Creating organisational alignment

Welcome to this fifth talk on performance management. I am Pietro Micheli, I'm Professor of Business Performance and Innovation at Warwick Business School in the UK and the topic today is Creating Organizational Alignment.

Very often, organizational alignment is conceived as a top-down process. So what do you have in front of you is a figure from a strategy book written by a quite known Strategy Scholar, and essentially it indicates what most organizations tend to do. To implement strategy, they start from corporate strategy, which is then defined into more detail, into business strategies and short-term operating objectives. The corporate strategy also Gives shape to the corporate structure and how businesses are going to be integrated and organizational design. Then this flows down into business structure and incentives and controls, some of which we covered in the previous talks. So key performance indicators, targets, and so on. As you've seen in the previous talks, my approach to this is a somewhat different, is one that is certainly more iterative and tends to go backwards and forwards. So even though very often we tend to think an alignment as something that goes top-down, as this figure indicates, in reality, it is and should be more of a two-way process. So the corporate strategy may flow down into business strategy for sure, but at the same time dependent on how the business strategies are conceived and how they go. Then of course, we can reconsider the corporate strategy, incentives and controls as they're called in the slide. They of course, have an impulse and some form of affect on the business strategy itself. So dependent on the type of KPIs that we use, the targets that we use, and whether we achieved them or not. Of course, we can reconsider the business strategy and the rest. Another point is that this not only indicates the structure that is very top-down, but also the type of intervention and the empowerment that is given to individuals. We're going to talk about empowerment in one of the next talks. But just to say, a a top-down approach like this kind of assumes that the knowledge sits in the senior management team and this is then cascaded down to individuals or teams and so on. Now the point is of course that some objectives and some indicators and targets and so on, of course they can be shaped lower down, so to speak. So it's very important to remember that this is to some extent, it is a top-down process, but it also has bottom-up influences and so people throughout the organization should be able to contribute to it. Let's have a look at a couple of examples.