Strategic alignment begins with a clear understanding of the corporate strategy. It is then followed by a grasp of the interdependencies among the various functional strategies. And to truly be strategically aligned you must link these internal strategies with the external market conditions. This has proven to be difficult. SBI has found that 91% of companies are misaligned. The main reason is the realization that companies really have tactics masquerading as strategy. This results in a lot of waste, or as we like to define it, thrashing. This means a lot of work with very little productivity gains.
To fully understand strategic alignment, you must first define and understand strategy versus tactics. What is the difference, and how can you implement them either effectively or efficiently?
Strategy vs. Tactics
Quite simply, strategy is defined as doing the right things, whereas tactics is doing things right. These two are interrelated. Companies can be effective or ineffective at strategy and efficient or inefficient at tactics. And mixing these up can cause a company to miss their revenue growth goals.
We use a 2×2 grid (pictured above) to demonstrate the strategy versus tactics model. The horizontal axis has strategy, defined as doing the right things. The vertical axis has tactics, defined as doing things right. In the upper left contains those companies that will die quickly. It’s because they have a poor plan that is executed brilliantly. On the bottom left are companies that will die slowly. This is due to a poor plan executed poorly. On the bottom right are the companies that will survive. They have a brilliant plan that is executed poorly. Finally, in the upper right hand quadrant are companies that will thrive. This is because they have a brilliant plan executed brilliantly. This is ideally where organizations need to be.
Why does it matter? Should you care about where your company lies within the 2×2 grid?
The short answer is yes. Understanding where your organization lies on the gird will help you understand what issues to fix in order to make your number. It will help with your strategy planning. For example, if your company falls into the die slowly category, it means you have strategy issues and tactical issues that need to be addressed. If your company falls into the survive category, it means you are tactically executing on a bad strategy. Fixing the organization’s strategy should be the focus.
We have found that there is a frequent and recent over-rotation to tactics. But tactics are half the equation. This results in heroic efforts needed to make your number. Instead, you need to nail the strategy first. Create the brilliant plan, and then you can execute upon it efficiently.
The classic example we see often is the sales compensation plan. Often sales forces redo their comp plans yearly. That’s a pure tactic. It’s an important one, but it’s purely a tactic. What’s the sales strategy behind redo the comp program? What in your strategy is the cause of redesigning your compensation plan?
Progressing from stage to stage takes time. This time involves not just documenting but implementing strategies. Too often executive teams give up when it gets tough during implementation and progressing to the thrive quadrant. But this is the time when absolute focus is needed most. The benefits are worth the effort in shareholder return. It’s the only way you can make your number consistently, year after year.