FOR STRATEGIC EFFECTIVENESS ALIGNING PEOPLE AND OPERATIONAL PRACTICES TO STRATEGY F O R B U S I N E S S L E A D E R S A N D S E N I O R M A N A G E M E N T Robert W. Eichinger Kim E. Ruyle David O. Ulrich
FYI f o r STRATEGIC EFFECTIVENESS Aligning People and Operational Practices to Strategy ROBERT W. EICHINGER KIM E. RUYLE DAVID O. ULRICH
FYI FOR STRATEGIC EFFECTIVENESS Important Notice: COPYRIGHT 2007 Lominger International: A Korn/Ferry Company. ALL RIGHTS RESERVED. FYI For STRATEGIC EFFECTIVENESS First Printing February 2007 (07.1a) No part of this work may be copied or transferred to any other expression or form without a license from Lominger International: A Korn/Ferry Company Tel. 952-345-3610 Fax. 952-345-3601 www.lominger.com The LEADERSHIP ARCHITECT is the exclusive registered trademark of Lominger International: A Korn/Ferry Company ISBN 1-933578-06-8 Lominger reorder part number 21032
Dimension II: Strategy Execution Cl u s t e r D: Al i g n i n g w i t h St r at e g y Set your expectations high; find men and women whose integrity and values you respect; get their agreement on a course of action; and give them your ultimate trust. John Akers Former Chairman, IBM Coming together is a beginning. Keeping together is progress. Working together is success. Henry Ford Founder, Ford Motor Company The Signpost It s not enough to create a great competitive strategy. You need alignment. Everyone needs to be aligned. People must understand and share a common view of the future. They must share commitment to the strategic goals. Everything needs to be aligned. Processes, goals, rewards, communication, policies everything aligned. A small team pulling in the same direction will beat a larger team working at cross-purposes every time. Items 4. Continually shape the organization s structure and work flows to meet the changes and challenges of our marketplace 24. Apply total work systems (e.g., TQM/ISO/Six Sigma) where needed 44. Efficiently and effectively communicate our strategy to all employees 64. Align people policies, practices, and programs to support our business strategy 82. Identify the management and leadership competencies that our strategy requires Unskilled Can t craft a compelling vision Communicates poorly Fails to set appropriate goals Doesn t reward the right things Is unable to design effective processes Is unwilling or unable to change, to adapt Lacks clarity in adopting policies and procedures Does not hold people accountable Dimension II: Strategy Execution D: Cluster Aligning ### with Strategy 19
Skilled Communicates a clear, compelling vision Sincerely believes in and is passionate about the strategy Provides timely and relevant information to all who need it Sets aggressive goals that cascade down through the organization Has a process orientation; can effectively engineer business processes Has an eye for talent and selects the very best people for the role Possesses clarity of purpose and focuses resources and energy appropriately Drives the message about competitive strategy to every corner of the organization Rewards the behaviors that support the strategy D: Aligning with Strategy Dimension II: Strategy Execution Some Causes Fuzzy strategic vision Dysfunctional culture Lack of process discipline Mixed messages Poor listening Actions don t match message Lacking perspective Inattentive to details, can t execute Conflict avoidance Rigid, unwilling or unable to adapt The Ten LEADERSHIP ARCHITECT Competencies Most Associated with This Cluster (in order of connectedness) 51. Problem Solving 52. Process Management 50. Priority Setting 2. Dealing with Ambiguity 47. Planning 58. Strategic Agility 5. Business Acumen 46. Perspective 63. Total Work Systems (e.g., TQM/ISO/Six Sigma) 65. Managing Vision and Purpose 20
The Map Even the best strategies will fail if they are not communicated and executed. Many studies have shown that it is the organizations that have a common mind-set that win more consistently. A common mind-set means everyone in the organization knows what the strategy is and knows what tactics and plans to follow. Every employee should be able to clearly explain the strategy in a couple of sentences. They should be able to explain how they contribute to the strategy. When everyone can do that, you ll have achieved a common mind-set; you ll have reduced friction in your processes and increased the efficiency of decision making, resource allocation, and initiatives. Once a common mind-set is established, the rest depends on clear leadership and clean execution. Alignment is the operative word. All of the things the organization does need to align with the strategy. Policies should result in aligned behaviors. Rewards should support aligned behaviors. Processes and organizational structure need to be aligned. Deployment of leaders and teams needs to be aligned with and guided by the strategy. Total alignment leads to laser-like execution. Not a second wasted. Not a penny wasted. Mission accomplished. Some Remedies 1. Focus. Think laser photons in a coherent beam. They re aligned. They re of one wavelength. They re focused. Bring a laser-like focus to everything. Your processes. Your organizational structure. Policies. Procedures. Compensation and rewards. Hiring. Performance management. Succession planning. Decision making. Communication. Everything focused on achieving your competitive business strategy. 2. Communicate. Communicate. Communicate. A common mind-set is created by communication and dialog. Think of it as a marketing campaign. If there was something very important for your customers to know, what would you do? Do the same with the strategy. Engage marketing professionals inside or outside the organization to create a marketing campaign complete with themes, slogans, ads, colors, and a communication strategy which includes multiple communication methods and channels. The dialog is for both understanding and ownership. Help people own the vision. Craft the message so it s crystal clear and easily understood by everyone. Embrace it passionately. Then, assuming you have the right people in the right roles, it s all about execution. Dimension II: Strategy Execution D: Aligning with Strategy 3. Align with customers. Design from the outside in. Start with the delighted customer. Design the distribution and delivery chain backwards, asking what each process step should look like to result in a delighted customer. What will the product look like? The service? What s the best way to get the order? The best way to deliver? Always think first of the customer. 21
D: Aligning with Strategy Dimension II: Strategy Execution 4. Align leadership. Every strategy has a leadership brand that goes with it. Every strategy, given a particular industry context, location, and market, has a set of required leadership skills and competencies. A strategy that calls for speed in decision making needs speedy managers and executives. A strategy that calls for key account intimacy requires managers and executives that are good at forming lasting relationships. A strategy that calls for producing commodity products in a cost-conscious market needs leaders who are efficient managers. For each element of the strategy, consider what kind of a leader or manager will best be able to execute this element. Once you have the competencies, evaluate the current managers and executives and locate the fits and gaps. For the gaps, decide whether you will close the gap developmentally, find a better fit inside, or go outside to get the best fit. 5. Align goals. Common sense, right? Your top-level business objectives must align with your strategic intent. It starts at the top and cascades down to the individual employee. Every individual contributor should have goals aligned with and in support of the team. The team goals should be aligned with and in support of the department, and so forth. From the top of the organization to the bottom, establish goals so people and groups are aligned with the strategy. 6. Align measurement. Goals don t mean much if results aren t measured. Rigorously measure. Measure what matters to your strategy. Measurement gets people s attention. Measure inputs. Measure outputs. Measure processes. Use the results of measurement. Analyze, act, correct, change, improve. Make measurement and improvement part of everyone s job. Give them the tools and language and skills to measure effectively and to take corrective action for improvement. 7. Align culture. Culture is the way things are done in the organization, the sum of the habitual behaviors of the individuals. How do you hire? Promote? Celebrate? Make decisions? Reward? Communicate? Every organization has a certain style that may be more or less well defined. The style influences behavior. What behaviors do you need to support your strategy? What style will promote those behaviors? Choose a style, a culture that is aligned with your strategy, then adopt policies and procedures and an organizational structure that reflect that style. Model the behaviors you want emulated throughout the organization. Put structures in place to promote that culture. If you want a culture that drives decision making down to the lowest level, you need to have policies and procedures that empower frontline workers. That needs to become the norm. Talk it. Walk it. Reward it. Culture is a powerful influencer of organizational performance. Make it work for you. 8. Give lots of feedback. Feedback is an essential component of performance. Get employees aligned by communicating, goal setting, measurement, and also by including regular feedback on their performance. Effective feedback is specific, 22
direct, and delivered in a timely and genuine way by the manager or customer. Make your environment a feedback-rich environment, and supplement the feedback with coaching and mentoring to encourage and guide development in the core competencies. 9. Align rewards. Goals, measurement, feedback all are essential components of aligned performance. Those are the things that get performance kick-started. But it is meaningful rewards and consequences that sustain the performance over the long haul. Align your reward system to your strategies to reinforce the behaviors, accomplishments, and skill development that will drive competitive advantage and success. The performance picture is not complete until you ve aligned the rewards with your strategy. 10. Align with best practices. There are established and proven methods to improve business practices. Practices like Total Quality Management, Six Sigma, Lean Manufacturing, and Business Process Reengineering are all used to improve quality, productivity, timeliness, and costs associated with processes. Alignment with customers and strategy is inherently built into these practices. Consider these practices and adopt what best fits your organization. Pick something and get started. Dimension II: Strategy Execution D: Cluster Aligning ### with Strategy 23
D: Aligning with Strategy Dimension II: Strategy Execution Suggested Readings Abraham, G. A. (2006). Strategic Alignment. Leadership Excellence, 23(8), 12. Allio, M. K. (2005). A short, practical guide to implementing strategy. Journal of Business Strategy, 26(4), 12-21. Aquila, A. J. (2005). Align compensation to your firm s strategic goals. Accounting Today, 19(14), 9-23. Bossidy, L., & Charan, R. (2002). Execution: The discipline of getting things done. New York, NY: Crown Business. Bradford, R. (2002). Strategic alignment. Executive Excellence, 19(1), 8-9. Goodstein, L. D., Nolan, T. M., & Pfeiffer, J. W. (1993). Applied strategic planning: A comprehensive guide. New York: McGraw-Hill, Inc. Gupta, A. K. (1984). Contingency linkages between strategy and general manager characteristics: A conceptual examination. Academy of Management Review, 9, 399-412. Gupta, A. K., & Govindarajan, V. (1984). Build, hold, harvest: Converting strategic intentions into reality. Journal of Business Strategy, 4(3), 34-47. Kaplan, R. S., & Norton, D. P. (2001). Building a strategy-focused organization. Ivey Business Journal, 65(5), 12-19. Kaplan, R. S., & Norton, D. P. (2006, March). How to implement a new strategy without disrupting your organization. Harvard Business Review, 84(3), 100-109. Kerr, J. L., & Jackofsky, E. F. (1989). Aligning managers with strategies: Management development versus selection. Strategic Management Journal, 10, 157-170. Lawler, E. (1996). From the ground up: Six principles for building the new logic corporation. San Francisco, CA: Jossey-Bass. Steel, R. (1991). From paper to practice: Implementing the corporate strategic plan. Business Quarterly, 55(3), 119-124. Williams, S. L. (2002). Strategic planning and organizational values: Links to alignment. Human Resource Development International, 5(2), 217-233. 24