Strategic_Alignment

 

Is your company’s strategy working? And if not, what is the key to success? In our research, we have found that top producing companies do one thing differently – they are in strategic alignment. What does this mean? The functional strategies are linked together like a chain. Essentially, the core functions are tied together, which results in predictable outcomes. There is a clear understanding of the corporate strategy, followed by a grasp of the inter-dependencies of the functional strategies.

 

There are six steps to achieving strategic alignment:

 

6 Steps of Strategic Alignment

  1. Market research – understanding the market, accounts, buyers and users.
  2. Corporate strategy – the allocation of people, money and time in the pursuit of profitable growth.
  3. Product strategy – launching products and services that solve the market’s problems, while remaining aligned with the corporate strategy.
  4. Marketing strategy – driving demand for the company’s products and services.
  5. Sales strategy – turning market demand into revenue by selling your product and services to target buyers.
  6. Talent strategy – building a team capable of defining and executing the functional strategies.

     

Unfortunately, we have found a large percentage of organizations fail to exhibit strategic alignment. A whopping 91% of companies struggle with this issue. And when this happens, no groups inside of the company can be successful.

 

Instead, the top companies are in alignment and function in a predictable state. What does this mean? It means they are a level 5 on SBI’s Revenue Growth Maturity Model. Organizations can plot themselves to understand where they fall on scale, and in comparison to their competition.

 

Revenue Growth Maturity Model

  1. Level 1 – Chaos. No functional strategies exist, and resources are wasted.
  2. Level 2 – Defined. Strategies exist, but are not implemented. The organization is not executing.
  3. Level 3 – Implemented. Defined strategies exist, and are implemented. But the functions are operating in silos, and are not in alignment.
  4. Level 4 – Managed. Strategies are defined, aligned and implemented internally. Everyone knows the plan and how to execute.
  5. Level 5 – Predictable. The corporate and functional strategies have been defined, aligned and implemented both internally and externally with the market.

     

Additionally, there is a strong correlation between two key metrics within the model – customer acquisition cost, and customer lifetime value. As maturity levels improve, both of these metric improve as well. The improvements in each are significant. For example, level 5 organizations improve their CAC by 26% from level 1 organizations. And a level 5’s customer lifetime value increases by 30%. The investment in strategic alignment is fully realized in level 5 organizations.

 

In the end, you must take an objective view of what is going on in your business. You need to ask yourself tough questions. Understand where you’re spending money, but not realizing results. With these answers you can start a dialogue with your internal team in order to achieve strategic alignment.