6 Steps to Define Your 'True North'
A few years ago we worked with the new CEO of a consumer packaged goods (CPG) company. He saw a lack of alignment amongst his new management team around the corporation’s goals and strategic direction. We worked with him to define the company’s one true objective and then to embed it within the organization. We came away from this work with a strong appreciation for aligning an organization around what we call its 'True North."
What do we mean by True North? A company continually faces fork-in-the-road alternatives; True North is a decision-making tool the management team can use to choose their path forward. Said differently, True North is a "break all ties" governing objective for how the company should operate.
A company’s True North objective might be one of the following:
- deliver double-digit returns to our investors
- provide the best customer service in our industry
- have the lowest-cost operations
- grow volumes at double-digit rates
- balance the needs of our stakeholders and serve all of them to the best of our ability
Our client chose “deliver double-digit returns to our investors” as its True North. (Note: We are big fans of management teams with a governing objective around maximizing returns to investors. In our view, a management team must serve all its stakeholders well in order to maximize investor returns.)
6 Steps to Finding Your True North
We took our client through a six-step process to define and embed their True North:
Step 1: Develop several potential True North statements; these should be simple yet crystal clear statements of the company’s governing objective.
Step 2: Align as a management team on the right True North for the business.
Step 3: Perform an honest assessment of how the company has performed in recent years against the chosen True North; understand and break down the potential barriers to embedding it into the company’s DNA moving forward.
Step 4: Communicate, communicate, communicate! Everyone in the organization should be able to recite the True North statement in their sleep and know how to apply it in their daily lives.
Step 5: Improve information flows, so that everyone in the business has the information they need to make decisions that achieve the True North objective.
Step 6: Walk the Walk. As the leader, you need to make sure tough decisions are made quickly according to the True North objective. Look for opportunities to shake up old organizational behaviors not aligned with True North. Test the organization’s commitment to True North early and often so you can shape the business to your desired behaviors.
Be defining and embedding his team’s True North objective into the organization, the CEO was able to make a number of tough business decisions quickly, including acquisition and divestiture decisions, new market entry, and expansion within existing markets.
Do you and your organization have a True North? How well are you and your team aligned around it? By following the steps outlined above you may be able to more easily rally the business around your chosen path forward.
KARL STARK AND BILL STEWART | Columnist | Co-founders, Avondale
Karl Stark and Bill Stewart are managing directors and co-founders of Avondale, a strategic advisory firm focused on growing companies. Avondale, based in Chicago, is a high-growth company itself and is a two-time Inc. 500 honoree.