Report Align Concepts

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SPECIAL REPORT

Strategic Alignment Process

Copyright © 1998 by Richard C. Seaman , Strategy Implementation, Inc. 1

If an organization has an aligned strategic planning process it will produce a strategy that is

implementable (see Special Report: The Strategy Planning Process). In order to actually

implement that strategy, however, it may be necessary to change the organization’s culture to the

degree necessary to ensure that individual employee behavior supports the requirements of the

strategy. Implementation is most easily accomplished if the culture and strategy are in alignment.

Concept of Alignment

The concept of alignment is based on the fact that elements of a hierarchical system have a

preferred order, that one element is dominant. In other words, a hierarchical system has a

“driver”. To achieve maximum performance from a hierarchical system, the driver should

determine what happens in the rest of the elements. If an element does not support the driver to

the optimum degree, it is out of alignment. If, for any set of reasons, the element cannot be

moved into alignment, the operation of the entire system suffers because something other than

the dominant element is determining its performance. Strategic alignment is a hierarchical system.

Strategic Alignment

Market Conditions

Strategy

Informal Values

Organizational Structure

Systems

Staff

Style

Market Conditions

Market conditions constitute the driver of strategic alignment because conditions in the market,

such as customer needs and expectations and competitive strengths and weaknesses, define and

limit the strategic options available to a company. From a cultural perspective, market

conditions represent the driver because market conditions, by definition, are beyond the control

of company executives and employees. Once the company chooses a target market segment, the

conditions that prevail in that segment define the parameters of a culture needed for success in it.



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The organization and all of its members must adapt to the requirements of market conditions

since they can’t control those requirements.

Strategy

If the chosen strategy drives the organization’s culture, the strategy will be successful (if it was

valid in the first place). If, however, the company is unwilling or unable to change some element

of the culture so it supports the strategy, the strategy will fail. It will fail because it will never

really be implemented. If a company’s culture is out of alignment with its strategy, the culture

will win.

For example, a company might declare that “flexibility” is a fundamental part of its strategy. But

if it has a rigid culture, all of its employees will continually be frustrated in their ability to

implement the strategy by the actions of the company itself! This is the equivalent of spurring a

horse to move forward and pulling back on the reins to make it stop at the same time.

Informal Values

Informal values, the first element of an organization’s culture, refer to the unwritten rules that

really govern what people do. These are things that every employee knows but that never get

discussed in a public forum or in an official way. What does it take to get promoted? What does

it take to get fired? How late do you have to stay at work each day in order to be considered a

“good worker?” Every organization has a time, never published, but generally well known. New

employees discover it because people who leave before that time tend to make excuses (“Sorry I

have to go, but I’ve got to pick up my husband at the airport.”), and those who leave after thattime tend to brag about it the next day (“Boy, I was here until 8:30 again last night!”).

Informal values are not right or wrong; they are simply either in alignment and support the

strategy, or they are not and don’t.

Organizational Structure

Many types of organizational structure are possible, but none is inherently the right way to

organize for all companies, or even all companies of similar size, industry, etc. On the contrary,

direct competitors should, logically, have different organizational structures to some degree to

reflect their different strategies.

Virtually all companies have a vertically oriented organizational chart because that approach

clarifies one important aspect of any culture: who has direct power over whom? However,

traditional organizational structures are often out of alignment because they fail to clarify who, if

anyone, has authority over horizontal processes between functions, departments, and divisions.



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When there is confusion in this area the culture of the organization can easily deteriorate into

internal warfare between competing power blocks.

Systems

Systems refers to any aspect of an organization that is pervasive, that touches all of it. Examples

would be things like the company’s computer and networking system, its compensation system,

and its facilities management process.

The most powerful system with regard to culture is the compensation system. Employees are

often encouraged by management to cooperate with each other to make the customer happy, but

are frequently driven toward the opposite behavior because they are actually paid to make their

boss happy. If an organization tries to serve customers through cross-functional processes and

teamwork, but orients compensation around functional and individual performance, it will satisfy

neither the customers nor the employees.

Staff

Staff is often thought of in terms of good or bad, qualified or incompetent. For alignment

purposes the issues are more subtle. What are the definitions of good and bad behavior? What

are the consequences for good and bad behavior? Are the consequences consistent? Do the

selection, recruitment, hiring, training, retention, promotion, and reward of all employees support

the strategy, or are some aspects out of alignment? Are considerations other than implementing

the strategy allowed to distort the process?

Consider the “Old Joe” problem. Executives frequently complain that one of their most

intractable problems is the difficulty of overcoming employee cynicism and generating employee

enthusiasm for company initiatives. They seem to be saying the employees simply won’t listen

to them seriously. The employees won’t listen until the “Old Joe” problem is resolved.

Most organization’s have an “Old Joe”. Joe has been with the company for a long time. He

hasn’t done much in the way of useful work for years, and mainly just gets in the way and takes

up space. He doesn’t contribute, but isn’t punished, because Joe is “bullet proof” for some

reason. He is the CEO’s brother-in-law, or he holds the original patent, or he knows where some

very unpleasant skeletons reside. Whatever the reason, companies feel their hands are tied when

it comes to trying to make Joe do something and holding him accountable for the results. They

constantly worry “What will Joe think?”

The focus of concern should be what everyone else thinks. All the rest of the employees are

watching them do nothing about Joe. As long as executives talk about performance and

commitment, but do nothing about the Joe’s in an organization, employees will continue to be

cynical and so resist calls for new behavior.



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Style

And finally, there’s style. Not the style the executives prefer, or the one they were trained

under, but the style that supports the strategy. This may be open and supportive, as is the caseat Hewlett-Packard, or it may be confrontational, as it is at Intel. The point is that it should be

driven in a very conscious way by market conditions and the strategy, and nothing else.

Dynamics of Alignment

The most devilish aspect of strategic alignment is the fact that market conditions, the dominant

element that should determine what happens in the rest of the elements, are constantly changing

so the definition of alignment changes with time. The reason so many companies get into so

much trouble dealing with change is the simple fact that they fail to realize they are shooting at a

moving target. To make matters worse, they often mistakenly assume that they are in control of the amount of time they have to achieve alignment.

Say, for the sake of argument, that the market is “moving west at 10 miles an hour”. The very

least a company can do is to migrate its strategy and culture west at 10 miles an hour. It won’t

achieve alignment this way, but it will prevent the gap from getting bigger. Unfortunately, many

companies feel, in effect, they can only move west at 5 miles an hour because more rapid change

would be too disruptive. This amounts to a “death strategy” because the market, not the

company, determines how much time is available to achieve alignment.

The Strategic Alignment Process solves these problems by assessing elements of the culture touncover any misalignment, diagnosing the causes of misalignment, and prescribing changes that

will achieve alignment and allow implementation.

For more Strategy Implementation tools and reports, please go to

http://www.strategyimplementation.com

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