INTRODUCTION TO ORGANIZATIONAL ALIGNMENT
In 2019, Dave Ramos, the founder and CEO of SHIFTPOINTS, wrote Drive One Direction - How to Unleash the Accelerating Power of Alignment.
It has become the seminal work on the subject.
Part One of the book is an introduction to organizational alignment.
The material that follows is an excerpt from the book.
ALIGNMENT 101
The United States Military has an acronym called BLUF, which stands for Bottom Line Up Front.
Here is my BLUF: Alignment is the ultimate competitive advantage.
I came to that conclusion after studying over three hundred companies of all shapes, sizes, and industries.
In addition, as part of my research, I interviewed over One Hundred CEOs.
Finally, we read “every book ever written” about alignment and dozens of white papers and scholarly articles.
We distilled our findings into The Twelve Foundational Principles of Alignment. They are:
- Misalignment is an extremely common, pervasive problem that plagues organizations of all types.
- There is no standard definition for alignment … so we developed One.
- Alignment is mission-critical for every organization. That is why we say, “Alignment is Job One.”
- Alignment is infinitely more complicated and difficult than it was just One Generation ago.
- The complexity of alignment increases exponentially as the company grows, driven by three factors: the number of employees, the number of divisions, and the number of locations.
- Misalignment is the root cause of virtually every organizational—and interpersonal—dysfunction.
- There is no generally accepted metric to measure alignment … so we developed the One-Question “Corporate Alignment Percentage™ (CAP)” assessment.
- Misalignment is extremely costly … and improving alignment might be the highest ROI activity any organization can undertake.
- Each company must create alignment in a unique One-of-a-Kind Way. This is driven by your life stage, operating model, and business philosophy.
- Alignment is primarily created at the corporate level. This utilizes the “One and Only One” model.
- Teamwork is the foundation of alignment, but you must answer the question, “What does team mean?”
- Highly aligned companies dramatically outperform their fragmented competitors. That is why we call them “fast-lane companies.”
We think of The Twelve Principles as “Alignment 101.” In the following pages, we will be expanding on each of them.
As you will notice, I use the word “One” a lot. (My wife says I have a One-Track Mind. Of course, if she says it, it must be true!)
Actually, I use the word “One” over and over because it is the best word to describe alignment. It is also the word that virtually every CEO we interviewed used.
Some may find this trite or kitschy. Some—especially the grammarians and purists—might find it irritating that I always capitalize it.
Nonetheless, I hope you find the ideas in the book to be One(s) worth considering.
ONE WORD
Alignment. [A·line·ment]. One word. Three syllables. Thousands of applications.
But, what does alignment actually mean?
The etymology of “align” is French. Webster’s says the first known use of the word was in 1693. Some of the common uses include:
- to arrange things or people in a straight line.
- to bring things or people into alignment.
- to bring people into agreement with a particular group, party, cause, etc.
- to bring things into a proper coordination (such as the wheels of a car).
Align is a verb. Aligned is a past participle. Aligning is a gerund. Alignment is a noun.
Okay, enough of that. What does alignment mean for your company?
There are three dimensions of corporate alignment:
First, companies must be externally aligned. That means that their vision, strategies, goals, etc. must be aligned with market realities and customer expectations. Since the external environment is constantly changing, companies must be both aligned and agile.
In fact, the ability to quickly realign the entire company to meet changing external conditions is mission-critical. We call this “aligned agility.” Companies who create this capability have a tremendous competitive advantage.
Second, using the standard organization chart as an illustration, companies must be vertically aligned. On the vertical dimension, the corporate headquarters team develops visions, values, strategies, goals, priorities, plans, policies, and more. Every division, department, team, and individual must align with the things that come “down” from corporate.
Finally, again, using the organization chart as an illustration, companies must be horizontally aligned. That means that divisions must align with each other. Europe must align with Asia. Marketing must align with sales.
The Hatfields must align with the McCoys.
In summary, here is my working definition of alignment: an optimal state where everyone—and everything—is externally aligned with market realities, vertically aligned with corporate priorities, and horizontally aligned to leverage the full resources of the company to win.
In my working definition, I use the term “everyone and everything.” Companies have both people and things.
Aligning things means that there is only One Version. For example, you must eliminate conflicting versions of key documents. (One client inadvertently had multiple old versions of their mission, vision, and values circulating around. Those multiple versions created confusion.)
Aligning things also means that those things deliver One Message. In other words, your vision statements, mission statements, strategies, policies, goals, products, metrics, systems, etc. must be in alignment with each other.
Aligning people means you must align them with your things, and you must align them with each other.
I hope you like my definition. If not, perhaps you should gather your team and write your own.
JOB ONE
We believe that every organization, regardless of size or industry or operating model, must create strategic alignment.
That is why we say, “Alignment is Job One.”
For every idea, there are contrarians. Alignment is no exception.
So, let’s consider the question: is alignment really necessary for every organization?
Consider some of the common objections to alignment raised by my contrarian friends:
- Can’t you just let everyone do whatever they feel is right?
- Won’t top-down controls stifle innovation and creativity?
- Do you really need rules?
- Won’t people just naturally self-align to do what is in the corporation’s best interest?
- What, are we going to all join hands and sing “Kumbaya”? (see the More Resources section for the words!)
After all, you can’t legislate morality.
Perhaps you are an alignment contrarian. Perhaps you have these questions and more. If so, consider these examples:
In 2014, the online retailer Zappos adopted a utopian “self-management” model called Holacracy. When Zappos adopted it, hundreds of managerial positions were eliminated. It was hailed as the future of work. Fully empowered employees. Free to contribute. Free to innovate. Free from creativity-stifling management.
Not so much. The Holacracy model has a formal constitution that is 42 pages long.
Consider Burning Man, the annual festival in the Nevada desert. It is designed to be the ultimate, utopian experience of individual freedom and “radical self-expression.” It attracts over 70,000 people from all walks of life (including, ironically, billionaires who fly in on private jets).
But even Burning Man has rules to keep everyone aligned.
Yes, but how about the anarchists?
The International Anarchist Federation is fighting for “the abolition of all forms of authority whether economical, political, social, religious, cultural or sexual.” Interestingly, to become a member, you must agree to align with their statement of principles.
Amazing. Even anarchists need alignment.
I hope these examples help convince you that alignment is mission-critical for every organization.
ONE GENERATION
My dad went to work at General Electric in January 1962.
In just One Generation, the workforce has radically changed, and creating alignment is now radically more difficult.
In my dad’s generation, the workforce was very homogeneous. Most of the “white collar” workers were white males. Most of the women in the workforce were in secretarial roles.
Now, the workforce is tremendously and beautifully diverse. The increase in diversity is a great thing. Let me say that again; the increase in diversity is a great thing, but it does make alignment much more difficult.
In my dad’s generation, a large percentage of the workforce had military experience. They were comfortable in top-down, command-and-control organizations. They were trained to obey orders.
Now, the workforce is radically different. Many were raised in the “me” generation. Millennials have a very different worldview. As a result, the old command-and-control way of creating alignment is no longer effective.
In my dad’s generation, there was a basic civility and decency in society. Children were trained to say, “Yes, Ma’am” or “Yes, Sir.” Politicians referred to each other as “distinguished colleagues.” There was a respect for authority.
Now, people denigrate each other every night on TV. They attack each other in social media. They shoot the police. This makes alignment much more difficult.
In my dad’s generation, many companies had either explicit or implicit guarantees of lifetime employment. My dad spent thirty-one years with GE. When I started at IBM in 1979, the company still had a culture of lifetime employment.
Now, the workforce is extremely unsettled, and most people will work for multiple companies in their careers. Companies expect loyalty, but they don’t give it in return. This makes alignment much more difficult.
In my dad’s generation, the majority of people working at a company were officially classified as employees.
Now, the workforce is an ever-changing mix of employees, long-term contractors, temporaries, and gig workers. This creates multiple classes of workers with different benefits, different rules, different loyalties, and different goals. This makes alignment much more difficult.
In my dad’s generation, when you wanted to communicate with someone who worked in your building, you walked down the hall.
Now, people send an email to the person sitting in the next cubicle. This makes alignment much more difficult.
In my dad’s generation, companies had physical offices.
Now, many companies have large numbers of full- and part-time telecommuters. Some companies, such as Zapier, are 100 percent virtual.
In my dad’s generation, the Fortune 500 was extremely stable: companies remained on the list for an average of sixty-one years.
Now, the average tenure of a Fortune 500 company is fifteen years. Companies that were models of stability—like Arthur Andersen, Nortel Networks, and Lehman Brothers—are completely gone.
The combination of these organizational and societal forces has made alignment radically more difficult.
ONE SCALE
When companies are small, they are in One Business. They target One Market. They sell One Product. There is One P&L. Everyone probably sits in One Office.
But, as companies grow, the complexity of creating alignment scales exponentially.
Just to be clear, even small, One Business businesses can have alignment problems. (We’ve even worked with solopreneurs, otherwise known as One Person Companies, who had alignment problems.)
But the larger you are, the more likely you will struggle with alignment.
The complexity of aligning an organization is driven by three factors: the number of divisions, the number of locations, and the number of countries.
As companies grow, they create divisions. There is only One Problem: divisions—by definition—divide.
When companies create divisions, they must align the divisions with corporate and they must align the divisions with each other.
In addition, each division adds its own strategies, goals, standards, priorities, policies, etc. to the things that cascaded down from corporate. Then, departments are expected to align with both the things that cascaded down from corporate and the things that cascaded down from the divisions.
In addition, as companies grow, they expand geographically. Most companies follow a predictable pattern. They expand from local to regional to national to multinational and ultimately become truly global companies.
However, the broader your geographic footprint, the harder it is to create alignment.
Even opening a second office in the same city can cause misalignment problems. We recently learned of a company that had one office in downtown Washington, D.C., and another office in Tysons Corner, Virginia. They were only fifteen miles apart, but the company had become badly fragmented, and the two offices fought constantly. The CEO ultimately decided to shut both offices down and move to a new, neutral location.
Finally, expanding globally sounds like a great strategy, but companies must consider the implications for alignment.
Multiple languages, multiple currencies. More travel. More complexity.
McKinsey calls this the “globalization penalty,” and their research showed that global companies consistently scored lower than locally focused companies on several dimensions of organizational health.
In summary, the alignment challenge grows exponentially as your company grows. To quantify this, SHIFTPOINTS developed the Alignment Complexity Index™ (ACI).
To calculate your Alignment Complexity Index™ (ACI), multiple your #Divisions x #Locations x #Countries.
Alignment is a universal challenge. The more divisions, locations, and countries you have, the harder it becomes.
ONE ROOT CAUSE
I believe that the root cause of virtually every organizational problem is misalignment.
Why do I believe that? Let me count the ways!
When your market vision is misaligned, you miss growth opportunities.
When your business model is misaligned, you lose money.
When your human resources strategy is misaligned, you hire the wrong people.
When your product development team is misaligned, you build the wrong product.
When your operating model is misaligned, people spend endless hours in internal coordination meetings.
When your mission-critical processes are misaligned, you miss your deadlines and irritate your customers.
When your management system is misaligned, decisions are frequently overturned.
When marketing and sales are misaligned, you miss your revenue targets.
When management and labor are misaligned, workers go on strike.
When the board and the CEO are misaligned, the CEO gets fired.
I could go on, but you get the point: misalignment is the root cause of virtually every organizational dysfunction.
We also see misalignment as the root cause of most interpersonal conflicts.
For example, recently I was coaching an executive who was struggling to meet his numbers. I asked him, “Why are you missing your numbers?”
He gave me an explanation that seemed plausible, but then I asked, “Would your boss agree with that explanation?”
“Probably not.”
Given that the executive and his boss were not aligned on the root cause of the problem, there was little chance that they would agree on the executive’s proposed solution.
In another session, a different executive was recounting her accomplishments. Again, I asked the question, “Would your boss agree with that list?”
“Probably not.”
In both cases, the executives and their bosses were misaligned.
Alignment is both a strategic corporate issue and a tactical interpersonal one.
That is why improving alignment is Job One!
ONE QUESTION
A few months ago, I went to the car dealer for maintenance. As I entered the service bay, I drove over a special sensor on the ground that measured my alignment in real-time.
I was dismayed to learn that my car was out of alignment.
That’s right, the guy who was writing a book about alignment called Drive One Direction was driving a car that was out of alignment.
Imagine my shame!
I did some research and discovered that the system was made by Hunter Engineering Company in Bridgeton, Missouri (www.hunter.com). Here is what I learned:
“Hunter’s patented alignment check system is the quickest way to measure alignment angles that affect tire life. The test takes less than a minute to produce total toe and camber measurements for both axles. Results are displayed in easy-to-understand, color-coded graphics.”
Ever since that experience, I wanted to create a radically simple way for companies to measure their alignment.
During my CEO interviews, I always asked them about the importance of alignment.
“Alignment is mission-critical,” was the Number One answer.
Then, I would ask them about the old adage, “If you can’t measure it, you can’t manage it.”
Every CEO gave me the same answer, “I totally agree with that!”
Then, I would go on to say, “So, you told me that alignment was mission-critical … and if you can’t measure something you can’t manage it.”
“That’s right!”
“So, how do you measure alignment?”
At this point, there would be a long and awkward pause …
Measuring alignment is a complicated problem. However, to get things started, we developed a simple One Question survey:
On a scale of 1 to 100, rate your company’s current level of strategic alignment.
1 = We are like a group of warring tribes. Civil war about to break out.
100 = We are like a perfectly synchronized rowing crew.
Go ahead … answer the question for your company … what’s your number? We call this your Corporate Alignment Percentage™ (CAP).
Perhaps you are drawn to the simplicity of the CAP model. Perhaps you feel the need for a more “sophisticated” approach. Regardless, we believe it is essential for your company to develop a way to measure alignment. There are three primary reasons.
First, strategic alignment is mission-critical. You simply cannot succeed without it. Second, strategic alignment is a leading indicator. Third, strategic alignment is EveryOne’s business. Thus, EveryOne can improve the metric.
So, how does your company measure alignment?
ONE FORMULA
The classic illustration of alignment is the rowing crew.
But imagine an eight-person boat with only seven rowers.
Or worse yet, imagine that one of the rowers is rowing in the opposite direction.
Misaligned crews lose the race. Misaligned companies lose millions.
But how much does misalignment cost your company?
Fortunately, you can calculate the cost of misalignment.
Let’s say your company has 1,000 employees, and your Corporate Alignment Percentage is 80 percent.
That means that 20 percent of your employees’ time and energy is wasted … which is the equivalent of 200 people lost.
You are paying for 1,000 people, but only getting the energy of 800. If your average loaded cost per person is $100,000 per year, that is the equivalent of 20 million dollars!
Now, you should do your own math.
What is your total payroll? What is your Corporate Alignment Percentage?
How much is misalignment costing your company? Conversely, how much value can your company recapture by improving alignment?
Perhaps an illustration will help you understand the benefits of improving alignment.
A few years ago, I owned a twin turbocharged BMW.
In case you don’t have a degree in automotive engineering, let me explain how a turbocharger works.
In a normal engine, gasoline is mixed with air and is then ignited by the spark plug to produce power. This process is not 100 percent efficient, so hot gases flow out the exhaust pipes into the environment.
A turbocharger is a small device that looks like a fan. It “recycles” the hot exhaust gases and forces them back into the engine. It converts the energy that would otherwise have been wasted into additional horsepower.
Alignment is the turbocharger of organizational performance.
The Drive One Direction® process “recycles” the energy that is wasted by misalignment and turns it into additional people power.
This enables you to zoom past your competition!
My assertion is that improving alignment is likely the highest ROI activity you have.
ONE-OF-A-KIND
I strongly believe that alignment is Job One.
But every company must create alignment in a unique, One-of-a-Kind Way.
Three primary factors impact your company’s approach to creating alignment.
The first factor is your company’s life stage. Startups are worried about survival, and spinouts are focused on cutting the corporate umbilical cord. (See the One Life Stage chapter in the More Resources section for more details.)
The second factor is your company’s operating model. (See the One Operating Model chapter in the More Resources section for more details.) Some companies run like denominations, and some churches run like corporations.
The third factor is your company’s business philosophy.
When you combine these three factors, the result is thousands of unique permutations.
However, regardless of your company’s unique situation, alignment is mission-critical.
Our goal was to develop One Methodology that would work for every company, regardless of life stage, operating model, or business philosophy.
This led us to develop the Drive One Direction® methodology.
We believe that every company, regardless of life stage, operating model, or business philosophy, can—and should— apply the Drive One Direction® methodology. However, every company should do so in a unique, One-of-a-Kind Way.
For example, every company has a corporate brand. Your job is to create a unique, One-of-a-Kind Brand.
Every company has a corporate culture. You must create a unique, One-of-a-Kind Culture.
Developing a One-of-a-Kind Way of creating alignment will differentiate you from your competitors. It will allow you to create a unique One-of-a-Kind Company.
Some of the exemplar companies, such as Amazon, use the term “DNA” to articulate their unique approach to creating alignment. We like that, since your DNA both identifies who you are and differentiates you from everyone else.
Alignment is Job One, but every company must create it in a unique, One-of-a-Kind Way.
ONE AND ONLY ONE
Corporate. [core-per-it]. Adjective – pertaining to a united group.
A key insight from the exemplar companies is that they created alignment at the corporate level.
The strongest form of alignment is the “One and Only One” model. You literally have One and Only One for the entire company.
No divisions, departments, geographies, or functions can have a different one. Your One and Only One(s) are absolutely, positively, and non-negotiably the same everywhere in your company.
For example, Tesla has One—and Only One—Mission Statement. Netflix has One—and Only One—Code of Conduct. Bognet has One—and Only One—Way.
In most cases, these items are exactly the same everywhere. In some cases, they are essentially the same. (For example, your One Tagline might be translated into other languages.)
You might think this is obvious, but many organizations will handle this differently.
For example, you might think every company should have One—and Only One—Mission Statement. But we have worked with companies where every division, department, and team had its own mission statement, none of which was linked in any way to the corporate mission statement.
But surely, every company has One List of core values. Nope. (As you will discover in the Hilton case study, at one time they had thirty different lists!)
Making something a One—and Only One—Corporate Standard is simple to understand, highly effective, very efficient, and very easy to enforce.
Of course, it can also be perceived as too centralized and too controlling. Sometimes, One Size does not fit all.
One Vision might not fit all business units. One Expense Policy might not be fair to all locations. The fashionistas might rebel against having One Dress Code.
Some companies create alignment with many Corporate One and Only One(s). Others delegate more autonomy to their divisions or operating companies.
The corporate executive team should carefully balance the need for centralized control with the desire to empower EveryOne.
So, your company must decide.
What must be absolutely, positively, and non-negotiably the same everywhere?
ONE TEAM – WHAT DOES TEAM MEAN?
A lot has been written about teamwork.
Teamwork is the foundation of alignment.
But many people have never been on a high-performance team, thus they do not have a real framework or experience base to work from. They don’t really know what “team” means.
In addition, there are many kinds of teams:
- A crew team is a homogeneous group. Each member has a virtually identical build and an identical skill-set. There is only One Team, and they must work in perfect harmony in order to win. They are all—quite literally—in the same boat!
- A golf team is a loose collection of individuals, all playing their own games. The team wins if enough people win their individual matches. However, it is possible for an individual player to win the individual trophy, yet have their team lose the match.
- An improvisational jazz band is a different kind of team altogether. There is no conductor, no playbook, no scoreboard, no trophy, no match to win or lose, and no coxswain to keep everyone synchronized. Yet, the musicians demonstrate amazing teamwork.
- A football team is a highly interdependent group of diverse players. Each player has very specialized skills. While there are sub-teams—offense, defense, and special teams—there is only one winner at end of the game. They win or lose as a team.
In 2015, retired General Stanley McChrystal discussed the complexity of sub-teams in his book, Team of Teams. In many companies, the real issue is that people are aligned with their “sub-team” but are not aligned with the other teams or with corporate.
- The Boston office is tight, but they don’t get along with the New York office.
- The marketing team is tight, but they don’t get along with sales.
- The corporate finance team is tight, but they don’t get along with the divisions.
- The European team is tight, but they don’t get along with the Americans.
- The Democrats are tight, but they don’t get along with the Republicans.
People tend to get along with their immediate group. Their function. Their local office. Their clan. Their tribe. But they fight with people who are not part of their group.
So, as you embark on the journey to improve alignment, perhaps you should start by answering One Simple Question, “What does ‘team’ mean?”
ONE DIRECTION
Imagine a fleet of vehicles.
All of them driving in One Direction, dynamically aligned with a navigation system that can reroute the fleet on a dime.
That was the vision that inspired this book and led us to trademark the term Drive One Direction®.
Over ten years ago, I started a consulting firm to help companies improve alignment. In fact, my original code name for the business was “aligned.org.” While I did not use that as our company name, alignment has been our focus since the beginning.
Over the past decade, we have worked with dozens of companies. We studied hundreds of organizations of all shapes, sizes, and industries. And, as I mentioned, I interviewed One Hundred CEOs.
All of this led me to develop the twelfth foundational principle: highly aligned companies dramatically outperform their fragmented competitors.
Specifically, highly aligned companies excel in three areas:
- Revenue Growth: Exemplar companies such as Salesforce, Basecamp, and Hagerty grew at incredible rates, and their CEOs specifically attributed their revenue growth to their high level of alignment.
- Employee Engagement: Highly aligned companies, such as BTI360, Publix, and McKinsey, are perennial Best Places to Work award winners.
- Customer Engagement: Exemplar companies, such as Southwest, Mayo Clinic, and USAA leveraged high levels of alignment to ensure that they deliver on their brand promise. These companies have industry-leading NetPromoter.
Many of the exemplar companies we identified, such as The Carlyle Group, Salesforce, and Amazon committed to alignment from Day One. Driven by prior experience working for fragmented companies, their founders had the wisdom to build their new companies on a foundation of alignment.
Obviously, this is the best-case scenario.
However, many companies, including Ford, Microsoft, and Starbucks, successfully implemented “One Company” campaigns to realign organizations that had become highly fragmented. In all three cases, the stock price more than doubled in the years following the launch of the alignment initiative.
Thus, it is possible to realign a highly fragmented company.
In summary, our research led us to conclude that highly aligned companies dramatically outperform their misaligned competitors.
That is why we call them “fast-lane companies.”
SUMMARY – ALIGNMENT 101
I opened this chapter with a BLUF.
Alignment is the ultimate competitive advantage.
Many companies will say they agree with that idea. But the exemplar companies are passionately and unwaveringly committed to it.
In Part One – Alignment 101, we covered The Twelve Foundational Principles of Alignment. To summarize:
- Misalignment is an extremely common, pervasive problem that plagues organizations of all types.
- There is no standard definition for alignment … so we developed One.
- Alignment is mission-critical for every That is why we say, “Alignment is Job One.”
- Alignment is infinitely more complicated and difficult than it was just One Generation ago.
- The complexity of alignment increases exponentially as the company grows.
- Misalignment is the root cause of virtually every organizational—and interpersonal—dysfunction.
- There is no generally accepted metric to measure alignment … so we developed the One-Question “Corporate Alignment Percentage™ (CAP)” assessment.
- Misalignment is extremely costly … and improving alignment might be the highest ROI activity any organization can undertake.
- Each company must create alignment in a unique One-of-a-Kind Way.
- Alignment is primarily created at the corporate level. This utilizes the “One and Only One” model.
- Teamwork is the foundation of alignment, but you must answer the question, “What does team mean?”
- Highly aligned companies dramatically outperform their fragmented competitors. That is why we call them “fast-lane companies.”
Alignment creates speed. That is why we call it the accelerating power of alignment.
So, how do companies unleash the accelerating power of alignment? Drive One Direction will answer that question.
Our goal is to have your company Driving in One Direction.
