How to quantify the health of your business

Every business needs a health score. Not having one or picking the wrong one leads to dangerous blind spots. Here's how to define a health score and find yours.

Sundar Swaminathan
October 08, 2024

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Unlike a Northstar Metric (which I wrote about), a health score is a less common term in tech.

But, it’s just as important.

While a Northstar metric is best for long term strategy, a health score helps companies optimize in the short term.

A health score is also different than a key performance indicator because of it’s importance.

Think of a health score as the most important KPI. MIKPI.

Just kidding. No one calls it that.

The challenges with health scores are that they’re not perfect indicators of health.

Yes, I know that’s confusing.

But, let’s look at humans.

Here are 5 vital signs we look at when we go to the doctors:

Now, I’m not a doctor but I know that not having a standard BMI doesn’t immediately mean you’re unhealthy.

IYKYK

It’s WHY you don’t have a perfect BMI that makes it healthy or unhealthy.

Let’s look at what Uber used to create a healthy marketplace to get a better understanding.

Every business (regardless of model) is built off supply and demand.

At low prices, everyone wants to buy and no one wants to sell.

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