Every Monday morning, just before 9am, everyone on the team at Shopify gets the exact same email.

Auto-generated and just two lines long it says something along the lines of:

"Growth was X%. We hit/missed our goal of Y% CMRR growth."

This may not seem like a big deal, but Tobi Lutke, the founder and CEO of Shopify, called this single email, "the motor of a fast-growing multi-million dollar venture-backed business."

Shopify IPO’d in May earlier this year, with a valuation of over $1 billion.

The concept of the compass metric is simple. If you are starting a new company you have to choose a metric for success. For Shopify this metric is growth in CMRR, or Committed Monthly Recurring Revenue.

Accuracy of this metric is critical. A compass that points in all directions is not a good tool to find north.

Here at iDoneThis we track Monthly Recurring Revenue (MRR) growth as our compass metric. But we have exactly the same thing as Shopify--a single email that comes through (daily for us) that tells us exactly where it’s at, and this has helped us become a million-dollar company

This is the single most important email the company ever sends, and it should be your most important email as well. If you are not sharing your compass metric with your team, they are missing out on a vital piece of company information, and the whole business is losing as a result.

A lot of companies are terrified of sharing this kind of financial data, even between key personnel. But by opening up and sharing your metrics, you open up the company to an entire culture of growth – one where there is no ambiguity about progress, and one where everyone is empowered to act.

The Right Kind of Plans

The German Field Marshall Helmut Karl Bernhard Graf Von Moltke (the elder) might not be that well-known to you, but you have probably heard his most famous maxim: "No plan survives contact with the enemy."

Personally, I always preferred Mike Tyson's version: "Everyone's got a plan until they get punched in the face."

You can have the most awesome, well-crafted, on-point plan to achieve growth, up revenue, or add users, but the more complex those plans get, the more likely something will go wrong. Then you’re knocked off base and constantly firefighting to get back to your original plan.

A few decades ago, the U.S. army had a similar problem. The generals and staff officers were excellent at coming up with battle plans, but then the enemy would spoil things by getting involved. The plan would go out the window and then the soldiers on the ground would have to improvise.

The military learned two things from this: 1) soldiers are awesome at improvising, and 2) intricate plans are useless.

To take advantage of 1 and negate the problems of 2, in the 1980s the army came up with the concept of Commander's Intent.

Instead of just devising and deploying a sophisticated plan, top-level commanders would instead specify their intent ("I want to win this war") along with their plan for the engagement. This way, if it all went south then the mid- and low-level commanders would know what the ultimate goal was and be able to devise their own plans accordingly to achieve their commander's intent.

Intents now run through the whole structure of the military, with all level of commanders specifying their intent along with their plan. Going back to business, a CEO might have a great plan for their company, but when things go wrong, and they will, if no one else in the company is empowered to act, if no one else really knows what the ultimate intent of the CEO is, then the company is going to flounder.

For Tobi, as the commander at Shopify, his intent each week is to reach that 3% growth. It’s a tough goal, but everyone knows that it is the goal at Shopify. Tobi doesn’t have to come up with all the plans for this kind of growth. Instead, all the teams in the company know his intent and can test ideas, plan strategies, and aim to achieve that goal.

Therefore, the key to growth can be boiled down to two things: one email, and one all-knowing, all-empowered, super-team.

How to Empower Your Team with Financial Transparency

An adaptable and awesome team is really what drives the success of companies like Shopify and iDoneThis. Having your compass metric and other financial and growth data available to them allows them to do what they do best--get the company growing.

So why don’t more companies do this?

Simple. They’re scared. A lot of C-levelers are terrified of giving up power, even when it is for their own, and their company’s good. They are also really worried about failure, and think that only they can stave off defeat.

Another issue is trust. They worry that employees will share this super-secret sensitive financial information around.

And then there are some companies that just don’t think that their employees need to know this kind of information.

They are utterly wrong. The thing about having the compass metric is that it reveals your basic business plan to your employees. So many companies hide this fundamental idea, which is nuts.

Price Intelligently, the makers of ProfitWell, a free SaaS analytics tool, recently looked at data across 63 SaaS companies to see how financial connectedness correlates with growth. They wanted to know whether the more a company shares its financial data and compass metrics, the better it does.

They found exactly that. The difference was massive--the more a company shared its financial data with its employees, the more growth it saw.

Price Intelligently puts this down to fostering a culture of growth and profit and empowering all employees to act. In all companies everyone involved ultimately impacts growth, but in these connected companies, the employees get feedback on their impact. If they run a test, try out a new idea, they can see the compass metric change. This feedback means that it is always on their mind and every idea is configured towards increasing growth.

Companies think that their employees don’t want or need this type of information, but the data shows otherwise. Through ProfitWell, Price Intelligently sees 60%+ open rates on these daily update emails, showing massive engagement with the employees. People really want to be involved in their companies, and the companies that let them, thrive.

These type of emails or messages we and Shopify get make sure the whole team is focused. Everyone knows what the ultimate goal is, and everyone knows their job in attaining that goal. There is no ambiguity, no vagaries about how well the company is doing.

3 Steps to Starting Your Growth Engine

So if you want to manage your team with just a single email, and climb into the growth machine like Shopify on your way to building your own billion dollar company, you just need to do three simple things.

1. Pick your compass metric

Choose a specific metric that is linked nicely to growth so you can see where your trajectory is heading. CMRR growth, like Shopify, or another metric that better suits your needs. Just make sure it’s accurate so that you can track your progress.

2. Send it out to your team

Get that email out. Ours is provided by ProfitWell which we use to track our SaaS financial metrics. Their daily goal progress reports are vital for each member of our team, keeping us in the loop on our growth and revenue. You can send out your own emails, and some companies even put their metrics up on screens in the office. Whatever you choose, disseminate!

3. Empower all

Make sure everyone knows they can change this number, for better or worse. Allow this number to inspire them and tell them that all the small changes they make, wherever they are in the company, affect that bottom line. Ultimately, all it takes are small changes by all employees to grow a company from nothing into a behemoth.

Through one email, your team knows every day where the company is heading, and the culture of growth this fosters means that every single member of the team is empowered to act.

Published on: Aug 10, 2015