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Organization Alignment

(An Effective Innovative Model For SMEs)




                                               Nitin Sethi


                                           1
Ultimately, there may be no long-term sustainable advantage
except the ability to organize and manage.
                                 ~ Galbraith and Lawler (1993)




                                                   2
Contents
I.    Key Challenges

II.   Lack of Organizational Alignment

III. Importance of Organizational Alignment

IV. Case Studies

V.    What Next?

VI. WaterHealth Way

VII. Alignment Map
      I. Circle of Means
      II. Circle of Ends
      III. Circle of Life




                                              3
Key Challenges
Although the below given challenges are not mutually exclusive and collectively
exhaustive, the real challenge is to overcome “lack of organizational alignment”.


          Initiative overload


          Lack of discipline, accountability and follow-up


          Lack of coordination and teamwork


          Conflict/differences between key people


          Department, function or process bottleneck


          Transmission loss due to ineffective communication
          processes

          Inability to manage cultural change as Organization
          grows




                                                                 4
Lack of Organizational Alignment
Though most of us agree that strategic planning is no rocket science but studies have
shown that up to nine out of ten strategic plans fail1
             Findings                                       Reasons

1
                                                                 Most
 60 % of organizations don‟t link                            discussions
 strategy to budgeting                                     end at strategic
                                                               planning

2

 75 % don‟t link employee incentives
 to strategy

3
                                                              Lack of
 86 % of business leaders spend less                       Organizational
 than one hour per month discussing                          Alignment
 strategy
                                                                               Planning and
                                            Execution
4                                         Lacks synergy
                                                                              leadership not
                                                                               being part of
                                          with Strategic
 95 % of workers don‟t understand              Plan
                                                                              Organizational
                                                                                  System
 their organization‟s strategy

1Source:   Fortune Magazine



                                                                       5
Importance of Organization Alignment
Importance of Organizational Alignment can be summarized through 3 Es i.e. What it is
essential for, what it ensures and what it eases.




                                                                      Easing:

                                                                      •Organizational
                                                                       performance
                                          Ensuring:                   •Harmony between
                                                                       strategy, culture and
                                                                       processes
                                          •It helps management to
                                            ask the right questions
                                          •It changes and
                                            improves the way
                                            information flows
             Essential for:                 between the
                                            board, executive
            •Clarity of direction           leadership, senior
                                            management and rest
            •Agreement on company‟s         of the organization
             values, vision , mission (VVM)
            •Creating unique market
             position
            •Achieving strategic and
             operational goals



                                                                                    6
Case Studies – I. Britannia Industries
Background
This case study highlights the problem faced by Britannia during business diversification due to lack
of „Organizational Alignment‟
Organization Goal
To emerge as a successful food company that provides high quality and tasty yet health foods and
beverages.

Brief Story
 Company was market leader in biscuit category
 Company was facing high competition and increase in raw material cost which was
  pushing down margins
 Decided to increase its product offerings by entering allied food categories
 This change was not articulated down the level efficiently as the strategic and
  operational objectives laid down for the same were not cascaded properly
 There was misalignment between different business units, functional units and trade
  partners.
 Lost focus on core market as well due to lack of clarity
 Due to this misalignment the company faced declined market share in biscuit category from 58% in
 2001 to 38% in 2007, although 90% revenue were still coming from core business i.e. Biscuits
 category.




                                                                             7
Case Studies – II. HCL Technologies
Background
This case study highlights the problem faced by HCL Technologies due to increase in
competition, reducing margins and high attrition.
Organization Goal
To turnaround and bring change in the Organization in order to ensue sustenance and growth
Brief Story
 Once considered a pioneer ten years ahead of the competition, in 2005 HCL‟s turnover was $ 565
    million and growing at 35% YoY
   Faced challenges due to increase in competition, reduction in margins and high attrition.
   Rolled out radical new strategy “Employee First, Customer Second” (EFCS).
   Strategic objective was to create unique employee organization, drive an invert organization
    structure, create transparency and accountability and encourage a value driven culture
   Identified and addressed following issues
     – HCL Technologies was in service business and it was first level employees not managers who played
       the critical role in creating value.
     – Top down management model which exalted those with hierarchical power rather than those who
       create customer value.
 Key changes made
     – Empowering front line employees
     – Create reward system that recognizes customer centric behaviour
     – Removal of extra hierarchical level in the organization


                                                                                 8
What next?
To ensure seamless organizational alignment, strategy must be complemented with an
alignment process - “The Alignment Map”. Following are the check points for “The
Alignment Map”

1
                                    •The corporate office defines strategic guidelines to shape strategies at lower
    Enterprise value proposition     levels of the organization

2
       Board and shareholder        •The Corporation‟s board of director‟s reviews, approves, and monitors strategic
             alignment               plan

3
    Corporate office to corporate   •The strategic plan is translated into corporate policies that will be administered
            support unit             by support unit

4
    Corporate office to business
               units                •The corporate priorities are cascaded into business unit strategies

5
      Business units to support     •The strategic initiatives of the business units are incorporated in the strategies
                units                of the functional support units




                                                                                                9
The WaterHealth Way
At WaterHealth India we have created and implemented “The Alignment Map” that
ensures seamless alignment between Organization‟s objectives and initiatives with
Values, Vision and Mission. Through the Alignment Map, we try to achieve synergy
between scarce means and elusive ends.


                              “The Alignment Map




                                                                10
Alignment Map: Circle of Means

                                     Values
                                                  The operating part of the
                                                  Strategic plan is developed
                                     Vision       at various levels leading
                   Annual Review                  finally as a feedback to the
                                     Mission      Strategic Planning process.

Quarterly
                                    Strategic
 Review
                                    Objective
               “Circle of Means”

                                     Strategic
Tasks + Projects                    Initiatives


                           AOP
                                   Operational
                                    Initiatives



                                    Dynamic
                                   Initiatives




                                                          11
Alignment Map: Circle of Ends

Generally known as the         Values
budgeting process, this
loop lays out hard and         Vision
measurable metrics for                        Feedback
performance for the entire     Mission
organization.
                                                                Annual
                              Strategic                        Appraisal
                              Objective
                                            “Circle of Ends”

                               Strategic
                              Initiatives                       KRA



                             Operational        Budget
                              Initiatives



                              Dynamic
                             Initiatives




                                                         12
Alignment Map: Circle of Life

                                      Values


                                      Vision
                    Annual Review
                                                       Feedback
                                      Mission

Quarterly
 Review                                                                Annual
                                     Strategic
                                                                      Appraisal
                                     Objective
                “Circle of Means”                  “Circle of Ends”

 Tasks + Projects                     Strategic
                                     Initiatives
                                                                      KRA

                         AOP
                                    Operational       Budget
                                     Initiatives



                                     Dynamic
                                    Initiatives




                                                               13
Benefits
Implementing Alignment Map has helped WaterHealth in following ways:



  1     30 % increase in EBIDTA Margin YoY in 1st
        Half



   2
        Increase in Employee Satisfaction
        score(ESAT)



   3
        Inculcating a meritocratic culture within the
        Organization



   4    No transmission loss due to seamless
        alignment across the levels




                                                             14
Thank You




            15
Strategic Objectives




                            Back




                       16
Strategic Initiatives




                             Back




                        17
Operational Initiatives




                               Back




                          18
Personal Effectiveness (PE) Map




                                       Back




                                  19
Special Project Brief




                             Back




                        20
KRA




           Back




      21

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Organization Alignment

  • 1. Organization Alignment (An Effective Innovative Model For SMEs) Nitin Sethi 1
  • 2. Ultimately, there may be no long-term sustainable advantage except the ability to organize and manage. ~ Galbraith and Lawler (1993) 2
  • 3. Contents I. Key Challenges II. Lack of Organizational Alignment III. Importance of Organizational Alignment IV. Case Studies V. What Next? VI. WaterHealth Way VII. Alignment Map I. Circle of Means II. Circle of Ends III. Circle of Life 3
  • 4. Key Challenges Although the below given challenges are not mutually exclusive and collectively exhaustive, the real challenge is to overcome “lack of organizational alignment”. Initiative overload Lack of discipline, accountability and follow-up Lack of coordination and teamwork Conflict/differences between key people Department, function or process bottleneck Transmission loss due to ineffective communication processes Inability to manage cultural change as Organization grows 4
  • 5. Lack of Organizational Alignment Though most of us agree that strategic planning is no rocket science but studies have shown that up to nine out of ten strategic plans fail1 Findings Reasons 1 Most 60 % of organizations don‟t link discussions strategy to budgeting end at strategic planning 2 75 % don‟t link employee incentives to strategy 3 Lack of 86 % of business leaders spend less Organizational than one hour per month discussing Alignment strategy Planning and Execution 4 Lacks synergy leadership not being part of with Strategic 95 % of workers don‟t understand Plan Organizational System their organization‟s strategy 1Source: Fortune Magazine 5
  • 6. Importance of Organization Alignment Importance of Organizational Alignment can be summarized through 3 Es i.e. What it is essential for, what it ensures and what it eases. Easing: •Organizational performance Ensuring: •Harmony between strategy, culture and processes •It helps management to ask the right questions •It changes and improves the way information flows Essential for: between the board, executive •Clarity of direction leadership, senior management and rest •Agreement on company‟s of the organization values, vision , mission (VVM) •Creating unique market position •Achieving strategic and operational goals 6
  • 7. Case Studies – I. Britannia Industries Background This case study highlights the problem faced by Britannia during business diversification due to lack of „Organizational Alignment‟ Organization Goal To emerge as a successful food company that provides high quality and tasty yet health foods and beverages. Brief Story  Company was market leader in biscuit category  Company was facing high competition and increase in raw material cost which was pushing down margins  Decided to increase its product offerings by entering allied food categories  This change was not articulated down the level efficiently as the strategic and operational objectives laid down for the same were not cascaded properly  There was misalignment between different business units, functional units and trade partners.  Lost focus on core market as well due to lack of clarity  Due to this misalignment the company faced declined market share in biscuit category from 58% in 2001 to 38% in 2007, although 90% revenue were still coming from core business i.e. Biscuits category. 7
  • 8. Case Studies – II. HCL Technologies Background This case study highlights the problem faced by HCL Technologies due to increase in competition, reducing margins and high attrition. Organization Goal To turnaround and bring change in the Organization in order to ensue sustenance and growth Brief Story  Once considered a pioneer ten years ahead of the competition, in 2005 HCL‟s turnover was $ 565 million and growing at 35% YoY  Faced challenges due to increase in competition, reduction in margins and high attrition.  Rolled out radical new strategy “Employee First, Customer Second” (EFCS).  Strategic objective was to create unique employee organization, drive an invert organization structure, create transparency and accountability and encourage a value driven culture  Identified and addressed following issues – HCL Technologies was in service business and it was first level employees not managers who played the critical role in creating value. – Top down management model which exalted those with hierarchical power rather than those who create customer value.  Key changes made – Empowering front line employees – Create reward system that recognizes customer centric behaviour – Removal of extra hierarchical level in the organization 8
  • 9. What next? To ensure seamless organizational alignment, strategy must be complemented with an alignment process - “The Alignment Map”. Following are the check points for “The Alignment Map” 1 •The corporate office defines strategic guidelines to shape strategies at lower Enterprise value proposition levels of the organization 2 Board and shareholder •The Corporation‟s board of director‟s reviews, approves, and monitors strategic alignment plan 3 Corporate office to corporate •The strategic plan is translated into corporate policies that will be administered support unit by support unit 4 Corporate office to business units •The corporate priorities are cascaded into business unit strategies 5 Business units to support •The strategic initiatives of the business units are incorporated in the strategies units of the functional support units 9
  • 10. The WaterHealth Way At WaterHealth India we have created and implemented “The Alignment Map” that ensures seamless alignment between Organization‟s objectives and initiatives with Values, Vision and Mission. Through the Alignment Map, we try to achieve synergy between scarce means and elusive ends. “The Alignment Map 10
  • 11. Alignment Map: Circle of Means Values The operating part of the Strategic plan is developed Vision at various levels leading Annual Review finally as a feedback to the Mission Strategic Planning process. Quarterly Strategic Review Objective “Circle of Means” Strategic Tasks + Projects Initiatives AOP Operational Initiatives Dynamic Initiatives 11
  • 12. Alignment Map: Circle of Ends Generally known as the Values budgeting process, this loop lays out hard and Vision measurable metrics for Feedback performance for the entire Mission organization. Annual Strategic Appraisal Objective “Circle of Ends” Strategic Initiatives KRA Operational Budget Initiatives Dynamic Initiatives 12
  • 13. Alignment Map: Circle of Life Values Vision Annual Review Feedback Mission Quarterly Review Annual Strategic Appraisal Objective “Circle of Means” “Circle of Ends” Tasks + Projects Strategic Initiatives KRA AOP Operational Budget Initiatives Dynamic Initiatives 13
  • 14. Benefits Implementing Alignment Map has helped WaterHealth in following ways: 1 30 % increase in EBIDTA Margin YoY in 1st Half 2 Increase in Employee Satisfaction score(ESAT) 3 Inculcating a meritocratic culture within the Organization 4 No transmission loss due to seamless alignment across the levels 14
  • 15. Thank You 15
  • 21. KRA Back 21

Editor's Notes

  1. The Alignment Map should be cyclic and have an iterative process. The Alignment Map as a part of the annual governance cycle will make sure that whenever plans are changed at the enterprise or business unit level, executives gets realigned to the organization accordingly