Corporate Strategy: 5 Critical Alignments To Assess

By Joe Evans

As businesses muddle out of the recessionary hangover, the fundamentals management matter more than ever. For multi-national enterprises and small businesses alike – it is all about the results. With the pressure to perform ratcheted up to an all time high, corporate strategy and crisp execution are top of mind with business leaders. Crisp execution requires business strategies to be aligned with methodically planned actions. This article addresses five of those key areas where alignment to corporate strategy are essential to business effectiveness.

1. Strategy and mission alignment

If organizations cannot succinctly explain what they do, how will their marketplace consumers understand it? An organization’s mission statement must be defined broadly enough to allow room to maneuver, yet be direct and purposeful in defining the market(s) served, the products and / or services provided by the firm and the distinguishing characteristics of those offerings.

Let’s look at Target’s mission statement as an example and then break it down into parts.

Target’s Mission: “Our mission is to make Target the preferred shopping destination for our guests by delivering outstanding value, continuous innovation and an exceptional guest experience by consistently fulfilling our Expect More. Pay Less.^® brand promise.”

What are the key elements?

- Market Served: economy and quality minded shoppers

- Contribution: exceptional guest experience

- Distinction: outstanding value, continuous innovation and an exceptional guest experience by consistently offering more for less

This same information must align with the strategy of the organization. Strategies are broad in scope, but should also be capable of being summed up in strategy statements that employees will understand and embrace. A strategy statement, while being simple in structure, must also anticipate the need for adaptability. Too much specificity in the statement will undermine flexibility down the road.

At a minimum, for strategy to yield competitive advantage, it must address three key questions:

- “What do we do?”

- “Who are our customers?”

- “How do we do what we do better than our competitors?”

The aligned strategy statement “shell” for one of Target’s brands might be stated as follows:

“Our strategy is to _____ by offering _____, at a cost that brings value to our customers unmatched by our competition through ___ and ____.”

Note the alignment of elements in the mission and strategy:

Contribution = “What do we do?”

Market Served = “Who are our customers?”

Distinction = “How do we do what we do better than our competitors?”

2. Strategic goals and core values alignment

Strategic goals and organizational core values are both extremely important aspects any business, so overlooking the alignment of these elements is a serious mistake.

Strategic goals should define the outcomes the organization desires to accomplish in measurable terms.

Core values serve as the compass to help steer strategic decision making. Businesses should know what these values are and state them in no uncertain terms.

If a core value of the organization is to respect employees and promote quality of life, then setting goals that are unrealistic and are sure to drive employees into the ground is a violation of that core value. Such a violation represents an alignment issue. While super-human feats may bring about short-term benefits, sustaining them over time is not realistic – therefore, no long-term advantages will be gained.

3. Strategic goals and operational capacity alignment

The best way to ensure alignment between strategic goals and operational capacity is to face realities during planning and do not allow over zealousness projections to take over. Ask questions.

- Do our internal systems have the ability to support goal achievement?

- Will suppliers, distributors and partners be able to keep pace in support of goal attainment?

- Can our managers and employees step up to the added workload an pressure we will be asking of them?

4. Strategic goals and core competencies alignment

Strategies should follow a simple alignment rule related to business core competencies. Compete where you have an advantage, otherwise do not. Do the skills and knowledge exist in the right levels within the organization to accomplish the strategic goals? In strategy development, the question of “what should we do” is a corollary to the “what we do” question. This perspective relates to building competitiveness in your offering and exploring tangential markets that might be exploited, provided that the barriers to entry are not too high and organizational capabilities match the opportunities being evaluated. Truly gauging core competencies is key to ensuring alignment exists in this area.

5. Strategy and operational execution tactics alignment

Operations-level planning describes the tactics of execution, correlating strategy to action. Misalignment often occurs here, primarily because companies skip over operational planning altogether or do a poor job of paying attention to details.

The goal of the operational planning is to create realistic and comprehensive work breakdown structures (project plans) for the work entailed in all identified initiatives related to the strategic goals of the client. Additionally, accountability and responsibility structures get established at the initiative and project levels when operational planning is done correctly. This activity has an important alignment to budgets, as it affects resource plans, infrastructure and schedules that might have downstream consequences to sales, marketing and other functions.

In conclusion

It is critically important to build alignment into strategic plans as they are constructed and each time they are refreshed. Alignment refers to sensibly attaching strategies to actions while remaining true to the organization’s mission, core values, actual operational capabilities and core competencies along the way.

6 Habits of True Strategic Thinkers

You're the boss, but you still spend too much time on the day-to-day. Here's how to become the strategic leader your company needs.

By Paul J. H. Schoemaker | @inc

In the beginning, there was just you and your partners. You did every job. You coded, you met with investors, you emptied the trash and phoned in the midnight pizza. Now you have others to do all that and it's time for you to "be strategic."

Whatever that means.

If you find yourself resisting "being strategic," because it sounds like a fast track to irrelevance, or vaguely like an excuse to slack off, you're not alone. Every leader's temptation is to deal with what's directly in front, because it always seems more urgent and concrete. Unfortunately, if you do that, you put your company at risk. While you concentrate on steering around potholes, you'll miss windfall opportunities, not to mention any signals that the road you're on is leading off a cliff.

This is a tough job, make no mistake. "We need strategic leaders!” is a pretty constant refrain at every company, large and small. One reason the job is so tough: no one really understands what it entails. It's hard to be a strategic leader if you don't know what strategic leaders are supposed to do.

After two decades of advising organizations large and small, my colleagues and I have formed a clear idea of what's required of you in this role. Adaptive strategic leaders — the kind who thrive in today’s uncertain environment – do six things well:

Anticipate

Most of the focus at most companies is on what’s directly ahead. The leaders lack “peripheral vision.” This can leave your company vulnerable to rivals who detect and act on ambiguous signals. To anticipate well, you must:

Look for game-changing information at the periphery of your industry
Search beyond the current boundaries of your business
Build wide external networks to help you scan the horizon better

Think Critically

“Conventional wisdom” opens you to fewer raised eyebrows and second guessing. But if you swallow every management fad, herdlike belief, and safe opinion at face value, your company loses all competitive advantage. Critical thinkers question everything. To master this skill you must force yourself to:

Reframe problems to get to the bottom of things, in terms of root causes
Challenge current beliefs and mindsets, including your own
Uncover hypocrisy, manipulation, and bias in organizational decisions

Interpret

Ambiguity is unsettling. Faced with it, the temptation is to reach for a fast (and potentially wrongheaded) solution. A good strategic leader holds steady, synthesizing information from many sources before developing a viewpoint. To get good at this, you have to:

Seek patterns in multiple sources of data
Encourage others to do the same
Question prevailing assumptions and test multiple hypotheses simultaneously

Decide

Many leaders fall prey to “analysis paralysis.” You have to develop processes and enforce them, so that you arrive at a “good enough” position. To do that well, you have to:

Carefully frame the decision to get to the crux of the matter
Balance speed, rigor, quality and agility. Leave perfection to higher powers
Take a stand even with incomplete information and amid diverse views

Align

Total consensus is rare. A strategic leader must foster open dialogue, build trust and engage key stakeholders, especially when views diverge. To pull that off, you need to:

Understand what drives other people's agendas, including what remains hidden
Bring tough issues to the surface, even when it's uncomfortable
Assess risk tolerance and follow through to build the necessary support

Learn

As your company grows, honest feedback is harder and harder to come by. You have to do what you can to keep it coming. This is crucial because success and failure--especially failure--are valuable sources of organizational learning. Here's what you need to do:

Encourage and exemplify honest, rigorous debriefs to extract lessons
Shift course quickly if you realize you're off track
Celebrate both success and (well-intentioned) failures that provide insight

Do you have what it takes?

Obviously, this is a daunting list of tasks, and frankly, no one is born a black belt in all these different skills. But they can be taught and whatever gaps exist in your skill set can be filled in. I'll cover each of the aspects of strategic leadership in more detail in future columns. But for now, test your own strategic aptitude (or your company's) with the survey at www.decisionstrat.com.

Is Your Business Telling You It Needs A Break?

Via @vistage by Joe Evans

We must listen to the signals our business is sending us. Organizations get tired and need rest cycles too. Not quite the same as we humans need rest, but instead, organizations cannot endlessly expend energy without replacing it along the way. Like humans, businesses need cycles of work and then rejuvenation. Constant full-speed acceleration, without maintaining the organizational pistons, will wear out the engine and momentum will slow. This means that balance is needed between the need to constantly move the organization forward and the need to recharge energy and celebrate successes along the way.

The relentless charge creates fatigue and burnout within the organization and can lead to an exhausted and ambivalent workforce that is detrimental to growth, innovation and operational excellence of our business. That does not mean that we cannot push or should coast along and slack-off in regards to advancing the betterment of our businesses. However, it does mean that we have to have a formula mixed correctly in order to fuel our business for the long-run. We need to think in terms of running a marathon and not a sprint. Given that, the formula must be calibrated our culture and it must also be attenuated to our business strategy and goals.

This may all sound a bit warm and fuzzy in our hard-driving business environments, but even in the engineering world of thermodynamics, this property is acknowledged as an important consideration. Entropy is a property that can be used to determine the energy available for useful work in a thermodynamic process, such as in energy conversion devices, engines, or machines. Such devices can only be driven by convertible energy, and have a theoretical maximum efficiency when converting energy to work. During this work, entropy accumulates in the system, which then dissipates in the form of waste heat.

So how can this engineering principle be applied in business? There are several ways in fact.

Channel Focused Energy To Avoid Waste

We must focus the uses of energy. In the psychological world, ADD (attention deficit disorder) is diagnosed when an individual meets certain criteria for hyperactivity, impulsivity, or inattention. Likewise, in the corporate world, organizations can exhibit ADD-like behavior when they mistake activity for effectiveness; when they lose focus on established objectives; and when they respond haphazardly to environmental changes.

Many well-meaning managers and leaders assume that because members of the organization are “active” that they are also “effective.” In reality, activity does not equal effectiveness; and it’s not representative of indispensability. Rather, effectiveness is the result of “doing the right things, right”. And the right things are those activities and actions that make organizational goals a reality.

Ensure You Have The Right Type Of Energy

A 2003 MIT Sloan study identified four corporate energy zones that can either stimulate or handicap competitiveness. This in-depth study proved that organizational energy and focus is a critical component to success.

Some key points that arose from the MIT study are worth considering:

After more than 50 years of largely ignoring soft factors, like emotions and feelings, organizations are recognizing the powerful role that emotions play in shaping corporate behavior.
Corporate leaders are responsible for unleashing organizational energy and guiding it toward key strategic goals.
Organizational energy is the combination of the company’s emotional, cognitive, and physical states. While difficult to measure, organizational energy is evident in the intensity, endurance, and innovation processes of a company’s work.
Individual energy, especially of leaders, influences organizational energy. Likewise, the energy state of the organization affects the energy of individuals.

It is the intersection of intensity and quality that determines an organization’s energy state, which usually falls into one of four categories – “The Four Energy Zones”:

Aggression zone (responding to threat)
Passion zone (responding to an exciting goal)
Comfort zone (coasting dangerously on past success)
Resignation zone (has nearly given up)

Expend It Wisely, Then Replenish Energy and Renew Excitement

Renewal of organizational energy comes from celebrating the achievement of milestones, then refocusing energy again on the next milestone. Therefore, milestones must be defined in order to be recognized when they are met and rewarded if they are accomplished according to performance acceptance criteria. Large strategic objectives can be broken down into many milestones, so there should never be a problem of advancing the business goals through milestone cycles of hard work and real celebration.

You Can't Analyze Your Way to Growth via @harvardbiz

The biggest enemy of top-line growth is analysis and its best friend is appreciation. Sure, in a small minority of companies and industries, like the smartphone business these days, there is explosive growth, and if an analysis is done of past trends, it shows lots of opportunity for top-line growth.

But in the majority of businesses, if the available data are crunched, it shows a slowly growing industry — one growing with GDP or population. That generally convinces the company in question that there aren't really opportunities for top-line growth, and that in turn becomes a self-fulfilling prophecy.

The fundamental reason is that analysis of data is all about the past. Data analysis crunches the past and extrapolates it into the future. And the past does not include opportunities that exist but have not yet happened. So, analysis conspicuously excludes ways to serve customers that have not been tried or imagined or ways to turn non-customers into customers.

Thus the more we rely on data analysis, the more it will tell a dour story on top-line growth — and not give particularly useful insights. The data analysis of P&G's home care business — hard surface cleaners, dish and dishwater detergents — would have indicated that there weren't many opportunities for top-line growth circa 2000. These categories were growing at something between population growth and GDP growth, clearly candidates for harvesting or maybe sale.

If instead, the core tool is not analysis but rather appreciation —deep appreciation of the consumer's life — what makes it hard or easy; what makes her (in this category) happy or sad — there is the opportunity to imagine possibilities that do not exist.

For instance, suppose your consumers have to clean floors. It's easy enough to appreciate that mopping a floor is a fairly miserable task. Think about what it involves: getting out and filling a bucket, dragging the bucket around and repeatedly jamming the mop in and out of it, and then dumping out and cleaning the bucket. If you appreciate your floor-cleaning customers, you'll be looking to help them avoid having to go through this experience every time they have to clean a floor — because not every floor will need such a heavy-duty approach. It was out of this appreciation-triggered insight that the electrostatic Swiffer anti-mop was born and produced massive top-line growth, approaching $1 billion in sales in a decade.

A similar thing happened with Febreze.

There was a slowly growing market for air fresheners that masked odors emanating from hard-to-clean household items like furniture, drapes, and carpets. However, odor masking was hardly an optimal solution for the consumer. Appreciation of the consumer's feelings would have revealed that genuine odor elimination was the underlying desire.

Out of that appreciation came Febreze, which captures and eliminates the odor molecules in fabrics. Not surprisingly, it also produced spectacular top-line growth where the conventional analysis showed that there wasn't much to be had.

Organizationally and behaviorally, analysis and appreciation are two very different things. Analysis is distant, done in office towers far from the consumer. It requires lots of quantitative proficiency but very little experience in the business in question. It depends on data-mining: finding data sources to crunch, often from data suppliers to the industry. Appreciation is intimate, done in close proximity to the consumer. It requires qualitative proficiency and deeper experience in the business. It requires the manufacture of unique data, rather than the use of data that already exists.

In my experience, most organizations have more of the former capabilities and behaviors than of the latter and hence most struggle with top-line growth. The biggest issue isn't the absence of top-line growth opportunities but rather the lack of belief that they exist. And that is driven by the dominance of analysis over appreciation.

ROGER MARTIN

Roger Martin (www.rogerlmartin.com) is the Dean of the Rotman School of Management at the University of Toronto in Canada. He is the author, most recently, of Fixing the Game. For more information, including events with Roger, click here.

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