The best performing companies are often the best aligned. But who in your company is paying attention to how well aligned your strategy is with your organization’s purpose and capabilities? Who is truly an “enterprise leader,” concerned with mobilizing the resources of the entire company as a system of many moving and interconnected parts? Enterprise leaders are the system architects of their company’s long-term success. They envision what needs to be done to connect the company’s purpose to its strategy to its organizational capabilities, and then design tweaks to processes and structures to make sure that all of these components work in concert with one another. If the only person thinking about that at your firm is the CEO, or an executive who is doing it in 20% of her time, that’s not good enough.
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The best performing companies are often the best aligned. But who in your company is paying attention to how well aligned your strategy is with your organization’s purpose and capabilities? In my research and consultancy with companies, I observe that, oftentimes, no individual or group is functionally responsible for overseeing the arrangement of their company from end to end. Multiple different individuals and groups are responsible for different components of the value chain that makes up their company’s design, and they are often not as joined up as they should be. All too often, individual leaders seek — indeed are incentivized — to protect and optimize their own domains, and find themselves locked in energy-sapping internal turf wars, rather than working with peers to align and improve across the entire enterprise.
So, who should be responsible for ensuring your company is as strategically aligned as it can be? The answer should not be “the CEO” or “the Chairman” or the equivalent. The job of aligning the modern corporation is too complex to be added on to the slate of someone whose job it is to consider hundreds of other things, no matter how talented or powerful they are. Consider for your own company:
Practically, who at the enterprise level in your company is responsible for ensuring it’s as strategically aligned as possible? Is their focus and behavior consistent with this responsibility, or is it merely an addition to their overriding day job? Is it the responsibility of your company’s most senior managers, or should it be a more distributed responsibility? How much and how often is time devoted in your company to revisiting its core organizing principles and discussing how to build capability for tomorrow’s customer, versus focusing on today’s business?
How is your company’s leadership making informed decisions about the arrangement of your company as a complex system of many moving and interconnected parts — including organizational capabilities, resources, and management systems — all aimed at fulfilling one overarching purpose? What frameworks and information do your leaders require to ask good questions, have better conversations, and make robust strategic and organizational choices?
What capabilities do your enterprise-level leaders require to be effective at aligning your company to ensure it is fit for its purpose? Leaders I’ve worked with who take on the challenge of strategic alignment describe themselves as needing to be “multi-everything” in outlook and ability. Multi-everything in this sense means: multi-level: being capable of enterprise level thinking – from 50,000 feet down; multi-disciplinary: being “T-shaped,” or possessing generalist and specialist knowledge ranging across the business; multi-national: having no geographical or cultural bias in scope or decision making; multi-stakeholder: understanding the company from multiple perspectives and interests and, finally; multi-phased: choosing to think in the near, medium and long-term despite pressure for immediate results.
If there are no obvious answers to these questions, then there is a good chance that nobody is paying enough attention to strategic alignment in your company. If that’s the case, you urgently need to address this gap in leadership focus and capability. Achieving sustainable competitive advantage through superior strategic alignment does not happen by accident – it happens by design, or not at all, and it requires a special breed of leadership, which I call enterprise leadership.
What Do Enterprise Leaders Do?
Unlike mainstream ideas about personal leadership, which at their core are concerned with mobilizing people, enterprise leadership is concerned with mobilizing the resources of an entire company as a system of many moving and interconnected parts, of which people (or “human resources”) are just one element, and not even necessarily the most important for developing strategically important organizational capabilities. Enterprise leaders are not people leaders in the traditional sense; they are the system architects of their company’s long-term success.
The purpose of enterprise leadership is to make strategic interventions to ensure the most important components of the company’s fundamental design align seamlessly. These components include the company’s business strategy (how the company is trying to win at fulfilling its long-term purpose), its organizational capabilities (what it needs to be good at to win), its resources (what makes it good enough to win, including its structures, cultures, people and processes) and its management systems (what delivers the day to day performance it needs to win). These critical components form a value chain through which companies perform their long-term purpose, more or less well. The value chain is only as strong as its weakest link.
Principally, enterprise leaders are responsible for:
- Envisioning: Crafting a robust vision of what strategic alignment looks like at their company, and communicating that vision in a meaningful way to others, including investors, staff, business partners and customers. The vision outlines the essential principles that will guide the company’s detailed strategic planning, organizational design, operational priorities, and performance goals.
- Designing: Following those principles, enterprise leaders should carefully design each component of the company’s value chain to be highly complementary of each other, and supportive of the firm’s long-term purpose. Tweaks to the organization’s design may happen only episodically, but the leader’s concern with strategic alignment should be constant. The design and management of the company as a complex and adaptive system of many moving and interdependent components should be revisited regularly, based upon robust diagnosis, to ensure it remains fit for purpose despite changes in the external environment.
The challenge is there is no one-size-fits-all choice of business strategy or related organizational design that results in superior strategic alignment. Organizational structures and cultures, for example, should be as distinctive as the strategies they support and make possible, which in turn depend upon the organization’s long-term purpose. For instance, to become more innovative, many companies are attempting to redesign themselves as agile, highly connected and open networks of teams and partners in which knowledge is highly dispersed. The cost to this is that network-based organizations are complex to manage and hard to control. For product-centric companies, where cost management is the strategic priority, the relatively simple, stable and closed-system hierarchy characteristic of “bureaucratic” thinking remains in principle the best organizational design.
Who Are the Enterprise Leaders?
The enterprise leadership role often falls to senior executives by default. In some companies embracing network-based working structures, the responsibility is also the domain of dedicated design teams. No one approach to enterprise leadership is better than the other.
Japanese multinational, Ricoh, for example, has invested in building a highly networked internal design function within its 105,000 strong workforce operating across 200 countries, referred to as the Future Business Development Center. Its purpose is to operate at the enterprise-level and lead positive business transformation across all business lines and geographies in line with the long-term group strategy and future customer requirements. Built to harness rigorous design thinking capability, the diverse team consists of technologists, advisors, analysts and researchers—not simply career managers. The thinking is that to achieve superior strategic alignment in the face of increased business complexity requires harnessing the collective intelligence and energies of a purposeful team of enterprise leaders across the organization, and their extended internal and external support networks.
Regardless of for whom it is a responsibility, enterprise leadership is essential to designing and managing ever more complex companies as highly capable systems, fit to meet the demands of customers and resist the disruptive maneuvering of competitors. Without it, the risk is that companies flip-flop between different strategies and unconnected organizational designs in endless rounds of reorganization or, conversely, mistakenly maintain the status quo and fall behind competitors in the rapidly changing marketplace. The best companies are the best aligned, but only when led by design.
More Info: hbr.org
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