A myriad of research studies and our own observation has demonstrated that culture is critical to corporate performance. Understanding the importance of culture to performance is certainly not a recent area of interest for leaders, as Peter Drucker observed years ago, “culture eats strategy for breakfast”. His point was not that strategy is irrelevant, but that culture can kill a great idea or strategy at the point of execution. We have found that the root cause of breakdowns in execution can be traced to a lack of organizational alignment, and that addressing alignment can be the starting point for turning the culture.
Getting Predictable Results
Alignment, in its simplest form, means the actions at the front line of a business accurately represent the priorities of the CEO. This begins with a clearly articulated vision and plan for the company that is understood throughout the organization. Expectations outlined in a plan can and do go off track, however a well aligned team will quickly identify off-plan conditions and course correct. The more aligned various levels of the organization are the more likely off-plan conditions will be identified and remedied – producing more predictable results.
Look where you want to go
Good organizational alignment begins with good vision. At a company outing several years ago I had the opportunity of experiencing firsthand the thrill and sheer terror of racing an open wheel car. Instructors didn’t just let us loose on the track – they put us through a disciplined training program to teach us key principles of race car driving. We would spend some time in the classroom and immediately apply our lessons on the track. The most memorable lesson related to cornering and a simple, but consistent mantra to “look where you want to go”. It seems that we naturally look where danger is and consequently can and do drive our vehicles into danger rather than out of it.
It occurred to me that the notion of looking where you want to go on the track seemed analogous to developing a company vision – the idea of intently focusing on where you want to go and not getting distracted. Often leaders do get distracted and focus on where they don’t want to go, which is reinforced through the organization.
Elements of Organizational Alignment
Of course, you can only take these analogies so far, as your operating environment is much more complex and varied than a race track. Dealing with complexity and change, and creating more predictable outcomes goes beyond articulating a vision. The vision identifies where you want to take the business. The next step is developing your business plan with a keen eye towards understanding the key drivers of profitability, and how they may differ than in the past. You don’t want to build alignment around a plan using assumptions based on past performance, as you simply increase the likelihood of making the same mistakes and achieving the same results. Since prior results were a byproduct of lack of alignment, you need to reset your budget and operational baseline in order to put a new stake in the ground to enable proper alignment going forward.
Alignment all the way to the front line means everyone is clear as to how their actions and behaviors impact profitability. Often employees are acting in way that is consistent with their understanding of performance expectations – which can be different. For example, a sales executive that over commits order or product changes to her customer may cause significant schedule changes and increase the cost of fulfilling an order. Although she delivered terrific service (which she is measured on), her actions do not fit a company with a vision to deliver their product with the lowest cost. Conversely, the operations executive who batches orders to reduce operating cost will likely do so at the expense of customer service. Although less costly (which he is measured on), his actions do not fit a company with a vision to deliver leading customer service.
Better alignment across functions will lead to a better understanding of the interdependencies. If not addressed, the disconnect at different levels can become more acute over time and help to create a culture with poor communication and coordination.
Changing the Culture
Addressing organizational alignment begins with putting in place the management systems that will reinforce appropriate planning, scheduling and coordination. This will lead to clearer expectations, better coordination at all levels and better execution against the plan. Regardless of how you refer to this new culture (accountability, high performance, results-oriented), what you should expect is more predictable execution.
