The Power of Strategic Alignment

The Power of Strategic Alignment
The bridge between strategic ambition and impact is built through strategic alignment: the process of ensuring every part of your organization is pulling in the same direction. Regardless of the goal and the strategy to reach it, the better you and your team are aligned and working together, the more likely you will succeed.  We call this the power of strategic alignment.  It accounts for 31% of the difference between high and low performing teams in terms of:

• Revenue growth.
• Profitability.
• Customer satisfaction.
• Leadership effectiveness.
• Employee engagement.

Ideally…
At its core, strategic alignment means that an organization’s purpose, strategy, structure, business practices, processes, culture, and capabilities are configured to reinforce one another so that the entire enterprise moves coherently toward its goals.

The group of trekkers pictured above follows the lead in almost perfect synchrony.  Each one carries their own pack, each must take steps on their own, and each understands the power of the team effort in reaching their destination.  They are aligned in plan, skills, abilities, and behaviors.

Ideally, leaders set and communicate a clear, believable, and implementable plan and then select team members with the right skills who commit to the goals and the way to get there in a way that makes sense.  Right?  But in the real world the majority of corporate organizations do not make it to the “top.”  Indeed, IBM found that less than 10% of well formulated business strategies are effectively executed.

What Organizational Alignment Research Found
Our organizational alignment research based upon 410 companies across eight industries showed that strategically aligned companies grow revenue 58% faster, are 72% more profitable, and retain customers 2.23-to-1.  To perform at their peak, companies and teams need to align their culture (how the work gets done) and talent (the needed skills in the right positions) with their strategy (the overall plan for success.)

Sadly, the research also found that team members are half as clear as their leaders about their team’s:

• Goals and accountabilities.
• Roles and responsibilities.
• Success metrics.
• Operating norms.

The research also found that the lack of strategic clarity below the C-Suite causes high levels of misalignment which in turn creates high levels of organizational churn, dysfunction, disengagement, and underperformance.

How to Achieve Strategic Alignment
From our work with executive teams and organizations, three levers consistently stand out:

1. Clarify and Communicate Purpose & Strategic Direction
   Articulate why the organization exists and how that purpose translates into strategic choices.  Strategy communication must be consistent, repeated, and connected to everyday work.
2. Align Structural and Operational Elements
   Ensure that structure (reporting lines, roles), processes (how work gets done), capabilities (skills, systems) and culture (behaviors, norms) support strategic priorities.
3. Build Dynamic Mechanisms for Continuous Alignment
   Alignment is not a one-time event; it is an ongoing process. Create feedback loops, monitor strategic metrics, engage middle managers as alignment agents, and revisit alignment as context shifts.

6 Questions to Measure the Power of Strategic Alignment
After your next strategy retreat, you will know your strategy is clear enough, believable enough, and implementable enough when your key stakeholders agree that they:

1. Clearly understand the overall strategy.
2. Can articulate how their work directly contributes to the strategy.
3. Believe the strategy will lead to successful results.
4. Feel the strategy provides clear direction to their work.
5. See employees implementing the strategy successfully across the company.
6. Trust the leaders to commit to the agreed upon strategic priorities across the company.

The Bottom Line
Strategic misalignment leaves strategies stranded.  High performing companies begin the path to success with a clear, believable, and implementable strategy that stakeholders can commit to.  Ideally that strategy would be articulated on a one page strategy map and include your big strategic bets required to succeed.  Once you have harnessed the power of strategic alignment, you can then focus on lining up your culture and your talent to get you where you want to go.

To learn more about avoiding the traps associated with unclear business strategies, download 7 Ways to Stress Test Your Strategic Clarity