Complete Guide to Strategic Alignment

Total reading time: 91 minutes

Chapter 3: Reasons why companies experience misalignment

Misalignment can occur for several reasons. While many of these reasons are unavoidable, managers should keep them in mind as they align their teams.

Misaligned incentives and priorities

Individuals and teams can become misaligned when their incentives do not match. Incentive misalignment can occur in a few different ways.

  1. Incentives do not complement each other. Uncomplimentary is a common form of incentive misalignment. Non-complementary incentives mean that individuals or teams work with different incentive structures that cause them to behave differently from the rest of the organization.
  2. For example, marketing has a goal to convert 20% of its Marketing Qualified Leads to paying customers. This goal exists because leaders want marketing to do a better job qualifying their leads, so sales end up with higher quality leads. The sales process involves sales providing the customer with a demo of the product, so conversion can only happen after sales give a demo.
  3. Unfortunately for the marketing team, sales has no such goal of providing every marketing qualified lead with a demo. Instead, they're held accountable to a different goal: get at least 20% of their self-generated prospects to schedule demos. Conducting demos for their own leads ties up most of the time that they're not spending cold calling or sending out emails, so they have no time to provide demos to MQLs.
  4. As a result, the marketing team meets their objective (generate the leads), and the sales team meets their objective (convert 20% of leads they generate themselves). But that’s not what it looks like from afar.
  5. To the outside observer, it may look like marketing is failing at their goal. Marketing may have a conversion rate of 0% despite having well-qualified leads because Sales does not have any incentive to do their part. Unfortunately, the company does not get what they're looking for: a boost in overall conversion rate, leading to higher sales overall.
  6. Incentives contradict each other. These are goals or priorities that actively oppose each other. The most common form of contradictory stakeholders is competing interests between stakeholders. This issue is particularly pronounced in public policy: a decision that is made to benefit one group comes at the cost of another group.
  7. For example, a product manager has a goal of completing three epics this month. To do this, they'll need the engineering team's help to build the features in these epics. Like with many product managers, they have control over the roadmap that engineers follow. These three epics easily take up the entire team's time, causing them to work overtime.
  8. Now, here's where things start to conflict: the VP of Engineering began to base bonuses for the engineering team on the team's ability to satisfy the Joel Testwhen writing new code. She wants the team to focus on quality and process, not just pumping out half-working features as fast as possible.
  9. The engineering team is now left with a difficult choice: do they prioritize working on the bugs that customers have complained about before writing new code (one of the tenets of the Test), or do they focus 100% of their time on completing the epics?

The lack of proximity

Research in social psychology has discovered a correlation between physical proximity and the intensity of personal relationships. Since alignment relies on communication, any barrier to communication will negatively impact the degree of alignment between teams of people. As MIT researchers have discovered, proximity boosts collaboration between otherwise disconnected individuals (even if these individuals work in different fields).

In the modern workplace, workers' physical location plays a large role in whether individuals will interact - and therefore, share ideas and communicate about their work. Therefore, leaders need to be cognizant of this reality and address it directly. One method is to create opportunities for otherwise unrelated individuals to intersect at work; in the age of remote work, this might mean crafting a "digital water cooler" for people to connect.

The whirlwind

As the adage goes: "what gets measured, gets managed." While there is some dispute to the validity of this statement — and the individual who originally said it — the saying is still apt for alignment. Leaders who do not prioritize managing alignment leave it to happen by chance, which rarely leads to the results that managers expect, often because other issues arise to fill time.

One of the core concepts presented in The Four Disciplines of Execution is the idea of "the whirlwind." The whirlwind includes every routine task, email, request, or assignment that people spend their time focused on. Managers included.

Alignment is often a victim of "the whirlwind." In the pursuit of "getting things done," little to no time is spent focused on alignment, leading teams to start to hyperfixate on their own individual tasks. The longer managers allow the whirlwind to drive action, the further off-course teams get.

The wrong types of communication

One common misnomer about alignment is that it can be solved by having more communication. Tools like Slack, Zoom — heck, even email, and the telephone — have all improved our ability to communicate efficiently. Why then, has alignment remained a problem since the days of Peter Drucker (the 1950s)?

Simple. Using tools like Slack or Zoom will not solve alignment issues automatically. Effective communication requires people to talk about the right things to the right people at the right time. Unfortunately, many modern tools allow people to over-communicate, rather than share relevant information that helps others make decisions about the work that they're doing.

The problem with over-communication is that it prevents real work from happening. Think about every time you've been distracted at work or pulled into a pointless meeting: a lot of communication happened, but none of it was relevant to the work you were doing. Over-communication also has a poor signal-to-noise-ratio; that is, over communication obscures important information from being heard.

Alignment is not actively managed

Alignment is not a once-and-done activity. In fact, it's not even a once-per-quarter or annual process. Alignment needs to be managed on an on-going basis in order for it to impact action.

Unfortunately, this isn't happening as widely as it should. According to Bridges Business Consultancy, only 53% of the organizations surveyed had a measurement system in place to measure the strength of execution toward a strategy. They found only 1 in 5 organizations review its execution monthly, and only 46% of leaders believe their company is good at implementing strategy.

Many teams fall into the trap of setting goals, discussing priorities or reviewing a strategy only at the beginning of the quarter (or year). Between each review, individuals return to their old ways of working: being totally consumed by the work they are assigned to, not thinking about the big picture, and not working towards the real goal of their work.

The longer the team is allowed to go without reviewing the big picture, the more likely they are to be adrift.

Alignment requires active management. Managers should be looking for ways to integrate context, performance, and accountability into the everyday work people are doing. Individuals should be empowered to change focus when they are no longer working towards a common purpose. Alignment is a process of continuous improvement, not just an outcome.

Poor visibility of goals and priorities

One of the leading causes of misalignment is the lack of visibility on goals set at the team, department, and organizational levels. While many managers and executives set goals for their teams and company, these goals are often only known by the people to who they're directly assigned. This is often unintentional: goals are not shared with the broader organization because there's no sensible place to share them.

For example, an organization with team-level goals that are only known to the individual teams are more likely to have significant communication silos. Worse yet, these teams are likely to also overlap in areas where they have the opportunity to collaborate. These teams are unlikely to, however, because they're unaware of their counterparts in other parts of the organization.

The impact of poor visibility toward goals and priorities extends beyond silos between teams; poor visibility also ensures goals are unlikely to be accomplished. Organizations with poor goal visibility are also unlikely to use goals as a core part of team planning, leading to goals that don't get accomplished.

Changing priorities

They say "the only constant in life changes." Unfortunately for organizations, change can misalign individuals, teams, and entire departments. Change cannot be avoided, but alignment can be managed during it.

It is not practical for companies to forgo embracing change in favor of alignment. Alignment is the cost of change, but it is the job of leadership to keep the balance. The goal is not to achieve perfect alignment, but instead to prevent misalignment from damaging the organization's effectiveness.

The problem of misalignment being caused by change is more acute in companies that don't have a regular alignment process; companies that review alignment quarterly or annually, in particular, are likely to experience a high magnitude of misalignment due to change.

Short-term gains, long-term costs

One common source of misalignment is the conflict between short-term results and long-term investments. This is particularly problematic when times are tough; an organization is often tempted to cut costs and focus on short-term survival, rather than investing time and money into long-term projects that will eventually make the company more successful.

Top-down communication and management

One common problem organizations have is a heavy reliance on top-down communication. Decisions are made at the top of the organization, often by executive leadership, and then cascaded down the organizational chart. While this is a common way to run an organization, it is far from optimal. Some of the challenges of top-down communication with regard to alignment include:

  • Change happens slowly. When the organization needs to change direction or react to a market change, frontline employees can take days or weeks to respond.
  • Problems take a long time to get solved. Information doesn't just flow down the organization chart — it often flows up. When decisions are made solely at the top of an organization, the response is often made too late.
  • Issues lack visibility. Unfortunately, when an organization relies on a chain-of-command style reporting structure, issues don't have the same level of visibility as they do in a more transparent organization.
  • An organizational telephone game. Many organizations relay information through several people before it gets to the frontlines. If you've ever played the game telephone (also called "Chinese whispers"), you know how the message can be vastly different when it gets to the end of the chain of people. If you're relying solely on top-down communication, the original intent or message can easily become obscured.

Nobody knows there is misalignment (hint: there is)

According to Synergy Integration Advisors, the most common reason organizations end up misaligned is a lack of awareness of misalignment between the organization's strategy and the goals departments have set.

Like with many things, the first step to solving a problem is recognizing its existence. That is, it is hard to solve misalignment if you don't know your team is experiencing it.

Our recommendation: assume misalignment is occurring and take proactive steps to address it. If you have a team that is larger than 20 people, chances are there is a degree of misalignment (the magnitude of misalignment is a bit more difficult to ascertain). We suggest implementing an alignment process anyway, even if you don't see strong signs of misalignment — this will not only address any hidden misalignment you may be experiencing, but it also will be a preventative measure to keep misalignment in check.

Assuming senior leadership understands the strategy

You'd think organizational leaders would readily understand the strategy and be able to communicate it. Not so, says research by MIT Sloan School of Management. According to an MIT study, only 28% of executives and middle managers that were responsible for executing strategy could list 3 of the top 5 strategic priorities of their business, while 33% were unable to list even one strategic priority.

The issue of leadership not understanding the strategy gets worse as you move down the organizational chart, as only 13% of frontline supervisors can list at least three top priorities for their company. This study illustrates a common problem leaders face in companies: they're only familiar with the work that they do.

A common result of this lack of horizontal visibility is organizational silos that create barriers for collaboration across company priorities. From our experience, we've seen many teams hyperfocus on their work, without thinking about others in their company that they can collaborate with to achieve several goals at once. Based on MIT's research, we now know this is mainly a problem of awareness, not willingness.