Aligning Strategies Throughout the Business
It is a familiar situation. Corporation A misses severely on its obligations several quarters in succession and the stock plummets. Consequently, the Board loses confidence, the CEO “resigns,” and a new CEO is chosen who declares a restructuring of the business.
In recent years, we have seen numerous such reports. Even where top-level executives display signs of “vision” and express what seems to be a sound business strategy on paper, results go amiss of expectations.
Strategy is often thought of as something that only top-tier executives can effect, and while it may be true that “top-down” strategy is most customary. We continue that individuals throughout the organization must both recognize the organization’s strategy and create an supplementary strategy for themselves—a supplemental strategy that directly impacts their respective areas of responsibility and braces the core of the business.
We have all been there. The leadership team spends long hours deciding on a strategy to improve performance. Management teams come up with supportive annual budgets. Bout teams settle long PowerPoint presentations and exhaustive spreadsheet files. Yet not much happens in terms of deliverables! Ambitious year-end targets are missed. Improvement curves keep being shifted to the right, and the reorganization begins.
Companies with obstructive cultures and meagre strategic alignment considerably underperform their competitors. Additionally, most executives recognize what’s at stake and what matters, even if their companies don’t always seem to get it right.
Questions arise as to why these events occur: What has gone wrong and why? Are the goals too assertive? Are the apparitions or strategies deficient? Are middle managers unable to execute? If the answer is yes to all these questions, then why is it so?
All are good questions; however, the key component is strategic alignment.
What is Strategic Alignment?
Strategic alignment is the connection between the goals of the business, which quantify the progress of the implementation of the strategy toward the vision, and the goals of each key contributor, including groups, divisions, business units, and departments.
Strategic alignment, then, is one and all rowing in the same direction. The tighter the linkage and the better the alignment, the likelihood of faultless execution becomes stronger.
Once implemented properly, strategic alignment delivers four major advantages:
- it allows an well-organized use of frequently scarce resources;
- it results in improved speed of execution;
- it encourages team efforts toward common goals; and
- it increases motivation by giving people a keener sense of contribution to the results of their groups and the corporation in total.
These are great results, but few corporations realize them. Since many corporations and their leadership teams try to gain strategic alignment, what barriers must be overpowered?
Two Key Components of Successful Strategic Alignment
Culture plays a critical role in this strategy. According to Fred Palensky of 3M Company, “for over 100 years, 3M has had a culture of interdependence, collaboration, even codependence. Our businesses are all interdependent and collaboratively connected to each other, across geographies, across businesses, and across industries. The key is culture.”
- Communicate broadly to help people understand the elements of the vision and of the key strategic directions. Repetition by the leadership and management teams at every opportunity—including sales meetings, company meetings, and operational business reviews—empowers each employee to understand vividly how he or she can contribute.
- Link the results of each employee’s job to the progress of the entire corporation strategy, and do it clearly and simply. This is best done by using simple measures of key performances (KBMs = key business metrics, or KPMs = key performance metrics) that can be connected to the employee’s annual performance review.
Strategic Alignment and a Culture That Supports Innovation
At our company, we use a cascading set of goals that determine the progress of the strategic implementation. This “waterfall effect” or “goal tree” starts at the top and cascades down. The objectives are assimilated into our annual performance targets and support the key goals of our leaders. This safeguards focus and alignment as employees deliver on their objectives. Objectives are rolled back up the “goal tree” in reviews of goals.
Implementing strategic alignment requires a robust promise from the top leadership and a focus on frequent communication using simple management principles of focus, clarity, and fortification. In the end, effective execution of strategic alignment is a leader’s top priority and ensures that goals are met and success achieved.
Purpose is what the business is trying to accomplish. Strategy is how the business will accomplish it. Purpose is durable—it is the north star towards which the company should point. Strategy comprises choices about what products and services to offer, which markets to serve, and how the company should best set itself apart from entrants for competitive advantage.
Keep corporate strategy at the heart of your organization’s culture by standing up a process to keep it front-and-center.