Chapter 4: How to measure alignment

Before deciding on a specific alignment methodology, it is critical to get an initial baseline reading of your organization's alignment. This section is dedicated to helping organizational leaders understand how aligned their organization is and where things may need improvement. We recommend regular measurement as part of an overall alignment strategy to keep your organization on track in the future.

Simple ways to test whether employees are aligned

Before implementing any alignment system, it's essential to evaluate where your company is currently. Here are a few ways to test for alignment in your team:

Survey on Priorities and Customers

Conduct an anonymous survey. Ask people to answer the following questions:

  1. What are our top 3 priorities as a company?
  2. Name at least 2 major initiatives that are not the focus on <Team Name>.
  3. How does our company sell? What are the primary channels for our business?
  4. Describe one or more of our user/customer personas? Who are they? What do they like?
  5. What makes them choose our offering over a competitor?

Business Model Canvas

Have each member of your team fill out a Business Model Canvas. You can find a downloadable copy of the Canvas here.

The canvas covers the following questions that every employee should be familiar with:

  1. Who are our key partners? Who are our key suppliers?
  2. What are our key activities (e.g., software development, marketing)?
  3. What is our value proposition(s)?
  4. What are our customer segments? Describe the major personas in detail?
  5. What type of relationship does each of our segments expect?
  6. What is our cost structure? Where does the company spend most of its money? This section does not need to be a line-by-line expense list, but rather, what are our primary areas of investment?
  7. What are our revenue streams? How do we make money as a company?

Who-what-when-where-why-how Analysis

Ask each employee to answer the "who-what-when-where-why-how" question framework.

  1. Who are our stakeholders?

    1. What does our company do to satisfy those stakeholders?
    2. When does our company provide value?
    3. Where do we provide value to those stakeholders?
    4. Why do we exist as a company? What is our purpose?
    5. How do we achieve our mission?

Create an alignment report

Use a software tool, like Minsilo, to capture the work done by your team. Then generate an alignment report that checks the team's work against the company's goals and purpose. Address any sources of misalignment.

Verify your team is aligned

After testing for employee understanding of your business model, customer personas, and stakeholder analysis, send out a short poll to ask people the following questions.

  1. On a scale of 1-10, how well do you understand our business model?

    1. On a scale of 1-10, how well do you understand who our customers are, why they buy from us, and what they find important?
    2. On a scale of 1-10, how well do you understand our company's purpose? How well do you understand our stakeholders?
    3. On a scale of 1-10, how well do you understand our team's strategy?
    4. On a scale of 1-10, how closely do you think your work matches the purpose of our business?
    5. On a scale of 1-10, how strongly do you believe our strategy supports our purpose as a company?
    6. What do you think we could improve?
    7. What areas do you think we do well at as a company?

In general, every employee should be able to answer basic questions about how your business works and what makes it tick. Basic employee fluency around your business model boosts a sense of ownership. It increases your people's ability to execute on your business' initiatives. It also improves your people's overall capacity to make decisions that align with your company's purpose.

These tests are a simple way to evaluate this fluency. Suppose you discover your people are not able to answer these questions readily. In that case, this is an excellent opportunity to invest in a system that shares contextual information about how your business works and ties it to the day-to-day work that your people are doing.

Other techniques for measuring alignment

Here are a few of our favorite techniques for measuring alignment. We recommend perusing each of these options before deciding on one because each method has its advantages.

Align Method

This method comes from page 47 of Oxford Said Business School professor Jonathan Trevor's book called "Align: A Leadership Blueprint for Aligning Enterprise Purpose, Strategy and Organisation." We highly recommend checking out this book for yourself, as it has a ton of valuable information on measuring and managing alignment. It also presents a useful model for thinking about which alignment strategy fits best for your business.

Here's how Trevor's method works.

First, start by asking your team two questions:

  1. How well does our business strategy support the fulfillment of our enterprise's purpose?
  2. How well does our organizational capability support the implementation of our business strategy?

Have your team assign a score for each of these questions from 0 to 100, with 100 being "perfectly well" and 0 being "not at all." Then average the scores from each of your respondents. Optionally plot the scores on an X-Y chart to visualize your results.

If your team scores above 50 on both categories, then your organization is generally aligned. If it scores less than 50 on either of the categories, then your organization is misaligned.

Note: having a score of 100 for one question and 0 for the other does not mean your strategy is well-aligned to your business. In essence, scoring below 50 means that your business is either not fulfilling its purpose or is incapable of fulfilling its purpose.

Analysis

Unlike many popular alternatives, Jonathan Trevor's simple approach considers the reality of whether an organization can achieve its stated strategy. Too often, teams and companies will set a bold strategy that they're unable to execute on. A lack of money, time, technology, or people are reasons why an organization could be unable to execute its strategy.

Other methods assume that an organization will only pursue a strategy that they're capable of actually accomplishing. This assumption is rarely guaranteed — instead, leaders should think carefully about committing to a strategy until they know the limitations of their team and company.

More broadly, Trevor's research showcased in Align lists four factors that influence a company's ability to execute its strategic plan: Does the strategy support the organization's purpose? Is the organization capable of delivering on the strategy? Does the organization's design (architecture) support the development of its organizational capability? Do the organization's management systems enable it to perform?

Deloitte 5 Key Questions Method

This method asks leaders to answer five questions to measure alignment between leadership and organizational strategy. This method comes from a 2008 publication by Deloitte, one of the Big Four accounting firms (and one of the world's largest management consultancies).

The 5 Questions

Here are the 5 Key Questions. We have adapted some questions to improve clarity or applicability to modern companies.

  1. How does our organization create value for our stakeholders?
  2. What do we have to be good at to be profitable?
  3. How are we doing?
  4. What improvement areas matter the most?
  5. Are our people pointed in the right direction?

We recommend surveying each person in your leadership team separately, then compiling the answers in an anonymized list. Separately collecting answers helps to ensure that people do not just go along with others' responses and that you're reliably able to measure alignment using this method.

Analysis

Leaders need to caution themselves when asking these questions (in particular, questions 3 and 5). Deloitte questions are hard to measure, and gut feeling is rarely enough to answer them reliably.

Based on other research we've done, leaders regularly overstate their team's understanding of organizational strategy. This tendency can lead the answers to question 3 ("how are we doing?") and question 5 ("are our people pointed in the right direction?") to be answered positively, even if the team is poorly aligned around the strategy. Therefore, we recommend leaders only use this method in conjunction with one of the options that we mentioned in the previous section.