What Does It Take To Create And Sustain Profitable Revenue Growth?
Organizational alignment creates growth – the alignment of strategy, culture and talent – just like the three cartoon characters above pulling together to keep the profitable revenue growth arrow pointing onward and upward.
Organizational Alignment Creates Growth
We believe that is the job of leaders to create organizational alignment and profitable growth. While most businesses strive for profitable growth, aligning all the critical factors to achieve consistent and highly profitable growth is not easy. But organizational alignment is worth it. Based on organizational alignment research of 410 companies across eight industries, highly aligned companies:
The Cost of Organizational Misalignment
Conversely, when strategy, culture and talent are misaligned, organizations underperform. For example:
So let’s look at the alignment of strategy, culture, and talent.
An effective business strategy provides clear direction, intense focus, meaningful purpose, and compelling inspiration. Effective strategies define where to play and outline the critical few collective actions required to win by answering 7 key strategy questions:
(1) How specifically will you grow quickly and profitably?
(2) How are you defining success and failure over the next 12 to 36 months?
(3) What is your organization’s core purpose and direction? Is it inspiring enough to rally the troops?
(4) Is your strategy well understood by your key stakeholders?
(5) Do your key stakeholders believe that it will set them and the company up to succeed?
(6) Is your ideal target customer clearly defined and agreed to by all key stakeholders?
(7) Are your offerings unmistakably differentiated from the competition?
Organizational cultures exist by design or by default. And, regardless of their origin, some strong cultures help companies perform (e.g. Southwest Airlines) and some strong cultures hurt performance (e.g. VW, Wells Fargo, Uber).
One thing is certain-as a leader, if you do not understand, shape, and align your culture and strategy, you will not perform at your peak. Cultural factors account for 40% of the difference between high and low growth companies.
For example, if innovative and cutting-edge offerings will be crucial to your strategic growth plans, you need to encourage a climate where open communication, creative thinking, and collaborative teams thrive. On the other hand, if your strategy depends upon a tried-and-true product that already has solid name recognition at high volume, you may want a culture with low process variation that can scale.
When it comes to workplace culture, it is not about right and wrong. It is all about ensuring that the way work gets done is aligned with where the company is headed.
We define talent as the workforce that leaders must build and manage to get work done – ideally in a way that creates a unique advantage that their competitors cannot replicate.
Talent – how you attract, develop, engage, and retain your workforce – accounts for 29% of the difference between high and low growth companies. One good indicator of success is observing that people who are a good strategic and cultural fit are most likely to be high performers within your strategy.
The Bottom Line
All three organizational factors – Strategy, Culture and Talent – need to be aligned. If even one of these three organizational pillars is misaligned, your company’s health and performance is at risk. Your strategy must be clear, believable, and implementable. Your culture must be understood, consistent, and aligned with your strategy. And you must be able to attract, develop, engage and retain talent that thrives within your culture to execute your strategy.
To learn more about how organizational alignment creates growth, download Organizational Alignment Research – The Detailed Ingredients to Success
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