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Friday, October 06, 2006

Aligning Systems for Optimum Strategy Execution

Once the strategic plan (mission, vision, values, strategic position) and the goals (vital few objectives, initiatives, measures, targets) have been established for an organization, the "hard part" begins.

Since we know that up to 90% of effectively formulated strategies fail due to execution, one of the most challenging barriers to effective execution is: an organization's own internal systems and processes!

The typical business is made up of combinations of components including:

  • Processes
  • Policies
  • Technologies
  • Measures
  • People
These components combine to make up internal "systems."

What is needed is an organized effort for continually aligning systems - meaning, getting all the components of the organization working in close cooperation to meet the goals of the company.

Two types of misalignment can occur:

  1. Creeping misalignment. This occurs every day, usually in very small ways, leading to significant misalignments to the organization's strategy.
  2. Strategic misalignment. This occurs when the systems and resources of an organization are not deployed to support strategic goals. This type of misalignment typically surfaces suddenly as a barrier to executing new strategies.

BOTTOMLINE: The cumulative effect of dozens of creeping and strategic misalignments is a signficant constraint on an organization's ability to execute its strategy. One estimate is that up to 50% of the resources of a typical organization are not applied (aligned) to the mission and vision of the company. It's an ongoing process, and working on aligning systems is a key to achieving lasting business excellence.

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