An overview of my thoughts on strategic alignment

1. Strategic Alignment
Static Dynamic
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2. The Goal of Strategic Alignment
A Seamless Culture
of Shared Purpose
“Well aligned companies outperform their
competitors on every major financial measure.”
Harvard Business School Research
“Alignment is the essence of management”
Fred Smith, FedEx
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3. The Reality
53% of people don’t feel their company strategy will lead to success
… Booz & Company
80% of employees would leave if given the opportunity
… The Economist
85% of CEOs believe strategic changes are not well implemented
… Grolman Group
70% of the time the problem is not bad strategy but bad execution
… Fortune
90% of companies implement their strategy ineffectively
… Kaplan and Norton
73% of workers don’t believe they are supporting company strategy
… Duncan Worldwide

4. Looking for Alignment - The key questions
1. What is our strategy?
2. What do you do?
3. How does what you do support the strategy?

5. Common Symptoms of Poor Alignment
• High turnover and low morale
• Passive-aggressive behavior
• Inability to articulate strategy
• Reduced accountability
• Sub-optimal teamwork
• Little upward information flow
• Fragmentation and duplication
• Inappropriate or misguided initiative
• Short-term focus on results
• Team goals trump corporate strategy
• Institutional apologists
• Lack of Innovation
• ‘Quit but still showing up’ syndrome
• Indeterminate ‘referred’ pain

6. The Cost of Employee Turnover
The Seven Deadly Sins
1. The job was not as expected (35% of workers that quit, quit within first year)
2. Mismatch between job and person (60% of employees are not using talents)
3. Feelings of devaluation, lack of recognition and insufficient resources
4. Insufficient growth prospects (ranks lowest 67/67 of mgmt. competencies)
5. Too little coaching and feedback (60% employees claim insufficient feedback)
6. Lack of trust and confidence in senior leaders (esp. pay disparity)
7. Stress and overwork (40% of US workers say their job is stressful)
Source: The Center for Association Leadership
http://www.asaecenter.org/Resources/EUArticle.cfm?ItemNumber=11514
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7. The Cost of Employee Turnover
Voluntary 2010 attrition rate ~ 16% (US Bureau of Labor Statistics)
Job Title Cost to rehire
Executive 3 to 5 times annual salary
Manager 1 to 3 times annual salary
Hourly worker 50% of annual salary
HBR and other sources
Example:
A 1000 person company will pay ~$10M to rehire from voluntary quits
Question: How much would greater alignment have saved them?
AlignComm
Answer: Between 20% and 40%
On average, employee turnover costs 9% of total revenue
Mercer
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8. Employee engagement
a pre-requisite to correct alignment
Engagement is the outcome of one’s personal
• Satisfaction • Advocacy
• Commitment • Initiative
• Pride • Persistence
• Loyalty • Energy
• Sense of purpose

9. Engagement and the Bottom line
A 50% spread in observed performance
Companies with high levels of People engagement improved 19.2%
Companies with low levels of People engagement declined 32.7%
Towers Watson
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10. Engagement and the Bottom line
Wealth Creation
The EPS growth rate of
organizations with engagement
scores in the top quartile was 2.6
times greater than organizations
with below• average scores.
Gallup (survey of 89 organizations)
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11. Engagement and the Bottom line
Safety
Those with engagement
scores in the bottom
quartile averaged 62%
more accidents.
Gallup
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12. Engagement and the Bottom line
Productivity
Engaged people are
consistently more
productive, profitable,
safer, healthier, and 87%
less likely to leave their
employer.
Corporate Leadership Council & Fleming & Apslund
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13. But …
Engaged teams are not enough.
They must also be aligned to the
goals of the entire organization.
Aligned teams
 Know there’s a plan
 Understand the plan
 Agree with the plan
 Buy into the plan
 Energize the plan
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14. Looking for Alignment
The key questions
• Is the strategy clear and well-communicated, and the
priorities understood by all?
• Is the leadership team aligned to deliver clear and
unambiguous direction?
• Do the processes work efficiently, or are there built-in
conflicts?
• Do I have a clear understanding of the needs, by each
demographic, of our people ?
• What do customers say, and how does it impact attrition,
retention and overall profitability and sustainability?
It is necessary to measure alignment quantitatively
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15. The Axes of Alignment
Horizontal Alignment
• Eliminating boundaries between
company and customer
• Understanding, creating, delivering and
Strategy supporting customer needs
• Value creation throughout supply chain
• Clearly differentiated and synergistic
functional responsibilities
Vertical Alignment
Process Customer
• The rapid and efficient deployment of
business strategy throughout the
organization
• Employee engagement and strategic buy-
in through consistent communication
People
• Two-way flow of information through
empowered employees
• Enabled by measurable and actionable
metrics
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16. Challenges of Horizontal Alignment
• Customer requirements change
• Customer voice hard to interpret
• Customers speak in present tense
• Few employees have direct interaction
• Understanding the customer is rarely a
collective responsibility
Horizontally aligned companies create a
shared reality with their customers
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17. Big Five Questions on Customer Focus
• What do our customers care about the most
• What opportunities do we have to delight
• How well are we satisfying them now
• What are the “best-of-the-best” competitors
doing
• What do we do to make us “difficult to do
business with?”
Horizontally aligned companies use the
voice of their customers as their beacon
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18. The Self-Aligning Company
• Invisible hand of culture
• Adjustments made quickly at all levels
• Organization senses needs and changes
• Distributed leadership
• Disciplined enough to continually monitor
the internal and external worlds
• Do the right things right and concentrate
on key metrics only
Key metrics must:
• Be broad enough so everyone can understand their individual contribution
• Unify the organization – its culture, systems and processes
• Be future based and customer oriented
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19. Steps to Align an Organization
Survey Analyze Diagnose Adjust
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20. Value of Alignment Analysis
• Develops long- and Strategy
short-term action plans
• Pinpoints areas requiring Process Customer
management attention
• Launches improvement initiatives
• Identifies skill gaps People
• Isolates best and worst practices
• Distributes effective leadership
• Aligns people, processes and
strategies with market opportunities
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21. Why this assessment differs from traditional
employee surveys?
1. Provides immediately tactical guidance
2. A local management tool for greater alignment to local customers
3. Comparative, quantifiable and prescriptive analytics
4. Readiness measured in the context of interdependent teams
5. Prioritized and actionable realignment recommendations
6. Identification of local barriers such as skill and coverage gaps
7. Quick, focused, digestible and of immediate value
8. Actionable within a few days of survey launch
9. Easily extensible for broader usage
10. Isolation of revenue risks and potential partner leverage

22. Powerful Alignment Analytics
Overall Alignment Index
“The Main Thing”
Category
“Critical Success Factors”
Dependent Factor
“Key Indicators”
Q1
Q2
Q3 Survey
Questions
“The best business tool in America” 22
Andy Greig, Division President, Bechtel Corp

23. Powerful Alignment Analytics
Comparative Alignment Dashboard
Team 1 Team 2 Team 3
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24. Powerful Alignment Analytics
Predictive Matrices of
Radar Diagrams
Correlated Dependencies
And many, many more
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25. Management behaviour may also need to be
aligned to the working situation. The AlignComm
Behavioural Alignment Instrument gets to the root
causes of misaligned managers.
Personality Situation Behaviour Performance

26. Behavior Alignment Instrument
Accurate Conjoint analysis, nongameable through evasion factors
Powerful
Powerful Identifies the 20 behaviors that drive 80% of performance
Each job is different, so to be managed effectively requires a
Situational specific and unique set of behaviors
Validated Questionnaire has high validity of 0.992 and reliability
Validated of 0.933 as reported by the London School of Economics

27. Three Primary Behavior Modalities Measured
Vision, change, increasing
Accelerating effectiveness, and driving things
forward
Consistency, efficiency,
Sustaining implementation, attention to
detail and maintaining quality
Responsibility avoidance,
Blocking conflict avoidance, or anger and
annoyance.

28. Behavior Alignment
Example of aggregated data report
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29. Return on Alignment
The trademarked AlignComm methodology to
aggregate, evaluate and prioritize remediation
alternatives to determine which have the
greatest impact on business results
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30. AlignComm
• Strategic planning support and guidance
• Workshops and seminars
• Alignment and engagement surveys
• Executive coaching
• Behavioral Alignment diagnostics for managers
• Return on Alignment ® modeling for remediation
prioritization
• Messaging frameworks and collateral
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