Pursuit of Common Purpose

Analysis reveals that alignment is the single most significant factor contributing to performance improvement

A business can have the most advanced technical infrastructure, the latest business performance software tools, pristine data, executive involvement, well-defined processes, but unless financial and operational alignment is achieved -- across functions and throughout the layers of the business and strategy, the organization will not perform at its full potential.

Forces of proliferation have shaped a new customer landscape which has resulted in many more unique needs and a more diverse customer base for which more competitors are vying. Companies may benefit from a more systematic approach to prioritizing opportunities, allocating resources, and coordinating the activities among the various functions.

Most business leaders have experienced the results of formal strategy sessions: multi-page briefing books filed with missions and visions, key messages, and positioning statements.  You might have one in your drawer right now.  After the assured all-hands meeting to announce strategy change, most employees go back to doing what they always have done. People will do what they know best.

Even organizations currently performing well can strengthened their competitive muscles through tightening space that may exist between strategy and execution by striving for operational alignment. Three building blocks form the foundation of alignment: people (where they function in the organization), process (including workflow) and technology (including tools and data.)

There are five types of alignment: *

Strategy and Measures
Many leaders are surprised when they take an in-depth look at their measurement system. It does not enable them to see the basic units of value creation that must link together to create the unique customer experience. Because they do not measure these elements, they do not control the key drivers that have the biggest material impact on strategic objectives.

As Robert Kaplan and David Norton have pointed out in their book Alignment, the organization's leadership needs a tool to articulate a theory for how to operate multiple units within the corporate structure to create value beyond what the individual units could achieve on their own.

Horizontal Alignment
While every function has a stake in the outcomes, many organizations limit performance to an extent because critical information is trapped in silos. Often, important customer insights are held in the marketing department, but not implemented within the sales organization.

Instead of individual functional metrics, a shared measurement system that is accessed by sales, marketing, manufacturing and finance would link them in a common cause and assure that all their energies are directed to moving the organization in the direction it wants to go.

Vertical Alignment
Are people at all levels working in unison toward the same objectives? How do you know if they are on track? Accountability is critical to maximizing the potential. A measurement framework with the various hierarchies helps you see how the business rolls up from the different perspectives. It enables those on the front lines to see the value of their contribution, and from the top, executives get to see where the most critical processes are found and also where the biggest roadblocks might exist.

External Alignment
Many businesses concerned about alignment within the management system however are tightly focused within their four walls. Today's fluid and evolving environment requires that the management system incorporate discovery that takes in information from outside and builds on learning and calculated experimentation.

Financial/Operational Alignment
Financial targets are often based upon past performance combined with aspirations of the organization's leaders without simultaneous dialogue that reveals the "hows." It is important the leadership in every function and level understand the cause-and-effect relationship between drivers and the financial results desired.

Visualizing the interconnections between the three major aspects can help to crystallize a holistic vision on a single page.  Through an alignment mechanism, changing customer needs can represent an opportunity to boost performance through cooperation between sales, marketing and manufacturing that will enable organizations to win big among the different types of customers that exist. 

* Simon Tucker & Ron Dimon

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