To improve the alignment between strategy and organisational design, follow these steps:
STEP 1: MAKE SURE YOUR STRATEGY IS WELL UNDERSTOOD
Regularly test understanding of your strategy among your people by asking them to tell you what the company strategy is in their own words. If this test reveals that the awareness is poor, invest more time, energy and creativity in communicating your strategy.
There are three unbreakable rules when it comes to communicating your strategy well:
Simple: Anyone in your company should be able to understand your strategy without having it explained to them at great length. As a great copywriter once said, “To explain is to fail!”
STEP 2: ENSURE ALL ACTIVITIES AND PROJECTS CONTRIBUTE TO THE STRATEGY
Inspiring: Your strategy should capture hearts and minds and inspire people to do great things that create value every day. You need to think carefully about imaginative and impactful ways to create a feeling of inspiration.
Repetitive: While we all hate duplication, communicating your strategy is the one occasion when it’s virtually impossible to repeat your message too many times.
Review the role that each function or department plays in delivering your strategy, and agree how that particular team creates value. Also ask each function or department to create an ‘organisational purpose statement’ that clearly explains the overall role they play in helping the company deliver its strategy. Review and sign off these statements at CEO or board level.
Using finance as an example, the organisational purpose statement could be the following: “We provide only the essential financial information needed to track progress versus our strategy and to identify how we can improve our overall financial performance”.
Now ask each departmental head to review their current organisation design and all key activities against this purpose statement and prove that each element of their organisation is designed to deliver the strategy. They should review each activity (eg a project, process, task, report produced, etc.) and ask themselves these questions:
- How does this activity help our department meet its purpose and deliver our strategy?
- Do we really need to do this activity at all? What if we stopped it all together?
- Is there a smarter, simple way to do this activity?
Next, ask them to make sure every job description has a dedicated (yet concise!) section that describes how that person’s specific role contributes to the company strategy.
For the head of legal, for example, this could be the following: “I ensure we stay on the right side of the law and regulations, while actively supporting our ability to achieve our strategic goals”.
STEP 3: FIX THE ISSUE OF ORGANISATIONAL DRIFT
As part of your annual planning process, each department should review all the activities and projects they will take on in the coming year – this is to make sure that all planned work will add value and contribute directly to the company strategy. This way the organisation design can only drift or carry on with outmoded structures for a year before being reset again.
The ‘keep/improve/kill’ framework is particularly handy for this. Review everything your team is doing, ask how this activity helps deliver the strategy, then decide to carry on or stop doing it.
The other useful questions to ask are:
- Are we doing the right things? (Then stop all projects/processes/activities that don’t help deliver your strategy.)
- Are we doing things in the right way? (Then find simpler ways to deliver the remaining activities/projects.)
Encourage people to challenge the value in process changes, new tasks or information requests. They should feel empowered to question the worth of anything that doesn’t appear to help with strategy delivery.
STEP 4: KEEP THE LONE WOLVES IN CHECK
Give leaders who are out of line with the overall strategy the opportunity to contribute to the development of the next strategic plan, making sure their ideas and views are carefully considered – they might have a point.
Once the strategy is signed off, give them six months to get their house in order. If their department is not 100% aligned with the company strategy by then, you may need to look for a new management team to lead that part of the organisation.
In the long run, you will drive more success from a fully aligned management team than a federation of lone wolves!
In order to keep your company simple, your organisation design needs to be totally focused on delivering your strategy, the whole strategy and nothing else. You should ruthlessly rip out any elements of your organisation design and any activities that don’t have a proven role in delivering your strategy.
If you succeed in this, your business will be simpler, your results will improve, and your people will enjoy their work, since every day they come to work they do so to achieve great things.
Professor Simon Collinson is the dean of Birmingham Business School. He is a world-recognised expert in complexity management, has consulted for a wide range of globally renowned companies, and has been widely published in prestigious academic journals.
Melvin Jay is the founder of Simplicity and the author of From Complexity to Simplicity. He has over 25 years of commercial and consulting experience with some of the world’s biggest companies. Visit simplicity-consulting.com.