Writing for Harvard Business Review in early 2017, Jonathan Trevor and Barry Varcoe delivered a concise, layperson-friendly overview of the value of organizational alignment.
The pair focused on the five independent components that contribute to strategic alignment. Done properly, these five components can collectively make the difference between a poorly aligned organization that fails to live up to its potential and a well-oiled machine that stands head and shoulders above less capable competitors. As Trevor and Varcoe put it, alignment ultimately means “winning through a tightly managed enterprise value chain [that]…is only as strong as its weakest link.”
Let’s review the five links in the enterprise value chain — the independent components that contribute to strategic alignment — and their implications for complex organizations.
Purpose: What Do We Do and Why Do We Do It
The first and most sweeping link is enterprise purpose: what the organization does and why it does it. Organizations that can’t readily articulate their purpose should ask basic questions that go beyond redundant or self-evident considerations (such as profit) and get at the mission animating the organization itself. For example: Why would anyone care if the organization went out of business tomorrow? Who does the organization serve and why?
Strategy: What Do We Need to Win at?
Strategy is the next link in the chain, but perhaps it’s better imagined as the next layer down in the pyramid that supports the organization’s purpose. That’s because strategy is integral to the realization of enterprise purpose: It’s what the organization must “win” at in order to realize its purpose — and the process of planning for that “win.”
Capability: What Do We Need to Be Good at?
Organizational capability — the set of capabilities that the organization must excel at to “win” — is the middle link or layer down. Unfortunately, it’s often overlooked (or, more charitably, under-resourced) by decision-makers focused on operational strategy and process leads more concerned with granular management. Without best-in-class organizational capability, even the clearest strategy is at risk of failure.
Resource Architecture: What Makes Us Good?
Resource architecture is the set of things that makes an organization good at what it does and defines the (flexible) upper quality bound: how good the organization is at the moment and how good it can get in the future.
Resource architecture can be broken down into four components: people (the sum of the organization’s human resources), processes (the combination of formal and informal work processes and institutional knowledge), structure (how work gets done within the organization), and culture (the values and attitudes that determine working behavior within the organization).
Management Systems: What Fundamentals Deliver the Performance We Need?
Last but not least, management systems underpin the enterprise value pyramid, delivering — or failing to deliver — the best-in-class performance that the organization depends on to “win.” Management systems include the entire set of management infrastructure, from “tangibles” like information technology systems to operational processes that define and optimize work, such as employee performance management. Management systems must be organized to optimize the four upstream links or layers and, ideally, put the organization in the best possible position to realize its purpose.
Is your organization as aligned as it could be? If not, what steps do you need to take to bring it into alignment?