Have you ever noticed the coordination that permeates an orchestral performance? Each musician channels their talents and culmination of countless hours of practice into a common energy of performing a musical piece as a united body of individuals. Individuals—all experts in their respective areas—unify their efforts to produce an outcome that none of them could produce alone or without the coordinating structure under which they perform.
High-performing organizations, whether sports teams, musical groups or business enterprises, are no different. They require a high level of coordination and alignment to produce an output that is greater than the individual skill sets and experiences that exist among their employees, leaders and distributors. When this coordination and alignment doesn’t exist in an organization, inefficiencies arise and can be manifested in various forms, including decreased productivity, change orders, rework requests and misspent money. Without an understanding of the coordinating structure of strategy that they should be operating under, individuals and business units begin to pursue their own interests and passions, which don’t necessarily align to the value-creation engine of the business. Don’t misunderstand—individual creation and pursuit of interests are critical in an organization, but they should be directed as part of the strategic framework that creates value for the organization.
Setting the organizational strategy and ensuring alignment of the organization to that strategy are among the primary challenges for executives. Yet these tasks are often neglected—or even completely ignored—due to the manage-in-the-moment practices that permeate many organizations. Caught up in urgent tasks, management fails to take time to assess and plan the company’s strategic direction. Or, if they do give it some attention, often the commitment level of time, resources and money is not sufficient to allow that strategy to make its mark, or the right people with the proper skill set and authority to get things done are not empowered. The result is that strategy is seen as “not making a difference” and is subsequently abandoned. Strategy cannot be a halfhearted effort.
Do You Have a Strategic Plan?
Before we can even begin conversations on aligning the organization, there first needs to be a corporate strategic plan. This strategic plan should look out at least three to five years and provide direction for the growth and sustainability of the enterprise. It should encompass how the organization plans to create ongoing value by leveraging its core competencies and resources.
There are a variety of strategic planning tools and techniques that have been developed and refined over the years, and they have varying levels of applicability. Such tools include business analysis techniques that can also be used in strategic planning, including SWOT analysis (Strengths, Weaknesses, Opportunities and Threats); STEER analysis (Socio-cultural, Technological, Economic, Ecological and Regulatory factors); PEST analysis (Political, Economic, Social and Technological); EPISTEL (Environment, Political, Informatic, Social, Technological, Economic and Legal); scenario planning and enterprise value mapping (EVM). The tool or tools you choose to use are not as important as the process you go through to analyze your business and put long-term plans in place to increase its value.
If your organization doesn’t engage in practices such as strategic planning, setting strategic goals with supporting plans to achieve them, using metrics like key performance indicators (KPIs) and balanced scorecards to measure growth, you should ask why. As a leader in your organization, you should ask yourself what you can do to move strategic planning forward. Imagine how much more powerful and productive your company could be if it had well-reasoned plans for strategic growth and supported them with annual operating plans and budgets to reinforce their actualization. The lack of a top-level strategic plan in your organization likely means that you have organizational inefficiencies and employees functioning at productivity levels below what they are capable of.
Even worse than not having a strategic plan, however, may be the failure to communicate that strategic plan and then align the organization to those plans. If you are investing the time and effort to engage in strategic planning but fail to communicate what those plans are and align the organization to the plans, your efforts in planning result in waste and frustration.
If your organization has a strategic plan, ask yourself these questions:
- Are your strategic plans known throughout the organization by all employees? Do individuals know how their projects and assignments link back to the overall strategy of the organization and do they feel their efforts are helping to achieve the strategic targets set by executive management?
- Do your business units have strategic plans and annual operating plans that align to the corporate strategic plan with concrete deliverables and metrics to support them?
- Do your field distributors know what the strategic plans for your organization are and are they engaged in activities that support these plans?
- Are your incentive plans for employees and distributors aligned to the strategic plans of the company so you are rewarding behaviors that support where the company wants to be long term? Or are you rewarding X but expecting Y?
The Aligned Organization
Once your strategic plans are in place at the corporate level, the next challenge is to cascade the plans throughout the organization to all levels to ensure alignment. How do you know if your organization is strategically aligned? What does an organization that is strategically aligned look like? One of the tools used in strategic planning is EVM. Originally developed by Deloitte, EVM is a tool to assist in both strategic planning by analyzing what activities an organization chooses to engage in to create value and in strategic alignment to illustrate what activities within the organization support the strategic plan—and, perhaps more important, which ones do not. It also helps identify gaps where strategic objectives of the organization are left unsupported by business units.
Let’s look at an example to see how this might work. Suppose your organization, through its business analysis and strategic planning processes, has determined that one of the ways it wants to achieve increased value is through revenue growth specifically derived through new product innovation aimed at bringing new distributors into the business. In conjunction with this stated qualitative object, leadership should establish quantitative measurements to define success and how to measure progress toward the goal.
With this decision made and committed to by the senior executives of the organization, the strategic plan now needs to be communicated throughout the organization and structured into business unit plans and objectives. Each functional area that has a supporting role in achieving this goal should work this into their plans, including specific quantitative measurements to track and report progress. Let’s examine what this might look like at a high level in various business units:
Finance—Product innovation often means increased spending in research and development. Funds should be appropriated to support innovative research in support of this strategic objective and in the proper context of other corporate priorities. Lack of resources is frequently cited as one of the limitations to achieving corporate objectives.
Sales and Marketing—In alignment with the strategic goal, programs need to be designed specifically with the stated intent of bringing new distributor recruits into the business, leveraging the new product innovations. Included in these programs should be ways of identifying and reaching out to new distributors. Perhaps this is to be done by developing tools existing distributors can use to reach out to potential new distributors. This may also involve the creation or refinement of incentive systems that further encourage existing distributors to bring new recruits into the business using the new, innovative products.
Communication tools to reach these new distributors must also be considered and planned. This may involve the development of new tools and communication channels, requiring broader cross-functional collaboration and support.
Maybe the corporation will take on the task of regional or national advertising in an effort to identify and attract new distributors. Likely, it is a combination of efforts both internally and externally that will be used to achieve the goal.
Research and Development—As the wheelhouse of product innovation, product development plans should be closely tied to corporate strategic priorities, especially those related to product innovation. Fewer, better executed product launches that are well-timed and well-supported and have direct ties to company strategy will deliver more measurable success for a company than simply launching products for the sake of launching new products. Remembering the stated objective is to bring new distributors into the business, the product development plan should specifically address how this will be accomplished by the new products being developed.
Regulatory—Product innovation may strain and challenge the existing regulatory resources of the company, especially if the new technologies being developed or purchased are new to the company, or new to the world. If the new product embodies a new delivery form, fresh packaging, novel ingredients or new regulatory classifications, then this must be carefully planned and resourced. Involving the regulatory team during the early stages of product development can help mold a product outcome that is more in line with the company’s goals and skill sets, while avoiding regulatory challenges and hurdles, which must be addressed late in the product launch plan. Application of advanced product-quality planning principles to the regulatory aspects of a product can also greatly reduce the regulatory risk when bringing an innovative product to market.
Execute the Plan
Having a plan in place at the top level and even cascading the plan and aligning the organization are of little value if the plan is not executed. Too often we see organizations fail to fully implement their plans for a variety of reasons: lack of ability to execute, misaligned resources, lack of accountability or too much time and energy spent in crisis management and focusing on the present rather than the future.
As a business leader, one of your top priorities is ensuring the strategic plan is executed. Fundamental to this is knowing what the strategic plan is and how your role supports the plan. Can you state what your company’s strategy is and are you committed to it? Do you keep it at the forefront of your daily operations and in your conversations with staff? Can your organization state what the strategy is and is their work tied to supporting that strategy?
Orchestras don’t just play music ad hoc. They strategize and coordinate, with each individual knowing the piece, tempo and key signature, resulting in a coordinated harmony. Similarly, the ability to plan strategically, align the organization to the strategic plan and orchestrate the necessary resources to perform with the proper expertise and sequencing will ultimately lead to the accomplishment of your corporate strategic objectives and increase the value of the organization and your effectiveness as a leader. Strategy, done right, allows the organization to function at a much higher level.
Jonah Detro is the Chief Product Officer at Young Living Essential Oils.