“The purpose of an organization is to get ordinary people to do extraordinary things,” management guru Peter Drucker once wrote.
But that’s only part of the story. For these “extraordinary things” to enhance the organization’s competitive effectiveness they must directly support the organization’s strategic goals. If a strategy exists only at the top of an organization, it will have little effect. To produce unity of action, strategy must be translated to and acted on at every level within the organization. No one is exempt.
An apt metaphor is the teamwork that propels a rowing eight. Any rower who falls out of rhythm or reduces the team’s pulling power will impede the progress of the boat. Everyone must, quite literally, pull their weight. There is simply no room for passengers.
Yet most companies fail to achieve this level of strategic alignment. A survey by Right Management Consultants found that two-thirds of employees either do not know or do not understand their company’s strategy, and only one-third felt fully engaged with their jobs and their company.
There is a connection between these outcomes. Employees cannot engage with companies that cannot express a sense of purpose. The cost of this engagement deficit is heavy. A 2013 Gallup survey found that companies in the top quartile for employee engagement achieved 10 percent higher customer ratings and 22 percent greater profitability.
This challenge goes to the heart of what it takes to be a leader.
We cannot think of strategy and leadership as separate domains. They are essential parts of each other. Every failure of strategy is a failure of leadership — either to set the right priorities or to mobilize the hearts and minds of employees. It is strategy and leadership working hand in hand that is the key to success.
For a strategy to be translated to every unit in an organization, there needs to be a shared understanding of the process by which this will be achieved. The graphic below describes a method I have found to be successful in numerous companies I have worked with.
Here is the logic: Strategy is about harnessing insight to make choices on where to compete and how to win the competition for value creation in an organization’s chosen markets. At the corporate level, the primary choices on those questions must be made. Then within each organizational unit, these primary choices need to be translated into derived choices in a process of systematic alignment.
Within each organizational unit the first order of business is to develop a clear line of sight to the corporation’s strategic goals and then to use this as the springboard and inspiration for this process of translation. In military parlance an operating unit must first understand the “commander’s intent” and then set priorities and commit resources accordingly.
Executives in staff functions sometimes ask why they need to have a strategy since they don’t generate revenue, and are therefore simply cost centers. My response is to counsel them not to think of themselves as cost centers but as value centers. With this change of mindset, their mission becomes clear: to generate greater value than the costs they incur. If they fail to do this, they will simply be reducing their company’s profits.
I often hear managers complain that their executives have not clarified the organization’s strategic goals. But we need to accept that leaders are not perfect, and do not always present this kind of clarity on a plate. Life is messy. The answer is not just to sit back and complain, or simply take shots in the dark. That is victimhood, not leadership. Effective managers take responsibility for finding clarity through dialogue with their leaders; they are able to lead both up and down. They know they owe this to their teams.
Organizations create their future through the strategies they pursue. In a dynamic world, this invariably involves change and uncertainty. As employees seek clarity of purpose, there are always three questions in their minds. At times of change, the need for clear answers is intensified:
- What are we aiming to achieve, and why should I care?
- Where does my department fit in, and what is expected of me?
- How will we measure success, and what’s in it for me?
The task of strategic leadership at every level is to ensure that these questions are answered honestly and clearly, and that everyone has the chance to contribute meaningfully to the end result. As Henry Kissinger once observed, “No strategy, no matter how ingenious, has any chance of succeeding if it is born in the minds of a few and carried in the hearts of none.”
In a seminar I ran for a major corporation one of the participants asked the CEO how he saw his role as the head of such a big enterprise. He walked up to a flip chart and drew a gearbox. Then he explained: “I see my responsibility as controlling the large wheel in a gearbox. The role of a gearbox is to transmit power. Every time I turn that large wheel just one notch, all the smaller wheels will spin progressively faster. Those smaller wheels are you and your teams. My most important job is to turn the big wheel on just the right issues so that all the energies of the company are driving the few things that matter most to our success.” He paused for a moment, and went on to make the clinching point: “All of you also have your hands on a large wheel, and you owe it to your teams to turn that wheel on just the right issues — those that line up with our corporate priorities.”
Whenever the challenge of strategic alignment comes up in that company, the executives remind themselves of “the parable of the gearbox.”
All too often top leaders believe that their key task is to “communicate” the strategy to the organization in a one-way process. But just telling people what to do produces compliance at best — and resentment at worst. It is a fact of life that people will support what they help to build. As the German philosopher Friedrich Nietzsche wrote, “people will do almost any what if you give them a good why.”
True commitment comes from the dedication to a cause greater than ourselves combined with the knowledge that we can make a difference that matters. All motivational research points to one fundamental truth. Success resides in the gap between compliance and commitment.
Read the original piece on Columbia Business School’s Ideas and Insights blog.
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