Align Strategic: All Facts You Should Know

Strategy alignment improves business performance, but it takes work. ThoughtExchange is designed to quickly align and bring together your teams to address the most pressing issues facing your business. Keep reading, you will learn how to measure and how to reach the goal of aligning strategy.

What is Strategic Alignment?

Strategic alignment occurs by design and is frequently the crucial component lacking in your success. According to Creately, “strategic alignment is the prudent arrangement of the various internal and external elements of an organization—from its business strategy to its organizational structure—to best support the achievement of its long-term goals and purpose.”

You can most effectively ensure your organization’s long-term success by examining and coordinating different aspects of it. Most aligned, engaged, prepared, and change-ready organizations are those with high performance.

From the traditional bureaucracy model to the—often referred to as “more innovative”—network model, alignment of your organizational architecture matters. This might not work if your efficiency-focused strategies are based on a flexible network model. It might be excellent for creativity but not for efficiency. Clarify your organization’s architecture to make sure your model satisfies your business needs. This is frequently a significant leadership challenge.

Why Does Strategic Alignment Matter?

The impact of strategic alignment on organizational performance has been the subject of extensive academic study over the past few decades. There are some really powerful conclusions:

• According to one study, up to 80% of the variance in performance among organizations can be attributed to the degree of strategic alignment within an organization. This outcome is quite shocking.
• According to another study, strategic alignment accounts for 51% of the difference in an organization’s performance, and consensus/buy-in levels account for another 38%. Since they together accounted for about 90% of the variation in operational results of organizations, alignment is crucial, but so are buy-in and support.
• According to a third study, the degree of strategic alignment between an organization’s business objectives and the activities carried out by the IT department accounts for 18% of the variation in overall performance. It is therefore crucial that you align your IT spending with your overall business strategy.

There are numerous studies on the effects of strategic alignment, so we could go on, but I believe the point has been made. Because it is closely related to better business outcomes, strategic alignment is important.

The fact that it is, in theory, very simple to fix suggests that strategic alignment matters. Large-scale company reorganizations are not necessary. Your IT systems don’t require a complete overhaul. Not all of them need to be retrained…

You simply need to center everything you do on your strategic goals. Of course, it’s not as easy as it sounds.

What is the Importance of Strategic Alignment?

Strategic alignment, which has a positive impact on organizational alignment, is the result of the excellent implementation of a plan and strategic planning. yes, read that passage once more.

Let’s focus on “implementation excellence” for a moment. Consider the individuals who comprise your company’s business units, departments, and teams. They are your most valuable asset and require assurance that they are given priority. Implementing any strategy begins by educating, involving, and aligning the people responsible for executing it. Something that one is a part of and holds dear will make people feel more connected. if your organization is having trouble aligning its teams.

It should be obvious that organizations that are strategically aligned stand a better chance of succeeding in the difficult business environment of today. The alignment of strategy, organizational capabilities, and architecture are essential.

“In an aligned enterprise the whole is worth more than the sum of the parts,” Jonathan Trevor, an Oxford professor, explains strategic alignment leadership in a YouTube video.

What Are Our Strategic Goals?

In an ideal world, your strategic goals will flow from your strategic planning process, but in most large organizations, strategic planning is not really done properly leaving most managers wondering how “big strategic statements” affect them.

[We look at how things should function in a perfect world in the section on strategic planning. Let’s assume for the remainder of this section that the organizational strategic planning process doesn’t really cascade through it effectively.]

Even if the overall strategic planning process isn’t providing you with what you need, there are some things you can do to determine your own strategic goals. Identifying your strategic goals is the first step, and then you must rank them in order of importance. Because your team’s ability to make decisions that are clear, consistent and well-aligned depends on the weights and relative importance of your goals, this second step is extremely crucial (and frequently skipped).

Identifying Our Goals

Prior to discussing how to identify goals, let’s first discuss what they are NOT.

Strategic objectives do not refer to particular tasks or programs. When we ask managers what their goals are, we often hear answers like, “I need to deliver Project X” or “I need to launch Product Y”. These are actions or deliverables that will help you reach your objectives.

Finding the real objectives can frequently be done by first taking a look at the major projects that your team is working on. By looking at the “goals of the projects,” you often find the goals of the organization.

Let me state it in another manner. If Project X will help you enter the European market, for example, then “Growing sales by entering the European market” might be one of your goals. One of the things you’re doing to assist in achieving that objective is delivering Project X.

So take a look at your major projects and ask, “What are the project’s commercial objectives?” – this will give you a good initial list of strategic goals.

Next, you can determine the overall goals of your organization if it has a set of key performance indicators. There are limitations here, though, as KPIs can become “set in stone” in many organizations. This implies that your KPIs might be a reflection of goals you had several years ago!

One airline I spoke to used a set of KPIs to direct resource allocation. When asked what one of those KPIs actually meant, nobody could answer – no one even knew what this KPI actually meant – it had simply been there for years and was “how we’ve always done it”!

KPIs can thus be a good place to start, but make sure they accurately reflect your current objectives.

Weighting Your Goals

The next step is to determine the order of importance of your strategic goals now that you have a list of them. Why?

Well, to put it plainly, not all of your objectives are equal. More importantly, it’s unlikely that your goal’s relative importance will be accepted by your key stakeholders. This means that there’s no common “set of rules” that can guide decision-making and actions making it difficult to keep things aligned.

So, we need to “weigh” our goals but we need to do it in a way that everyone supports.

Although it may seem like a straightforward task, there are actually good ways and bad ways to go about completing it. For instance, getting a whiteboard and asking a large group of people to rate or weigh your goals is rarely very effective. That kind of process is open to decision biases creeping in and tends to be poor at building real consensus and buy-in (though you may think you reached a consensus).

The best decision-making process is the AHP (analytic hierarchy process; don’t be alarmed by the intimidating name), according to research on decision-making, particularly research on multi-criteria decision-making, which is what we’re dealing with here.

You can learn about AHP here, but for the purposes of learning about strategic alignment, here’s what you need to know:

• AHP structures the discussion to reduce decision bias
• AHP is collaborative, and helps build consensus and real buy-in (see our Collaborative Decision-Making Guide)
• AHP gives a clear weighting to each of your goals
• You can use these weighted goals to “measure” strategic alignment (see How to measure strategic alignment later in this document)
• AHP has been validated academically

You can now present your team with a weighted map of your top-level goals that demonstrates what is most crucial. Your team is more likely to use your goals to guide their own decisions and actions the more widely you communicate them and the better your team understands what you’re trying to accomplish and why.

How to Measure Strategic Alignment?

Let’s assume that we want to strengthen our strategic alignment. How do we go about doing it?

So far, what we’ve discovered is that strategic alignment refers to choosing and doing things that are in line with your strategic objectives.

“Goals” is plural. Several of them are typically present.

Therefore, assessing strategic alignment requires more than checking boxes. Asking a simple yes/no question, “Is X consistent with the plan?” is one of the most common mistakes people make when trying to achieve strategic alignment. Why? Well, because everyone will say “yes”.

Really what we’re interested in is the contribution X makes to your various strategic goals. In other words, whenever you’re making an important decision you should be evaluating the contribution each alternative (projects, vendors, sites for a factory, etc.) makes to your strategic goals. You won’t be able to determine which option is most in line with those strategic goals until after that.

Another common error is assuming that the executive team should conduct the measurement of strategic alignment. For instance, many organizations will roll out the projects they have chosen for the upcoming year in front of senior management and let the leadership team decide whether or not they are strategically aligned.

Can the VP of sales accurately predict how a specific project will affect customer care? Is your CFO an accurate estimator of the additional revenue that will result from a particular initiative? Of course not!

So how do we actually assess alignment in practice?

The solution is to make use of a reliable AHP-based weighted scoring system. I won’t reiterate what we discussed earlier in this document regarding AHP. We’ll instead focus on the scoring phase of the procedure.

You develop scales for each of your strategic goals in this step. These scales ought to quantify how much each participant contributes to the objective you’re considering. For example, if entering the European market is one of your strategic goals, your scale might look like this:

Will this project have any impact on our ability to enter the European market?

• 0 – No impact on European market entry
• 1 – Small impact of European market entry
• 2 – Moderate positive impact that would make a small, but definite difference
• 3 – A real difference to either the speed, size, or risk of market entry
• 4 – A significant difference in either the speed, size, or risk of market entry
• 5 – A game changer or “must have” for market entry in Europe

Now, it’s really hard to write a good scale “in theory” so this scale probably has flaws, but you get the idea – you’re looking to capture what the impact is on the business goal.

Now that we have a lovely scale that perfectly captures the contribution to our goals, who should provide an answer?

This depends on what you’re evaluating. Generally, the answer should be “people who are experts and who do not have a preference for one outcome or another”.

Consider your project selection. If the person requesting the project is asked to score their idea against different goals, they will try to “game” the system by scoring everything higher than it should be.

This is why it’s a good idea to have an “independent expert” do the scoring where possible. If that isn’t possible, you can always ask an authority to look over the responses and determine whether they make sense. This facilitates the collection of more reliable and objective data.

Sometimes you’re measuring something that is quite subjective or something that you can only estimate by intuition (as opposed to “level of effort” or “net present value” which you can model or base an estimate on previous data).

For example, you might be asking “What effect does this vendor’s design have on employee morale?” That’s a hard thing to estimate in any really “rational and reliable” way. You’d get a much better response in this situation if you assembled a panel of experts and asked them all the same questions. According to research, a group of people—even just three people—are much more accurate at making estimates than a single person.

So, the rule of thumb is to use subject matter experts to score the contribution of your alternatives (projects, vendors, site for a warehouse, etc.) against your weighted strategic goals. Ask a group of people for their opinions if you’re measuring something that is inherently subjective.

Once your alternatives have been scored, simply multiply the scores and weights for each goal to determine the final score for each option. As a result, each alternative receives a final score that lets you know which tasks, suppliers, or locations are best.) are most aligned to your strategy.

It is frequently a good idea to present this data in a format similar to this, with the contribution to each goal made by each alternative being made clear and the weighting of each goal being indicated.

How to Achieve Strategic Alignment?

Organizational alignment can be improved by strategically aligning the business, which will increase productivity, effectiveness, and profitability. See how your organization stacks up against the following:

Align and Unite Your Leadership Team

In today’s world, a leader must be able to “fly high and land softly,” which means they must be able to think both conceptually with a broad perspective of the entire organization and practice with the capacity to help the rubber meet the road.

Lack of strategic alignment often starts at the top, negatively impacting leaders at all levels getting “on board.” An MIT Sloan School survey of more than 4,000 managers found that only 28% could correctly list three of their firms’ top strategic priorities. A gap in the execution of strategies is a common outcome for many organizations caught in a vicious cycle.

This is especially true in larger, siloed organizations where resources are frequently allocated to the main agendas of business groups rather than to corporate strategic priorities. Without leaders who actively create alignment beyond pockets within their groups, an organization is nothing more than a group of people pursuing their own interests. With 4 Simple Steps to Unifying Your Team, Inc..com goes into more detail on this.

And let’s not overlook the necessity of bringing together the frozen middle management, which must act as the catalyst for any transformational change. People frequently have to alter their behavior—which they find difficult—in order to change an organization. However, if they are involved in the right way, they will act as a catalyst for producing excellent results.

Bring your leadership groups together to discuss the business as a whole, taking into account the present and the future.

Develop and Deliver the Strategic Playbook

The primary objective of strategic planning, according to AchieveIt, is to bring a company’s mission and vision into alignment. The strategic plan serves as a road map to help you get from one to the other, with the mission serving as the starting point and the vision as the destination.

It is more crucial than ever to have a clear vision, values, and goals as we navigate a new way of working in the corporate world. When properly communicated and backed up by actions, these promote alignment and can be a powerful playbook for your company.

Change strategist coach Kathy Wilson shares a play-by-play in her “strategic planning handbook.” In order to ensure that important initiatives and goals are still relevant, you can and should review your strategic plan. If any strategy or tactic conflicts with the values of your organization, it should be reevaluated.

Also keep in mind that not every member of your strategic planning team will be able to clearly state your mission, vision, and values. Maintain them, make sure they are relevant, and integrate them into every part of your company.

Inspire Commitment

When you walk into a high-performance organization, you can feel the difference. Instead of being dejected by the changes taking place, people are energized and confident about the strategy of their organization. This is so because it’s likely that they took part in the strategic planning.

According to the accomplished organizational health expert, Patrick Lencioni, commitment is a function of clarity and buy-in. It’s not the same as getting consensus when you get team members’ commitment. Consensus-building involves compromise, which might not produce the desired outcome. Clarity of purpose, trust, and healthy conflict all contribute to commitment. Every team member understands the rationale behind and supports the chosen idea, both within the group and when shared with others. Even if only one idea is pursued.

“Buy-in is much easier if your employees participated in developing the strategy,” explains Robert Bradford echoes the need for commitment by highlighting how crucial buy-in is to your strategy.

To be inspired to work toward the desired outcome, everyone must feel included. Therefore, it is best for your organization to involve as many people as possible in the strategic planning process. Finding ways for those who are not directly involved to participate in strategic decision-making from the bottom up will help build connections and understanding, and reduce resistance when introducing strategic plans and priorities.

Feedback and input must go through various channels at various levels of your organization, including manager and employee one-on-one meetings and executive leadership meetings.

Bring the Designers and Deliverers Together With Cross-functional Collaboration

Your leadership team is in sync and on board, you have a strategic plan, you understand your organizational architecture, and the strategic playbook is in use. Have you considered the untapped potential in a cross-functional collaborative environment yet?

Teams from various business functions and groups come together in a cross-functional collaborative environment to support a common strategic objective or priority.

It’s worth the investment to bring teams together because doing so can foster innovation, increased efficiency, and engagement. It can also result in more alignment between various business functions as a result of awareness and involvement, as explained by Truenxus, who also breaks down the challenges and solutions associated with cross-functional collaboration.

Don’t Set and Forget

Have you ever had a strategic priority that gained traction before something catastrophic, like a pandemic, happened? Okay, it doesn’t have to be a pandemic; it could simply be a change in senior leadership, a new product or service, etc, that can cause a strategic priority to change or be housed for a while. Did you designate a procedure to follow in the event of change when you were planning?

Strategies should be incremental rather than radical. They are long-term and generally have broad scopes. Things inevitably change as we go along.

A good place to start when trying to change with the times is having the flexibility to be agile in your work models. Outlining a procedure for re-evaluating and realigning your strategic plan from the start is advisable. This way, the process of reevaluating risks, challenges, potential opportunities, and future goals will reassure everyone—from the closely involved planners to those who weigh in from the frontline.

Washington State University reiterates that strategic planning should not be viewed as “a one-time project that produces a milestone document of its best thinking at the moment” to achieve its vision.

Use a Strategic Alignment Model

So how does your company fare? To ascertain if you are aligned, use a strategic alignment model. These give you a visual representation of how your organization’s priorities are connected and aligned both vertically and horizontally.

This is how The Center for Management and Organization Effectiveness defines an alignment model:

An alignment model is a tool that aids in assessing how well an organization’s longer-term plans are aligned with its capabilities, resources, and opportunities as well as with risks, vulnerabilities, and management-related opportunities. Additionally, it will assist a company in comprehending how to track the development of strategic alignment. Every business activity must have the resources and capabilities necessary to carry out its portion of the enterprise strategy, so it is crucial to make sure this is the case.

How to Develop Strategic Alignment With Collective Intelligence?

Peter Drucker says, “culture eats strategy for breakfast.” This implies that, regardless of how successful your strategy is, culture will determine your success. Do you understand your culture and how you rank in achieving strategic alignment?

Don’t undervalue the power of collective intelligence when it comes to strengthening your strategy, promoting better alignment, and enhancing organizational performance, regardless of the size of your organization—whether it has 10 or 10,000+ employees. Your greatest asset is, after all, your people.

What is Meant by Strategic Alignment?

According to Creately, “strategic alignment is the prudent arrangement of the various internal and external elements of an organization—from its business strategy to its organizational structure—to best support the achievement of its long-term goals and purpose.”

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