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i business process management
In an all-too-familiar scenario, corporation
X doesn’t meet its commitments several quarters in a row, and its stock
plummets.
Consequently, the board loses confidence, the CEO resigns, and a new
CEO, who immediately announces a sweeping restructure of the
corporation, is announced.
In the past few years, newspapers have been inundated with such reports.
Even at corporations where top-level executives exhibit vision and have
articulated an apparently sound business strategy, results fall short of
expectations.
Everyone has been there at one point or another in their career. The
leadership team spends long hours making and agreeing on a three- to
five-year plan to improve the performance of the business. Management
teams work just as hard to come up with a supportive annual budget. Both
teams create extensive PowerPoint presentations and exhaustive
spreadsheet files, yet not much changes in terms of actual delivery.
Year-end targets are missed regardless of ambitions efforts. Improvement
curves are continually shifted to the right until the above scenario
manifests. Now the process of reorganizing the corporation begins in
earnest.
Questions immediately arise: What went wrong and why? Were the goals
unachievable or too aggressive? Is the vision or are the strategies
inadequate? Were middle managers unable to execute the strategies? If
the answer to all these questions is “yes,” why was it so? These are all
good questions, and many are addressed with extensive proposals on
possible solutions or how to find them. At this point, a key element
that should be addressed is the importance of strategic alignment.
But what is strategic alignment? It can be described as the linkage
between the goals of the business and the goals of the key contributors.
The business goals quantify the progress towards implementation of the
strategy to accomplish the vision and the goals of each key contributor.
Key contributors consist of groups, divisions, business units,
departments, and individual employees who have an interest in the
successful continuation of the business.
Put simply, strategic alignment means that everyone is moving in the
same direction. The tighter the linkage, the better the alignment, and
the greater the likelihood of smooth corporate execution of strategies.
The benefits of proper strategic alignment include the efficient use of
resources, which are usually scarce, faster execution, the promotion of
team efforts towards common goals, and increased employee motivation.
Employees have a greater sense of contributing to their individual teams
and the corporation as a whole.
While many corporations could benefit greatly from these results, few
are able to realize them. Since the leadership of many corporations and
management teams attempt to achieve strategic alignment, the question is
why they cannot. What barriers must be overcome? How can they
effectively implement strategic alignment? What are the key factors in
success?
To achieve strategic alignment successfully, the first component is good
communication within the organization. Everyone should understand the
elements of the corporation’s vision and its key strategic direction.
Persistent repetition by the leadership and management teams should be
done at every opportunity, including operations business reviews and
sales and company meetings. This will help all employees understand how
they can contribute to the corporation’s overall progress. Too often,
vital communication opportunities consist of boring presentations of
high-level tables filled with data that is difficult for employees to
relate to their everyday jobs.
The second component essential to achieving successful strategic
alignment is to clearly and simply link the results of each employee's
job to the progress of the corporation’s overall strategy. This is best
done by using simple measures of key performance, or KBMs (key business
metrics) and KPMs (key performance metrics). These measures should be
related to the employee's annual performance review.
Thermo Electron Corporation, a leader in the field of analytical
instrumentation located in Waltham, Massachusetts, presents an excellent
example of effective strategic alignment. It uses a cascading set of
goals to quantitatively measure the progress of implementation of the
strategic plan. This “goal tree” or “waterfall effect” starts at the top
of the corporation and cascades down to all the other levels of the
organization, from the corporation to the divisions; from the divisions
to the business units; from the business units to the departments; and
from the departments to the employees.
When it reaches the level of the employees, the objectives of the plan
are incorporated into their annual performance targets, and these
objectives directly support the key goals of the highest levels of the
organization. This ensures focus and alignment as each employee daily
delivers on the objectives. Objectives are rolled back up the goal tree
or waterfall in periodic reviews of the goals at all levels of the
organization.
Achieving strategic alignment is difficult; it requires a strong
commitment from the top leadership and must focus on clear and
persistent communication at every opportunity using the simple
management principles of focus, clarity, and continual reinforcement.
Effective execution of strategic alignment and ensuring the successful
accomplishment of goals should be the leadership’s top priority.
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