“There is no universal or one-size-fits-all prescription for a winning business. But corporate leaders today seem to agree that strategic alignment is high on the list.” – Jonathan Trevor and Barry Varcoe
Strategic alignment at its core is the creation of “a coherent whole” of all that encompasses a given organisation. Strategy being a vital component of all organisations, helping define a roadmap for success, setting values and giving purpose. Yet research suggests that strategy on its own has little effect on business performance, rather it is the alignment of activities to fit this strategy that yields a desired outcome. Strategic alignment can be thought of as the process of ensuring that an organisation’s goals, objectives, and strategies are aligned with its resources, capabilities, people and actions to achieve effective performance.
Realising such strategic alignment means giving your organisation the best chance of success.
As the Center for Management and Organisation Effectiveness describes:
“Organisations that are strategically aligned operate more efficiently and achieve better outcomes because people and teams develop action plans that are focused on achieving common goals and objectives. Without strategic alignment, people become confused about their priorities, make fewer effective decisions, and likely engage in more conflict.”
This is supported by a 2020 study which confirmed “that there is a significant positive effect of the strategic alignment on the decision effectiveness, as it could enhance decision quality, time and acceptance.” In essence strategic alignment can mean everyone is on the same page, resulting in greater teamwork, cohesiveness, and coordination, a reduce in wasted efforts, more effective and timely decisions, employee purpose, clarity, and ultimate empowerment.
Understanding and achieving strategic alignment are two very different concepts however. A Forbes study found that 65% of organisations have an agreed-upon strategy, yet just 14% of employees understand the organisation’s strategy and less than 10% of all organisations successfully execute the strategy. A recent Harvard Business Review study of more than 500 frontline employees, middle managers, and senior executives across 12 different organisations also found a large gap between actual and perceived alignment. Discovering that whilst 82% of respondents felt strategic agreement within their company, analysis of “detailed written explanations from those same employees around what their company’s strategies were, [showed that] actual alignment (as measured by the linguistic overlap in the concepts and words they listed) was, on average, just 23% — two to three times lower than perceived alignment.”
So, what is needed to overcome this gap to achieve actual strategic alignment? Leaders can take some key steps to ensure all within the organisation are committed to the same cause:
- Focus strategy on driving customer value – the same HBR study found that those who overcame strategic confusion did so by setting goals that prioritised their customers. By setting strategies based on customer value it helps drive all towards a simple and attainable truth, not wasting resources on initiatives which ultimately do not promote a customer benefit.
- Encourage employee participation and implement strategy through communication not directives – Provide opportunities for employees to share ideas and their own perspectives on organisational purpose, values and strategy. Have them involved in setting the goals and decision making, rather than imposing upon them. Transparent consultation and dialogue across the board is critical in reaching holistic buy-in.
“Leaders cannot simply announce a strategy and assume it has permeated the rest of the organisation. Instead, they must proactively solicit input and feedback from across the org chart, truly listening to lower-level employees and engaging in meaningful dialogue. After all, top-down communication from leaders to frontline workers may drive perceptions of strategic alignment, but it won’t improve real consensus.” – Mittal et al., 2023
- Define employee roles clearly – Employees not aware of their expectations often have a tendency to carry out tasks incorrectly or even avoid responsibilities all together, hindering organisational attainment of strategic goals. It is important set clear guidelines, providing confidence and assurance their role will be executed in a desired manner.
- Link performance goals to strategy – This way, strong performers have a direct positive influence on strategic performance. Incentivising such individual successes means more are motivated to reach alignment.
- Monitor and measure success – Such tracking of alignment helps reveal the efficacy of activities. Helping to flag any areas of concern, adjusting efforts to improve.
Strategic alignment involves ensuring an organisation’s strategies are in line with its actions and is often easier said than done. By prioritising the above steps the gap between actual and perceived alignment can be reduced, and ultimately help organisations operate more efficiently and achieve better outcomes.