| Strategic alignment Source: Executive Excellence Publication date: 2002-01-01 Arrival time: 2002-02-06 Robert Bradford ONE DIFFICULTY companies face in strategic planning is turning their vision into a reality. To transform your organization into the one you envision takes more than great strategy and implementation, you also need to make the strategy an integral part of your operation. When we speak of this idea, we usually use the phrase "strategic alignment." Alignment will make it much easier for your management team to move in the direction you intend. Without alignment, every bit of forward motion will be a struggle. Five Steps to Take How can you achieve this alignment? You need to take five steps: 1. Provide your employees with the conceptual tools they need to think strategically about their work. Employees must be capable of making decisions with strategic impact in order to be aligned with the company's strategy. These conceptual tools might include examples, role models, and training. This does not mean that every employee needs to be a great strategic thinker, but employees must understand how their work contributes to the company's success. Another thing to do to get people on board is to make sure your people understand enough of the basics of business that they can see how the strategy will make them better off, increase their job security, and increase the likelihood that they get promotions and pay increases. Without these conceptual tools, it will be much more difficult to get buy-in and intelligent support of the strategy. 2. Make sure your employees understand your company's business strategy. Good strategy requires focus. There are three main ways to satisfy customers: price, quality (in the broad sense, including product features, technology, packaging and other value-adding features), and service (again, in a broad sense, including delivery, and support). In a strategically focused organization, there are fewer ways to satisfy the customer. In simple terms, a company that targets specialty customers will excel in quality or service, but will likely be in the higher price range. Commodity companies that excel at price, usually fall down on quality or service, and sometimes both. "Front line" employees-those that have contact with customers-often want to please customers in these three ways, but to fit with the focus of the company usually should be willing to leave some customers dissatisfied (for example, a Rolls-Royce salesperson should not get upset that a customer didn't buy because of the price). Without a clear understanding of the strategy, this alignment is impossible, especially when "front line" employees are far removed from the strategic planning process. 3. Build strategic alignment around the structure. This can be done in several ways, but let's look at one example. It's common to find a "silo effect," where the organization is very effective vertically within a department or division, yet lacks efficiency and flexibility in activities that require cross-departmental cooperation. This effect will play in your favor if you create separate strategic business units, but may present obstacles to integrating an acquired company, or tackling organization-wide strategic change in areas like quality or IT, which require cross- functional teams. "Matrix" structures break down "silo" walls by creating reporting structures by both function (i.e., manufacturing, accounting) and market or product (i.e., home office printers, banking industry). 4. Make sure your strategy is reflected in the structure of jobs, especially those in critical areas. The way you hire, train, compensate, and retain the people you have in key strategic areas must work with your strategies. If you target commodity customers, for example, you definitely want all these things to reflect your commodity orientation. For example, in your hiring either you want high-quality people who by virtue of their quality and productivity keep your costs down or you want cheap people who will keep your costs down simply because they cost less to pay. In places and positions where you are hiring expensive people, you want to use the skills of those people to drive your costs down; otherwise, all you'll do is drive your costs up. On the other hand, if you have a specialty strategy, you want to hire people who add value to your product or service. People in your company will need to add value commensurate with the cost of hiring them. At the same time, you may have ways to add value with inexpensive people. If you do, you need to train them to think about the customer and the product or service the right way. Inexpensive people may not understand certain specialty marketplaces. In any case, you will be challenged by the cost of rejecting otherwise well-qualified job applicants who won't fit with your strategy. Another challenge companies face is the tendency to use specialty people in places where they should use commodity people. In a commodity company, this drives up costs, and the potential for added value is lost on the targeted commodity customers. In specialty companies, commodity people and job structures drive value out, which devalues your product offering and drives specialty customers away Matching employees and their jobs to strategy has a big payoff. 5. Make sure employees buy in to the strategy. If you have an employee who thinks the strategy isn't good, you won't have alignment. Some people just won't buy into some strategies. For example, the technical salesperson in the new-user computer store may not buy into the strategy of targeting new users as a market, since the strategy doesn't fit with the salesperson's skill set, but it will create problems for both the employee and the company. Often, this buy-in problem arises as the result of a failure to fit the job design to the strategy, or some related activity, such as hiring. It's useful to ask if the lack of buy-in stems from a valid objection to the strategy If not, you and your employee should part ways, since such a basic strategic conflict won't be good for either of you. Unless people come up with the idea themselves, believe that the strategy serves their interests and improves their job security, they won't buy into a strategy. The strategy has to have credibility with your employees. It's easier to add credibility in a company where management spends a little extra money to make working conditions better for people. Probably the most difficult situation is when you're in a company that has many employees who are paid at the low end of the pay scale. Often, input from these people is strategically critical and has a critical effect on the way your products or services are created, delivered, and perceived by your customers. As a leader you might ask, what would it take? It may not take pay, but if you can't offer pay, you need to offer a real and valuable substitute. An ideal way to get people aligned with strategy is to make it their strategy. Buy-in is much easier if you can make your strategy a strategy that employees create themselves. We encourage involvement in the strategic planning process for as many people as is practical. There are limits to what is practical. It's difficult to have effective strategic planning meetings when you have too many people, just as it is when you have too few people. What you want are ways to make people feel that they are contributing to the strategic decisionmaking process, even when there are not directly involved in the decision making. Companies that take these five steps to build alignment between their employees and their strategies find greater success. Clearly, you will find better support for implementation of your strategies and more effective dayto-day use of your strategies at all levels when you achieve alignment. This will make the difference between struggling to make your vision a reality and smoothly flowing into the future you have defined. ACTION: Take these five steps to build alignment between your strates and your employees and then seek implementation. RESOURCES: Read Rosabeth Moss Kanter's Rethinking Your Strategy. Robert W. Bradford is president and CEO of Center for Simplified Strategic Planning. www.cssp.com. Copyright Executive Excellence, Inc. Jan 2002 Publication date: 2002-01-01 |