What is strategic alignment, and why does it matter?

“Building a visionary company requires 1% vision and 99% alignment.”

- Jim Collins & Jerry Porras

I love this image of the rowers.

The leader who looks forward and directs without doing any of the actual work.

And the crew puts in 100% effort in harmony. Trusting, disciplined, persistent, drilled, committed. Lovely.

But we all know organisations just don’t work like that.

People talk about:

• “just do it”
• ”the most important thing is to do something”
• "analysis leads to paralysis".

But the real problem is getting everyone to ‘just do’ the same thing.

As a starting alignment requires clarity as to what everyone is aligning too. And that thing ought to be your business strategy!

Effort diffuses quickly

I once worked with an organisation that had only 130 employees but was running 100 projects! Everyone was very busy. Their days were filled with progress updates and prioritisation workshops. But nothing ever seemed to get done.

Alignment is about what you do, who does it, when you do it and how you do it.

And, as is usually the case with business strategy, it is also about what shouldn't get done and how much of what kind of involvement different people should and shouldn't have.

Alignment requires focus. Clarity about what's in and what's not.

People will fill in the blanks

A lot of strategies fail because it is just not clear to people what they should actually do to support it. 

They’re just vaguely worded statements of ambition.

And when that happens, habit takes over. And people inevitably go back to doing whatever it was they were doing before the new strategy was launched. Because that feels comfortable.

Or worse still, they just invent their own strategies.

Alignment requires a clear call to action.

Discipline

Sometimes alignment fails because the strategy is at fault. But other times it fails because people just won’t align.

I remember a senior manager getting very excited as he told me about a great new idea he had and how he was mobilising his team around prioritising it.

But, I pointed out, this idea did not relate in any way to the 4 strategic priorities which his board had had agreed with the organisation only the month before. And in fact, when I asked him, he admitted he’d been so busy with this shiny new initiative that he had barely had time to think about those 4 strategic priorities, let alone do anything about them.

Was he too scared to implement the agreed strategy in case he failed? Did he lack the required balance between thought and action? Or was he just too easily distracted?

Either way, he lacked the discipline - the follow-through - required to execute the strategy.

Another senior manager in similar situation told me outright that she didn’t care that her plan didn’t align with the organisation’s strategy; it’s what she want to do for her career.

What’s more she didn’t think that the executive team were committed enough to their own strategy to do anything to stop her from just pushing ahead. And it turned out, in that case, that she was absolutely right.

Start with a solid foundation

One of the best ways to increase alignment is to base your strategy on a solid evidence base. (See Everyone is entitled to an opinion, but...)

The more you rely on opinions, instead of on evidence, the more you have to accept that everyone has a different opinion, and the less likely it is that you’ll ever get them into alignment.

It’s amazing how much more constructive conversations become when you stop talking about who’s right and who's wrong, and start talking about what evidence you have and what it means.

So, as business strategists, we should constantly ask: How will you align all of your people and resources to the achievement of your goals?

Choice, trade-offs and differentiation

“Strategy is about making choices, trade-offs; it’s about deliberately choosing to be different.”

- Michael Porter

In my previous post, I talked about the importance of focus. See Don't chase two rabbits.

Focus requires making choices. For example, the choice to do one thing rather than another. Or to do one thing before another.

Of course, the actual choices you make are incredibly important.

Chase the other rabbit

Going back to our rabbits - if you choose to chase the same rabbit everyone else is chasing, you’re much less likely to catch it.

So, chase the other one.

If you have to chase the same one, don’t follow the pack. Find a different way to chase and trap it.

Business strategy is not about being trying to be a little better. It’s about trying to be different. And in being different, being 10X better.

No one wants another Amazon or another Google or another Apple. Or even just another strategy consultant. Because we already have all of that.

-est and -er words can be the enemy of good strategy

Every time your strategy includes a word that ends in -est (biggest, best, fastest, etc.) (or even -er: bigger, better, faster), or anything similar, stop. Take a step back and think of Wayne Gretsky (see Skate to where the puck is going to be, not where it has been). He wasn't the biggest or the fastest or the strongest player. He was just in a different place.

Competing on price or features rarely ends well. It just starts a price or features war. To truly differentiate on price, I think the research says that you need to be at least half the prevailing price, maybe more. A similar statement could be made about features.

I remember working with a company that was losing market share. I asked them what they’d tried. They’d reduced prices. How did that go? It worked great for a few weeks until all their competitors followed suit. And then they were back to square one but with narrower margin. So then what? Well, then they added some product features. That also worked for a while until their competitors copied that too. Now they were back to square one but with a more expensive product still at a reduced price. Eventually we were able to find a completely different aspect of the business to focus on, and the business recovered the ground it had lost and then some.

Don't just be better. Be different.

Trade-offs

Trade-offs provide a great way to deter your competitors from simply copying you.

When Southwest Airlines launched the world's first low cost airline, they deliberately chose not to do certain things. They didn't offer in-flight meals or allocated seats. They only flew point-to-point and to secondary airports. And they only used one type of airplane.

As a result, they were significantly cheaper. And for those people who did not care for the things Southwest didn't offer, they were perfect.

Their competitors could have copied them, of course. But that would have meant stopping doing those things also. And that could have lost them a lot of their existing loyal customers. The trade-off was too great for them. So they left Southwest Airlines alone.

Similarly, Ikea choose not to assemble or deliver the furniture they sold. And they chose large well-stocked stores with plenty of onsite parking. Again, this appealed to many customers. But the trade-off for traditional furniture stores was too large.

Unique and valuable

Where does that leave you?

In very simple terms, business strategy is about choosing to focus on only that which:

• is different
  and
• your (target) customers value
  but
• can't already get anywhere else
  and
• which you are uniquely well placed to deliver.

If you can tick those 4 boxes, then you're in a strategically good space!

And so, as business strategists, we should constantly be asking: How will you differentiate yourself in the market in a way that enables you to create and capture value?

Everyone is entitled to an opinion, but...

“If we have data, let’s talk about data. If all we have are opinions, let’s go with mine.”

- Jim Barksdale

I'll start this post of continuing the story of Wayne Gretsky. I started it in two recent posts:

• Skate to where the puck is going to be, not where it has been and
• Don't chase two rabbits.

Gretsky was great and skating to where the puck was going to be. But, he never explained how he knew where it would be. It’s assumed that he was just very good at reading the play.

Where others saw chaos and unpredictability, he saw data/evidence/patterns/probabilities. He took the information available about the state of play and out-thought everyone else on the pitch.

Don't "just do it"

These days, we have a predisposition to action rather than thought. We’re told to “Just do it”. We're told the most important thing is to do something. Even anything. Because action is better than thought.

But, strategy teaches us that we need thought to choose the right actions. “Fail fast” and “test and learn” are great. But random experiments are at best inefficient. And ill-conceived experiments are even worse.

As Henri Bergson said, you should:

"Think like a man of action, act like a man of thought."

You have to look for evidence

It doesn't take a lot of experience to realise that you will probably never have all the data you want. But we still have to make decisions. And we can't always afford to wait to get more data.

But that is not an excuse for not bothering. My experience is that there is usually a lot more evidence available than people care to acknowledge. It takes a little creativity to find and interpret it. But that effort pays off in spades.

I remember hearing a proposal from the manager of a call centre within a medium-sized business. They weren’t keeping up with the number of incoming calls. He wanted to hire more call handlers.

But I asked him why people were calling in the first place. It turns out he knew exactly how many people were calling but had absolutely no idea what they were calling about. So I went and collected some data.

It turned out that most people were calling about things that the company had messed up. So it seemed obvious to me that they should at least consider that a better solution might be to hire more people or train them better to not mess those things up, rather than simply hiring more people to clean up the mess afterwards. But without having looked at that data, you’d have no way of knowing that.

Finding evidence is not enough, you still have to interpret it

It's equally true that we have a tendency to mis-interpret or over-interpret data the data they do have. 

• We see what they want to see, and not what is actually in front of them.
• We mistake correlation for causation.
• We mistake what customers say for how they actually behave.

So its obviously important not just to have the data, but to use it well.

Evidence of the future

Another mistake is thinking that there can be no evidence for the future because it hasn’t happened yet.

But as the famous Science Fiction write William Gibson said:

“The future is already here, it’s just not evenly distributed.”

Consider COVID-19.

Think of all the companies who’ve been experimenting with remote work for years.

Think of all those films and that famous 2015 Ted Talk by Bill Gates. He not only predicted the global pandemic but also described how it would happen in pretty accurately detail.

The conspiracy theorists, of course, have a field day with that. But all he was doing was pulling together the evidence which was readily available to us all.

So, if we weren’t prepared for pandemic it wasn’t because there wasn’t any evidence, but because we hadn’t paid attention and acted on the insight.

Evidence versus intuition

I've heard other people argue that experience and intuition are better guides than evidence.

Don’t get me wrong: Intuition and experience are wonderful things.

But, they tell you:

• what data to look for,
• how and where to look for it, and
• how to avoid misinterpreting it.

Experience and intuition also contain all our biases and failings.

So intuition and experience aren’t a substitute for evidence. They’re a tool for using evidence more effectively.

Hindsight is 20:20

We tend to turn for inspiration to very successful people or businesses. And what we see is what they did. That what’s visible. And I think that may be partly what is behind our current bias towards action. 

But what we don’t see is the thought they put into it and the evidence on which they based it.

Or, we see the few who succeeded without using evidence and thought. And forget about the vast majority who simply failed on that basis.

Conclusion

There is another saying about opinions: Opinions are like noses; everyone has one but they think each others' smell. (Although I think the original saying might have referred to a different piece of anatomy.)

Opinions are a weak foundation for business strategy. Evidence is the antidote.

So, as business strategists, we should constantly be asking: What evidence to you have to support your decisions? And what processes do you have in place for re-confirming or adjusting that on an ongoing basis?

Don't chase two rabbits

“The man who chases two rabbits catches neither.”

- Confucius

In a recent blog post, I talked about the legendary Canadian ice hockey player, Wayne Gretsky. Gretsky was famous for his ability to read the play and position himself ahead of the puck.

Gretsky, of course, could only skate to one place at a time. He had to make a choice. I bet he got it wrong a lot of the time. But, from his record, we must conclude, that he got it right even more often than that.

In my experiences, businesses hate making choices. Often, when I present a client with a range of different strategic options, their natural tendency is to want to do them all. To chase both rabbits.

This applies to choices about customers or customer segments, strategic initiatives, almost everything in business.

Strategy always involves choice. If there is only one rabbit and only one way to chase it, you’re not really doing strategy. You’re just hungry and trying to get dinner.

But as soon as there are two rabbits or two different ways to chase them, then strategy comes into play:. Which will you chase, why and how?

It is important to choose which rabbit to chase. It is equally important to choose NOT to chase the other one.

In fact, Harvard Business School strategy guru Michael Porter says that:

“The essence of strategy is choosing what not to do.”

But most organisations treat strategy only as deciding what new things to do.

So it’s no wonder that employees often greet a new strategy with a groan. They already feel over-worked and under-resourced. And now they have all this new stuff to do on top of all of the old stuff they were already doing.

As a result, they get demoralised. They end up falling back onto old habits. They end up doing what they used to do, and not what the new strategy requires them to do. Or, inevitably, they end up not doing anything terribly well. They end up chasing two rabbits!

I remember talking to the CEO of a startup division within a large corporate. He had become quite desperate. They hadn’t even launched yet. But already there were 130 employees. He told me that everyone was madly busy and constantly telling him they needed more people. And yet, he couldn’t understand why so little was actually getting done.

After a short investigation it turned out that those 130 employees were running no fewer than 100 projects between them. It was chaos, with almost no focus. It took a few months, but eventually we whittled those 100 projects down to about 20 key projects which were actually required to deliver the strategy. Everything else was stopped. And with that focus, people were able to move forward.

They were chasing too many rabbits. It was only be choosing to chase fewer rabbits that they could move forward.

Even if you do need to chase both rabbits, you’re still better off doing everything you can to catch the first one before you start chasing the second one.

I heard a great mantra the other day:

"stop starting, start finishing".

And so, as business strategists, we should constantly be asking: What will you choose to do? And equally importantly, what will you choose not to do or to stop doing?

Skate to where the puck is going to be, not where it has been

I remember the first time I watched live ice hockey. I was with my cousin, watching her kids play in Boulder, Colorado.

Even at their relatively junior level, it's a great spectator sport. It's fast, it's physical, and it's non-stop. In fact, its a great analogy for business in today's very competitive environment.

Wayne Gretsky is a Canadian ice hockey player. In his prime, he was so good that the earned the nickname 'the Great One'.

Curiously, Gretsky was not know for being the biggest, fastest or strongest player on the ice. You might think that these were the qualities that counted most for an ice hockey player. But, despite these short-comings, he had still earned his reputation as the best.

When asked what his secret was, his answer was disarmingly simple:

"I skate to where the puck is going to be, not to where it has been."

(Reference)

Unfortunately, most businesses don't do this. They behave more like 8-year-olds on a soccer field - all chasing after the ball.

If you doubt the ineffectiveness of this approach, then watch this video.

Have you ever noticed that professional sports people anticipate the game. They position themselves ahead of the play. In the open space. Where the opportunities arise.

Young children, on the other hand, have a tendency to chase after the ball in small groups. All doing the same thing. Never quite catching up. Or, at least, most of them do until they've been properly coached.

It’s easy to understand why businesses behave in a similar way. We’re creatures of habit. We're under-coached. So when the going gets tough, we fall back on what’s worked before.

Most managers got promoted because they were successful. But that could have been 5 to 10 years ago. Some of them have been resting on their laurels ever since. So when faced with a new problem, they revert to what’s worked for them in the past. We all heard the dreaded: “that’s just the way our industry works” or “that’s the way we’ve always done it before.”

I remember many years ago waiting to go into a board meeting. I overheard two directors discussing with some excitement how they’d both just renewed their insurance online. This was when that was still new and exciting, so quite a long time ago. But 20 minutes later, those same 2 directors rejected a proposal, because “we all know that people don’t buy insurance online!”

One of the key advantages of strategic thinking is that it gives you an opportunity to get a head of the ball. To get ahead of the competition. Ahead of the market. To skate to where the puck is going to be, not to where it has been.

If you're chasing after the ball, you will never catch it. It keeps moving. It's always ahead. You're always behind. Eventually, you'll exhaust yourself. It will be someone else who scores the goal.

The say that the only constant is change. Tomorrow will not be the same as yesterday.

And so, as strategists, we should constantly be asking ourselves: What will we need to do to succeed in the future, and how is that different from what we needed to do to succeed in the past?

It's in the numbers

When I first took an interest in business strategy, I shied away from getting too involved in the numbers.

I had a degree in accounting, and, later, and MBA. So I didn't have a problem dealing with numbers. But I didn't want to be seen as a 'bean counter'.

Bean counters, I reasoned, focus on efficiencies and cost cutting. Strategists focus on the big picture. Blue sky thinking. Frameworks and models. Inspiration couldn't be reduced to spreadsheets.

But I quickly realised how wrong I was.

Yes. Strategy is about the big picture, blue sky thinking, frameworks, models and inspiration. But behind all of those things lie the numbers. And until you can get to the numbers, the job isn't done.

The numbers used in business strategy include but extend well beyond those typically found in financial statements and reports. 

They include demographics and economics; product and process performance. They include market research. They come from within the organisation, within the industry, and from without. They deal with durations and conversion rates, volumes and prices. They look behind hunches and anecdotes to spot trends and structures. They range from statistically valid samples to pure educated guesswork.

It requires imagination and insight to determine what numbers to look for, where to look for them, and how to interpret them.

Triangulating between more diverse source of information increases confidence. Understanding how to reconcile disparate and even contradictory information requires finesse and experience.

If you want to understand how a business works, and if you want to get good at doing your job, ask how, what, when, where and why.

But if you want to get good at business strategy, you need to go further. You need also to ask how much, how many, how often and how long.

(The image at the top of this post is partly inspired by one of my favourite films, the Matrix, and in particular the scene in which Neo finally learns to see through the real world to the numbers and code it manifests.)

6 reasons to hire an independent business strategy consultant

So, you need help with your business strategy. What do you do?

Here are 5 reasons why you should hire an independent business strategy consultant.

1. Capacity

Let's face it, you're busy. You have a business to run. You have fires to put out. You have new clients to woo.

You don't need to overcomplicated business strategy development and execution. But it does take time. Time you don't have.

An independent business strategy consultant can do some of the heavy lifting for you. Take some of the load off. Allowing you to focus only on the outcomes and what's most important.

2. Experience

You've probably been involved in developing and executing the strategy for your business for a while. After all, it is part of your role as a senior leader.

But an independent business strategy consultant has probably done it dozens of more times at dozens of more organisations. And it may be all they've focused on for some time.

All that extra experience pays off. They've seen and tried more different approaches. They've seen what did and didn't work. You can benefit from that experience.

You don't need lots of models and frameworks in order to develop and execute a business strategy. Just like you don't need lots of tools to service a car. But it does help. A lot! So find someone who has the right tools at their disposal, who knows how to use them, and has the experience required.

3. Objectivity

You could delegate the job to someone on your team. After all, you've gone to a lot of trouble to hire the best people you could get. You trust them to run your business. Why not trust them to help you with your strategy?

Unfortunately, they have vested interests. Strategy has consequences for them. And sometimes, the right strategy for you and your business won't align with their personal interests.

So find someone to help you who has nothing personal to gain or to lose by subtly nudging your strategy in one direction or another.

4. They don't 'land and expand'

Most of the larger consultancies operate a 'land and expand' strategy. Your first contact is with an experienced veteran consultant. Often a partner.

But once they've made the sale, most of the work is performed by an army of juniors. The senior consultant may oversea the work. But often they spend as much time looking for additional opportunities to sell you yet more armies of juniors.

Don't get me wrong. Its a very successful model. It works very well for the consultants. And sometimes its exactly what you, the client, need.

But sometimes it isn't.

An independent consultant doesn't have an army of juniors to sell. So you get the benefit of consultant you actually hired for the entire engagement. It's a case of different horses for different courses. But it's important to be clear which is right for your circumstance.

5. They go away

It's likely that you will need that extra capacity, specialist experience and objectivity for a defined period of time. To address a specific challenge. To explore a new directions which you may or may not pursue.

Once your new strategy is in place, you'll want to make structural changes in order to execute it effectively. Eventually, the organisation will have absorbed the new strategy. You may neither want nor need to keep that extra capacity, experience and objectivity around all the time. After all, good consultants don't come cheap.

So you want help from someone who will go away until you need them again.

6. Personal reputation

They say an independent consultant is only as good as their last engagement.

An independent consultant doesn't have a big brand or the reputation of an army of other consultants to hide behind. Their name and personal reputation is on the line with each engagement they accept.

And so, they have to make each engagement count. Their commitment to your success is extremely high.

Things to aware of

There are, however, a few things to be aware of. One is the have-a-go consultant.

The have-a-go consultant is someone who finds themselves between jobs. So they decide to 'have a go' at consulting. Sometimes, they're genuinely trying to work out if it is the right route for them. Other times they just filling in time until the can find the right job again. Some even treat their consulting sojourn as one or more very long job interviews. They're hoping you'll like them so much that you'll offer them a permanent job.

Maybe a have-a-go consultant is adequate for your needs.

But independent consulting requires specific skills. It's also a mindset. It is different from being an employee. Have-a-go consultants are unlikely to have the depth and breadth of experience of someone who has been practicing for a while. Of course, everyone has to start somewhere. But have-a-go consultants are less likely to be investing in building the capabilities required to succeed in the long term.

And if they're treating their engagement with you as an extended job interview, then they have a vested interest in the outcome. They no longer have that objectivity.

So if you need help with your strategy, an independent business strategy consultant may be exactly what you need. Hopefully, this post can help you to decide.