The Importance of Strategic Understanding
Taken from the Lean Lexicon, the term “True North” is used to describe the ideal state of perfection a business should be continually striving toward. True North is where an organization’s strategic goals are successfully executed, such as revenue and profits, while also fulfilling their philosophical visions or purpose. For a business to know where their Truth North lies, the entire organization must have Strategic Understanding.
So what happens when True North is defined but not clearly communicated? Execution will suffer. Employees will perform their jobs based on different assumptions of what the company’s goals are. It is not uncommon for teams to be pursuing conflicting goals, each defending a separate belief about what the strategy should be. This is a recipe for a toxic culture. No organization is immune to this confusion. BMW’s development of electric cars was famously stymied for several years by a very public disagreement between its former CEO and its Engineering Lead.
Is your organization understanding its strategy?
Answer the questions below. If you answer “yes” at least once, you need to clarify your intent to all employees:
● Does your leadership team sometimes disagree on what differentiates your business in the marketplace?
● Are your employees sometimes confused about the direction the business is heading?
● If we surveyed your employees, would we find some who are unable to explain your strategy?
● Are teams sometimes asked to optimize conflicting goals?
A leader’s role is not only to formulate a strategic plan, nor is it to simply adjust and update targets. A true leader will act as a guide, using strategic intent as their compass. A leader must ensure that the entire organization is aware of, and is actively and simultaneously moving toward the company’s True North. This must be communicated up and down the organization. Otherwise, goals, strategies, or current initiatives could begin operating south of the equator!
However, communication is not enough. What is most important is UNDERSTANDING. Employees should embrace the company’s strategy. If they do not agree with it, leadership should encourage a company culture where one can “Disagree and Commit”. This approach is consistently applied by Jeff Bezos at Amazon, where someone can respectfully challenge decisions when they disagree but must commit wholly once a final decision has been determined.
For an organization to develop Strategic Understanding, the company must first define its actions by clarifying its long-term Mission, Vision, and Strategic Intent.
Is your business demonstrating “True North” execution? To find out, please contact us and we can initiate an assessment of your execution capabilities.
In our next blog, we will consider how critical leadership is to execution.