Alignment is a critical driver of success in any modern business. It is the difference between people working together towards a shared outcome and people working independently of each other, often veering in opposing directions.
We’ve seen first hand the value of managing alignment directly. Alignment is not something that simply happens because you communicate more or utilize a software tool for alignment. While these techniques and tools are invaluable resources for managers, they are not effective without a well-formulated strategy. Leaders need to act deliberately and methodically when developing a strategy.
We cover the benefits and importance of alignment in the Complete Guide to Organizational Alignment — our free ebook about alignment, which describes:
Identifying the 10 types of alignment in organizations is an important first step in crafting a strategy. Leaders cannot pick and choose which type of alignment they want to base their strategy on. Each type of alignment is important and is part of an overall strategy.
There are 10 types of alignment in a typical company. They are:
The rest of this article focuses on each alignment type independently. We recommend thinking about each of these in terms of your organization: what does each type of alignment look like at your company.
The highest level of alignment occurs at the organizational level. Organizational alignment is focused on linking each activity, team, and department within a company to a common purpose. Most organizations align around a shared set of objectives or goals, which steer each initiative the company partakes in.
Organizational alignment is primarily the responsibility of senior leadership. This includes the C-Suite and often senior VPs. Individuals at this level set and manage goals for the entire organization and create a common context for people to work in.
Organizational alignment involves a degree of portfolio management to borrow a term from the Project Management Institute. An important element of aligning an organization is deciding which initiatives support an organization’s mission, then eliminating poorly aligned projects, initiatives, and programs that do not support that mission.
Focus is an often underrated, but profit-driving characteristic of successful companies. Consider Apple’s notorious simplification of its product line in the late 1990s after the return of Steve Jobs, which catapulted the company from near failure to becoming one of the world’s most valuable companies by market capitalization. When companies focus only on valuable and in-demand opportunities, they reduce waste and increase earnings potential.
Another key factor in aligning an organization is getting people to believe in and support a common goal. It’s less about decision making and more about day-to-day execution; organizational alignment is primarily concerned with people working together towards the same organization-wide objectives.
Every company needs to have a strategy to be able to sustain success. But having a strategy alone is not enough: people in a company need to work towards the same strategy. That’s where strategic alignment comes into play.
Unlike organizational alignment, which is concerned with getting the parts of an organization aligned around a common goal, strategic alignment is about getting people focused on executing the same strategy.
Strategy can exist at virtually any level of leadership within a company. We recommend every strategic plan includes a RACI matrix, which clearly defines the accountable and responsible parties. In brief, every strategy should have at least an accountable person.
Strategic alignment can be difficult to manage because misalignment is often difficult to diagnose correctly. There are a few things that cause strategic misalignment:
In general, managers should think about bringing the strategy into everyday conversation with the team. Regular review of the strategy should accompany all-hands meetings, whether they’re a staff meeting or sprint retrospective. The goal of every manager should be to keep their team aware and focused on achieving the strategy.
Cross-functional alignment is all about minimizing silos that form as the result of poor communication between functions. A common example of cross-functional alignment is marketing/sales alignment.
Ideally, cross-functional alignment should be managed by an alignment manager.
An alignment manager is an individual who works across teams and helps to increase the visibility of work being done by individual functions/departments. They also help facilitate alignment by consulting with individual teams and implementing systems for managing alignment.
Alternative: organize your company by product or service, instead of by function. Reorganize departments from “sales” and “marketing” to departments that reflect the company’s offerings.
Then, assign a product manager to oversee each product and have them take on the role of an alignment manager, connecting related resources within the company.
Cross-functional alignment can be difficult to manage, mainly due to competing incentive structures, lack of familiarity between functions, a “not my job mentality,” and communication silos.
We discuss incentive structures in more detail in the following section, but competing incentives and goals can be hazardous to cross-functional alignment. Take a shared goal between sales and marketing. In theory, both sales and marketing are focused on the same goal: getting more customers to spend more money with the company. In reality, marketing can be incentivized to ignore sales, especially when competing for customers.
Another issue, lack of familiarity and expertise between functions can be hazardous to cross-functional alignment. This is particularly problematic between highly technical roles — like product engineering — and sales: poor communication between the two functions can lead sales to promising customers one thing and engineering delivering another. A poor understanding of how each function works can cause individuals to become aloof, or worse, unrealistic with their expectations.
Speaking of aloofness, a “not my job mentality” is an unfortunately common issue, especially in larger companies. When individuals are given no reason to think bigger picture and own the outcomes of their work rather than their output, it can be easy for them to put their blinders on and only focus on their function. From there, individuals actively refuse to do work outside of their particular domain, ignoring the big picture and jeopardizing the overall mission.
Finally, communication silos are a common issue in complex organizations and across functions. While sales and marketing are likely to have decent communication among their ranks, they’re less likely to communicate with each other. They’re unlikely, however, to problem-solve together and work to find a common solution that utilizes both skill sets. There are numerous reasons why communication silos exist, but often times, it’s simply how they’re organized — sales and marketing are discrete teams that are separately managed.
Managing incentives is key to achieving alignment. People often ask “what’s in it for me” and only care about an outcome if there’s something of value to them.
Incentives come in many forms, and they’re not all monetary. For example, an individual may get a sense of accomplishment, growth, or altruism from completing a task or making a decision.
Nevertheless, monetary incentives remain the strongest driver of behavior. This is often more about self-preservation than a desire to get rich. If someone is rewarded for making poor decisions (such as being laser-focused on their own goals to the detriment of the needs of the customer), they have little incentive to focus on helping the business perform better.
There are two categories of incentives that need managing in most companies: monetary incentives and non-monetary incentives.
Monetary incentives are frequently managed by HR leaders and senior executives. When developing a compensation strategy, senior leaders should consider integrating measurable performance indicators, feedback loops, and systems for empowering frontline managers to reward their people. Every compensation strategy should be aligned to the business’s strategy; leaders should ask themselves: how does this support our mission?
Non-monetary incentives are managed directly by front-line managers. These can include a sense of altruism, career-growth, mentorship, and a feeling of accomplishment. For many, increased autonomy, freedom at work, and opportunities to mentor more junior team members can be strong incentives (only secondary to monetary incentives).
Employee-role alignment is all about getting the right people in the right positions. As a primary function of HR, companies should be thinking about how their staff fit the needs of each of the roles that they have.
Companies are rarely static in their operations. Change is the only constant for many businesses, leading to misalignment between employees and their roles.
This is most common in a growing company. Startups, in particular, often go through several phases of growth where roles fundamentally shift. The skills and competencies needed in a role a few months ago may no longer be relevant today.
Executives need to stay on top of this shift. For startups, this can mean bringing in experienced leadership in the form of an advisory board to help assess the company’s changing needs.
From there, leaders should be constantly thinking about their growth strategy. Should they hire new people and change which roles people perform, or would it be better to implement a development program for their existing people to train them for the changing needs of their role? Both need to be done well in advance because it can take a while (a few weeks to several months) to restaff or reskill their employees.
A related form of alignment is company-role alignment, which is the link between a company’s needs and the roles it has.
Returning back to the startup example, an early-stage company rarely needs a dedicated person for accounting or legal counsel. There comes a time, however, when a business’s operations become complex enough to warrant a dedicated person for this.
Leaders need to think about their changing needs and whether they have the right roles present in the company. Changes in size, complexity, product/service offerings, and technology can all play a role in what roles are needed.
Customer alignment, otherwise known as “stakeholder alignment,” is the link between the actions that individuals take within an organization and the needs of stakeholders.
Surprisingly, this is a regular area of misalignment. Companies that fail to deliver what their customers/constituents need will eventually lead themselves out of business.
For early-stage companies, poor customer alignment is routinely caused by the lack of product-market fit. Product-focused founders are a critical resource for managing this type of alignment; the goal for any company that offers a product or service must be first to develop the right product for a viable customer segment.
Established companies also struggle with customer alignment. Even previously successful companies can get misaligned when they develop internal structures, systems, and processes that impair their people’s ability to deliver what customers want.
Poor customer satisfaction is the first sign of customer misalignment. This is caused by a product that doesn’t meet the needs of a customer, poor service, or an unwillingness to listen to customers.
Product managers and owners are an invaluable tool for maintaining customer alignment. Their role is to own a product/service offering and ensure that it meets their customer’s needs.
There is not a single type of North Star that companies can align around, but North Star alignment is all about rallying around a common reason or cause. One notable feature of North Star alignment is that a company can only have a single North Star at a time. The singular nature of this type of alignment is beneficial for understanding — everybody should easily understand what the goal is — but it is not for every type of company.
This type of alignment is particularly useful in turnarounds, where the focus may be a singular objective, like keeping the business from failing. In a dire situation, having a singular focus can be the difference between survival and failure.
Purpose alignment is all about connecting a company’s day-to-day activities to its purpose — that is, it’s mission, vision, and values.
Traditionally, purpose alignment has been paramount at non-profits and other mission-oriented organizations. These organizations exist to serve a specific purpose, and they are held accountable for actually achieving that purpose.
Today, all types of companies can benefit from greater alignment to purpose. Companies that are primarily comprised of Millennials — the generation that now makes up the majority of the U.S. workforce — are likely to benefit from increased purpose alignment, as this generation doesn’t “just work for a paycheck — they want a purpose,” according to Gallup.
Companies that have strong purpose alignment not only experience greater employee engagement and retention, they’re also likely to have stronger brand loyalty. Brands can no longer rely on information asymmetry as an advantage over prospective customers; consumers have instant access to information about a brand through social media, online reviews, and a simple web search. Companies that do not align their actions to their stated purpose risk losing both their employees and their customers.
Leadership alignment is the tenth type of alignment, but certainly not the least important. This type of alignment is focused on the fit of a leadership team, the strategy, and the market opportunity a company is pursuing. If the leadership team does not have the right skills, knowledge, market expertise, or network to execute on its strategy, the whole company is in jeopardy of failing.