True North is a term from classical physics – wherein a ship decides to pursue a path that is somewhat different from the magnetic north. Implicit in the definition is that True North represents the true direction, the right geography and ultimately the absolute, correct path to charter – as different from magnetic or astronomic North.
Physics and Nautical sciences aside, the analogy is very relevant to the startup world – especially for startups that want to evolve to growth, profitability, successive funding rounds, and favourable. Defining a True North helps define everything in a startup’s existence – it’s charter, ethics, work culture, hiring ethos, customer success paradigms, product roadmaps, competitive differentiation, the attractiveness of beachheads, empathy maps, and even things like font colour on logos and any content artefact.
Reason being is that a true north is like a moral compass – it helps define and remind everyone of a key set of goals and principles that guide the very existence. True North can take the form of a mission statement – “We want to go the moon”, a corporate motto “Everyday low prices” or a set of products and ethos that eventually helps to collectively define a company’s credo. It influences strategic discussions and tactics like; what features to build, which markets to enter, how to differentiate, opportunities that should be discarded, and even (if such choices exist) deciding on which investors and strategic partners to align with.
Take the example of Salesforce.com. Its True North, probably ingrained in every employee and cubicle, at some point, is to build tools that reside in the cloud that make Salespeople succeed. Its magnetic north might be to Import leads, connect leads to customers, disparage On-premise Software ( remember the battle against Siebel?), and eventually to build/buy capabilities that enable adjacent groups – marketing, support, customer service, etc collaborate and work seamlessly with each other. But the True North remains building a highly admired organization and well-oiled machine that is adept at building features that can be consumed with a few clicks from one’s browse; simplifying the dissemination of new features to customer through a Nirvanic ‘one upgrade path’, making it beyond simple to enable traditionally transaction-driven (and by extension less organized) Sales managers to share knowledge and updates, and making enjoyable the process of Lead-> Prospect -> Customer -> Upsell/Cross-Sell. To a point where customers imbibe key elements of the movements and articulate these capabilities to colleagues and the industry at large with an evangelical zeal. Clearly identified True Norths tremendously help organizations in scaling to progressively newer heights.
They help in resolving high conflict situations – for example, whether to grow at the expense of profitability or vice-versa. To exit when lucrative, but otherwise misaligned suitors (those with a corporate philosophy misaligned with one’s own), make unsolicited offers for the company’s equity; or continue down an more uncertain both philosophically-acceptable path? It provides for the philosophical, and commercial, lodestone that sets the tone for regular, mundane tasks as well as long-term thinking on product roadmaps and strategic direction.
The phenomenon helps in every area of daily activity, and then more. True Norths help in hiring the right people – usually through a process of self-selection – by which the startups attract people that identify and align with its own goals and aspirations. A startup with the aspiration to build the world’s most powerful cure for cancer-based on biomarkers, protein expressions and genomics — would, given the right PR and connects, attract stellar bioinformatics professionals and luminaries from the academic and corporate world to join them. They would also, be able to attract this talent, relatively inexpensively – with lesser fixed costs like salary and more outcome-based compensation like equity. The flip side of this coin being, that startups without a true direction would meander aimlessly from one myopic opportunity to the other and attract people without any genuine mission.
All employees (many savvy startups call them ‘hackers’, ‘partners’, ‘visionaries’,) of startups with a genuine True North quickly inculcate these key central beliefs and set out achieving them in rapid time. Gone are the days of lengthy orientations, drawn-out reviews and such; indeed newer and powerful metrics like Sales/employee or Valuation/Employee define startups in stride.
Establish your True North very early and then firmly ingrain it inside each person and every square foot of your organization. Consistently reinforce this belief system amongst internal and external stakeholders to a point where the entire ecosystem identifies simply cannot separate you from this belief system and core ideals. it will, in due course, out your ship firmly on course for reaching its destined goals.