We're talking about IBM and the importance of alignment. Let's go a little bit deeper into some of the things that really relate to this story and maybe flesh it out a little bit more. First of all, alignment's not an easy thing to achieve and many organizations struggle with it a little bit. And we want to look at why is that? Why is it difficult for organizations to achieve that kind of consistent, coherent approach to implementing their strategy? Well the first is complexity. Especially in large organizations. You've got a lot of moving parts. And you can think of it as entropy, the second law of thermodynamics if you want to. Systems want to come apart. They have a tendency to go towards disintegration, the pieces flying in different directions. And the more complex the system, the more likely it is that that happens, and the same is very true of organizations. In fact, a lot of research says that middle managers, when they look at their performance, and where they struggle the most, it's the number of priorities that they're faced with. It hurts their ability to execute, because they lose focus. An executive at Coca-Cola told us that the number one job of senior leaders in her organization was to eliminate what otherwise would be attractive opportunities to jump on, because their job was to keep the organizations focused on those things that were mission critical. So complexity is the first. The second is the amount of change, and especially the velocity of change and how unpredictable it is. So if organizations are pretty static and stable you can just implement the plan and everything's fine, but there's an old saying in the military that no plan survives contact with the enemy. In other words, when you get out there, when you're making it happen, things change. And the rules of engagement change on the ground, and that can destroy alignment of organizations if they're not ready for it. So the complexity and the amount of change, and really the unpredictability of that change, makes alignment difficult over time. The third thing is coordination and what we might call agency. And this is something we see all the time is that people even with the best of intentions will operate in a way that is consistent with what they see as important for performance in their world. So you might have somebody in marketing who has a different set of priorities than somebody who's in operations or in human resources. And in organizations these represent competing demands. So what's in front of somebody they'll work very, very hard to make sure they're successful. But you may get a lot of noise in the system and people working out of alignment because they're focused on their own jobs. So these things, complexity, change, and coordination make keep an alignment one of the challenges organizations face. So what we found is there's probably three things that really lead to better alignment in organizations and we want to cover those. First of all, it's clearly articulating the strategic intent. And this sounds obvious. Alright, but one of the things that we found interesting was that in most industries there's no one best strategy. So clearly articulating the strategy doesn't mean find the best strategy. It's whatever strategy you're doing, it needs to be clearly stated and translated from the top of the organization down into the organization. Not just communicated, but what does it mean for each person in their job? A terrific study by Tracy Wersima found that about 75% of senior leadership teams did not clearly articulate their strategy. In fact, when they pushed back on this, they found those leadership teams actually had a hard time articulating what the strategy was. And if that's the situation, then you can imagine it in complex organizations the translation process of communicating into the organization is not going to happen very effectively. The second thing is creating an environment where there's shared expectations for high performance. This is really the values of the organization and kind of embeds it more into the culture. Do we expect this from one another? And do we hold ourselves accountable? You know many fine cultures can reinforce other values. They can reinforce creativity. They can reinforce individual innovation, coordination, and those are fine, but what we found is that the cultures that expect high performance and drive that engrounded in practice have a more likelihood that strategy is going to be effectively executed. The third is accountability for results. This isn't just a responsibility for results, but it's sort of the account and the ability. Are there metrics that show what success looks like? And do you have people aligned around those so that they're able to hit those metrics and have influence over it? An old saying by Peter Drucker, what gets measured gets done, and we find this true as sort of an axiom of executing strategy. Now there's a caution here, and that's the unintended consequence of accountability for results and these expectations for high performance, and that's that sometimes people will back off of setting very challenging goals. If the accountability is too onerous, sometimes people will approach a fairly conservative approach. So the idea is use accountability but use it to engender these high expectations for performance. Now one example of a technique that organizations often use to get at these different elements of alignment is called strategy mapping by Kaplan and Norton. These are the balanced score card guys, and what this strategy mapping does is it answers four questions, and it really works to align and show the causal relationships among these four elements. The first is how do we create shareholder value. What's the financial story about this organization, around growth, of our own margin, and what are the key metrics around that? The second question is how do we create value for customers? How does that customer value relate to product leadership, operational excellence, intimacy, et cetera and is there a connection between value creation and driving the financial performance of the firm? The third is, what's the internal capability focus? Those key processes and capabilities that are central to us creating value for customers, and therefore shareholders. And finally, the fourth question is, how do people manifest that value? How is that embodied in the human capital of the organization? Now strategy mapping's interesting, because when you answer these questions and lay out the specifics, you can see this external alignment and internal consistency. And it really is a roadmap for leaders coming together and having a clear idea of what's necessary to drive performance. But you can take it a step further, which is laying in a set of metrics for each of these pieces. I know this is difficult to see, and it's not the specifics I want you to see, to recognize. But it's that there's an overall map, and then there are metrics that people are accountable, and then there are initiatives that everyone can get behind. So a tool like strategy mapping is one of the ways that organizations can create external alignment, internal alignment and align the leadership of the organization as well. So going back to what's really necessary for alignment in organizations, it is this clearly articulated strategic intent. What's the map? And can we articulate that for the rest of the people in the organization? Do we have shared expectations for performance, and are there metrics that hold us accountable and give us an idea of how we're coming close to the results that we want to achieve? So, keep in mind that alignment is important for a consistency and coordinated action. Without that, it's very difficult to execute your strategy. Many managers have told us that this is probably the first and the most important step in execution. You've got to get alignment right first, up front or all the other things that we're going to talk about will be sub optimized. It's difficult to achieve. The more complex the organization and the more it's going through change, the more it wants to get out of alignment. But leaders have that opportunity to keep the organization together. It's about clarity, it's about shared expectations and accountability. These are the keys, and those are the most important elements for creating execution.
