Zemo Trevathan and Associates, Inc.Zemo Trevathan and Associates, Inc.
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The Business Value of Strategy Alignment
Defining Strategy Alignment Interventions in the Context of Financial Organizational Outcomes
It's actually common knowledge. Successful organizations have good strategy alignment. Most leaders in business and any institution for that matter will agree, the degree by which their vision is communicated effectively to each member of the organization in order that their contribution is aligned with the financial outcomes determines the success of that organization. Unfortunately, corporate leaderships' gut feeling of aligning the highest level strategies across the enterprise and down to every employee does not always translate into a financial investment with an expected return on investment. Strategy alignment initiatives are considered "soft" and intangible to measure like training and marketing when in fact the business value of strategy alignment can and should be measured by the same financial standard as any "hard" asset the company invests in. Measurement of strategy alignment has either been ignored or implemented at level of making sure everyone was happy with the process. This isn't good enough. The goal of determining the business value of strategy alignment is not just to validate the return on investment of that initiative, but to discover the specific drivers of business success and maximize the effort for greater return in future initiatives.

Business Value
In this cost savings economy where the CFO reigns, demonstrating the value of any business initiative in financial terms is imperative. Individual employees, teams, and departments all must demonstrate the business value of their work or lose their jobs, lose their budget, or get dissolved and outsourced. Most units can't define their value beyond cost savings and pull together data that makes a compelling business case to justify their team and their work towards a true return on investment. The metrics have traditionally been considered intangible, out of reach, or too expensive to measure. But the alternative doesn't contribute to business impact either. Regardless of how much is saved year to year or quarter to quarter, there is always a diminishing return. This "Savings on Investment" approach, or SOI, falls short of demonstrating true business value. The focus needs to rather be on demonstrating a return on investment and maximizing business impact. The goal in this new "Delivering Business Value" environment is to become a high-performance, high-value contributor to the corporate strategies that can show decisively how its work is driving higher revenue, improved client satisfaction and greater operating efficiencies. To meet these needs, managers need a common understanding of value and how it's created in the context of their business unit in relation to the rest of the organization; an accessible tool to communicate business value in financial terms; and a means to measure and monitor their success effectively.

Strategy Alignment
If "strategy" is defined as "a framework within which the choices about the nature and direction of an organization are made," then strategy alignment is the complete integration of every organizational component to the mission, strategic vision, planning processes, day-to-day decision making, and human performance systems. As a dynamic process, strategy alignment facilitates continuous monitoring, review, and updating of the strategy, crucial in today's environment of constant change.

The process of strategy alignment is often divided into five phases that are each linked with feedback loops for validation and adaptation to changes. These five include:
Phase 1: Strategy intelligence gathering and analysis which ensures quality, up-to-date information by which to make decisions;

Phase 2: Strategy formulation which includes exploring fundamental beliefs and assumptions to create a strategic vision, products and services offered, profile of targeted consumers, geographic scope, competitive advantage, needed capabilities, and financial goals;

Phase 3: Strategic master planning which encompasses the development of the implementation plan, prioritizing, defining steps and roles in detail, sequencing, scheduling, researching, executing, and monitoring strategic projects;

Phase 4: Strategy implementation which involves taking planned actions, monitoring implementation, and modifying the strategic master project plan as circumstances change. In this phase, the more strongly employees feel ownership of the strategy, the more they will committed to the strategies' success. And,

Phase 5: Strategy monitoring, review, and updating which is a key input to regular review that evaluate the effectiveness of the ongoing implementation as well as examine the validity of underlying assumptions of the strategy.
To make this process successful, there is a necessary need for creating a "strategic culture" (the combined effect of behaviors, norms, beliefs, values, heritage, thinking, and relationships and the way they manifest themselves in an organization and its strategic performance) which is often the primary function of strategy alignment initiatives. When these align with, and support, an organization's strategy efforts, strategic success is likely assured. This strategic culture concept is further validated by Per Christiansen and Jon Lund Hansen in "Organisational Ecology and Strategic Leadership, Christensen & Lund Hansen 1993 where they describe a third view or systems approach of systemic thinking as follows:

It is easy to see the world from one's own point of view, or first position as we refer to it here. It is more difficult to see it from the other's - second position. Seeing relationships between one's self and others is the most difficult of all - from the third position. This perspective: to see processes and patterns from an outside viewpoint, is also called system-perspective, or systemic thinking.

High performing organizations manage their workforce to create breakthrough results using four key aspects:
  1. Align their workforce with the top-level business strategy
  2. Actively engage the workforce in all phases of strategy implementation
  3. Measure the business impact of the contributions of the workforce
  4. Provide constructive feedback to the workforce on their results compared to the measurements.
For strategy alignment to achieve the greatest business impact, it's vital to involve as many people as possible in the process of implementing, if not actually setting strategy. Energizing and motivating people to action is easier when they feel involved, rather than being imposed on from above.
Conference speakers and articles in industry journals are replete with calls for demonstrating ROI among a variety of interventions including IT, training, and facilities management, as well as strategy alignment consulting services. Harder to find, however, are case studies that describe specific examples and metrics in the context of measurable organizational outcomes for strategy alignment interventions. A new model is required that breaks away from standard forms of planning and that incorporates the business value concepts with those of strategy alignment as follows:

Standard Planning
Business Value
and Strategy Alignment
Industry-specific models and language imposed on business Business models and language applied to Industry
Emphasis on counting and cataloguing of prescriptive data and wish lists Emphasis on activities, functions, and performance concepts
Outcomes measured as Industry-defined performance statistics Outcomes measured in business terms
Prescriptive, on-size-fits-all planning process Conceptual framework, flexibility applied to specific client needs
Strictly tactical, linear approach Balance between strategic and tactical, iterative process
Financial outcomes based on SOI using line-item budget Financial outcomes based on ROI using a business case format, cost-benefit analysis
Top-down dissemination of information about strategies to workforce Inclusiveness of workforce in strategy development and implementation

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ARTICLES
ZTA Business Value Analytics Approach

Barriers to Creating Business Value

The Five Levels of Business Value Awareness

Business Value Metrics: ROI vs SOI

The Business Value of Strategy Alignment

The Business Value of Facilities Management

Zemo Trevathan and Associates, Inc., 111 Standing Rock Road, Chapel Hill, NC  27516
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