The myth of strategic alignment
New research reveals surprising reasons why managers are often unaware of their company’s strategy. The CEO of a large technology company recently reviewed the results of its annual employee engagement survey and was delighted to find that strategic alignment emerged as a key strength.
Among the senior leaders surveyed, 97% stated they clearly understood the company’s priorities and how their work contributed to corporate objectives. Based on these scores, the CEO was confident that the company’s five strategic priorities (which had not changed in the past two years and which she communicated regularly) were well understood by the leaders responsible for implementing them.
These same managers were then asked to list the company’s strategic priorities. The CEO was shocked by the results. Only a quarter of the surveyed managers could list three of the company’s five strategic priorities. Even worse, a third of the leaders responsible for implementing the company’s strategy couldn’t list a single one.
A problem more common than it seems
This phenomenon is neither isolated nor exclusive to the technology sector. Most organizations fall short in strategic alignment: An analysis of 124 organizations revealed that only 28% of executives and middle managers responsible for strategy execution could list three of their company’s strategic priorities.
When executives see these results, their first instinct is to schedule more public meetings or send another email outlining the corporate strategy. The urge to double down on existing corporate communication strategies is understandable, but it’s unlikely to solve the problem.
Three invisible causes of strategic misalignment
The MIT Sloan School of Management’s Strategic Agility project study has uncovered three non-intuitive causes of strategic misalignment and concrete steps that senior leaders can take to improve strategy understanding across the organization.
1. Acknowledge that you have a problem
The first step in solving a problem is recognizing that you have one. Senior executives often assume that the entire company is on the same page regarding strategy, but this assumption is usually wrong. The Strategy Execution Survey includes a series of questions designed to measure whether a company has a shared set of strategic priorities, how well those objectives are understood, and whether they influence resource allocation and goal setting across the organization.
Senior executives rate their company better in all these dimensions than lower-level managers in the organization.
A large percentage of management teams overestimate alignment, leading to a strategic alignment gap.
2. Get an agreement from the top down
Strategic misalignment often starts at the top. When developing strategic priorities, the leadership team should agree on a single set of objectives for the company, rather than each leader pursuing their own agenda. Unfortunately, most of the leadership teams we studied failed to agree on company-wide priorities. In the typical organization we studied, little more than half of the senior executives agreed on the same list of strategic objectives. Note that the MIT Sloan study did not measure whether team members were committed to achieving the strategic priorities; it only measured whether they agreed on what those priorities were.
Slightly more than half of the management team could list all or at least one of the company’s five official priorities. But the other half of the team was completely out of touch.
3. Incorporate the second level
Strategic misalignment often begins at the top, but it doesn’t end there. Managers’ ability to accurately list their company’s strategic priorities continues to decline as one moves down the organizational hierarchy. One might predict a steady decline in alignment as one descends the hierarchy, or perhaps a sharp drop among frontline supervisors who are furthest from senior management.
Alignment collapses between senior executives and their direct subordinates
Strategic alignment plummets from the organization’s top executives to their direct reports and continues to decline, albeit more gradually, among lower-level managers.
Senior executives should first focus on their direct reports, ensuring they understand the company’s overall strategy and how their function, geography, or business unit fits into the bigger picture. One effective way to do this is for each senior executive to consistently explain why their unit’s goals are important to the team and the company as a whole.
The cost of disconnection
A shared understanding of strategic priorities among key leaders doesn’t guarantee successful execution, but it’s a good first step. Widespread confusion and disagreement about what matters most undermine the prioritization and coordination needed across teams to implement the strategy. If managers don’t understand what the company as a whole is trying to achieve in the coming years, they can’t align their actions with the organization’s overall direction.
What to do to close the gap
To increase the likelihood that their strategy will be understood across the company, senior executives must recognize that they may have an alignment problem, agree as a team on strategic priorities for the entire company, ensure that their direct reports understand these objectives, and guarantee that leaders at all levels of the organization communicate what the corporate priorities mean for the company as a whole.
Source: MIT Sloan
