Alignment is a condition in which the key elements of an organization—its people, strategy, customers, and processes—work in concert to serve its primary purpose. thereby increasing value for stakeholders. For business organizations, that means growth and profit. For not-for-profit entities, the desired outcome may be “accomplishing the mission” or, for a hospital, “providing better patient care at lower cost.” Whatever the enterprise or its goals, the degree to which those key elements are integrated and working in concert will determine how quickly and successfully it will fulfill it primary purpose.
Over 30 years of empirical research has confirmed that businesses that are aligned and integrated outperform their competitors on every financial measure.
Simply put, alignment drives efficiency and effectiveness, and all the good things that follow from them. To achieve alignment, everyone must be on the same page, understanding the organization in the same way.
Every enterprise for which we have worked, whether industrial, government, or healthcare, here or abroad, operates with the four major elements. Each has a strategy. Each employs people to execute the strategy. Each has customers. And all have processes for satisfying customer needs. These four elements must work together hand in glove. The relationships between them form our alignment framework (Figure 1.1), which helps people understand the story of the business—that is, how the business works.
The framework has two axes, one vertical and another horizontal. The vertical axis links people with strategy; the horizontal axis connects business processes with customers. Both are animated by what we call The Main Thing, the ultimate purpose of the organization and the unifying concept to which every employee and every unit can contribute.
Vertical alignment describes a condition in which every employee can articulate the enterprise’s strategy and explain how his or her daily work activities support that strategy. Horizontal alignment breaks through the boundaries that so often separate companies from their customers. Employees in horizontally aligned organizations notice the linkages shown in the figure between strategy and customers, between people and customers, and so forth. Alignment between these elements is as important as alignment on our two axes. A strategy, for instance, that doesn’t align or make sense for customers will undermine everything that the organization and its people attempt to do. The same can be said for strategy and processes. A brilliant strategy for addressing customer needs will do little good if the organization has not developed business processes that efficiently and effectively deliver the goods!
The four elements in our framework—strategy, people, processes, and customers— must be aligned and realigned to achieve high performance. Here are five things that any executive—and any unit manager—can do to achieve the kind of alignment we advocate:
- Articulate the essence of the business, which we call the Main Thing. Your people should embrace it at a visceral level.
- Define your most important strategic goals and link them to the performance management system
- Insure that your people understand the strategy, understand how they will contribute, and have the skills and resources they need to make the strategy work
- Assure that the voice of the customer informs your strategy and is heard by every employee
- Redesign business processes in response to customer requirements
Of course, that which is aligned must be kept aligned! Alignment is not a natural condition. Without the sustained commitment of leadership, organizations tend to fly apart. The antidote is regular repetition of goals and review of performance against those goals.
Achieving and maintaining alignment in a turbulent and fast-changing world may be the most important chore for today’s leaders. But it’s well worth the effort. As Fred Smith, Founder/CEO of FedEx once told us: “Alignment is the essence of management.”
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