Mastering Strategic Alignment

The single biggest issue with strategic alignment is the disconnect between objectives and work.  Executives are very good at defining their strategic priorities and establishing the goals and objectives that will define their successful performance against those priorities in the upcoming period.  But then things go wrong.

Organizations frequently communicate those objectives to department heads who then develop their own proposals in siloes to try and meet those objectives.  Frequently these proposals are based on current tactical shortcomings, or departmental pet projects and the business cases designed to show how the initiatives will contribute to one or more objectives are sales pitches without realistic projections.  This results in the wrong work being approved and alignment is lost before work even begins.

This question seems quite obvious as without strategic alignment an organization won’t be achieving the ultimate goals of the business. Strategic alignment is absolutely crucial in delivering the business results the business desires. Without strategic alignment, organizations are working on work that doesn’t add value to the overall business goals. Anything that is being done outside of the strategy of the business is a distraction and utilizing resources, whether that be time, people, money, etc., that isn’t working toward the objectives of the business. This is often a waste of resources and minimizes the performance potential of an organization. 

Maturity is key and supported by a practice of good governance are must haves to align projects to the strategic goals for the organization. An immature organization is not measuring for improving, not aligned with key personnel in the best areas for growth and has no agreed upon way in which to prioritize strategic projects. Loudest voice in the room wins with no input from others will only satisfy a few and the company will not meet its goals. A major trait of a mature organization is where the leadership listens and follows up on the ideas of the teams who really want to improve the business and their daily working lives as well.  In order for an organization to drive strategic action through projects, it must have matured its people, processes and technologies.

For PMO’s, I recommend PMO leaders follow Gartner’s Five Progressive Levels of the PPM maturity model and develop plans to get to the highest level of Effective Innovation from the first level of Reactive.  Work with the team to plan out each step – although it may not be linear in practice, a good PMO will still make progress and will know when it has reached that level.

When you align your strategy to the goals and objectives of the business then you are ensuring your organization is working on the right programs and projects to support where the company wants to go in the future. This is one of the key components of running a PMO and that strategic alignment has to be at the forefront of every PMO leader’s mind as they think about the programs and project they are executing.

That question I look at very differently and I don’t equate PMO maturity levels to strategic alignment unless you are talking about PMO Governance. Even that, when you bleed those two topics it confuses people that struggle in one areas or another and so I think it important to look at strategic alignment as in aligning your PMO to the strategy of the company and PMO Maturity levels as how mature you are across different areas of your PMO. Two very different topics and should be looked as separately.

The type of organizaitons that benefit from strategic alignment include:

• For profit companies
• Non-profit organizations
• Government organizations
• Educational institutions

It’s really not complicated.  It is to ensure a common alignment between priorities, goals and objectives, funded investments, delivered work, and achieved benefits.  There should be an ability at every step in the process to tie back to one or more strategies and understand how work and benefits align.

In today’s world that’s a fluid alignment – changes in the environment and during work delivery require that alignment to flex and adapt, but that’s all part of effective management.  The successful organizations are the ones who maintain alignment most successfully and achieve benefits that directly contribute to strategic success.

Some steps I would recommend to improve strategic alignment is the following. One be sure that there is a strategy in place based on solid business objectives and goals. Next think about what it will take to get to those goals and prioritize those that will either get you there faster, cost you less or ultimately deliver you more overall. Strategic alignment is also something that needs to be communicated to the entire organization. All stakeholders should know what the goals and objectives of the business are and should be instructed to remain aligned with those even as those may shift due to changing priorities or business requirements. Lastly, strategic alignment needs to be tracked correctly. Make sure your KPIs and OKRs are aligned with the strategic goals of the business so you can continuously track the organizations progress in achieving those goals and keep a pulse on the effectiveness or ineffectiveness of the strategic alignment overall. 

Organizations that are seeing success with strategic alignment are quite simply more successful – dramatically more successful. When you think about the typical strategic processes in an organization, you tend to think of frustration, annoyance, of failure to hit goals and objectives. Department heads are frustrated their initiatives aren’t getting approved. Executives are frustrated that they’ve approved 20 different projects and only 10 are getting done and it’s been like that for the last 5 years and why can’t we all work harder. The people doing the work are frustrated because more work is being approved than can possibly be delivered and nobody listens when they try and push back.

When you look at strategic aligned organizations, that simply doesn’t happen. Executives say this is what we want to prioritize. These are the investments that we want to make. These are the goals and objectives we want to accomplish and they assign the owners of what they are expected to go and deliver. Those owners then have accountability for delivery a subset of the goals and what they do within the span of their investment as long as they only use the allocated funding to ultimately achieve the goals and objectives. The teams doing the work understand not only what they are doing and why are they are doing it and are supported by an investment owner that understands the limitations. That understands the expectations that can manage in real time and can understand where things vary.

With that, you don’t have this attempt to force alignment when it’s not really there. You don’t have business cases that are really sales pitches. You have metrics and measure that are actually align with the work that is being deliver as opposed to excuses as to why we couldn’t be held accountable. It’s just a much better approach to running a business – it’s less stressful, it’s more engaging and it results in better performance and better ROI. 

A good strategic alignment framework starts with a tool to support it. A project portfolio management software solution can help ensure orchestration of work across your enterprise is aligned with the strategic goals of the business. This puts your organization in a position to see in real-time the benefits realization of the desired results are being achieved. It also offers governance without restriction because it supports constant change that inevitable in today’s work environments. A PPM solution allows organizations to quickly and seamlessly make adjustments to business plans on the fly while remaining aligned to the goals and objectives of the business. This is done through insight-led decision making using real-time business data to drive strategic business decisions for optimize business performance supporting a strategic alignment framework. A successful strategic alignment framework is going to deliver results. Results that could be as simple as faster, less disruptive change, improved ROI or improved resource utilization. Strategic alignment frameworks are best supported through a comprehensive, PPM software solution. 

An example of an organization doing strategic alignment well can be easily determined with a simple way of measuring the projects that were specific to the strategy and determining – 1. How many projects did we complete against the strategy, vs non-strategic projects. If the number is 80% or greater, then this is a great start. The next measurement is answering the question of how much did we spend vs the return that was promised – did we get more customers? Did our topline grow because of the strategic projects? Did our EBITDA % grow because of productivity projects costing the business less to operate without impact to serving customers?  This is done well at Solenis because in 2015, the ratio of strategic to non-strategic projects were ~22%/~77%. After this analysis, the executive committee and the PMO decided to do more strategic alignment to projects that improve business performance metrics.

The tools we can use that people can implement to solve for strategic alignment are speak to your executive leaders and what their top 3 strategic goals are. The reason you want to do that is because you don’t want to do projects outside of that and find out that you aren’t supporting the strategic strategy of the business. In fact in 2015, I did this exercise of what we said we were going to do and what we actually did and there was just a little bit of overlap. That showed up in our performance results and our performance appraisals because there was just such a big disconnect. The first tool is to collaborate. Find out what your executives top 3 goals are and have a strategic planning session around how we are going to resource both cost and people to achieve those goals. So that when other things come, because there is an ever changing business dynamic, so we can decide if we need to shift our focus or decide we aren’t doing this now because it doesn’t match what you said you were going to do. The results for me have been a high overlap of what we said we were going to do and what we actually did. This was also reflected in our performance appraisals with high ratings because we are actually adding value to the business. So, it starts off with collaboration to understand where the business is trying to go, leverage the project portfolio management tool to see the progress of those projects including any changes in those goals. You can start to just list those out, but I would recommend using a project and portfolio management tool for that. 

First, what is alignment? How close we are to the goals we established. We talk about strategy we are talking about the high level objectives established by leadership in the organization. The strategic goals of a business are what is going to take it to the next level. In order to help the organization in strategic alignment, you need to have a clear and compelling vision and mission that is communication to the entire organization so they know what they are trying to achieve. The organization must communicate it clearly. You need to establish a governance structure and how resources will deliver within that structure. Ensure processes and culture are aligned to the strategic vision. Regularly review your progress because change is going to happen and you need to adjust. These are the steps that you should take to solve for strategic alignment in your organization. 

Organizations can follow these steps to solve for strategic alignment:

1. Define clear goals and objectives
2. Communicate effectively
3. Involve employees
4. Align systems and processes
5. Monitor and evaluate progress
6. Foster a culture of alignment

Getting internal buy-in for proper strategic alignment really shouldn’t be difficult. At the end of the day, nobody from the executive to the front line team member wants to be working on something that doesn’t matter, that doesn’t help the business. There is already an understanding that the work we do, that the investments we fund, the benefits that we ultimately achieve align with the strategic goals and objectives of the organization. The problem comes sometimes with understanding where, when and how those disconnects happen. That’s usually the biggest challenge is trying to get agreement on what it is we need to do to fix alignment.

Generally speaking that’s in the hands of the executives. They have to be prepared to drive everything from the top, as just opposed to saying, here’s the goals and objectives go figure out how to meet them. That’s really where the strategic alignment piece comes in. It’s also where the strategic alignment adjustments have to come in. The executives have to figure out, you know what, something is different. Competitors are doing something, customer expectations are shifting, technology is emerging that we haven’t been able  to leverage in the past. So, we have to be able to change things and keep the alignment all the way through. Getting buy-in for that really comes down to visibility. Helping everyone in your organization understand what they are doing, why they are doing it, and how it actually supports the growth of the business. If you can do that, the rest is easy. 

Modern PMOs are key to strategic alignment improvement. The strategic PMO, the enterprise PMO – whatever it gets labeled in your organization – is that body that has oversight of the entire strategic planning and delivery and process throughput. They don’t any one element, but they guide everything that happens. They make sure that the executives are setting goals and objectives in a realistic timeframe. That they are clear in what they want to achieve. That the KPIs or OKRs are well defined and understood by all stakeholders. They are going to be the enablers of tools like roadmaps to help communicate them. They are going to make sure the funding and governance is happening at the investment level and that the investment owner knows what they have to deliver, by when and with which resources. They make sure that those investment owners are working with the various work teams, whether that’s waterfall, Agile, hybrid or even ad-hoc work methods to ensure the work is broken out and delivered. They are working with those work teams to ensure that the work that is happening is being monitored and measured including the variances are being identified and measured so that if there’s changes that are necessary they can happen. They are working with the downstream internal customers and stakeholders to make sure that the benefit measurement is happening in accordance with what was defined upfront and if there are variances there they are working back to make adjustments in the portfolio.

Ensure the PMO is the enabler of the improvement of strategic alignment and by extension the enabler in strategic success for the business. If the PMO is not trusted to, empowered to, or doesn’t have the skills to do this function then the organization is going to struggle and the PMO is probably going to find itself replaced. 

The two biggest roadblocks we have seen in our organization’s strategic alignment is getting agreement/consensus on the main strategic priorities and the  communication of the strategy and the priorities throughout the organization in an impactful/meaningful way. 

What would surprise you is that an obvious answer would be the department heads and the direct reports to the CEO. However, if there is a good connection to the folks on the ground doing daily operations or are out serving customers, they bring a great deal of knowledge on how we can improve processes, understand trends in the industry, and what attracts customers to name a few.  Therefore, focus groups of the operations teams to get an idea of what can make their lives better and the company better along with the strategies developed by their leaders can create a combined effort to move the business towards its strategic vision.