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Alignment Conclusion

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Alignment Conclusion

  1. 1. DRAFT Not for distribution Alignment: Conclusion Alignment matters. Without alignment you are very unlikely to achieve effective innovation. A study ranked over two hundred companies in terms of strategic alignment. Those in the bottom 20% had an overall innovation success rate of just 34%. Those rated in the top 20% for alignment had an overall innovation success rate of 71%. There is a direct correlation between innovation success and alignment. Get alignment right and you significantly improve your chances of innovation success. • The Innovation Engineering Institute research finds that those companies in the top 20% of the Innovation Alignment survey versus those in the bottom 40% are 300% more likely to be successful with their innovations. That's 300%—not 10%, not 20%, not 30%. • Research shows that strategic alignment had the highest correlation with positive business results (sales and profit growth). It was higher than even customer focus, co-creation, risk-taking, creativity, and competitiveness. Alignment is the way to give people autonomy and to get better results. Autonomy feeds creativity, but studies show that when you give autonomy without having alignment in place, there is a negative correlation with innovation success. People can get lost in the detail of what they are doing and lose sight of the big picture. A study showed that companies that give a high level of autonomy without having strategic alignment in place have an overall innovation success rate of just 21%. Those that provide autonomy within the context of effective strategic alignment have an overall innovation success rate of 71%. Alignment is the foundation for the systems that drive innovation. With alignment in place, the right attitudes and learning orientation emerge. Studies show that this is a good predictor for excellence in innovation systems. We will be talking about systems in detail in a later section but, without alignment, you will have a significantly lower chance of establishing the systems you need. Most importantly, alignment allows you to frame the narrative of your innovation journey, and that ensures that people are working on the things that matter. We will see again and again through this book a fundamental truth; doing the wrong things right just leads you further down the wrong path. Success starts with identifying the
  2. 2. right things to work on. Sometimes you will do the right things wrong, but if you keep your eyes open and learn as you go, you will be able to do the right things, right. What is alignment? In simple terms, alignment is knowing where you are going and making sure everyone in the organization understands this and how they can contribute. It is also about motivating people to make them want to go there with you. Alignment means: • Choosing a direction, • Communicating it clearly, • Creating buy-in and understanding up, down and across the organization. Alignment means that people know how to move forward without needing continual guidance. It is about setting the context within which everyone works. Where are we going? Over the previous four chapters, we looked at your business from many different perspectives. We looked at what you are doing, are you delivering value, how could you deliver more value and what are the cultural changes you need to make? These chapters required you to ask some tough and important questions. The order of the chapters was not random, but a progression of ideas where each additional level of depth might cause you to take a step back and re-think your business. If you have thought hard about these questions, you are ready to move on to the next step… Tell the Story Setting objectives is an important part of alignment. In fact, many organizations assume that all they need to do to build alignment is to create objectives. However, a What How BetterValue Check How to
  3. 3. PWC study in 2015 found that only half of middle-managers could identify even one of their company's strategic objectives. That is a fundamental problem. If people do not know what an organization's strategic objectives are, they cannot be working towards achieving them. "Most corporate mission statements are worthless. They consist largely of pious platitudes such as: "We will hold ourselves to the highest standards of professionalism and ethical behavior." Russell Ackoff Enabling Organizational Alignment Consider this example. Imagine hired at international fast-food chain Wendy's to work on strategic innovation. The company's mission statement was; "Wendy's Mission is to deliver superior quality products and services for our customers and communities through leadership, innovation and partnerships." Does that clearly tell people what they are expected to do next and every day? Probably not. If an organization sets objectives at a very high level or which are vague or uninspiring, it may not be apparent throughout the organization how divisions and individuals can contribute to these. These objectives can seem to be someone else's problem, the province of upper management and of little relevance to day-to-day operations. A lack of clarity leads to objectives that do not achieve what is needed, and we are never as clear as we think we are. Military commanders face similar problems. Just like today's rapidly changing markets, the battlefield is a dynamic, high-risk and sometimes chaotic environment. Military leaders must be able to communicate objectives clearly so that every soldier understands not just what to do but why they are doing it. Then, if a plan fails, troops may use their initiative to find alternate methods of achieving their objectives. In other words, they are free to innovate within the context of alignment provided by a clear expression of their leader's intentions. In military terms, this is known as Commander's Intent. The term was first used by the US Marine Corps, but it is now widely used throughout a number of military organizations. The concepts behind Commander's Intent are just as applicable to the business world as to the battlefield and they provide a simple guide to the setting of objectives. Commander's Intent must be:
  4. 4. • Clear. Objectives must be at such a level that every person can understand how they can help to achieve them. Military leaders make a distinction between Strategic Objectives, high-level aims which reflect national policy and lower level Operational Objectives. Companies too need Strategic Objectives, but these should be underpinned by Operational Objectives which can be used as a guide in day-to-day decision making. • Short and simple. If you want people to be able to remember something while they are focused on other tasks, it has to be easily remembered. For that, it must be brief. • In narrative form. A list of bullet points just is not going to tell a story, and many, many studies have shown that people remember information presented in narrative from better and for longer. • Available to everyone. Commander's Intent statements are included in every military briefing. In business, objectives must be communicated and repeated through integration in training, awareness-raising and existing systems and processes. Most importantly, Commander's Intent should not simply describe an aspiration but instead must provide a clear definition of an achievable, desired and measurable outcome. Effective business objectives are integrated into the workflow and used to guide decisions. TRUE NORTH provides a tool to create these objectives. TRUE NORTH TRUE NORTH is a simple process designed to achieve a clear statement of Commander's Intent. The steps in this process are: • What is the story? (Narrative) • What do you want to be? (Outcome) • What don't you want to do? (Restrictions) • What are the operational constraints? (Tactical) • Where do people start? (Here are places to start) • Then, a simple one-line summary (TRUE)
  5. 5. The TRUE NORTH process helps to define a destination. That allows the definition of clear objectives, the foundation of alignment. This provides context for autonomy within distributed workforces, but it does not prescribe what to do to get there. That is important because it does not block agility, the ability to modify or even completely change direction completely according to circumstances and because it allows management to focus on WHAT and WHY while allowing people to use their expertise to define HOW. The objectives derived from the TRUE NORTH process are cascading, ranging from high-level strategic objectives to lower-level operational objectives. They apply vertically in an organization, affecting every level from upper management to the workforce but they are also shared horizontally, crossing divisional silos. I recommend that you create at least three objectives; one directly related to a product, one focused on culture change and one operational objective related to working smarter. The objectives derived from this process must be: • Clear, simple and easy to understand, • Strong bold and challenging, • Meaningful, • Achievable, • Motivating.
  6. 6. Most importantly, these objectives must tell people what success will look like, motivate them to strive for it and tell them what they should do next to work towards it. This is important; research reported in the journal Research-Technology Management found that the two of the most significant drivers of innovation portfolio success are: 1.) Project aligned with business objective, 2.) Development spending reflects the business's strategy. Let's return to the example of Wendy's mentioned earlier. Using the TRUE NORTH process, their mission statement might have looked like this: This provides a much clearer set of objectives that do not just provide motivation but support decision-making at every level. Developing these objectives takes time, but not too much time; people need a period to adjust to change, and the sooner effective objectives are in place, the sooner alignment will happen. The real impact of alignment – shared purpose and commitment If you look honestly at the history of any major innovation or new business, it will seldom be a straight line from idea to market. Sure, sometimes the news media will make it look like a Eureka moment followed by riches. The reality is it takes hard work and persistence to build the ideas to make innovation happen. When you are your team know where TRUE NORTH is, you can keep adapting and improving to get where you need to go.
  7. 7. Making your business a place people want to work I love the book, Exponential Organizations from the Singularity University. It describes organizations that have gone beyond profitable and successful to become what author Salim Ismail calls "exponential," having a disproportionate output and effect on the marketplace. Ismail identifies common factors in such companies, including innovative corporate structures and the ability to effectively leverage new tech, but one important factor is that these organizations all have a higher aspirational purpose that transcends strategic objectives. This over-arching aspiration, defined as a "Massive Transformational Purpose" (MTP), is what drives the organization at every level. It is why the organization exists, and the MTP provides not just motivation but also an essential guiding principle for decision-making. The best MTPs are simple and can be expressed in a few words. Examples include; • Google; 'Organize the World's Information.' • SpaceX; 'Humans must become a multi-planetary species.' • Tesla; 'Accelerate the transition to sustainable transportation.' • Boston Children's Hospital; 'Until Every Child is Well.' • Best Friends Animal Rescue; 'Save them All.' In his opinion, an essential element of the process of evolving into an Exponential Organization is defining MTP. An MTP can provide a powerful driver for change that resonates throughout an organization. Defining an organization's reason for existence boosts morale as well as helping to provide alignment at every level and a guiding principle for innovation. One of your TRUE NORTHS should be about your bigger purpose. It does not need to be about changing the world, but it has to be something people believe is important and in which they are willing to invest their time, energy and passion. Going step by step is a powerful way to make sure that where you are going is not only right, but also something that will motivate you and your teams.
  8. 8. Moving forward Alignment is the cornerstone of innovation success. Innovation, by its very nature, demands that people are given autonomy and the freedom to be creative. But, if uncontrolled, these things can lead to internal competition, conflict and wasted time and resources. Alignment provides a higher purpose, the framework within which creative freedom can be channelled and controlled. But alignment provides much more than a context for innovation. It compels an organization to consider fundamental questions of why it exists, where it is now and where it wants to be in the future. It provides a vision of what success looks like and enables the development of clear, effective and useful strategic and operational objectives and perhaps even to an MTP. These provide motivation and direction and ensure that everyone is working towards the same vision of success. In our research with several hundred companies, it is clear that strong alignment can overcome even some of the largest organizational issues. If your mission is big and people really commit, they will build the systems and structures needed to make things happen. If you get this right everything else is easier. Alignment provides the map for the journey of innovation, ensuring that everyone understands the direction of travel and the ways in which they can contribute to moving things forward. Alignment is the essential foundation upon which all successful change is built.
  9. 9. Alignment does not tell people how to do their jobs, but it will tell them what they are doing and why they are doing it. It also provides a clear mission and that in turn promotes a positive innovation culture that allows autonomy while keeping people focused on both delivering value to customers and capturing value for the organization. Having those things in place is not just essential for building ideas, it helps build the right ideas you need to move forward. We will be looking in detail at the process of building ideas in the next section of this book.

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Sample chapter from my new book cycles

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