Complete Guide to Organizational AlignmentOrganizational Alignment Frameworks and Methods

Chapter 5: Organizational Alignment Frameworks and Methods

There are numerous frameworks and methods available for aligning an organization. While each has its advantages and disadvantages, there is no “one true method” to align an organization. Instead, we recommend evaluating each option for suitability to your organization.

That said, there are a few practices all organizations (regardless of size, industry, or purpose) should practice to fulfill their mission and achieve their goals. These practices are:

  • Setting and tracking goals. Goals are essential to achieving whatever outcome an organization exists for.
  • Measuring performance. Closely related to setting goals, leaders of any organization should understand the metrics their people drive and regularly review metrics for suitability.
  • Holding people accountable. Individuals within any type of organization should be held accountable to goals that are set.

In the past, organizations had few options for automating the process of managing alignment. Businesses were limited to office productivity tools — namely, spreadsheets, presentations, and word processing documents. While these tools were useful for capturing information, they struggle to provide a real-time view of alignment and make aligning people more complicated.

These days, numerous software tools make managing alignment less difficult. Nearly every methodology has a software tool available for it (except Kotter’s 8-Step Change Model). Regardless of the framework you choose, we recommend considering a software tool to help you implement and get the most out of the methodology.

The Status Quo

Since the beginning of knowledge work in the 1950s, leaders have found ways to align people. Even without a formal methodology or framework, company leaders have sought ways to keep people on the same page and working toward the same outcomes. As the pace of work has accelerated over the past 20 years, the viability of adhering to the "old way of doing things" has diminished greatly.

Meetings

One common way leaders address alignment is by having more meetings. In the early stages of a company — typically when there are fewer than 25 employees — meetings are mostly manageable. Organizational knowledge is often shared just by being around each other; meetings are mostly limited to an immediate team and are focused on planning. Even remote teams, which struggle with alignment issues at an early stage, can keep up-to-date on what the organization is doing without spending hours per week in meetings.

However, as companies get larger, so does the complexity of the organization. There is no longer just one line of business or one focus. Many organizations hire managers at this stage (around 25-50 people) to deal with the day-to-day. Alignment also becomes problematic at this stage because each team is focused on their tasks and rarely get to see what other people are doing.

Adding just one layer of management decreases transparency significantly. Organizational leaders lose visibility into what individual contributors are doing, as they now only get status reports from managers. Likewise, individual contributors become less in-tune with the strategy, relying more heavily on their manager to tell them what the rest of the company is doing.

It is at this point that the number of meetings increases dramatically. Meetings are now held to get people in alignment with each other and the company’s strategy. Meetings are held to get updates about work, so managers can report to senior leaders what their teams are working on. Meetings are also held between managers to keep each other aware of what other groups are doing.

Unfortunately, no amount of meetings will solve the problem of alignment. They do help, but they’re not perfect. Alignment gets exponentially more difficult as the company grows in size and complexity.

Types of alignment meetings

We’ve touched upon a few of the meeting types in the previous section, but here is a more comprehensive list.

  • Status report meetings — these are meetings focused on getting updates about the work being done. Typically held between managers and their direct reports, this meeting focuses solely on discussing work that this already occurred. In companies with project managers, these meetings are held between project managers and their teams.
  • Course correction meetings — these are meetings that are held to address a problem with alignment. Typically, these meetings involve addressing a project, behavior, or action that does not align with the business’s strategy or purpose. These meetings are frequently conducted exclusively with more junior reports; senior members of a team are rarely brought into these remedial meetings.
  • Context meetings — these are meetings used to share context about a project or initiative. When done correctly, context meetings provide a high level of clarity to the team about the “big picture” of their work. These meetings frequently fail to provide real context because they involve discussing the strategy in a manner that individual contributors do not find relatable. Furthermore, information from context meetings is often ephemeral. It temporarily is front of mind for employees but is often neglected as “more pressing issues” arise.

Email

Instead of holding a meeting, some leaders opt to use email to share information. While this certainly is an effective way of getting it seen, it does not guarantee its usefulness. Any form of one-way broadcast communication is problematic with regard to alignment.

Email is also limiting because future employees, team members, or stakeholders will not have the context available. The best option with email is to use an email list or message board, which allows anybody added to that group to view past messages. While this will improve access, it is no guarantee that individuals will view the content from the past.

Email is also a snapshot in time. While some email systems allow you to recall old messages, they do not allow you to edit them. Any conversations that occur in an email thread need to be read through in their entirety. As you can imagine, this can get out of hand quickly if a lot of messages and replies are stored.

We do not recommend using email to align people. As an organization, consider ways to make this information available more broadly and in an organized manner (like a wiki, knowledge management system, or a tool like Minsilo).

Slide Decks

A common tool used by executives to communicate strategy is a slide deck (often called a Powerpoint deck). Slide decks are useful for providing a report to casual audiences — such as investors and board members — but they're not a useful tool for aligning an engaged team. There are several reasons why these decks fail to align people.

For starters, decks are a broadcast medium. Leaders use them to share information, but they're not interactive. Teams need to ask questions, share feedback, or make comments in another tool. Separating conversation from the strategy makes it harder for future members to digest the information and drastically adds to conversation friction. Since alignment needs to be actively managed, leaders cannot take a passive approach to inform their people; they need to be ready for questions and provide answers.

Also, responses to the strategy cannot be easily found in the future. Q&A is a powerful tool for boosting alignment because it helps to communicate a strategy from an individual contributor's perspective — not just the executive who developed it.

Another factor that makes slide decks a limited tool for alignment is the lack of follow up. Strategy decks are often created to help kick-off a new initiative but are rarely used (outside of status reports) to manage execution. Decks are also not a good way to track performance, since they are highly limited for storing past information.

This wouldn't be an issue if they were always kept together, but what often happens is that leaders will send out a deck and will not send out an updated version with up-to-date performance measures. Individuals are unlikely to take the strategy seriously when they can't keep score.

Keeping score is also critical to morale. If people can get a pulse on what is working, in real-time (rather than only once per quarter or year), they’re more likely to take immediate action to improve the situation. This is why many video games include a scoreboard: they keep people engaged and focused on improving their performance.

Speaking of out-of-date information, slide decks are often sent out as versioned documents. The only problem is that there is no guarantee that the information will be sent out to the same people every time it is updated. The lack of a central repository for storing strategy documents means that people who encounter the deck have no guarantee that they’re looking at the latest version.

The problem of out-of-date information plagues any office document (yes, even cloud-based documents in Office 365 or Google Docs suffer from this issue), but it is especially problematic for strategy documents. The last thing leaders want for their people to be working on a strategy from the past. Talk about confusion.

Slack and Microsoft Teams

We've included these two tools because they're often touted as a way to align teams. As we've found through research, alignment doesn't happen through osmosis; alignment is a process that requires active management. That is, managers have to actively address alignment, not just hope that it will occur.

Tools like Slack and Microsoft Teams are great for decreasing friction in communicating with colleagues (especially compared to email). Individuals are more likely to work together when it's less challenging to ask questions, answer, and share information. Improved communication flow can result in what temporarily looks like alignment, but is actually not.

One of the critical problems with Slack and Microsoft Teams with respect to alignment is the focus on minutiae. Like task management tools, chat software can help people understand the specifics of the work they're performing, but not provide visibility to the "why." This is not inherently a problem with Slack or Microsoft Teams, but rather an issue of how these tools are used: they're often just used to communicate with others about the task at hand and rarely used for building alignment.

Managers should consider using Slack or Microsoft Teams as a way to decrease the cost of communication and as a way to share information in real-time. Just don't be surprised if people are still misaligned after sending information. Like emails and slide decks, important information in chat programs is regularly ignored by people overwhelmed by the volume of messages they receive. It is essential to use a system that engages everybody, rather than just sending them a message.

Formal Methodologies

Organizational alignment has been a known issue in the workplace since the first knowledge workers started to populate offices across the world. Since the 1940s, several methodologies have cropped up to address the issue of organizational alignment. 
The large variety of methodologies is due, in no small part, to the varied nature of how organizations work. Every company has its own unique alignment needs, depending on the work it does, the markets it serves, and the people it hires. Though tempting, we do not recommend blindly implementing a framework because it is “in fashion.”

Instead, leaders should think carefully about which suits their own unique circumstances. What is best depends on the company’s needs, market, opportunity, people, and strategy. We’ve written this section to help leaders evaluate popular options and make a decision for themselves.

Balanced Scorecard

Year of inception: 1992 One of the more famous tools for organizational alignment is the Balanced Scorecard. Balanced Scorecard is a high-level scorecard showing the significant elements of an organization’s strategy. It is also a strategic planning and management system. It is frequently used at the organization, department, team and project levels.

What is it?

Balanced Scorecard is considered "balanced" because it is designed to help leaders of organizations balance priorities. One of the tool's assumptions is that an organization regularly has numerous opportunities that can be pursued or prioritized. The framework addresses the reality that an organization can only prioritize a limited number of opportunities — that is, leaders need to choose carefully which activities, projects, and initiatives to pursue.

The Balanced Scorecard is both a system and a report. It provides leaders with visibility into the direction their company is headed. It is also useful for making strategic decisions, particularly around balancing priorities, because it clarifies what an organization is executing on. This visual approach makes it a powerful tool for communicating a high-level overview of an organization, department, or team because it shows (at a high level) every major activity going on.

While the name may imply an organization would only have one scorecard, many organizations that utilize the tool have several. Some of these organizations cascade scorecards, creating sub-scorecards based on a master organization-wide scorecard. This practice can be problematic, as it is often difficult to keep the scorecards in sync with each other, causing some groups within a company to veer off course unintentionally.

How is it used

Here are some of the standard practices surrounding the Balanced Scorecard. A scorecard is created at the organization level, which serves as the highest level scorecard representing all of the organization's major activities.

  • Scorecards are often created at various levels of the organization and then are aligned with the organization-wide scorecard.
  • Balanced Scorecards track Key Performance Indicators (KPIs), separating metrics into four categories: finance, customers, learning & growth (sometimes called "organizational capability"), and internal business processes.
  • Metrics are regularly updated, and the scorecard is re-evaluated once a quarter or annual basis.

Pros of Balanced Scorecard

  • Focuses on both qualitative and quantitative indicators.
  • Can support quality management programs.
  • Easy to communicate a business’ strategic priorities once the scorecard is created.
  • Supports cascading alignment, which is helpful in organizations that are relatively stable and unchanging.
  • Can help individuals in different functions understand their role in the overall strategy.
  • Incorporates both strategy and organizational purpose.
  • The Scorecard helps organizations avoid focusing purely on a single area, such as only focusing on financial performance at the cost of organizational capability or customer success.
  • When correctly implemented, the scorecard can be used to align resources by providing leaders with a simplified view of an entire organization. We qualify this pro, as leaders need to be diligent about including every single activity with an organization (large companies especially may struggle to meet this criteria).

Cons of Balanced Scorecard

  • Requires top-down management, so agile organizations will struggle to use Balanced Scorecard to the fullest.
  • Balanced Scorecard requires a centralized organization to be used properly. This can prevent companies from utilizing a decentralized command structure, which allows for greater agility and durability.
  • Cascading of scorecards is a tedious process and can result in slow responsiveness to change.
  • Balanced Scorecard is time-consuming and expensive to keep track of. For the scorecard to be useful, the company implementing it must keep track of their KPIs on a regular basis.
  • Can be an overly simplistic representation of an organization. This is where multiple scorecards are often created since a single scorecard restricts view to a high level.
  • Works best with easily measured activities and metrics. For work that is difficult to measure (like R&D), the scorecard can lead to these activities being under-represented.
  • While the Balanced Scorecard is intended to improve communication, it can also cause silos to form by amplifying the division between activities. This is particularly true in companies that create sub-scorecards for individual departments and teams.

Who it’s for?

  • Top-down management
  • Companies with a high level of stability (change is infrequent) and a high level of autonomy.
  • Companies that want to enforce functional silos. This is not a slight against Balanced Scorecard — sometimes silos can be helpful for improving the agility of teams when managed correctly.
  • Companies that already use KPIs
  • Regularly used in small companies to align functions. Large companies can also benefit from Balanced Scorecard, but the complexity of cascading scorecards can be limiting.

Software for Balanced Scorecard

  • BSC Designer — free option for small organizations; increase to $69.95 per person (volume discount available)
  • Quickscore — starts at $125 per user per month (volume discount brings this down to as low as $25 per month)
  • Smartsheet — not only a Balanced Scorecard tool. Starts at $25 / user / month for the Business tier
  • Clearpoint Strategy — starts at $50 / user / month

Objectives & Key Results

Year of inception: 1973 Objectives & Key Results (OKRs) is the most popular goal setting and alignment framework. It has gained a significant following because it is easy to understand and promises improved performance in teams that implement the framework.

The Objectives & Key Results framework was created at Intel in 1973 by then CEO Andy Grove, and popularized in Silicon Valley in the early 2000s when John Doerr brought it to Google. In the past decade, the OKR framework has gained significant popularity across industries — not just tech companies in Silicon Valley.

How it works

Getting started with OKRs is relatively straightforward. In its most basic form, OKR is just a framework for writing goals that are easily understood and specific enough to be accomplished.

To get started, define 3 to 5 objectives. An objective is an aspirational statement of what success looks like. It does not specify how success will be accomplished. Examples of objectives include:

  • Improve customer loyalty
  • Decrease customer churn
  • Implement a Product Led Growth strategy Then, for each objective, define 1-3 key results. A key result is a measurable statement that describes what success looks like for your objective. Examples for improving customer loyalty:
  • Achieve an NPS score of 8.5 or higher by the end of Q4.
  • Roll out a loyalty program to 10,000 customers by the end of Q3.
  • Survey our top 1000 customers to figure out why they chose us over our competition. For a basic implementation of OKRs, your job is done. All you need to do is share these goals with your team and start measuring each of your key results. Some key results are measured with percentage complete, such as “release V2 of our product.” We recommend being careful with percentage-based goals because key results should not be mistaken for tasks (e.g., do not use key results to track the steps needed to complete the objective).

Most teams that use OKRs update them once per quarter. It is okay to drop goals halfway through a quarter, as your business priorities may (and often do) change. Many teams differentiate between annual and quarterly goals, although we recommend defining specific dates (such as Q2 to Q4).

Some teams that use OKRs also set stretch goals and define a grade for that goal that defines success. For example, if the goal is “roll out a loyalty program to 10,000 customers,” a grade of 0.7 — or 70% — means that 7,000 customers is considered passing. If the team drops below 7,000 customers, then the key result has not been achieved. While popular, this system for grading goals can be confusing and actually prevent goals from being accomplished.

Pros

Objectives and Key Results has a number of benefits:

  • The framework limits the number of goals you can set for a particular team. This improves the likelihood of the goals that you set getting accomplished.
  • Well-written OKRs are readily understood by people across the organization. When used properly, they can be a valuable tool for aligning disparate individuals and teams within a company.
  • OKRs are becoming increasingly popular, which means it will be easier to get buy-in from senior leaders. It will also become easier to hire talent that is familiar with the process of OKRs.
  • OKRs can increase a team’s focus, especially when they’re incentivized to prioritize accomplishing certain OKRs.

Cons

In addition to several positives, there are a few negatives to be aware of when implementing OKRs. Some of these negatives can be mitigated with some additional work.

  • Sandbagging of goals is common with OKRs. Managers need to be cognizant that goals will sometimes be set artificially low, so they can be achieved without putting in much effort. This is particularly problematic in highly technical fields, where the manager is not technical enough to understand the work their team is doing.
  • Poorly written OKRs are too prescriptive, limiting the ability for people to make their own decisions about how to get work done.
  • Many teams fail when setting OKRs for the first time. Some of the problems for new practitioners of OKRs include: setting unrealistic goals, setting too many goals, and not writing specific enough goals.
  • Setting OKRs at the bottom of an organization can lead to alignment issues. This is often the case when there is not enough context for people to set their own goals. Using a system like Minsilo, which provides varying levels of context in one place, can help to mitigate visibility issues inherent in setting goals at a low level.

It is important to note that bottom-up goal setting is a powerful tool for getting buy-in from individual contributors. Therefore, it is not always advisable to forgo bottom-up goal planning in order to reduce the risk of misalignment.
  • When using traditional tools (e.g., not OKR-specific software), many teams fail to keep their OKRs up to date. Instead, they opt to update their OKRs once per quarter. Unfortunately, when OKRs are not part of a regular routine, they’re unlikely to receive adequate attention in execution.

Best Practices

As a company, we've helped numerous companies set up their OKRs. Here's what we've learned works best.

  • Any goal — whether it's using the OKR framework or not — should be set in the context of a strategy. The strategy should always come first. It's hard to set reasonable goals when you don't understand where you're going.
  • Objectives & Key Results can mask information at the bottom of an organization when administered rigidly. We recommend implementing a system for continuously getting feedback on what's working on the frontlines to be responsive to changing customer needs.
  • OKRs are not a source of truth, but rather a guide for keeping people-focused. Emphasis on "guide": your team should ignore (and later adjust) your OKRs when they no longer suit the business's needs.
  • Focus on capturing information from individual contributors. Since OKRs are written so that they're directly actionable by individual team members, the information gathered by individual contributors is critical to determining which goals are working and which should be adjusted.
  • Be specific with your goals. Writing vague goals or using "corporate speak" will only encourage your people to ignore the OKRs that are created. Nobody cares about an objective that says "Increase shareholder value". Instead, write something that explains its value, like "Get XYZ Corp to its next round of funding."
  • Do not create OKRs for the sake of creating OKRs. Individuals may be tempted to create OKRs to satisfy the requirement, without thinking carefully about the relevance of the goals they set. Not every function needs OKRs, although every function should be connected to company-wide OKRs.

Who it’s for

Objective and Key Results is a versatile framework that is useful for:

  • Companies of all sizes. We’ve seen success with OKRs at the earliest stages of a company (2-3 people), up to massive organizations.
  • Readily measured functions and teams. Measurable work is most common in sales and marketing, but it can also include product and engineering teams.
  • Companies that already have an accountability framework or system. Do not set goals without it in place first because it can backfire and demoralize the team. We suggest companies use something like a RACI chart with each OKR.

Software for OKRs

There are countless software tools for OKRs, but some of the best include:

Alternatives to OKRs

While popular, the OKR framework is not the only option for teams looking to implement a formal goal setting methodology. Here are a couple of alternatives:

  • Objectives, Goals, Strategies and Measures (OGSM)
  • Management by Objective — this is a predecessor to OKRs that was created by Peter Drucker in the 1950s.

SMART Goals

Year of Inception: 1981 While not a framework, SMART is a useful method for writing practical goals. SMART stands for Specific, Measurable, Attainable, Relevant, and Timebound. Since it is not a framework, we recommend utilizing it in conjunction with a goal-setting framework like Objective & Key Results or OGSM.

How it works

Here’s how to write goals that meet each of the elements of a SMART goal:

  • Specific — be as clear as possible with the goal. The more narrow and focused you can make the goal, the higher likelihood it will be accomplished.
  • Measurable — the definition of success should be objective. Use numbers or percentages whenever possible. A third party should be able to look at your progress and determine whether you’ve met the goal.
  • Attainable — can you and your team actually deliver the goal? Consider the resources you have available to you — do you have the time, money, and human capital needed to achieve this goal? Do you have the tools or know-how to make it happen?
  • Relevant — goals should be set with an outcome in mind. Does your goal relate to your purpose (mission, vision, and values) and strategy?
  • Timebound — when do you need to accomplish your goal by? If you don’t set a timeframe, it’s easy for a goal never to get achieved. Don’t set goals with an indefinite timeframe (instead, incorporate indefinite timeframe goals in a vision statement, where appropriate).

Pros

  • Simple to understand. It only takes a few minutes for someone to become proficient in the framework, since there’s almost no complexity to it.
  • Flexible. SMART goals do not prescribe a specific way of setting and tracking goals, meaning they can be applied to almost any organization.
  • Compatible. SMART gets you to write better goals and that’s it. This means you can use it in nearly any organization.

Cons

  • SMART is not a methodology. It is only a lightweight framework for writing more articulate and useful goals.
  • SMART goals need a methodology like OKRs or OGSM. It is hard to administer goals without a corresponding framework.
  • SMART itself does not provide a way to flesh out goals that are written in accordance to the acronym. There’s no checklist or system for evaluating the practicality of goals that are set in the framework.
  • SMART does not provide context around the big picture. It’s easy to become myopic with the goals that you set in the framework.

Who it’s for

  • Individuals. Unlike OKRs, SMART goals can be set at the individual level and used for personal performance/growth and team performance.
  • Managers
  • Executives
  • Since it is not a process at all, SMART can be used in pretty much any scenario where goals or strategic plans are being written.

Software for SMART Goals

  • Minsilo
  • Trakstar
  • Reviewsnap

Alternatives to SMART Goals

While SMART is the most famous goal framework/acronym, it is not the only one out there. Many of the alternatives were created in response to SMART’s limitations. We highly recommend reading the following alternative frameworks for inspiration on how to write better goals.

  • SMARTER: Specific, Measurable, Achievable, Relevant, Time-Bound, Evaluate, Readjust

    • Evaluate — regularly review your goals and assess whether they’re still relevant.
    • Readjust — adjust your goals if they’re no longer relevant, appropriate, or necessary. Or adjust them if you set the wrong goals initially (maybe they weren’t so SMART after all).
  • CLEAR: Collaborative, Limited, Emotional, Appreciable, Refinable

    • Collaborative — goals should foster collaboration rather than individual contribution.
    • Limited — goals should have a defined scope and end date. Goals should not be ambiguous.
    • Emotional — goals should inspire people to care about them. Are you setting goals that people can be emotionally connected to?
    • Appreciable — goals should be broken down if they’re too large into something that can be readily accomplished.
    • Refinable — goals should be regularly reviewed and adjusted when new there’s new information.
  • FAST: Frequently Discussed, Ambitious, Specific and Transparent

    • Frequently Discussed — goals should be discussed in every planning and strategic meeting. Goals are the way plans and strategy are translated into action.
    • Ambitious — goals should require effort to accomplish (but not be impossible to achieve).
    • Specific — goals should be measured and clear enough that the team knows how to accomplish it.
    • Transparent — goals should be shared across the entire team (and, ideally, organization).
  • PACT: Purposeful, Actionable, Continuous, and Trackable

    • Purposeful — goals should relate to your organization’s purpose, including its mission, vision, and values.
    • Actionable — goals should be written in a way that they can be acted on today. Don’t think too far into the future. Think about what you can do in the near future.
    • Continuous — goals aren’t really intended to be achieved and checked off. Goals are not a todo list. Instead, PACT goals should reflect an ideal state to be in (like a thermostat — the room should get to 72F and stay there), not a once-and-done outcome.
    • Trackable — instead of measuring a specific metric, simplify the goal to a simple “yes” or “no” outcome. Is it done or not?

Alignment Management Methodology

Year of Inception: 2018 (revised in 2020) The Alignment Management Methodology (AMM) is a novel way of managing alignment, which looks at alignment as a core function of all management teams. The methodology's primary purpose is to create self-managing organizations that require less multi-level management (e.g., no need for middle managers).

It was developed at Minsilo in response to decades of research into the fields of organizational alignment, behavioral psychology, and leadership. It is a subset of the field of alignment management. The methodology was developed for organizations that aim to be more autonomous, requiring fewer managers while improving responsiveness and performance.

AMM is an amalgamation of Balanced Scorecard, OKRs, KPIs, RACI, and the 4 Disciplines of Execution. It focuses on applying long-term contextual information about organizational purpose (namely mission, vision, and values) and strategy to day-to-day execution.

How it works

Here's how to get started with the Alignment Management Methodology.

Step 1: Create a map of your organization (high-level context). In the first row of your map, define your company's mission, vision, and values. You can optionally add additional purpose-level context, such as a thesis statement, perspective, or leadership principles. This level should only be concerned with the high-level beliefs of an organization and its reason for existing; operational concerns should not be included.

In the second row of your map, define your strategy for fulfilling your organization's purpose. You can create supporting documentation in any tool, as long as it is easily understood by a general audience (within your company). The strategy should be clear enough that it can be shared across your company.

After defining your strategy, create a RACI chart for each strategic plan. RACI — Responsible, Accountable, Consulted, and Informed — is an accountability framework that helps to clarify the roles people take on strategic initiatives and objectives. Be sure to include an accountable

Step 2: Develop a plan for execution based on high-level context (low-level context). For each strategic initiative you define, you should create a minimum of 1-2 goals for each. We recommend using the OKRs framework for developing well-organized goals that are easily understood.

Next, define your key performance indicators (KPIs). The Alignment Management Methodology makes a distinction between trailing (lagging) and leading indicators.

Trailing indicators are measures that can only be measured in the longer term. Any change you make today will not be realized until weeks or months later. For example, if your sales cycle is several months long, an increase in the number of leads in the pipeline will not increase sales revenue until months down the road. Therefore, sales revenue is a trailing indicator.

By contrast, leading indicators measure the output of things you do in the short-term. Many leading indicators have an impact on trailing indicators. Returning to our example of sales revenue, a key input in any sales process is prospecting. The number of cold calls made per week, for example, would be a leading indicator. That is, cold calls lead to an increase in sales revenue in the long run.

Once you're done defining your indicators, create a separate RACI chart for each goal that you set. This will ensure each goal is given your team's appropriate attention by defining "who does what" with each goal.

Step 3: Measure and track the contributions your team makes. Aligning execution to strategy is an important component of any alignment system. Therefore, we recommend regularly writing down the activities that your team is engaged in. This should happen at least once per week, although some teams may want to do this in the form of a daily standup.

Step 4: Review, adjust, and realign. Since organizational alignment is a process that needs active management, it's critical that managers and individual contributors regularly review the work that has been done and check for alignment. We recommend regular alignment checkpoints, where individuals share the work they've done since the last checkpoint and align that work to a specific team and organization-level goals.

For teams that use the RACI framework, individuals should review the goals that they are marked as "accountable" or "responsible" for at least once per day. Daily review helps keep these goals front-of-mind for individuals and greatly increases the chance that they're accomplished. Users of the methodology may also want to color-code their goals, using a red-yellow-green "traffic light" system that helps individuals to spot issues quickly (where red is "blocked", yellow is "at-risk", and green is "on-track").

On a weekly basis each team should conduct an alignment checkpoint. During the checkpoint, which can be done individually or as a team, individuals and/or their managers:

  • Connect the work that was done in the past with the business context (e.g., strategy, purpose, and goals). For less intuitive connections between execution and context, it can be useful to annotate the connection with an explanation of why it aligns with the context.
  • Identify similarities of work between contributors.
  • Identify areas of misalignment, particularly between execution, strategy, and goals. We recommend writing down a reason for any misalignment that occurs; this is a valuable tool for improving the process and avoiding future misalignment. On a weekly or bi-weekly basis each team should conduct a 15-30 minute alignment retrospective meeting. The purpose of this meeting is to discuss business context, identify issues, and commit to solutions to issues. This meeting can be brief, especially if the team is well-aligned. ++Alignment Retrospective Meetings…++

On a bi-weekly to monthly basis senior leaders should conduct a Leadership Alignment Review session. This session focuses on reviewing reports about progress in the teams that they manage. This review should focus on understanding progress towards organizational goals and look for misalignment between the organization’s goals and its realities. In particular, any new information discovered by individual contributors that may impact the strategy (like they’ve learned something important and new about the market or about the company’s target customer) should be surfaced.

Pros

  • Accountability is built into the methodology.
  • Reduces the amount of time managers need to spend directly on coordinating work and making decisions about execution, allowing them to focus more on longer-term strategic work.
  • Improves communication within a team and across teams.
  • Helps to break down organizational silos.
  • Lowers operating costs by reducing the number of managers needed to run a company.
  • Increases the performance of individual contributors, since less time is spent focusing on administrative and managerial tasks.
  • Fosters a sense of ownership.

Cons

  • Requires a high level of discipline at all levels of the organization. This can be overcome with technology to a degree, but a culture of disciplined execution is highly recommended.

    • This discipline needs to be organic and cannot be enforced through policies.
    • That said, people are more willing to be disciplined when they’re given the autonomy to make decisions.
  • Data needs to be collected throughout the process.
  • Specialized software is required to implement AMM fully.

    • Spreadsheets cannot be used to model AMM because multi-dimensional alignment cannot be modeled in a spreadsheet.
    • Relational database or graph database software CAN BE used for this, although a practitioner would need to build their software on top of this database.

Who it’s for

  • Dynamic, innovation-centric organizations.
  • High-growth startups
  • Decentralized organizations.
  • Agile organizations.

Software for the Alignment Management Methodology

Minsilo is currently the only tool on the market to fully support the methodology.

Kotter’s 8-Step Change Model

Year of inception: 1995 Change management is a critical part of any alignment program. The very process of aligning people involves change. That’s why we include this otherwise non-alignment-specific model.

John Kotter invented Kotter’s 8-Step Change Model in the mid-1990s to get his teams to buy-in to changes at work. While this model was originally created for managing change, it has also been applied to creating and managing alignment. Since Kotter’s model is not a rigid system, we suggest you consider using it in conjunction with another alignment framework or system.

How it works

As the name implies, there are eight steps to managing change. Here's the list along with our commentary explaining how each step applies to manage alignment.

  1. Create urgency. There is no shortage of things that need to happen in modern business. As a leader trying to align your team, you need to appeal to your team's feeling of urgency around the things you're aligning them around. Often, your team will be asking themselves: with all of the work I need to get done, why is now the right time for me to be focusing on this new initiative, goal, or plan?
  2. Form a powerful coalition. Successful change management requires the right team, especially when kicking off a new strategic initiative or set of goals. The coalition you create will be responsible for implementing the changes needed for alignment, as well as being instrumental in getting the rest of the company to buy-in. Be sure to include people who have a high level of trust with your organization — you need them to lead the way and show that the initiative is worth putting effort into.
  3. Create a vision for change. Be clear and specific in what you're trying to align people around. It's not enough to say "what" the change is; you need to explain "why".
  4. Communicate the vision. Communicating the vision doesn't mean just telling everybody about it — you need people to believe in the vision. At this critical stage, having a coalition of influential people (not only people high up in the organizational chart) is vital to getting people to buy-in to the vision.
  5. Empower action. Give your people the tools they need to execute on the new initiative or strategy effectively. You may want to consider:

    • Hiring new people or restructuring your organization. You need to have the right people in the right positions to implement the change fully. Remove obstacles, such as existing processes and procedures that may impede the strategy's successful implementation.
    • Provide training or education to your people on the change. This is especially important when the change is complex or requires a set of technical skills.
  6. Create quick wins. Skepticism is natural with any change. To prevent people from abandoning the change, you should quickly find believable success indicators to rally your people around. It is helpful to start small with a new initiative — don't initially focus on activities with a long payback period.
  7. Build on the change. Once you've had a few quick wins, you can start to focus on longer-term investments of time and energy. Add your loftier goals only once your team believes in the change.
  8. Make it stick. Recognize the people who made this change possible and ingrain the chain into the culture of your organization. Make the change part of the underlying company culture.

Pros

  • Addresses the human side of change management and strategic alignment. The model does not focus on mechanical changes to an organization (e.g. processes, procedures, technologies), but instead the human factors (e.g. incentives).
  • The process is easy to understand and follow (although sometimes difficult to utilize successfully).
  • Useful for changing an organization’s habits toward ones that align with the leader’s vision.

Cons

  • Strictly a top-down approach to management. This is not necessarily an issue for companies that have a single strong leader that the company follows, but it will be problematic in organizations where the leader is not trusted or respected.
  • Does not include a process for gathering feedback or changing to new information. Individuals within an organization may feel that the change is forced upon them rather than being part of the change themselves.

Who it’s for

  • Top-down management organizations.
  • Leaders managing a turnaround, especially when dramatically changing the business strategy.
  • Leaders in established companies that find it difficult to affect change.
  • Legacy organizations
  • Startups that are undergoing a pivot.

Recommendations

While a simple model to implement, here are a couple of things to keep in mind.

  • Only use this model if you’re certain that people will follow the leader. People will align around leaders they trust and respect, but will often do the opposite when they don’t respect the leader.
  • Use this model in conjunction with one of the other alignment methodologies. It can be useful for getting people to practice alignment in other parts of the business.

Objectives, Goals, Strategies and Measures (OGSM)

Year of inception: 1950s Objectives, Goals, Strategies, and Measures — more commonly known as OGSM — is a strategic alignment framework created in Japan in the 1950s. The framework helps managers contextualize long-term investments in more immediate terms (goals & measures). Traditionally, the framework focuses on a business’s 3-5 year strategy, which is then adjusted each quarter.

How it works

A simple way to understand OGSM is to think of it as a one-page operational plan for each strategic initiative. This one-pager is then reviewed often to track changes to the metrics it measures.

Step 1: Create an objective. An objective provides your people (and your customers) clarity on what your business is trying to accomplish. It should be meaningful and self-explanatory. There should only be one objective per OGSM document. If you have multiple objectives, create separate OGSM sheets.

Step 2: Define a number of goals for each objective. For each objective, define 3 to 5 goals that will help you accomplish the objective. Be sure to write your goals measurably — either as a specific target (e.g., close 250 deals) or as a percentage complete. You may also want to make sure each goal is SMART.

Step 3: Define strategies that are relevant to those goals. In the case of OGSM, strategy is more tactical than it is big picture. Use this section to summarize the strategy. We recommend 2 to 3 bullet point sentences that are 140 characters or less. If your strategy requires more detail, create a separate document for the strategy, and reference it in the OGSM document.

Be sure to consult with your team on the specifics of the strategy. Avoid being too prescriptive on the way the goals will be accomplished. You should allow experts within your team to determine the logistics of how to accomplish the goals.

Step 4: Define how you’ll measure each goal. Identify and write down the Key Performance Indicators (KPIs) for each goal. These should be relevant and specific to the goal (ask yourself: what does success look like?) 

Once defined, be sure to collect data about each measure that you track regularly. We recommend reviewing the data at least once a week in order to keep your team on track and aligned to the objective you’ve specified. Color code each goal with a red-yellow-green line (red means “off-track”; yellow means “at-risk”; and green means “on-track”).

(optional) Step 5: Define the actions or projects you need to complete to achieve each goal. While this step is optional, it can help provide more specifics about the action plan that your team will take to achieve the objective. We recommend assigning this step to a project manager, who can use the OGSM document as part of the process of creating a Business Requirements Document and Project Plan.

Pros

  • Since each objective is color-coded when reviewed, it is simple to identify underperforming or problematic objectives and quickly address them.
Can quickly see how the big picture relates to day-to-day activities
  • Helps managers leaders prioritize initiatives and activities within a company.
  • Promotes long-term strategic outcomes rather than short-term wins.
  • Easy to understand and digest. An OGSM document can be shared across an entire company and should be readily understood by anybody with a basic understanding of the business.
  • Emphasizes the measurement and alignment of Key Performance Indicators in the context of strategic objectives. This vastly increases the likelihood that an objective will be accomplished.

Cons

  • Requires management to buy into the methodology and provide significant support to it.
  • Complex organizations can be challenging to model in OGSM without losing fidelity.
  • Primarily designed as a top-down management tool, it does not allow for autonomous decision making and alignment.
  • While OGSM is a useful summary level document, it should be accompanied by more detailed strategies.
  • Keeping an OGSM document up-to-date can be time-consuming and expensive. This pitfall can be mitigated with the right software.
  • Difficult to align multiple OGSM documents. Even small companies need several OGSM documents, and these relationships can be hard to identify and track.

Who it’s for?

  • Medium-to-large companies
  • Companies without an existing strategic framework
  • Companies that have undergone significant growth or decline
  • Integrating mergers and acquisitions (and planning for the integration of M&A)
  • Companies undergoing a pivot, such as an early-stage startup.

Software for OGSM

  • Minsilo
  • Google Sheets — you can easily create your OGSM document in Google Sheets and share it with your company.

Alternatives to OGSM

Four Disciplines of Execution (4DX)

Year of inception: 2012 The Four Disciplines of Execution (4DX) is a system for managing organizations from a 2012 book of the same name. The authors of the book describe the system as an “operating system” for managing your organization. It is intended to keep an organization focused on completing goals that drive the business towards its vision, rather than just reacting to the needs of customers and external stakeholders.

While not officially an alignment system, the Four Disciplines of Execution is a valuable tool for aligning organizations around a common purpose and ensuring that execution matches the strategy. As a system, 4DX is focused primarily on medium-term goals (less than 1-year).

How it works

As the name implies, there are 4 disciplines that every manager should follow. These are:

  • Focus on your “Wildly Important Goals”. Often called WIGs, Wildly Important Goals are the goals that are critical to achieving your organization’s purpose and vision. They’re wildly important because organizations have a tendency to adopt too many low-impact goals, which distract from the main purpose of the organization. Remember, if the goal is not related to the purpose of your organization or its survival, then it is not “wildly important.” Teams should limit their WIGs to 2 to 3 goals and no more, because having too many goals leads to goals that never get accomplished.
  • Act on the lead measures. Goals can be measured with other leading or lagging (trailing) indicators. Lag measures can only be measured and not changed. What you do today will not impact your lag measures. Lead measures, by contrast, relate to the current activities. They often predict lag measures.
  • Keep a compelling scoreboard. In order for measures to affect behavior, you need to keep a scoreboard that is clear and up-to-date. People will stay more engaged if they can see tangible from their efforts. Managers should focus on connecting the dots between the work that the team is doing and the measures on the scoreboard.
  • Create a cadence of accountability. On a weekly basis, “highlight successes, analyze failures, and [course-correct] as a necessary.” The purpose of weekly review is to keep people disciplined around the execution of wildly important goals. Weekly review meetings are an important opportunity for individual contributors can share concerns and issues, allowing them to be addressed early and mitigated before they become severe.

Another key concept from 4DX is the idea of “the whirlwind.” The whirlwind is all of the work that distracts a team from focusing on their wildly important goals. This may include interruptions from colleagues, special requests from customers and managers, and administrative work. It includes any activity that does not progress stated goals or help the business get closer to its purpose.

It is called “the whirlwind” because it is easy to get swept up in, causing individuals to focus solely on activities that do not have strategic value. While it is impossible to ignore whirlwind activities entirely, managers should pay careful attention to their team’s time allocation — are they focused on strategic goals or just on reacting to tasks?

One general recommendation is to follow the 80/20 rule with time allocation towards the whirlwind. This rule states that managers should allow no more than 80% of time to be spent on the whirlwind, leaving 20% of available time (or 1 day per week) to strategic priorities. The exact amount of time spent on strategic goals will depend on the employee’s role and the needs of the business.

Pros

Cons

  • Since 4DX is a complete system, it can be challenging to get full support for the system in an organization. Since there is no software out there specifically for automating this system's implementation, the manual process change is likely going to be difficult to implement.
  • 4DX lacks a process to get buy-in from the entire organization. The book (and methodology) does not guide prioritizing goals or seeking feedback on them. The book introduces the idea of identifying “Wildly Important Goals,” but it assumes
  • Lacks a disciplined practice towards building context, which is essential to understanding the reason for each goal. 4DX can be implemented without putting any care into how the goals are determined, which can undermine the adoption of the goals in teams across a company. The methodology does not prescribe a specific process to avoid this.
  • One of the main problems is 4DX identifies a rough outline for how to align your team around the most important activities, but it leaves a lot of the implementation up to the practitioner. Tony Morrison, a business executive and writer, succinctly sums up the problem with the methodology as: “it is a worthwhile [methodology] but, like a fine meal, needs to be paired with complimentary pieces to really deliver.”

Who it’s for?

  • Agile teams
  • Companies of all sizes — I’ve seen it work in companies as small at 10 people and as large as thousands.
  • Almost any type of organization.
  • Product teams — when paired with a strong product management process, 4DX can be an easy way to act on customer-driven goals

Software for 4DX

There is no tool specifically for the 4 Disciplines of Execution. FranklinCovey, the publisher of the book, used to have a software tool for 4DX that appears to be abandoned.

Minsilo uses several of the principles of 4DX in its design.

Hoshin-Kanri

Year of Inception: 1950s Hoshin-Kanri is an alignment methodology that was created in Japan in the 1950s. The term "hoshin kanri" means "compass management", which comes from the idea that a leader should set a North Star vision and then get people to align their work around that vision. It is a methodology that promises to reduce waste and improve everyday actions.

Hoshin-Kanri is not a system for planning, but rather for communicating direction and setting expectations. It shares several similarities to Lean, including the use of the Plan-Do-Check-Act process.

How it works

There several steps involved in implementing Hoshin-Kanri, including:

  1. Establishing an organizational vision. This can include a vision statement and a mission statement. This becomes the organization’s Northstar.
  2. Developing breakthrough objectives. This is also known as your 3-5 year plan. It should include major goals that will get the company towards the vision. This should be high level enough that the company can adapt to changes over the next few years.
  3. Develop annual objectives. Annual objectives are goals and KPIs that are cascaded from the “breakthrough” objectives (e.g., your 3-5 year plan). Annual objectives should be limited to 3-5 objectives in total.
  4. Cascade goals throughout the company. Take the annual objectives specified in the previous step and break them down at a department and team level. This is the step where Hoshin-Kanri Catchball can begin to occur.
  5. Implement the annual objectives. Once the goals are set at a lower level (e.g., team/department level), the organization can begin pursuing them.
  6. Monthly review. The monthly review is where the objectives and goals are reviewed and adjusted. Hoshin-Kanri recognizes there are often issues that arise from the goals that are set and this step is designed to solve those.
  7. Annual review. An annual review should be conducted at the end of the year to determine and update the goals for the coming year. This review should be similar to a monthly review, where an X-Matrix is created. It can be helpful at this stage to start the entire HK process over, using the previous year’s X-Matrix as a guide.

Another core concept of Hoshin-Kanri is catchball, which is a process where leaders and their subordinates negotiate and align goals and priorities. As Kanbanize states, “the final goal [of Catchball] is to provide every person that will be working towards achieving the company’s goals with the opportunity to give input on their part and align every action in a common direction that is shared by everyone.”

Furthermore, an X-Matrix can be used to helps visualize the Hoshin Kanri process. At the center of it is the rhetorical wheel, which shows the breakdown of breakthrough objectives (3-5 year goals) that lead to annual objectives, and finally to quarterly KPIs / goals for individual departments.

Pros

  • Gets the company to think long term about its goals.
  • Encourages engagement from all levels of the organization.
  • Seeks buy-in from all layers of an organization.
  • Since the system does not specify a way to implement goals at a team or department level, little change is needed to enforce goals at these levels, assuming the team or department already has a system for achieving goals.
  • HK assumes that there will not be a perfectly devised plan initially, and the company will need to adjust. This system incorporates feedback and adjustment at a regular cadence — albeit a slow one.

Cons

  • Can be painfully slow at times because of the amount of Catchball that occurs. This is good for getting buy-in, but since Hoshin-Kanri is also fairly granular in its focus, there's often a lot to discuss and negotiate.
  • Relies on cascading goals.
  • Requires middle managers to manage the "tactical" level of the methodology.
  • Does not foster autonomy in teams, because the top of the organization defines the goals and KPIs for the team.
  • No intrinsic way to pass information from the bottom up. The only thing that flows up in the system is results, which means that the company will be slow to react (and likely inaccurate) to the customer's needs.
  • Cross-functional alignment is difficult with Hoshin-Kanri (read about Turf Wars on Lean.org).
  • Relies heavily on the chain of command.
  • Difficult to set up and get running in an organization. There are a lot of moving parts, and it is fairly complex. Many people in an organization will not understand how it works.
  • Since buy-in only comes from one level down at a time, it's easy for faux buy-in to occur.

Who it’s for?

  • Multilayered management teams that have three or more layers of management.
  • For relatively stable and unchanging businesses.
  • Ideal for manufacturers and other physical product producing businesses.
  • Businesses that are willing to embrace decision making only at the senior and middle manager levels.
  • Designed for users of the Lean manufacturing methodology.

Software for Hoshin-Kanri

  • i-nexus
  • KPI Fire
  • Kainexus