How to Achieve Strategic Alignment in Your Organization
Strategic alignment is a challenge for many organizations. It involves structuring internal and external organizational elements—strategy, processes, and structure—to support long-term goals. However, research from MIT Sloan shows that only 28% of managers responsible for strategy execution can identify their company’s top three strategic priorities.
A vision alone is insufficient without a strategy that supports organizational goals. Together, vision and strategy define the organization’s competitive advantage and how to sustain it. As such, strategic alignment requires a deliberate effort to evaluate whether your organization’s structure, processes, and capabilities support your strategic goals.
Misaligned companies face poor customer retention, high costs, and operational inefficiencies. Meanwhile, market volatility amplifies the risk of misalignment, with 46% of executives citing it as a leading barrier to aligning strategy and execution. This article explores the concept of strategic alignment, why it is crucial, and how corporate leaders can implement it.
Why Strategic Alignment Matters
The Benefits of Aligned Organizations
Strategic alignment drives measurable improvements in organizational performance by ensuring that purpose, strategy, and goals work cohesively. When such an alignment is achieved, organizations can focus less on decision-making and more on execution. One of the measures of an organization’s success is its agility, meaning its ability to adapt quickly to market changes and external disruptions.
According to McKinsey, companies with aligned strategies are better positioned to stay ahead of competitors, responding effectively to challenges and seizing new opportunities. Also, when employees see a clear link between their daily work and the organization’s vision, they are more motivated and committed. Without alignment, employees often perceive a gap between aspirational goals and practical execution.
This connection enhances productivity and reduces inefficiencies, as resources are directed toward business goals rather than wasted on redundant or misaligned efforts. As noted by PwC’s 2023 global CEO survey, CEOs who positively assessed their employees’ alignment with the organization’s values and direction reported profitability exceeding that of competitors by at least 10% over a two-year period.
Moreover, Bain & Company defines six organizational outcomes that define a well-designed organization, key to high performance:
- aligned with the company’s strategy
- capable of executing strategy with the right talent, processes, and tools
- effective at making and executing critical decisions
- adaptable in the face of rapid change
- efficient in realizing the benefits of scale and scope
- engaged to go the extra mile
Companies that score high in these six outcomes are more than five times more likely to be a business performance leader than an unaligned company.
Common Misalignment Challenges
Despite agreement on the importance of aligning strategy and operations, many companies continue to encounter significant obstacles that hinder progress toward this goal. Both strategy and operations executives share concerns about a disconnection between strategic priorities and operational realities, particularly in risk management and talent allocation and retention.
As noted by Forbes in a survey of over 200 C-level and senior executives, the primary barriers to alignment include:
- Changing market conditions that impact strategy execution (46%)
- Short-term cost pressures versus ROI (29%)
- Lack of timely and accurate data (22%)
- Operational employees not understanding strategic goals (21%)
- Risks or opportunities identified by operations not being incorporated into the strategy (19%)
Discrepancies exist between strategy and operations perspectives. For instance, 36% of operations executives cite short-term cost pressures as a barrier, compared to 20% of strategy executives. These differences highlight a lack of cohesion between the two functions, which can further impede alignment efforts.
This is why companies must implement robust systems to regularly assess the strategic alignment of their organization and develop clear plans to address gaps. Only by fostering collaboration and ensuring transparency businesses can bridge the alignment divide and achieve sustainable success.
How to test your company’s alignment
Achieving strategic alignment is challenging, as it requires managing this dynamic relationship while addressing both enterprise-level and team-level alignment. To assess strategic alignment, Harvard Business Review developed a simple two-question framework:
- How well does your business strategy support the company’s purpose?
Purpose is the ultimate goal or “north star” guiding the company, while strategy is the approach to achieve it. Effective strategies align with this purpose by defining the products, services, and markets to focus on. If a company lacks clarity on its purpose or strategy, alignment is likely weak, making it difficult to achieve long-term success. - How well does your organization support the implementation of the strategy?
Organization encompasses capabilities, resources, culture, and management systems. For example, if superior customer service is central to a strategy, the company must ensure its employees’ actions reflect this.
By scoring performance on these two dimensions (strategy-to-purpose alignment and organization-to-strategy alignment), businesses can classify themselves into four quadrants:
- High alignment (both dimensions): Companies excelling in both dimensions have the greatest potential for success. They exhibit strong financial performance, high employee engagement, and a culture aligned with strategic goals.
- Good strategy but poor implementation: Companies with strong strategy-to-purpose alignment but weak organizational execution struggle to achieve intended outcomes.
- Good execution but unclear purpose: Businesses with strong organizational capabilities but a poorly defined purpose risk becoming irrelevant.
- Low alignment on both dimensions: Companies in crisis lack both a viable strategy and the organizational structure to execute effectively.
Misalignment, whether due to unclear strategy, ineffective execution, or both, hampers performance and long-term success. Leaders must identify gaps, recalibrate their strategies, and evolve their organizations to maintain alignment. Let’s delve into practical steps they can take to ensure the right organizational design and agility.
A 6-Step Guide to Achieve Strategic Alignment
After auditing your strategic alignment, it’s crucial to ensure your organizational design is optimized to support successful execution. This 6-step guide outlines how to align capabilities, resources, and culture with your goals.
#1 Build Unique Capabilities
Develop the organizational capabilities necessary to execute your strategy and outpace competitors. Capabilities should integrate cross-functional efforts to address strategic priorities. For example, innovation might require collaboration between R&D, marketing, product development, and customer analytics. Ensure these capabilities align with your strategic goals and are prioritized to support competitive advantage.
#2 Prioritize Strategic Tasks Over Routine Work
Identify tasks that directly contribute to competitive advantage and elevate them to strategic importance. Assign top talent and resources to these areas while streamlining routine operations to ensure they do not overshadow critical priorities. For example, redefine roles and resources to position competitive tasks—such as engineering or customer success—at the forefront.
#3 Build Flexible and Adaptable Structures
Design dynamic organizational structures that can pivot to address evolving markets, external disruptions, or emerging opportunities. For instance, during geopolitical disruptions, quickly diversify risks and adapt supply chains. Empower frontline teams with decision-making authority to ensure responsiveness and resilience when market volatility is high.
#4 Allocate Resources and Decision Rights Effectively
Empower decision-making at the level closest to the relevant information and challenges. Use frameworks like RAPID (Recommend, Agree, Perform, Input, Decide) to clarify roles and improve decision speed and quality.
Additionally, establish cross-functional teams or councils to manage strategic priorities and resolve trade-offs effectively, as seen in Intel’s streamlined decision-making approach.
#5 Overcome Cultural and Process Barriers
Align culture and processes with the new strategy by removing obsolete governance systems and redefining values. Leaders should actively reshape cultural norms to foster collaboration and innovation, emphasizing teamwork over outdated behaviors. For example, remove legacy councils or committees that conflict with strategic goals, and reframe values to support the new direction, as Ivan’s company did to overcome silos.
#6 Align Leadership Teams
Leadership alignment is the cornerstone of strategic execution. Ensure leaders operate within a unified framework to avoid disjointed execution. Clarify strategic priorities, eliminate siloed agendas, and engage middle management to cascade alignment throughout the organization.
To support leaders, the McKinsey 7-S Framework (Strategy, Structure, Systems, Shared Values, Skills, Style, and Staff) helps ensure alignment across all elements of the organization, building synergy between the softer (culture, values, people) and harder (strategy, systems) components.
Consider Engaging a Freelance Consultant
A major hurdle for strategic and organizational alignment is talent shortage. Recruitment, retention, and training, is cited by 22% of executives as often failing to align with organizational goals. On top of that, according to Deloitte's 2022 CEO Survey, 71% of CEOs identified talent shortages as a primary factor expected to disrupt business strategy.
Here’s where independent consultants can help. Major companies are already engaging freelancers to answer to short-term talent gaps: a primary example is Google, where more than half of its workforce is freelance. In fact, they offer more flexible and scalable solutions than regular, full-time workers, and 78% of business leaders in the US said they are more likely to hire freelancers rather than full-time employees while economic conditions remain uncertain.
Consulting Platforms like Consultport help bridge the gap between companies and freelancers, offering a space where clients can easily find and book experts for all project needs. Let’s provide an example.
Case Study: Strategy Execution for a PE-Portfolio Company in Leisure & Travel
A leading international leisure and travel company with multiple sites, recently acquired by a private equity firm, engaged Consultport to execute a new strategy focused on growth and operational excellence. The company faced challenges in aligning its organizational structure, culture, and processes with the strategic objectives set by the PE firm.
Consultport proposed an experienced strategy consultant with a strong track record in transformation projects, who focused on six key areas: testing and refining operational concepts, developing detailed project plans, establishing KPIs, setting up a PMO for strategy execution, mobilizing stakeholders, and addressing organizational alignment.
The consultant started by analyzing the company’s culture and organizational design to assess whether it could support the new strategy. This review uncovered gaps in decision-making processes and cross-site collaboration. To fix these issues, the consultant redesigned decision rights and aligned the operational structure with strategic goals. This step ensured the organization’s setup supported its strategy effectively.
Next, the consultant refined operational concepts and built detailed project plans. These plans included clear timelines, milestones, and resource allocations to ensure efficient execution. This included:
- Establish Key Performance Indicators (KPIs) to measure the project success
- Set up and drive the PMO for the strategy execution
After 12 months, the company reduced project delays by 30%, increased stakeholder engagement, and improved organization agility. This strategic alignment positioned the company for scalable growth, enabling the PE firm to drive value creation across its portfolio.
Want to know more? Find a consultant with Consultport.
Daniel is a Process Excellence Consultant with several years of experience at McKinsey. He has specialized in enhancing efficiencies in the automotive and healthcare industries, working with prominent companies such as Ford, Daimler, and Pfizer. Daniel has experience in leading cross-functional teams and utilizing processes focusing on lean methodologies and continuous improvement to drive operational success.
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