With new trends and disruptions arising every day, companies are focusing now on coming up with new innovative ideas before their competitors do. Sometimes, this is done without ensuring whether strategies, operations, people, organizational capabilities, and resources are all aligned together and directed towards the purpose for which they started their businesses.
Of course, companies do know that all of their businesses’ elements should be organized and aligned together to reach their purposes. However, some could get lost in the new trending concepts without reviewing strategies and ensuring that their employees’ behaviors and actions are directed by the company’s strategy.
Having a well-documented strategy that looks great in meetings and presentations is not enough. Company leaders and managers should make sure that the strategy is well-communicated throughout the organizations, starting from the CEO of the company to the most junior person in the company; in other words, it should be aligned vertically and horizontally.
Understanding the definition of strategic alignment
According to Hough and Liebig (2013), strategic alignment “is the process in which the formerly developed strategy is executed and cascaded throughout the organization. It includes the calibration of the organization’s culture, staff, structure and governance with the strategy.” This means that employees need to witness and become aware of their contributions to the organization’s strategy.
Having all business aspects aligned together is a fundamental state for organizational effectiveness. A common agreement about goals and processes is present in a well-aligned company which occurs at two levels: horizontally and vertically. Horizontal alignment refers to the harmonization of strategic goals and performance measures employed in the different business units. Meanwhile, vertical alignment refers to the transfer of the company’s vision and mission with certain strategic goals down the hierarchy.
Not having a strategic alignment within your business is highly costly; you could lose your key talent employees, valuable customers, resources, and time. Moreover, departments might even work in an isolated zone from the company’s road map wherein each department or entity will be working and taking decisions based on their own departmental strategies. Setting a strategy or having a strategic meeting is not a waste of time.
Brightline conducted a survey in 2017 of 100 respondents from large companies and explained that communication throughout the organization and in all directions is fundamental for strategic evolution. The survey illustrated that leaders bolster the two-way flow of information between top executives and people in the company because it is very effective in delivering strategy across the company. David Kamenetzky, Chief Strategy & External Affairs Officer at brewer Anheuser-Busch InBev, explained that “Vertical communication within the business cannot fall into the trap of flowing one way—from the top, it is actually about tapping expertise throughout the organization. You have to do a certain element of consultation and even co-creation. It is about making sure the strategy is and remains right.”
So, what could be done to have a strategic alignment?Below are a few tips that could help in developing a strategic alignment within your organization:
Revisit your strategy and make sure it is well developed and serves the main purpose of the company. The KPI Institute certified course on Strategy and Business Planning Professional can help with this issue.
Conduct a strategy/strategic meeting that includes all relevant stakeholders(leaders, managers, seniors) for developing/updating and executing your strategy.
Make sure that your leadership and managerial styles serve your strategy. You don’t want to have styles that block the execution of your strategy.
Make sure that communication is clear within your organization and it flows in both directions (top-down and down-top).
Make sure that there is coordination between departments through conducting meetings to ensure that their processes, strategies, and priorities are aligned with the company’s overall business strategy.
Events and company meetings that gather all employees across the organization are important. Those events or meetings could remind the employees of the company’s purpose and strategy as well as their future plans, just to make sure that they are seeing the big picture of their roles.
In conclusion, strategic alignment is a crucial element for business success. Business owners should be aware of its importance and this is the most important step for executing it internally. Making sure from time to time that all your employees are aware of the firm’s main purpose, is not a waste of time. It has a direct positive impact not only on your employees but on your overall business as well.
The business world is dynamic, and crafting a winning strategy is often merely the first step. The true test lies in successfully translating that strategy into tangible results. This is where the often-overlooked power of change management comes into play.
While strategies may be meticulously planned and crafted on paper, they can often fall flat in the face of organizational inertia and resistance to change. This is where change management steps in, acting as the bridge between well-defined aspirations and their successful implementation.
Understanding the Why of Change Management
At its core, change management focuses on the human aspect of organizational transformation. It recognizes that successful implementation hinges not just on revised processes or new technologies, but also on the willingness and capacity of individuals within the organization to adapt and embrace the change.
By employing various strategies and frameworks, change management fosters a supportive environment that facilitates individual and collective buy-in to the proposed changes. This involves:
Clear communication: Effectively communicating the “why” behind the change, not just the “what,” is crucial.
Building confidence: Addressing concerns and providing training equip employees with the necessary skills and knowledge to navigate the change effectively.
Empowering employees: Fostering a culture of ownership and encouraging participation in the change process can enhance engagement and motivation.
This ability to transform and thrive in a dynamic business landscape becomes a key differentiator in today’s competitive environment. Thus, integrating change management principles into strategy execution is not just a “nice to have.” It is a strategic imperative with numerous benefits, such as:
Boosted effectiveness: By proactively addressing resistance and fostering a sense of shared ownership, change management significantly increases the adoption rate of new strategies. This translates to a smoother transition and ultimately, faster realization of the desired outcomes.
Elevated morale and engagement: When employees feel valued, informed, and involved throughout the change process, it cultivates a more positive and productive work environment. This leads to increased employee engagement, which is directly linked to higher levels of performance and innovation.
Enhanced organizational agility: By fostering a culture of adaptability and continuous learning, organizations become better equipped to navigate future changes and challenges.
Change Management in Action
Here are some actionable ways to incorporate change management into strategy execution:
Craft a compelling communication plan: Develop amulti-channel communication strategy that clearly articulates the vision, goals, and rationale behind the change. This could involve town hall meetings, targeted emails, internal newsletters, and Q&A sessions. The goal of this plan is to ensure transparency and consistent messaging across all levels of the organization.
Invest in building capabilities: Equip employees with the necessary skills and knowledge to navigate the change effectively. This could involve providing training programs, workshops, and mentorship opportunities. Remember, addressing knowledge gaps and fostering a learning culture is crucial for building confidence and encouraging active participation.
Empower change champions: Identify and cultivate champions within the organization who are passionate about the change and possess strong leadership skills. Empower them to act as advocates and peer mentors, providing support and guidance to their colleagues throughout the transition.
Embrace feedback and iterate: Regularly monitor progress and solicit feedback from employees at all levels. This data-driven approach allows you to identify potential roadblocks, adjust the implementation strategy as needed, and ensure that the change is aligned with employee needs and preferences.
By recognizing the crucial role of change management and actively incorporating its principles, organizations can bridge the gap between strategy and action, turning plans into tangible results and paving the way for lasting success in an ever-evolving business landscape.
This article is written by Rami Al Tawil, the General Manager of Organizational Excellence at Al Saedan Real Estate Company. He holds a master’s degree in industrial engineering from Jordan University of Science and Technology. With 19 years of expertise spanning strategy planning, performance management, business improvement, and more, he excels in aligning employees with strategic visions for consistent performance improvement.
Editor’s Note: This article was originally published on April 3, 2024 and last updated on September 17, 2024.
A hundred billion tons of materials enter the global economy every year. Only 8.6% of the total amount of the materials are cycled back into the economy. This is the result of the linear economic model. In a case study written by Thibaut Wautelet, he refers to the linear economic model as a production and consumption model based on the “take-make-waste” scheme. He explained that raw materials are collected, then transformed into goods that are used and finally discarded in landfills or incinerated as waste. This approach turned out to be broken, enabling overconsumption to the detriment of planetary health.
Governments and businesses are looking to adopt the circular economy model and start repairing the damage created by unsustainable production and consumption. According to published research in “Cleaner Environmental Systems Journal”, authors define the circular economy as a catalyst for sustainable business. Moreover, the circular model promotes “…the use of resources within closed-loop systems, reducing pollution or avoiding resource leakage while sustaining economic growth.”
The pressure to adopt sustainability compels companies to implement the “reduce, reuse, and recycle” practices from the design stage to post-sales activities. Based on the same research, “Circular economy as a driver to sustainable businesses”, the influence of the circular economy can be seen in many business areas:
Cost management – The circular model leads to the transformation of products at the end-of-life cycles into resources for new products. Integrating material recycling into new component production can close the loop, reducing waste and the usage of more expensive raw materials.
Supply chain – The circular management of the supply chain is based on the coordination across the different members in closing, slowing, or narrowing energy and material flows. Additionally, the packaging system is an important aspect of the distribution process circularity.
Process management – The business processes are rebuilt to make them more circular, facilitating the reusing and recycling out of the desire to extend product life and reduce environmental impact.
Service management – The Product-Service system is considered an enabler of the circular economy by offering services instead of products aiming at pro-environmental outcomes.
Research and development – The achievement of circular goals relies heavily on design, which determines the circular potential. The life-cycle-based research and development allows the selection of the type and quantity of materials and determining how they are combined – a process that affects the product’s life and the possibility of repairing and recycling it.
Figure 1. Product Lifecycle in Circular Economy Model | News European Parliament
Companies embrace the concept of circularity in response to the growing interest of customers in green practices and concerns about the global waste problem. Philips is one of the companies that are successfully paving the way toward the circular economy in their industry.
Philipswas one of the largest electronics companies in the world. But it has changed its focus on health technology, looking to improve people’s health and well-being. Its products include large-scale and small medical equipment and home care products. The company developed new business models to adapt to the circular principles organized on seven strategic pillars:
Close the loop with current products through take-back, refurbishment, and recycling
Further circular practices across Philips sites, including zero waste to landfill policy
The circular design of products and business models
Technical competence building
Driving change with external coalitions and supply chain
Embedding in the Philips Business System
In 2016, the company set goals to generate 15% of revenues from circular products and services and send zero waste to landfills in internal operations. At the end of 2020, Philips achieved their circular goals. Therefore, they set three greater targets for 2025: to generate 25% of revenue from circular solutions, send no waste to landfills, and close the loop by offering a trade-in on all professional medical equipment.
The Benefits of Adopting the Circular Model
The Circular Model and its principles are still new to the business ecosystem, and the market penetration of circular business models remains limited. However, the potential to scale up the model is considerable in many industries.
Besides the environmental impact that the circular model creates through the reduction of greenhouse gas emissions or the use of fewer nonrenewable resources, or achieving zero waste, shifting toward circularity can help companies secure a competitive advantage and create long-term value.
The circular model enables new revenue streams by accessing new markets or cutting off costs from waste generation. It reduces the dependency on raw material suppliers and increases resilience in the face of supply chain disruption.
Additionally, by implementing a circular model, businesses can attract new clients and improve the retention of old ones, as sustainable practices are becoming an influencing factor in customers’ buying decisions. Also, customer loyalty is favored due to servitization, product-as-a-service offerings, or take-back programs.
Based on the survey conducted by Deloitte, more consumers this year are pursuing a better sustainable lifestyle. Results show that 40% of consumers choose brands that promote sustainable values and practices, which increased by six points compared to 2021. The number of consumers who stopped purchasing from a specific brand due to their ethical or sustainable issues and concerns towards the company has also increased by six points in 2022, which is 34%.
Going in circles is the way forward. It is time for companies to rethink how they do business, considering industrialization’s impact on the environment, relevant international initiatives, such as the UN Sustainable Development Goals and the EU Circular Economy Action Plan, and the increasing importance of sustainability to everyday customers. The change may be difficult for organizations used to operating in the linear economy but not impossible as seen in the above examples. In order to thrive in the market, companies must establish circular business models and adapt their strategies to the circular economy.
To widen your expertise in establishing effective strategies and organizational planning, read more comprehensive articles here.
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Editor’s Note: This article was first published on May 26, 2022 and last updated on September 16, 2024.
Democratizing strategy planning refers to the process of involving various stakeholders of all organizational levels in the strategy formulation process. In the traditional approach, strategy planning is a top-down process formulated by selected stakeholders like the senior management and key decision makers. So, to make the process more inclusive and participatory, democratizing strategy planning comes into account.
One of the main advantages of democratizing strategy planning is that it increases employee engagement. Thomas, K. W. (2009) discussed in his paper “Intrinsic Motivation at Work: What drives employee engagement” that when employees feel that their voice is heard within the organization, they are more likely to feel connected and invested in the organizational success, which increases their motivation, commitment, and job satisfaction, and that means a lot for them as they feel more valued in the organization.
Another advantage of democratizing strategy planning is that it enhances ownership and accountability, which will be reflected in improved employee engagement, as employees who participate in the strategy planning feel a stronger sense of ownership and responsibility, which leads to extra accountability and willingness to go the extra mile in achieving the organizational objectives as per the psychological ownership theory, which emphasizes on the role of psychological ownership in influencing employee attitude and behavior which lead them to be more engaged, motivated and committed to their organization.
To implement democratized strategy planning, having and securing the leadership buy-in is crucial to its success, so it is necessary to present the benefits and potential of increasing employee engagement and fostering innovation in the organization.
After getting leadership buy-in, we need to define a clear scope of where employee inputs would be more valuable, which is recommended to be initiative-specific in the beginning to avoid any potential analysis paralysis. In addition, it is vital to develop a precise feedback mechanism to capture different stakeholders’ diverse perspectives and ideas and recognize and reward participation.
This process will take time to be implemented correctly without any issues, so it is essential to mention that continuous improvement is critical to reach a practical approach. To read more comprehensive articles on strategy, click HERE.
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Editor’s Note: This article was originally published on November 30, 2023 and last updated on September 17, 2024.
Traditionally, an ecosystem is considered a community of organisms co-working in a special physical environment. Ecosystem dynamics, in this context, would be the network of interacting and interrelated relationships within the system that form a complex and integrated whole. What differentiates this “new” view of business ecosystems (although James Moore in 2006 was already presenting the concept back in 2006, so it can hardly be called new) from systems theory is the holism of the concept. While in system thinking, a system has its boundaries, in ecosystem thinking, the system is boundless—it’s always part of a larger network of systems.
Ecosystems theory draws inspiration from the natural world, which makes sense since we’re all part of that. Giles Hutchins in his book The Nature of Business describes several key principles that guide interactions in an ecosystem, some of them, as follows:
Networks: Living systems are interconnected, they communicate with other systems without strict boundaries. As the book Realizing Community Futures states, “Life did not take over the planet by combat, but by cooperation, partnership and networking.”
Cycles: Matter and energy are in a continuous flow, both being consumed and created by parts of the system. As a whole, an ecosystem generates no net waste.
Diversity: The higher the biodiversity within the ecosystem, the more capable it is of withstanding challenges.
Dynamic balance: Nature works not through the maximization of certain variables but through responsive adaptations and feedback loops.
In business, an ecosystem is a complex network of interdependent entities and relationships that co-evolve and co-create to produce value that offers exponentially greater benefits than the sum of the network’s parts. In the absence of these benefits, there would be little reason to be in the system at all. Inherently, ecosystems are expansive, crossing many geographies and sectors, and they include a mix of public and private entities as well as consumers.
Here’s just one example of how the benefits manifest in the business world: In a technology ecosystem, companies can develop platforms jointly, integrate their services, or develop solutions jointly. This approach enables tech companies to promptly respond to changes in the market.
How Can We Apply Nature’s Principles to the Business World?
This is a tough question, as it implies going through the eye of the needle, as Otto Scharmer from U-Lab phrased it. This means we need to let go of our desire to continuously grow, get more, achieve more, and understand how slowing down is a necessity of long-termism. Here are a few principles of the new age of business. Consider this hard-to-swallow, but necessary medicine.
Synergy
The concept of synergy is based on maximizing collective potential. Simply put: Individual parts in an ecosystem possess distinct properties, which, when combined, create new and exponentially better characteristics. Synergy, the maximization of collective potential, means that co-creation achieves results that creation never could.
Emergence
An emergent strategy, as opposed to a deliberate strategy, stems from unplanned actions of individual contributors as a response to change or unexpected events, often resulting in spontaneous innovation. While deliberate strategies are all about planning, an emergent strategy is based on trust and shared values. There’s a reason that deliberate strategies are becoming harder and harder to implement, and emergent strategies are becoming more popular: change, disruption, and pressure have become the new normal.
However, emergence only works with a joint purpose. Therefore, companies will have to do better when it comes to inspiring employees with a common belief system, values, and purpose. This is not just marketing, but a prerequisite for synergy and better outcomes.
Holism
Holism in ecosystem thinking emphasizes comprehensive consideration of business challenges and opportunities, recognizing the interconnectedness of environmental, social, and economic factors. For example, a company adopting the triple bottom line approach—which involves evaluating environmental and social impacts alongside profitability—demonstrates holistic thinking by prioritizing sustainability and societal well-being alongside financial success, leading to more resilient and responsible business practices.
Proactivity
Proactivity in ecosystem thinking involves anticipating future challenges and opportunities rather than simply reacting to current situations. A practical example of this is a company investing in renewable energy solutions before regulatory changes mandate reductions in carbon emissions, positioning the company as a leader in sustainability. In this paradigm shift, our very survival hinges on our ability to embrace proactive strategies that prioritize sustainability, resilience, and responsible growth.
William Gibson’s words, “The future is already here, it is just not very evenly distributed,” highlight the uneven spread of progress. Ecosystem thinking encourages co-evolution and a shift from an ego- to an eco-mindset, reminding us to transcend self-centeredness and recognize our role as parts of a larger whole to avoid self-destruction.
If you missed the first part of this article, click here to catch up.
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About the Author
Bori Péntek is a management consultant specializing in organizational development and human resource management. She helps businesses align their strategies, processes, and practices with their core values, focusing on human and social well-being. With experience in recruitment, HR, and operations management across sectors like sustainable construction, research, and instructional design, Bori emphasizes improving employee well-being, fostering inclusive cultures, and ensuring that organizations are resilient and socially responsible. She develops solutions that address systemic challenges and support long-term success.
