SPECIAL REPORT Strategic Alignment Process

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 organizations 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.

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

SPECIAL REPORT Strategic Alignment Process

The organization and all of its members must adapt to the requirements of market conditions since they cant control those requirements. Strategy If the chosen strategy drives the organizations 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 companys 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 organizations 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 Ive got to pick up my husband at the airport.), and those who leave after that time 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 dont. 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.

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

SPECIAL REPORT Strategic Alignment Process

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 companys 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 wont listen to them seriously. The employees wont listen until the Old Joe problem is resolved. Most organizations have an Old Joe. Joe has been with the company for a long time. He hasnt done much in the way of useful work for years, and mainly just gets in the way and takes up space. He doesnt contribute, but isnt punished, because Joe is bullet proof for some reason. He is the CEOs 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 Joes in an organization, employees will continue to be cynical and so resist calls for new behavior.

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

SPECIAL REPORT Strategic Alignment Process

Style And finally, theres 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 case at 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 wont 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 to uncover any misalignment, diagnosing the causes of misalignment, and prescribing changes that will achieve alignment and allow implementation.

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