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How aligned is your enterprise? Oxford research shows that a strategically aligned enterprise is only as strong as its weakest link

Wednesday, February 8, 2017 10:02
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Why do some businesses thrive whilst many more struggle and fail? According to Jonathan Trevor, Associate Professor of Management Practice, and Barry Varcoe, Associate Fellow at Saïd Business School, University of Oxford, the answer is enterprise alignment.

Superior enterprise alignment enables McDonalds, for example, to serve over 70 million customers a day – over 1% of the global population – and dominate its industry, as it has done for decades. McDonald’s winning formula is tight alignment of its strategy, organisational capabilities, resources, and management systems, all arranged systematically to support its long-term purpose. 

Whilst most executives today recognise that their enterprises should be aligned, they tend to focus on just one of these elements to the exclusion of the others. ‘What really matters for sustainable performance is how they all fit together. The enterprise value chain that connects an enterprise’s purpose to its performance is only as strong as its weakest link’ said Professor Trevor. 

Enterprise alignment has never been more important – and difficult – than in today’s hyper-competitive and challenging business environment. The disruptions of the 21st century marketplace mean that tried and tested approaches to market success have a short shelf life. ‘To win, business leaders need to step-up and continually refresh how they align all elements of their enterprise’s strategy and organization to the opportunities and challenges of the 21st century marketplace. Many simply rely on what’s worked for them in past, with entirely predictable results. They fail sooner or later,’ commented Trevor.

In their latest article in Harvard Business Review Trevor and Varcoe pose a series of questions that challenge business leaders to test strength of alignment of their own enterprise.

  1. Enterprise purpose: what do we do and why do we do it?
  2. Business strategy: what are we trying to win at to fulfill our purpose?
  3. Organisational capability: what do we need to be good at to win?
  4. Resource architecture: what makes us good (and how good are we)?
  5. Management systems: what delivers the winning performance we need?

Superior enterprise alignment requires thoughtful, courageous and energetic leadership. Every element of the enterprise value chain supports the other. The penalty for misalignment is a dysfunctional business and poor performance.

The authors suggest there are four reasons for the misalignment that cripples many organisations (in all sectors) including:

  • A lack of appreciation of the risks of misalignment to performance; 
  • A failure of leadership to ‘own’ end to end alignment within an organisation; 
  • An inability to overcome the challenges of operating in a complex and rapidly changing environment; 
  • Mistaking activity for progress. 

The scale of the challenge however might be a step too far for many organisations. ‘We believe that persistent pressure for short-term results leads many leaders to baulk at the opportunity to implement difficult changes that would have positive and long-lasting organisational impact,’ concluded Varcoe.
    

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