming less important, and the idea of an app as a publishing tool, with related notifications that contain content and actions, is becoming more important.'

The concept of apps sitting in the background pushing content into a central experience, says Paul, is making more and more sense. The growing popularity of cards, as an increasingly dominant design pattern, and as containers for content that can come from any app is facilitating this. It means designing for systems rather than destination, for content that might be broken down into atomic units that can work agnostic of device, platform or screen size.

Something else is happening here. The growing integration into operating systems of the capability to reach inside apps to extract relevant functionality or data. As Wired pointed out earlier this month“Our dumb, silo’d apps are slowly but steadily becoming smart, context-aware services that link, share, and talk to each other without us having to necessarily see or touch those little squares.”

Google recently debuted Now on Tap - effectively an update of Google Now that makes it smarter, meaning that it can be activated without leaving other apps, examine what's happening on your screen and surface other relevant content (e.g. from other apps), effectively fusing it into the Android OS. Similarly, with iOS9, Apple announced an upgrade to Siri and Spotlight called Proactive, that allows users to reach inside apps to surface their data and link their functionality without having to open them from their home screen.

The existing mobile experience, dominated by a bank of icons for apps that lead to separate destinations is changing. And as experiences become more frictionless they may have more points of contact but potentially fewer options for control. As Google Now and Siri become more active at mining apps for functionality and data, the interface shifts from one controlled by app creators to one controlled by the maker of the operating system.

This is not necessarily a bad thing (from a UX point of view it can make our interactions more seamless) but it is a big shift, the implications of which are pretty huge for how we design services.

Dots Conference 2015


Last year I curated Dots Conference - run by Antony Mayfield and the smart folk at Brilliant Noise, and a key part of the Brighton Digital Festival. It was lots of fun, and the feedback was great from the people that came along, so I was really happy when Antony asked me to curate it for them again this year.

This time, the theme for the conference is 'Transformation' and we've got an amazing line up of speakers coming at the topic from multiple angles including people who are leading real change and digital transformation within large organisations, a couple of great authors who have compelling points of view about change, inspiring people who have come up with transformational ideas and done something about it, and technologists who have fascinating angles on how technology will empower a transformational future. So far, the line up includes:

  • Tess Macleod Smith, Publishing Director at NET-A-PORTER
  • Tom Hopkins, Product Innovation Director at Experian
  • Steve Chapman, Author of Can Scorpions Smoke?
  • Eva Appelbaum, Digital Director at BBC Earth
  • Adam Morgan, Founder of EatBigFish
  • Christina Scott, CIO of the Financial Times
  • Sam Conniff, Co-founder of Livity
  • Ciara Judge, Founder of Purchasemate
  • Stuart Turner, Founder of Robots and cake!
  • Antony Mayfield, CEO, Brilliant Noise

It should be excellent. The early-bird discount for tickets ends Friday, and you can both read more about it and buy them here. See you there.

Ritual and Changing Behaviour

As you've probably guessed, I've been reading Atul Gawande's The Checklist Manifesto, which is a well-written exposition of the power of simple checklists in driving efficiencies and performance. Atul uses lots of examples from healthcare (he's a general surgeon), aviation, engineering and construction to show how well-crafted checklists can be transformational in their impact.

I particularly liked a story he told about how establishing a new ritual through the introduction of a simple object had helped change behaviour in one children's hospital. Administering a pre-operation anti-biotic to patients can be a critical factor in preventing post-operative infection which can not only be dangerous but seemingly occurs with surprising frequency. It turns out that the precise time before incision that the anti-biotic is given is critical to making it work - too soon and it will have worn off by the time the operation starts, too late and it won't have time to take effect. 

Atul tells the story of how in 2005 Columbus Children’s Hospital discovered that, despite it seeming like a simple process, more than one-third of its appendectomy patients failed to get the right antibiotic at the right time:

'How hard could this be? Even people in medicine assume we get this kind of simple task right 100 percent of the time. But in fact we don’t. With all the flurry of things that go on when a patient is wheeled into an operating room, this is exactly the sort of step that can be neglected. The anesthesiologists are the ones who have to provide the antibiotic, but they are concentrating on getting the patient safely and calmly to sleep—and this is no small matter when that patient is a scared eight-year-old lying naked on a cold table in a room full of strangers getting ready to cut into her. Add in an equipment malfunction (“Is that red light supposed to be blinking like that?”), or the patient’s asthma acting up, or a page for the surgeon to call the emergency room, and you begin to see how something as mundane as an antibiotic can slip past. The hospital’s director of surgical administration, who happened to be not only a pediatric cardiac surgeon but also a pilot, decided to take the aviation approach. He designed a preincision “Cleared for Takeoff ” checklist that he put on a whiteboard in each of the operating rooms. It was really simple. There was a check box for the nurse to verbally confirm with the team that they had the correct patient and the correct side of the body planned for surgery—something teams are supposed to verify in any case. And there was a further check box to confirm that the antibiotics were given (or else judged unnecessary, which they can be for some operations). There wasn’t much more to it. But getting teams to stop and use the checklist—to make it their habit—was clearly tricky. A couple of check boxes weren’t going to do much all by themselves. So the surgical director gave some lectures to the nurses, anesthesiologists, and surgeons explaining what this checklist thing was all about. He also did something curious: he designed a little metal tent stenciled with the phrase Cleared for Take off and arranged for it to be placed in the surgical instrument kits. The metal tent was six inches long, just long enough to cover a scalpel, and the nurses were asked to set it over the scalpel when laying out the instruments before a case. This served as a reminder to run the checklist before making the incision. Just as important, it also made clear that the surgeon could not start the operation until the nurse gave the okay and removed the tent, a subtle cultural shift. Even a modest checklist had the effect of distributing power. The surgical director measured the effect on care. After three months, 89 percent of appendicitis patients got the right antibiotic at the right time. After ten months, 100 percent did. The checklist had become habitual—and it had also become clear that team members could hold up an operation until the necessary steps were completed.'

Another great example of the power of habit in changing behaviour.

The Three Types of Problem in the World


I rather liked this delineation of the three different types of problem in the world, featured in a paper on reform in the healthcare industry by Brenda Zimmerman of York University and Sholom Glouberman of the University of Toronto, and quoted in The Checklist Manifesto:

  1. Simple problems are ones like baking a cake from a mix. There is a recipe.
  2. Complicated problems are ones like sending a rocket to the moon. They can sometimes be broken down into a series of simple problems. But there is no straightforward recipe. Success frequently requires multiple people, often multiple teams, and specialized expertise. Unanticipated difficulties are frequent. Timing and coordination become serious concerns.
  3. Complex problems are ones like raising a child. Once you learn how to send a rocket to the moon, you can repeat the process with other rockets and perfect it. One rocket is like another rocket. But not so with raising a child, the professors point out. Every child is unique. Although raising one child may provide experience, it does not guarantee success with the next child. Expertise is valuable but most certainly not sufficient. Indeed, the next child may require an entirely different approach from the previous one. And this brings up another feature of complex problems: their outcomes remain highly uncertain. Yet we all know that it is possible to raise a child well. It’s complex, that’s all.


Zimmerman and Sholom go on to contend that we (in the context of the paper they are talking about healthcare experts) often:

'...implicitly describe complex problems as complicated ones and hence employ solutions that are wedded to rational planning approaches. These often lead to inappropriate solutions because they neglect many aspects of complexity. We are reminded of the old joke about the drunk who is stumbling around near a lamppost. He is asked what he is doing and says that he is looking for his car keys. 

“Oh, where do you think you lost them?”

“Down the block near my car,” he says.

“So why are you looking for them here?”

“Because the light is better.”

The sophistication of our models, theories and language for complicated problems can be as seductive as the lamplight. They provide better “light” and clarity and yet can lead to investigations that are ill-equipped to address complex adaptive systems.' 

Nicely put.