Mission, Strategy, and Metrics

Company-building is a founder-CEO’s primary job after a startup has attained product-market fit. In order to do this job effectively, founder-CEOs must learn to excel at three primary tasks:

Hire a great leadership team and make sure they work well together
Create purpose, direction, and alignment in the organization
Nurture a culture that attracts, motivates, and retains great employees

This document is about the second task on this list: creating purpose and alignment across a company. We describe a simple Mission-Strategy-Metrics framework (or “Mission-to-Metrics”) that you can use as a tool to create better alignment at your company. Itʼs the founder-CEOʼs job to ensure that the mission, strategy, and key metrics of a company are well-defined. Metrics are the most important of the three to have in place, so if youʼrestruggling with writing your mission or strategy, make sure to have the key metrics that define success in place and well understood by your company.

An effectively articulated "mission-to-metrics'' framework fosters alignment within an expanding organization. It aids members in understanding priorities without the CEO needing to be involved. We strongly advise penning your mission-to-metrics document in writing, reviewing it every quarter, and revising it annually.

1. Mission

We recommend taking a practical view on the importance of mission statements. Founders sometimes obsess over the wording of a mission statement, but you shouldnʼt. Great companies are formed around solving a customer problem, not around a grand mission statement.Some founders are lucky enough to define mission statements fairly early in their lives that inspire and endure for a long time.

Some examples are:

Stripe: Increase the GDP of the internet
Rippling: We free smart people to work on hard problems
OpenAI: Ensure that artificial general intelligence benefits all of humanity
Amazon: Be earth's most customer-centric company where people can find and discover anything they want to buy online
Google: Organize the world's information and make it universally accessible and useful

But most startups, even the very successful ones, iterate on their mission statement periodically. As Jeff Lawson from Twilio described, "We've gone through multiple iterations of our mission statement over the years. Somewhere between 20 and 50 employees we realized, 'Oh, we need a mission.' So we'd spend time writing one and say, 'OK, good enough. Let's just use that.' Some of them were really bad. It took a while for us to have conviction around the words to describe why we exist. I always had a sense for why we existed: the future of the communications industry is clearly going to be built by the many software developers of the world and will not remain in the hands of a few companies. Today, our mission is to fuel the future of communications, which we settled on after many other versions.”

Grant from Whatnot on using Mission, Vision, and Strategy to drive alignment

“Mission, vision strategy. I wrote the first whole draft of the mission, vision, and strategy at around 40 or 50 people. I tend to view these things mostly as an alignment tool. In the early days, you don't need it that much because everyone in the room is very clear with what they're doing and why they're doing it. But as we started to scale and get bigger, you need to write down those things, so it's very clear what you're trying to do, what direction you're moving in, and what you're going to do, and the things you're not going to do to get there."‍

It's useful and strongly recommended to have a mission statement written down on paper and communicated to employees because it helps you define your “field of play” as a company and reminds employees (new and old) about the big picture of what you're trying to accomplish. But donʼt obsess over getting the wording perfect or making it sound timeless. Be open to revisiting it and rewriting it from time to time. As one founder put it, "I know I need a mission statement because people want something to inspire them and to frame our long-term strategy, but it can become problematic if the mission statement starts to define what we do too closely and keep us from seeing our customers' biggest problems. It's important to have a mission that's broad enough to be enduring but not distract from focusing narrowly on the customer."

2. Strategy

As you scale to 50 people and beyond, a strategy document can become an important way to keep a growing team aligned. It's also helpful as a way to capture your thinking at a point in time about the company and track how your thinking evolves.

In our experience, the best companies have written documents that describe both their product and go-to-market strategies. The first versions of these are almost always written by the founder-CEO or another co-founder. Over time, other executives contribute or sometimes write these documents, with heavy involvement from the founders. The best strategy documents are deeply connected to your customer. They reflect a nuanced understanding of the customer problem you intend to solve and how you intend to solve it. They are grounded in customer observation and research.

How do you come up with a strategy document for the first time?

Here's a simple approach:

Start with the most important top-level goals for your company. some text
- Depending on your business, these might include things like revenue, number of customers, GMV, payment volume, API calls, etc.
Envision your company in 12 months. What does success look like for these goals?
For your product strategy, ask:some text
- Who is the customer you are building for?
- What are the key problems you are trying to solve for them in the next 12 to 18 months?
- It helps to be narrow rather than broad. Start with a small group of customers who have a clear problem that you can solve. If your early customer growth has been organic, this can feel unnatural. It requires you to shift your mindset to pinpointing customer profiles in a more precise way and defining what you need to build for them.
- Do you have an understanding of which product levers will drive your top-level metrics? Which new product features can you build to pull these levers?
- What supporting infrastructure do you need to build to ensure that your products will scale and that your product and engineering teams will be effective?
Developing a go-to-market strategy is generally harder in the early days. Most founders are not go-to-market experts, and most products require a fair amount of experimentation before a repeatable, effective GTM strategy can be defined. But this shouldnʼt deter you from writing something down. View it as an iterative process, driven by a set of initial hypotheses about how you can effectively distribute your product. Adapt from there as you learn more.some text
- In this phase, a good practice is to meet with other startup founders and compare your GTM approach with theirs. You'll get smarter about GTM and develop a better understanding of what makes your approach unique.
To start writing V1 of your go-to-market strategy, ask:some text
- Who is the buyer of your product? How do you reach that buyer effectively?
- What is the value proposition that will convince this person to buy or use your product?
- What channels should you use, and how can you make these channels effective?
- How should you price and sell your product in order to reach your 12-month goals? What is the selling motion and how does it need to be staffed?

Every six months, you should do an in-depth review of your strategy, budget, and progress towards your goals with your team. As part of that review, measure your progress, set new 12-month goals, and revise your strategy documents accordingly.

Finally, a word about format.

The best strategy documents we have seen are written in long form, not as slide decks or scribbles on a piece of paper.
They tend to be three to five pages long.
Writing it out forces you to be thorough and helps catch flaws in your thinking. This is the reason why Amazon has long favored the memo for new initiatives and has outlawed PowerPoint.
For your strategy documents, you should do the same.

3. Metrics

One of the most crucial tasks to ensure alignment across your organization is to determine the key metrics that define your startup’s success.

You can think of metrics as either “input” or “output” metrics. As the CEO, it’s imperative for you to discern and convey the internal factors (“input metrics”) that influence the desired results (“output metrics”) for your business.

Output metrics are results that external stakeholders, such as your investors, use to assess your business. Identifying these is typically straightforward.
On the other hand, input metrics are the detailed metrics that are instrumental in your day-to-day business management. These are the levers that your employees can directly influence and that subsequently impact your output metrics. It's vital to comprehend how different input metrics influence output metrics, for instance, understanding which input metrics affect revenue or customer interaction. Unraveling these influential factors can be challenging and might necessitate extensive experimentation and investigation.

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Example: Output and Input Metrics

Meta has consistently chosen Monthly Active Users (MAUs) as their output metric.
Early on, they identified that users who established connections with 7 friends in 10 days post-signup were more likely to become MAUs
Subsequently, they defined an input metric of “number of new users who add 7 friends in 10 days” - they focused on developing features to promote this
Features included restricting content visibility until a user had connected with 7 friends
As Product Managers and engineers prioritized enhancing this metric, they concurrently grew the number of MAUs

Identifying the Magic Moment metric:

Look at groups of users who became engaged, and groups of users who did not become engaged with your product over a historical period of time, ex. Last six months.
Analyze historical event logs with basic data science (correlations, segmentation, even eyeballing) to see if any patterns exist between key groups of users, ex. engaged, not engaged, paying, not paying.
For Facebook, the pattern that emerged was that the engaged users had reached at least 7 friends within 10 days of signing up.

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In Amazon's retail sector, the key metric is revenue‍
Amazon has found that customers are significantly more likely to place subsequent orders when they receive their initial orders within a day of making them.
Consequently, the product and operations teams were assigned the "fast-track in-stock" as the key input metric. This refers to the percentage of inventory, adjusted for demand, that Amazon is capable of shipping within a 24–48 hour timeframe. This was something that employees could directly impact to enhance customer satisfaction and the frequency of reorders, eventually leading to increased revenue.

One of Segment’s key input metrics is the number of integrations that are receiving data, serving as a gauge of the volume of data each customer is monitoringsome text
- When a customer surpasses a specific threshold in this metric, their likelihood of churn significantly diminishes. Thus, the number of integrations acts as a primary predictor of customer attrition. Consequently, the team strives to ensure that customers integrate the maximum number of tools available to maximize retention
Another metric closely tracked was “Pipeline Coverage” as a key leading metric for successsome text
- Pipeline Coverage is the total $ amount of pipeline you have relative to your target net new ARR
- Segment would look at the total amount of pipeline that they had each week. Pipeline grows at the beginning of the quarter and then the pipeline either by stuff getting punted out to future quarters, getting closed won, or losing kind of shrinks down to 1x…
- By the time Peter sold the company, like he could tell in like week two of the quarter almost exactly what they were going to close”
- If you have a very predictable way of generating these things, then you know when to hire the next account executive, how you expand the sales team, and that you're not hiring people into dead zones. Predictability wasn’t just like a thing that happened. It was a goal.‍

Total hours watched is Twitch’s output metric
To drive this internally, their goal is to encourage as many unique daily users to watch at least 5 minutes of video daily
Thus, their input metric is “five minute unique viewers”

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For their ChatGPT consumer product, OpenAI’s output metric is weekly active users (WAU)
Over time, they’ve learned that the more chat messages sent, the more likely a user would be to become a WAU
Thus, they’ve been experimenting with various prompting techniques (ex. "Plan a trip" or "Make a content strategy") to encourage users to send more messages

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Early on, Brex’s key metric was Gross Merchandise Volume (GMV) which is the total volume of payments processed through Brex cards - of which ~3% (interchange fee) was considered “revenue” and roughly ~1.5% (interchange - rewards) was considered “net-revenue”. This evolved to the key metric being “total net-revenue” as the business has expanded into multiple revenue streams (card interchange, banking deposit yields, and SaaS fees for their seat-based enterprise expense management solution) which is a sum of (1) corporate card interchange revenue, (2) net-yield on deposits, (3) SaaS fees.
Input metrics are tracked at the product-level - for corporate card, the input metrics are: # of monthly users and # of card customers that spend above $10k; for banking, the input metrics are: % attach-rate of customers with banking and # of customers with >$250k deposited; for expense management, the input metrics is # of paid monthly-active customers.

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Zepto's key output metrics are orders per day and gross profit per order
To drive orders per day, Zepto's key L0 inputs are monthly order frequency and retention
To drive gross profit per day, Zepto's key L0 inputs are average order value, fees/advertising per order, product margin, and total costs per order
These inputs are all further broken down into L1 and L2 inputs at a team level
Zepto's approach to metrics has been refined consistently as the team's internal understanding of their business equation has evolved
As an example, gross profit per order was only introduced as a key metric about 6-12 months after public launch and drivers of growth were better understood

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To establish your metrics, it is crucial to implement a procedure for reviewing and modifying them as needed. This involves documenting your metrics along with the reasoning behind them; scheduling regular meetings (monthly, etc.) to scrutinize this document; and based on the insights from these meetings, implementing alterations to the business practices and updating the metrics document for the next review cycle.

Here is an example of a monthly review document: Twitch: Monthly Business Review

Metrics can develop and adapt over time, but it’s imperative for everyone in the organization to have confidence in their accuracy to inform actions. Constantly questioning whether the metrics genuinely reflect reality can be disruptive. Achieving accurate metrics often requires engineering investment in the underlying infrastructure to ensure metric quality.

We recommend starting with a smaller number of clear and concise metrics—ideally around three or four—that are communicated regularly, instead of overwhelming the team with details that are hard to remember. It is crucial for every member of the organization to understand the significance and the rationale behind each metric. As the company scales, individual teams can then establish their own sub-metrics.

4. Communicating your mission, strategy, and key metrics

The world’s best mission, strategy, and metrics are useless unless your team understands and internalizes the message.

Learning to communicate clearly to an ever growing employee base can feel unnatural at first. You should simplify the message and repeat it to a degree that may feel strange. You will be surprised at how often you will have to repeat yourself for everyone at the company to understand.

Writing is a scalable way to communicate. Written documents can be shared with many people and serve as archived reminders of how your thinking changes over time. As noted in the prior section, we strongly recommend that you take the time to write your company’s mission, strategy, and key metrics in long form so that everyone at the company can read it. Some founders also send company-wide emails to communicate what’s important and reinforce key themes, sometimes as frequently as once per week.

Whatever methods of communication you choose, we recommend keeping three principles in mind:

Communicate to the entire company at least once a week.
Repeat the key strategic priorities in every communication.
Take the time to write your strategy, customer insights, and other learnings in long form and make these documents available to the company.

Finally, a key aspect of effective communication is the consistency of your message. As the CEO, your words carry tremendous weight. Everyone is trying to get your attention and please you. Many first-time CEOs have found that a stray comment they make in a team meeting inadvertently scrambles their team’s priorities as everyone suddenly begins to chase the CEO’s latest whim. Even worse is the CEO who can’t commit to a strategy or product direction. CEOs must be decisive. You need to set a direction and stick with it. One of the reasons we strongly advocate for writing things down in long form is that writing forces you to think things through and archives your thinking in a healthy way. It deepens your thinking and commits you to something. Try to set a cadence to review strategy and product direction rather than doing so continually. If you are considering a change of direction, you should always preview it with a small group of trusted people before announcing it to the whole company.

At Affirm, Max Levchin revisits their strategy document annually, viewing it as if it were his first year at formulating a strategy with fresh eyes. Reflecting on a decade’s worth of such documents, he observes that approximately 80% of Affirm’s strategy has persisted since the company’s inception.

Below is an exemplary mission-to-metrics document penned by Grant LaFontaine, the co-founder and CEO of Whatnot written for 2022. Whatnot operates as a peer-to-peer live commerce platform, facilitating transactions between buyers and sellers via live video streaming. The document, edited to protect strategic details, serves as a prime example of what every CEO should compose once their team reaches 50 members.

5. Example I: Whatnot's Mission-to-Metrics

From Grant La Fontaine (CEO of Whatnot): If you want to deliver a lot in a small period of time, you just need to move fast. You can't be spending shitloads of time debating the merits of going into shops, whether it's possible. And so [defining what we wouldn’t do] was truly for focus. Because we felt we had enough conviction in what we were doing that we were going to go all in on it. And then we, you know, we never thought we were always going to be right, but we always set up mechanisms to be nimble enough that if we learned something new, we would adjust more.

I tend to view strategy as always developing. You take all known information, put it at the best guess as to what the things you should invest in are. We try to carve out about 20 percent of resources to work on things that are off strategy, which are like adjacencies, where we may be able to learn something new that can transform the business. We had less screening guideposts in the early days, just because, honestly, I ran a ton of the roadmap, and I could just do what I felt was right. These days, at a bigger scale, the general guidepost that we give the teams is like 80 percent on core strategy and 20 percent on newer emerging things just to make sure we're always learning something new so that we can expand the market. The impact of being overly focused on the near-term strategy (6-12 months) is you can miss opportunities to lay the groundwork for future growth. This sometimes results in a sudden slow down once your core engine starts to break as you haven’t built the foundations for your next act.

Always start with your Mission/Values and Vision before outlining your strategy. This drives better alignment as it reinforces 1) why the company exists, 2) how you make decisions, and 3) where you are going.
Tie the strategy back to the key metrics you need to achieve within the time frame. This makes clear what it takes to “win” in the strategic planning period.

Mission

Enable anyone to turn their passion into a business and bring people together through commerce.

Customer and Market Insight

Buyers

Here’s what we know/hypothesize about buyers

Users most value product categories that have [these] characteristics.

[Explanation based on user research]

‍The core reason that people come back to Whatnot is [this]

[Explanation]

‍People need to trust Whatnot to come back and purchase‍

All marketplaces are built on the trust that you will get exactly what you purchase. To date buyers have loved Whatnot because they trust it. But if this erodes, the marketplace could fall apart.

‍People come to Whatnot looking for specific products or product types

[Explanation based on user research]

Sellers

Here’s what we know/hypothesize about sellers

Sellers are motivated by money

Sellers typically care most about generating money, so if we want to keep and retain them we should help them make more money by using Whatnot.

Sellers are trying to build and optimize their business

As a function of trying to make money, their presence on Whatnot is largely about business building: They really want to know how to optimize it. How do they best market, when is the best for a show, what supply sells best.

Buyers really want to sell on Whatnot

The single most asked for thing on Whatnot is the ability to sell. [Explanation for how we know this]

Our wedge

Our research and experience to date suggests that [this category] appears to be the gate to live and social commerce.
Once we get this category to scale, the opportunities to tack on other categories and products increase drastically.

Product Strategy

We’re building a P2P social marketplace by investing in:

Live: [Explanation of specific features]
Trust and safety: We’ll invest further in reviews, moderation, authentication and more to ensure when someone buys on Whatnot, they have a great experience. We aim to create the safest P2P horizontal marketplace on the internet.
Key feature X: [Explanation]
New product area Y: [Explanation]

Distribution or Go-To-Market Strategy

We’re going after enthusiasts and power sellers by:

Getting the community talking:‍

Scaling sellers: Sellers drive demand and increase supply on Whatnot. We’ll need to be best in class at onboarding them. [More explanation on how to do this]
Content strategy: [explanation on methods]
Owning influencers: [Explanation]
Paid ads: [Explanation]

Fix the funnel:

As we get people talking and into Whatnot there will be some significant areas in the funnel we’ll need to fix. We’ll avoid small incremental things, but will unlock things like scaling the seller waitlist to make sure people sell and go live on Whatnot, as well as doing a better job converting our initial buyers.
As we scale growth, we must ensure we’re doing this on positive unit economics—that is, we’re actually making money on each transaction. We should not subsidize our way to negative unit economics. As we launch early categories, we can do it for a small period of time, but we must quickly get them to positive unit economics in every category.
Further, we are not going to invest heavily into discounting subsidies, and instead focus our limited resources on creating value for our highest-value buyers and sellers.

Things we are not doing

X
Y
Z
A
B
C

Metrics

North-Star Metric

GMV = gross merchandise value = the value of all items sold on the marketplace not including taxes, shipping, or other fees

While this is our North Star metric, this is not the end-all-be-all for prioritizing. We still need to make sure we’re prioritizing a quality and reliable user experience; otherwise, long-term GMV will not materialize.

Key Metrics to Define 2022 Success‍

Build a “machine” that turns our major categories into market leaders

P0: Grow the GMV of W, X, Y, and Z categories to be x%+ of eBay’s monthly sales and increase GMV to y% in December 2022 amongst other existing categories.
P0: Enable [new format] that drives x% of monthly sales in W, X, Y, and Z categories.
P1: Build [new business segment] that generates x% of GMV in W, X, Y, and Z categories.

Generate significant sales in W+ categories with X, Y, and Z and enable rapid scaling of new categories

P0: Organically grow x+ new categories generating $xm/mo in additional GMV.
PO: Actively launch into y+ new categories generating $ym/mo in additional GMV.
P0: Build infrastructure to support launching into z+ categories by end of year.

Build a reliable and high-quality core live and marketplace experience

P0: Maintain buyer NPS at x%.
P0: Maintain seller NPS at y%.
P0: Get monthly gross profit/GMV to z%.

Grant on Planning: Our belief, and I still think it's generally correct. Whatever time you allot, the shorter the time period for planning, the faster people will move. Because they'll see a goal with a tight time window and they'll run to achieve it. And so philosophically We've always felt that we wanted to make planning as short as is reasonably possible, while making good decisions. This began with weekly sprints, then monthly plans until we reached about 150 people when it broke and we’ve moved to quarterly cycles.

Who wrote the mission to metrics doc at Whatnot at every stage?

Developing an understanding of the inputs that drive the outputs is critical to operationalizing your success. This is an iterative process and you’ll add and remove metrics over time. One strategy is to work backwards from key output metrics to understand what drives the business. These metrics will be turned into OKRs that your teams can actively make progress against.

5. Example II: Segment’s 100 Week Plan

Below is a case study on how Peter Reinhardt set and operationalized Segment’s strategy at $50M to $100M ARR. Peter believes narrative construction is key to communicating strategy. The right narrative drives urgency and alignment at scale

From Peter: Strategy is the layer of the stack of mission value strategy where you have the most flexibility as CEO. If you try to constrain the strategy to any of the strategy frameworks that are out there it's transparently bullshit and not really the right way of approaching it. This is where your skill at synthesis as a CEO is tested the most. Can you create a narrative from scratch of what needs to happen and why that needs to happen? At the highest level that distills things down.

‍When Segment reached $70M ARR, Peter developed a "100 week" narrative to transition the company to the enterprise. Salesforce and Adobe wanted to launch competing products and were telling customers that everyone needed a CDP (Segment's product). They had distribution, but no product. Segment had a product, but needed to build enterprise distribution. Peter picked 100 weeks as an arbitrary timeline to build distribution before Adobe and Salesforce could build a new and competing product. He communicated this to the company.

Peter on the 100 week narrative: The articulation was that we have a hundred weeks until Salesforce and Adobe have a product in the market. They already have the GTM team, and so we have a hundred weeks until they get a product on the market. And if we don't have a footprint in all the enterprise companies before they have a product in market, we're going to get locked out of all their accounts. So we have a hundred weeks to get a footprint in all the enterprises. This narrative aligned the company and created urgency as it clarified that Segment had 100 weeks to win the most attractive segment of the market.

They broke down this high-level narrative into 1) building a fast growing commercial business (e.g., tier just below enterprise) and 2) an enterprise business

It was a rallying call, it had FOMO and all the things that you would hope for in a strategy. We broke it down into needing a highly efficient and fast growing commercial business and then secondarily an enterprise growth story.‍

The 100-week plan was then broken into a financial plan with quarterly targets and input metrics that were owned by leaders and teams. They would track progress against the plan through: 1) weekly executive team KPI reviews and 2) all hands (that happened every couple of weeks). All hands are an important communication forum as its your opportunity to highlight progress against the strategy and reiterate the initial narrative you outlined

We broke down the strategy further into metrics. You can write these however you want, but for us this was OKRs. The important part of OKR is just that it keeps breaking things down into smaller and smaller and smaller pieces until you have things that people can actually go do this week. From an operating perspective, we had these weekly E-team KPI reviews, and all hands every couple of weeks. We [outlined] the structure for what was going to happen at each all-hands at the company. Like when we were going to review the last quarter, when we were going to do the board recap, when we were going to talk about the next quarter. And we would show people this is how all these pieces of company infrastructure fit together into an execution model.

Example Q1 KPIs that came out of the financial plan

ARR and Gross Retention
Productive Capacity [capacity of sales team]
Pipeline Coverage [pipeline over target ARR]
% Healthy Accounts [based on customer indicators]
Enterprise customers “promoters” [enterprise customers ready to advocate for Segment]
A Segment specific metric that captured Gross Margin
Rule of 40

Keeping External Stakeholders Aligned

External stakeholder alignment is just as important as internal alignment. You want your board and any other important stakeholders to be bought into the strategy of the company. They also can be helpful accountability partners for you as you execute quarter over quarter
Use the process of writing your board memo as a mechanism for driving clarity. Distill your key metrics, how they are progressing, how you are addressing issues, and where you need further focus. Try to use no more than a few pages. Peter, from Segment, wrote board memos each quarter for exactly this reason
Hold yourself accountable. You have accountability meetings internally. This accountability meeting is for you. Create a scorecard and present it to the board each meeting. This simply highlights performance against key metrics, learnings from the plan, and how you are tracking against them

Once you’ve written “Mission-to-Metrics” for your startup, and gotten feedback from your leadership and other key employees, you have to start communicating it to everyone regularly. You have to reiterate the Mission-to-Metrics much more than what feels reasonable, which may run counter to your instinct to be efficient. Your employees will not internalize the message unless you communicate it constantly. The real test is not simply whether employees can repeat it, but whether they can make good decisions in your absence based on the context you have provided.

One of the best examples of “Mission-to-Metrics” alignment comes from a friend who visited the manufacturing floor at SpaceX. Seeing a SpaceX employee assembling a large part, he stopped to ask him, “What is your job at SpaceX?” He answered, “The mission of SpaceX is to colonize Mars. In order to colonize Mars, we need to build reusable rockets because it will otherwise be unaffordable for humans to travel to Mars and back. My job is to help design the steering system that enables our rockets to land back on earth. You’ll know if I’ve succeeded if our rockets land on our platform in the Atlantic after launch.” The employee could have simply said he was building a steering system for landing rockets. Instead, he recited the company’s entire “Mission-to-Metrics” framework. That is alignment.

Additional recommended reading: The second job of a startup CEO

Mission, Strategy, and Metrics

Table of Contents

Chapters

1. Mission

2. Strategy

How do you come up with a strategy document for the first time?