state variables

Metric Selection

Monitoring a few key indicators provides a clear picture of the overall situation. The state variables might include cash runway, customer churn, employee turnover, or gross margin. These numbers tell the founder whether the company is moving toward its goals or drifting into danger.

Data Precision

Reliability of these indicators determines the quality of the decisions based on them. When state variables are poorly defined or based on bad data, the founder can be led into a false sense of security. They must be grounded in the physical reality of the business to be useful.

Tracking Boundary

Limits on the number of variables prevent information overload. The state variables should be few enough to be held in mind but comprehensive enough to cover the main risks. This balance allows the founder to maintain a high-level view without getting lost in the noise of daily operations.