Succeeding in strategy

With a new publication from Kaplan and Norton on the balanced scorecard, Peter Bebb analyses the age-old question, how do you successfully implement your organisation’s strategy? And ponders if business alignment could be the answer

The chain of command from boardroom to marketplace is lengthy, and along the way strategic intent can be distorted. Effective strategy implementation, business management and corporate governance depend on everyone having a clear understanding of what the organisation needs to deliver, how they can contribute, and how their contribution will be recognised and ultimately rewarded.

In today’s world, all organisations need to change rapidly and effectively, identifying and exploiting synergies between their component units, continually optimising their use of resources and allowing employees to realise their potential. To try to achieve this most organisations focus on the improvement of operational processes, to the exclusion of the business management process.

What is business alignment?

So how does business alignment address these issues? Business alignment seeks to explicitly align everyone and everything inside and outside the organisation on a single set of corporate goals, therefore delivering these goals more quickly, more effectively and at a lower cost.

Many approaches make these sorts of claims, but how things are done affects their effectiveness. Business alignment differs from other approaches in the way it achieves these results.

First, business alignment starts from the future – where you want to be – rather than trying to improve the present – where you do not want to be. This stimulates radical and objective thinking about what needs to be done.

Secondly, business alignment uses this picture of the future as a benchmark to challenge the present objectively, systematically and radically, which increases productivity and improves services.

Thirdly, business alignment allows and requires everyone to state the contribution they will make to the corporate outcomes, and how they will do so, which aligns everyone and everything on the corporate goals, internally and externally.

Finally, business alignment uses diagrams rather than prose to define the causal relationships between the required outcomes, activities and resources at all levels. This enables joined-up working and predicts the probability of achieving the required outcomes, reducing risk and reassuring the organisation’s governors.

What does the future hold?

Most organisations have given thought to the future, but sometimes this thinking is vague and has little effect on operations or behaviours. In such cases, business alignment requires the creation of a future-proofing benchmark.

The future-proofing benchmark improves an organisation’s peripheral vision and increases the completeness, consistency and probability of its strategy. The beauty of future proofing is that it enables anyone to question the current status quo in a powerful but unthreatening way.

In order to create a picture of the future an organisation needs to ask itself some challenging questions. For instance, what will the world be like in future? What will be the effect of this future world on the organisation? How should the organisation prepare for this world?

Future-proofing can be challenging for organisations, as often the pressures of the competitive work environment mean that we are reactionary, responding to the symptoms of a problem rather than an underlying cause. It is this looking to the future that epitomises business alignment and highlights the benefits that an organisation can derive. The ability to predict the achievement of outcomes while utilising resources to best effect is something that all organisations would wish to achieve.

Business management system

The business model created by business alignment is stored in a business management system, which provides integration, predictability and transparency.

• Integration – everything the organisation needs to do and employ to deliver its required outcomes is linked at all levels across the whole value chain from customers through yourselves to suppliers.
• Predictability – the causes of success are identified, and the probability of the required outcomes being delivered is objectively predicted, enabling risk mitigation.
• Transparency – anyone, internally and externally, can see what the organisation intends to employ, do and deliver, and the progress being made and expected.

Operating and financial review

The operating and financial review (OFR) would have required companies to provide transparency, consultation, comprehensiveness, consistency, all relevant information and continual review to their stakeholders. Although the OFR requirement has been withdrawn by the government, the implementation of these principles, not more regulation, is the key to effective governance.

The business management system implements the OFR principles. The integration provides comprehensiveness, consistency and all relevant information; the transparency enables continual review; and the predictability enables effective consultation.

The future of business alignment

More and more organisations are recognising the competitive need to align everything and everyone ON a single set of corporate goals. Business Alignment achieves this by simplifying the management process and making it transparent. In so doing, it increases the probability and reduces the cost of delivering corporate goals. And as Kaplan and Norton’s latest publication indicates, business alignment is going to become even more important to businesses in the future.

Peter Bebb is owner and director of Perendie, authors of Business Alignment. He has over 30 years’ experience in corporate and business alignment, and is currently facilitating ACCA’s use of business alignment. He can be contacted at peter.bebb@perendie.com