The North Star framework and how to find your orgs purpose

We look behind ‘the weasel words’ and ‘wordsmithing’ using tools like the North Star framework to get to the orgs clarity of purpose.

Clarity of Purpose

Dave Anderson  

We often have conversations about transformation and purpose. And something we talk about in The Value Flywheel Effect book is clarity of purpose. It’s really about transformation. A lot of companies are transforming. And I often think, do you know what you are transforming into? It’s an area that we’ve had a lot of conversations on and experiences of transformation and changing companies using the North Star framework. Do you think most companies know what they’re transforming to?

Mark McCann  

No, I do not. I think a lot of them see the successes of others. Or they see their competitors and from the outside they look like they’ve succeeded. And they think, we want a bit of that. We should adopt whatever they’re doing. But I don’t think they understand why they’re trying to transform. I don’t think they understand the reasons behind transformation or trying to improve. It seems to be based on status, or based on jealousy, or based on self preservation. It’s not based on core understanding of purpose for why you doing the things you’re doing. It can be very philosophical, and very deep, if you go down that rabbit hole.

Does your whole org understand the mission?

Mike O’Reilly  

My experience is that the organizations have a good idea of what they want to transform into. But the broader organisation doesn’t. I think that’s what you’re saying, Mark. You’ll hear businesses talk about wanting to corner the market or drive up the rate of business. But the broader organisation doesn’t feel part of it, or doesn’t understand the mission. A lot of the times it’s a lack of understanding of that mission and how it relates to what they’re doing on the ground. Teams or development squads don’t understand how they’re going to contribute to that mission and how what they’re doing is having an impact on the overall mission. And that mission will be described as transformation.

A big part of the problem is that successful transformations involve everybody in the company. But a lot of the time it doesn’t. We’ve run North Star framework exercises and the North Star framework playbook. I think it’s Amplitude that produce the workshop with John Cutler. That’s a phenomenal practice or tool for getting that level of understanding for where you are in the overall transformation.

The North Star Framework

Dave Anderson  

The North Star framework is brilliant because you find the one metric that matters, and then you work at how you can work backwards from it. And for many companies, the one metric that matters is not ‘making money’. Every company will have some kind of goal for profitability. There’s a great book by Mariana Mazzucato, called ‘Mission Economy – A moonshot guide to changing capitalism’. It’s a capitalist thing to say we’re going to make money every quarter, but a company should have a mission, which is above that. And I think one of the things that Amazon are really good at, and granted they’re a trillion dollar company, is a thing called ‘single threaded leadership’: one person who’s in charge of the customer need. That’s what they do.

If you figure out what that customer need is (the mission) then you can use the North Star framework to work backwards from that, and figure out all the metrics to get you to that and join the dots. We’ve had great success with North Star in the past. But if you don’t know why you’re here, you’ve got nothing to work backward from.

Weasel words and lag metrics

Mark McCann  

A lot of the time people are seeing the lag metrics, or they’re trying to chase the lag metrics: ‘oh, make more money, increase revenue, or sell more units’. They don’t think upstream. They don’t think about the North Star or the input metrics that actually make a difference. There’s a detachment from the people on the ground doing the work, trying to work as hard as they can with the best intentions. Because they don’t have that purpose or that alignment to the actual real purpose or the real North Star. And their efforts are in vain. They’re not actually influencing any of the input metrics that could affect the real North Star.

Dave Anderson  

Amazon talk about ‘weasel words’ as well. And the ‘elevator pitch’ is a great way to test that purpose. In Silicon Valley every company pitches that we’re going to do this because we’re going to change the world. So they use all these ‘weasel words’: ‘we are going to be the best, we’re going to change the world’. But that isn’t saying anything. That’s just an empty statement. A good elevator pitch corners a customer need and it’s a great way to test your ‘clarity of purpose’.

Don’t forget your lead measures

Mike O’Reilly  

Mark, you mentioned chasing lag measures and the processes or practices that North Star gave you to link to ‘the money in the bank’. And Dave, you mentioned about working backwards to lead your transformation through metrics.  And metrics are important to the organisation from a financial perspective. But what are the lead measures to have a proper influence over those lag measures. What sorts of things could we be doing more effectively, how do you instrument your transformation and how do you know that those lead measures are having an impact on the overall ‘money in the in the bank’ or core outcome.  We can move the needle on this North Star metric and that should result in successful outcomes.

But the interesting pieces out on the left of the North Star are the lead measures. If you don’t have those metrics, and that team doesn’t understand how it’s playing into the overall big picture, the management side can become really difficult. Whereas if you’ve got those lead measures, and the teams know what they’re trying to do in relation to the influence of the overall North Star, it becomes very easy to pivot or understand the impact that a squad has in terms of customer value. It’s very odd that a lot of organisations don’t operate that way because it’s super efficient and effective. It gives you a lot of opportunities to crack.

The importance of a psychologically safe environment

Mark McCann  

Organisations need to be brave with discussing Purpose on their North Star. They have to set up to invite some level of challenge to that. Once you make this visible, make metrics observable, start talking about the North Star and important metrics, and start to align your teams, the teams then become engaged with making a difference and seeing the benefits of the work. Then the teams will go out and start challenging the rest of the organisation by saying: ‘that doesn’t quite make sense, I don’t think that input metric is quite right, can we change that to something better?’. 

We will talk about this in the book, but you need to have a psychologically safe environment set up that invites a level of challenge.  So that your purpose can exist throughout the org through the teams, and they buy into it, it’s transparent, and they can see that what they’re doing makes a difference to the overall income for the company.

Dave Anderson  

That purpose needs to be consistent. That lag metric needs to be consistent over a long time. I enjoy people talking about ‘safe to fail’ and ‘fail fast experimentation’. Don’t experiment with your lag metrics!  Experiment with your lead metrics.  If you experiment with your lag metrics, then the company just gets really fed up and will think that you don’t have a goal. So you’ve got to lock in the lag metrics, your outcomes, your purpose, and you can experiment with the lead metrics.  Because that’s how to find out what’s going to move the needle.

You can’t wordsmith your way out

Another think we talk about in the book is that you can Wardley map your market to find out which capabilities should be your differentiator. What’s your IP? And what do you not need? What is your competition? Decide what you’re going to get rid of because it’s not a differentiator. And what you’re going to hang on to because it’s core to your clarity of purpose.

Mark McCann  

When you’re trying to shape that purpose, you need that situational awareness of the market you’re operating within. This can help you shape a meaningful purpose or North Star. There’s no point in saying ‘we’re gonna be the Amazon of Amazon.’ That’s already taken. You’ve got to know your landscape and who you’re competing against, so that you can shape what you are going to attack.

Dave Anderson  

In relation to wordsmithing, if your purpose is good, it’s good and it doesn’t matter what words you use to describe it. If it means something and is interesting, then it’s going to work. You can’t wordsmith your way out of a bad purpose. So I think that’s the craic. It’s been an interesting conversation on ‘clarity of purpose’. We explore this in the book. And we’ve more blog posts on this at TheServerlessEdge.com and posts on Twitter @ServerlessEdge. Thanks very much. Thanks, everyone. 

Mike O’Reilly  

Thank you. Thanks, guys. Bye bye!

Transcribed by https://otter.ai