Too often companies are set up for failure, and it’s not from lack of effort. On the contrary, all functional leaders, from the CEO to product, marketing and sales, are putting in a great deal of time. But they still do not succeed. The challenge of executing your corporate strategy is not with the effort put forth. The challenge instead, lies with moving the hard working silos into interlock, and getting them to stack hands on what matters.
Ultimately, companies’ fates are sealed by strategy. For example, say your strategy is focused on your products. You’re a product innovator, but you go to market with a product that doesn’t solve market problems. Therefore, the marketing team is unable to produce the right content, and sales doesn’t feel like they have a chance against the competition. This an illustration of a misaligned strategy. What should you be striving for instead? Strategic alignment.
What Exactly is Strategic Alignment?
Some executive leaders confuse tactical execution with strategic alignment. Others claim it has something to do with having a good working relationship with their peers. Even worse, some cannot articulate their corporate strategy.
So, what exactly is strategy alignment? It begins with a clear understanding of the corporate strategy, followed by a grasp of the inter-dependencies among the various functional strategies. However, internal alignment alone won’t cut it. Only by linking internal strategies with the external market conditions, can a company truly achieve strategic alignment.
Recently, we have seen companies move back to functional strategies in order to stitch their compounding set of initiatives together into a cohesive, functional plan. However, as these functional strategies re-emerge, each revenue-facing function has their own plan defined in isolation. While the performance of each individual function improved, collectively they were still operating in conflict with one another. In other words, the wheels are spinning, but they’re not spinning in the same direction.
Implications of Strategic Alignment
Companies with aligned strategies have a 96% chance of making their revenue growth goal. That means they only have a 4% chance of failure. Contrast this with organizations with misaligned strategies. They have only an 84% chance of success.
So, how do you know whether your company has a 96% or 84% chance of making their number? Start by evaluating your organization on SBI’s revenue growth maturity model. The levels are defined as follows:
- Level 1, Chaos – The company has a corporate strategy, but no functional strategies exist. Even worse, the department leaders are not familiar with the corporate strategy. The functions are ill-defined and unmanaged. The environment is not stable, and heroic efforts are often required.
- Level 2, Define – Corporate and functional strategies exist. The issue with level 2 companies lies in the fact that the strategies are created independently and then often ignored. No one in the organization refers to them, and they do not drive action.
- Level 3, Implemented – The corporate and functional strategies exist and are executed upon. The actions of the departments are driven by the strategies. But the problem is that it’s being done in silos. As we mentioned before, the wheels are spinning, but not in the same direction.
- Level 4, Managed – All strategies are written, and being used to drive action. The biggest difference with this level of organizations is that the functions are also collaborating. They are aligning with one another, and generating measureable results.
- Level 5, Predictable – All strategies are defined, implemented, and are aligned both internally and externally with the market place. This is where the top 10% of companies reside, and where they make their number consistently, quarter after quarter, year after year.
At the end of the day, you can no longer rely on just having functional strategies. It’s not enough. And the implications of misaligned strategies are too severe. Instead, strategic alignment is the only path to consistent revenue growth. Organizations must develop and execute a strategic alignment program that brings together the functional leaders across the organization. And ultimately aligns themselves with the marketplace.