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Organization Alignment
- 1. Organization Alignment (An EffectiveInnovative Model For SMEs) Nitin Sethi 1
- 2. Ultimately, there maybe no long-term sustainable advantage except the ability to organize and manage. ~ Galbraith and Lawler (1993) 2
- 3. Contents I. Key Challenges II. Lack of Organizational Alignment III. Importance of Organizational Alignment IV. Case Studies V. What Next? VI. WaterHealth Way VII. Alignment Map I. Circle of Means II. Circle of Ends III. Circle of Life 3
- 4. Key Challenges Although thebelow given challenges are not mutually exclusive and collectively exhaustive, the real challenge is to overcome “lack of organizational alignment”. Initiative overload Lack of discipline, accountability and follow-up Lack of coordination and teamwork Conflict/differences between key people Department, function or process bottleneck Transmission loss due to ineffective communication processes Inability to manage cultural change as Organization grows 4
- 5. Lack of OrganizationalAlignment Though most of us agree that strategic planning is no rocket science but studies have shown that up to nine out of ten strategic plans fail1 Findings Reasons 1 Most 60 % of organizations don‟t link discussions strategy to budgeting end at strategic planning 2 75 % don‟t link employee incentives to strategy 3 Lack of 86 % of business leaders spend less Organizational than one hour per month discussing Alignment strategy Planning and Execution 4 Lacks synergy leadership not being part of with Strategic 95 % of workers don‟t understand Plan Organizational System their organization‟s strategy 1Source: Fortune Magazine 5
- 6. Importance of OrganizationAlignment Importance of Organizational Alignment can be summarized through 3 Es i.e. What it is essential for, what it ensures and what it eases. Easing: •Organizational performance Ensuring: •Harmony between strategy, culture and processes •It helps management to ask the right questions •It changes and improves the way information flows Essential for: between the board, executive •Clarity of direction leadership, senior management and rest •Agreement on company‟s of the organization values, vision , mission (VVM) •Creating unique market position •Achieving strategic and operational goals 6
- 7. Case Studies –I. Britannia Industries Background This case study highlights the problem faced by Britannia during business diversification due to lack of „Organizational Alignment‟ Organization Goal To emerge as a successful food company that provides high quality and tasty yet health foods and beverages. Brief Story Company was market leader in biscuit category Company was facing high competition and increase in raw material cost which was pushing down margins Decided to increase its product offerings by entering allied food categories This change was not articulated down the level efficiently as the strategic and operational objectives laid down for the same were not cascaded properly There was misalignment between different business units, functional units and trade partners. Lost focus on core market as well due to lack of clarity Due to this misalignment the company faced declined market share in biscuit category from 58% in 2001 to 38% in 2007, although 90% revenue were still coming from core business i.e. Biscuits category. 7
- 8. Case Studies –II. HCL Technologies Background This case study highlights the problem faced by HCL Technologies due to increase in competition, reducing margins and high attrition. Organization Goal To turnaround and bring change in the Organization in order to ensue sustenance and growth Brief Story Once considered a pioneer ten years ahead of the competition, in 2005 HCL‟s turnover was $ 565 million and growing at 35% YoY Faced challenges due to increase in competition, reduction in margins and high attrition. Rolled out radical new strategy “Employee First, Customer Second” (EFCS). Strategic objective was to create unique employee organization, drive an invert organization structure, create transparency and accountability and encourage a value driven culture Identified and addressed following issues – HCL Technologies was in service business and it was first level employees not managers who played the critical role in creating value. – Top down management model which exalted those with hierarchical power rather than those who create customer value. Key changes made – Empowering front line employees – Create reward system that recognizes customer centric behaviour – Removal of extra hierarchical level in the organization 8
- 9. What next? To ensureseamless organizational alignment, strategy must be complemented with an alignment process - “The Alignment Map”. Following are the check points for “The Alignment Map” 1 •The corporate office defines strategic guidelines to shape strategies at lower Enterprise value proposition levels of the organization 2 Board and shareholder •The Corporation‟s board of director‟s reviews, approves, and monitors strategic alignment plan 3 Corporate office to corporate •The strategic plan is translated into corporate policies that will be administered support unit by support unit 4 Corporate office to business units •The corporate priorities are cascaded into business unit strategies 5 Business units to support •The strategic initiatives of the business units are incorporated in the strategies units of the functional support units 9
- 10. The WaterHealth Way AtWaterHealth India we have created and implemented “The Alignment Map” that ensures seamless alignment between Organization‟s objectives and initiatives with Values, Vision and Mission. Through the Alignment Map, we try to achieve synergy between scarce means and elusive ends. “The Alignment Map 10
- 11. Alignment Map: Circleof Means Values The operating part of the Strategic plan is developed Vision at various levels leading Annual Review finally as a feedback to the Mission Strategic Planning process. Quarterly Strategic Review Objective “Circle of Means” Strategic Tasks + Projects Initiatives AOP Operational Initiatives Dynamic Initiatives 11
- 12. Alignment Map: Circleof Ends Generally known as the Values budgeting process, this loop lays out hard and Vision measurable metrics for Feedback performance for the entire Mission organization. Annual Strategic Appraisal Objective “Circle of Ends” Strategic Initiatives KRA Operational Budget Initiatives Dynamic Initiatives 12
- 13. Alignment Map: Circleof Life Values Vision Annual Review Feedback Mission Quarterly Review Annual Strategic Appraisal Objective “Circle of Means” “Circle of Ends” Tasks + Projects Strategic Initiatives KRA AOP Operational Budget Initiatives Dynamic Initiatives 13
- 14. Benefits Implementing Alignment Maphas helped WaterHealth in following ways: 1 30 % increase in EBIDTA Margin YoY in 1st Half 2 Increase in Employee Satisfaction score(ESAT) 3 Inculcating a meritocratic culture within the Organization 4 No transmission loss due to seamless alignment across the levels 14
- 15. Thank You 15
- 16. Strategic Objectives Back 16
- 17. Strategic Initiatives Back 17
- 18. Operational Initiatives Back 18
- 19. Personal Effectiveness (PE)Map Back 19
- 20. Special Project Brief Back 20
- 21. KRA Back 21
Editor's Notes
- #10 The Alignment Map should be cyclic and have an iterative process. The Alignment Map as a part of the annual governance cycle will make sure that whenever plans are changed at the enterprise or business unit level, executives gets realigned to the organization accordingly