The Importance of Strategic Understanding

Lisa Kinsey

“True North” is taken from the Lean Lexicon and describes the ideal state of perfection that businesses should be continually striving toward. For most businesses, the business strategy explains what their True North is.

What happens when True North is defined but not communicated? Execution will suffer as employees perform their jobs based on different assumptions and goals. It is not uncommon for teams to pursue conflicting goals; sometimes, managers and employees form cliques that each defend a different belief about what the strategy should be, 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?     
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As leaders, we often believe that the job is done once we have formulated our strategic plan or updated our targets. This is not true at all. The real work starts when leaders transform into evangelists for their strategic intent and repeatedly and consistently explain it.

In fact, communication is not enough: what matters is UNDERSTANDING, i.e. making sure that all employees embrace the strategy. If they do not agree with it, the leadership should strive to have employees “disagree and commit”, an approach consistently applied by Jeff Bezos at Amazon.

“True North” must be communicated up and down the organization. Otherwise, watch out for goals, strategies, or current initiatives that operate south of the equator!

It is essential that any work your company does in this area involves first defining your actions by clarifying the long-term Mission, Vision and Strategic Intent of your business.

In our next blog, we will consider how critical leadership is to execution.

How well is your business executing? To find out, please reach out and we can initiate an assessment of your execution capabilities. Contact us at info@kinseymgmt.com