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August 31, 2017

Your company’s North Star (and how it will liberate you)

In the complex ecosystem of running a business, there can be many conflicting interests and uncertainties around what to do.

Finance may want to do x to increase margins, though Marketing may believe that this will compromise critical aspects of the business.

As owner-manager, it is likely that you will need to step in to resolve, not only taking you away from other activities, but meaning that the whole organisation needs to run things past you in order to progress.

To grow your company, it is necessary to unburden yourself from areas that don’t need your express attention, and allow your employees to act autonomously towards a known, shared goal.

The direction in which your team should go is set by you and, in moments of uncertainty, should act as a North Star.

All at sea

For those without a nautical background, the North Star is a fixed point in the sky which, regardless of your place in the world, will unwaveringly be shining from the north.

This means that in moments of uncertainty, there is always something which you can reliably use to navigate, and calibrate the course of your direction.

It serves as a constant guide, and a reminder of where you wish to be heading.

A North Star in the workplace

Taking this concept of a fixed point in the sky into your organisation can have huge, positive effects.

On an individual level there is a benefit in having this guiding point for your own moments of uncertainty.

The effect however is amplified when it runs throughout your organisation.

Going back to the ship analogy, once you’ve set the direction with which to go, you no longer need to be involved with every time you need to adjust course. If your employees know and communicate to each other which direction the ship needs to be heading, then it’s not necessary for you to spend your entire time at the helm.

What becomes the North Star?

There are broadly two ways in which you can bring to your business the concept of a fixed point which everyone knows to aim for.

Guiding principles

The first is a set of value which you won’t compromise on.

This involves setting out the parameters for your business within which you will give your team clarity around what they should/ should not work towards, and know whether they are meeting it.

An example of this comes from an Indian healthcare clinic set up by Dr Venkataswamy (a.k.a. “Dr V”).

He wanted to take a standardised approach to (sustainably) giving affordable eye surgeries so that no one would be excluded from having a life changing operation because of cost.

The guiding principles he set up were:

• Turn no one away, regardless of whether they can pay or not;
• Give everyone the same high quality of care;
• Don’t depend on any outside sources for funding

At first this seems like a bit of a conundrum.

Finding a sustainable way to offer high quality care to people who are not going to pay for it is rarely a recipe for success.

But within these non-negotiable tenets he was able to not only inspire a team of others who also shared this values, but generate creative solutions to the problem.

One route which they took was to have a two-tiered waiting room.

Those who could afford a nicer waiting room would choose to pay for a sofa, and a glass of cool water, thereby subsidising the eye care for those who could not. This allowed them to meet the goals, where others may have compromised on taking external funding, or turning away those who could not pay in order to keep the organisation sustainable.

One metric to rule them all

In the fast paced Silicon Valley world of tech startups, the North Star approach has been applied to choosing one metric which, when in doubt, all teams should work towards.

For Facebook, this was was monthly active users (i.e. the number of people who logged in to the platform that month).

In an organisation as complex as Facebook, there will be disparate teams designing different features for the platform, and would no doubt have innumerate ways of doing x or y when coming up with ideas.

There would be reasons for and against prioritising one decision over another but to break the stalemate, people would ask the question: is this likely to result in more, or less monthly active users.

Out of the potential anarchy of running a disparate company, the North Star metric gives everyone something to rally around.

Setting your North Star

This is the part when you can begin to think about bringing this concept into your own world of work.

Importantly it’s not something too specific.

It’s not a goal you might set in a strategic planning meeting like reach 1,000 repeat customers.

Instead it’s saying that your North Star is to increase our repeat customers.

The target of 1,000 would need to updated (hopefully) as time goes by, but the overarching concept of, when faced with a decision of A or B, to do the thing which will increase the number of repeat customers (rather than, say, increase our market share) you will have remain indefinitely.

This article covers some practical ways in which you can find your company’s North Star.

More is less

There is also huge power in reducing your complex organisation down to one metric, or small selection of guiding principles.

Of course there will be other goals which will exist in the company, but having every employee being able to answer instinctively where the organisation should be heading (because it’ll be so easy to remember) is incredibly powerful for the collective efforts of the team.

Remember, clarity affords focus.

Conclusion

From this post you can hopefully see the benefit that comes from understanding and communicating the direction with which you want to take your organisation.

It is likely that you’ll have some sort of variant of this already, however reducing it further to a single metric, or core tenets which everyone in the company can recite and use for direction will do wonders for ensuring everyone is pulling in the same direction, as well as building the business you believe in.

For further reading on ways that you, as a business leader, can codify your principles for others to follow, then take a look at the work by Ray Dalio, founder of one of the world’s most successful hedge funds. His book/ pamphlet named (you guessed it) Principles is given to all new recruits, and ensures all employees are on the same page.

In any case, best of luck with setting your course.

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