Strategic alignment is a process that ensures an organization's structure, use of resources (and culture) support its
strategy
Strategy (from Greek στρατηγία ''stratēgia'', "troop leadership; office of general, command, generalship") is a general plan to achieve one or more long-term or overall goals under conditions of uncertainty. In the sense of the " a ...
. "In its simplest form, organizational strategic alignment is lining up a business' strategy with its culture." Successful outcomes also require an awareness of the wider environment, regulatory issues and technological change. Strategic alignment contributes to improved performance by optimizing the operation of processes/systems, and the activities of teams and departments.
Goal-setting theory supports the relevance of clear, measurable operational objectives that can be linked to superordinate goals. This helps ensure resources are used effectively.
The concept of strategic alignment is significant in the context of a global business environment where activities need to be coordinated across regions and time zones. Strategic alignment encompasses not only technical and functional activities, but also issues relating to
human resource management
Human resource management (HRM) is the strategic and coherent approach to the effective and efficient management of people in a company or organization such that they help their business gain a competitive advantage. It is designed to maximize e ...
(and how best to develop people's motivation and capability). Studies suggest that the alignment of business strategy and HR strategy can impact performance. The process may extend across organizations and groups that share complementary objectives, e.g.
business partners. It has also been found that coalignment of business strategy, business structure, IT strategy, and IT structure contributes to performance. Many projects, but not all, are initiated using a
business case
A business case captures the reasoning for initiating a project or task. Many projects, but not all, are initiated by using a business case. It is often presented in a well-structured written document, but may also come in the form of a short ver ...
, and a business case can include details regarding strategic alignment.
Superordinate Principles
Creating operational alignment involves translating an organization's ''
Superordinate Goals'' and overall strategy into the more immediate objectives of a team or department. In addition to reviewing systems and processes, leaders also need to develop the skills, competencies and motivation of people in the organization. The
McKinsey 7s Framework provides an overview of this type of analysis, highlighting elements that contribute to alignment. This type of review, with follow-up interventions, contribute to key activities (linked to products and services) meeting customer and stakeholder expectations. At the same time, effective internal systems ensure the best use of resources, which contributes to future success.
Strategic Alignment requires awareness of ''Superordinate Principles'' that may include the 3BL "
triple bottom line
The triple bottom line (or otherwise noted as TBL or 3BL) is an accounting framework with three parts: social, environmental (or ecological) and economic. Some organizations have adopted the TBL framework to evaluate their performance in a broader ...
" perspective. This emphasizes criteria that take account of Planet, People & Profit (3P Thinking). It raises issues relating to
Corporate Governance
Corporate governance refers to the mechanisms, processes, practices, and relations by which corporations are controlled and operated by their boards of directors, managers, shareholders, and stakeholders.
Definitions
"Corporate governance" may ...
, which now include social and environmental considerations. KPMG make the point: "Businesses not taking ESG seriously are beginning to lose customers, employees and financing; eventually they will become unviable."
There are two main models of corporate governance, (i) the shareholder model, which prioritizes the return on investment for investors, and (ii) the stakeholder model that also emphasizes a responsibility towards other groups and wider considerations. Guiding principles relating to ''
Environmental, Social and Corporate Governance
Environmental, social, and governance (ESG) is shorthand for an investment, investing principle that prioritizes environmental issues, social issues, and corporate governance. Investing with ESG considerations is sometimes referred to as social ...
'' (ESG) is at the heart of the new thinking.
Trevor and Varcoe
In an article in Harvard Business Review (May 2016),
Jonathan Trevor and Barry Varcoe suggest two questions. These prompt reflection on strategic alignment.
# How well does your business strategy support the fulfilment of your company's purpose?
# How well does your organization support the achievement of your business strategy?
Findings suggest that both elements contribute to performance. The article notes that (alignment) 'also leads to a more positive work climate, above-average staff engagement, a strong commitment to values and few(er) energy-sapping turf wars and in-fighting'. (ibid)
See also
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Superordinate Goals that are linked to an organization's Vision and
Mission Statement
A mission statement is a short statement of why an organization exists, what its overall goal is, the goal of its operations: what kind of product or service it provides, its primary customers or market, and its geographical region of operation ...
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Strategy Markup Language (StratML), whose purposes include facilitating strategic alignment through the establishment of literal linkages among
performance indicators and the strategic goals and objectives they support.
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Environmental scanning
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Competition
Competition is a rivalry where two or more parties strive for a common goal which cannot be shared: where one's gain is the other's loss (an example of which is a zero-sum game). Competition can arise between entities such as organisms, indi ...
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Sustainability reporting
Sustainability reporting refers to the disclosure, whether voluntary, solicited, or required, of non-financial performance information to outsiders of the organization. Sustainability reporting deals with qualitative and quantitative information co ...
Business strategy alignment and the secrets of strategic planningh1>
Citations
References
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United States Office of Personnel Management'
overviewof strategic alignment in the context of
human capital
Human capital or human assets is a concept used by economists to designate personal attributes considered useful in the production process. It encompasses employee knowledge, skills, know-how, good health, and education. Human capital has a subs ...
management
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ARMA International'
discussionof strategic alignment in the context of records and information management, July/August 2007
on strategic alignment provided by Resource Management Systems, Inc.
Strategy 101: It's All About Alignment Forbes, October 16, 2012
Strategic alignment of business processes E. D. Morrison, A. K. Ghose, H. K. Dam, K. G. Hinge, K. Hoesch-Klohe, University of Wollongong, December 5, 2011
The Case for Strategic Alignment white paper by The Knowledge Compass, Inc.
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Organizational performance management