The Tools of Alignment
The Tools of Alignment
In a previous article, I discussed the value of alignment as a key method for CEO’s to reach their goals. I also introduced the 5 fundamental tools of achieving alignment:
Roadmap / Navigation
In this article, I will go a little deeper on some methods for using these tools and some unique ways to drive alignment at a practical level.
No conversation about alignment would be complete without mentioning the power of iterative consensus. Most of us who manage teams learned this very early on. When the team helps develop the plan, there is always going to be a higher level of affinity for the plan. Further, the plan will also likely be more realistic.
Purpose, roadmap and navigation are elements that should be developed with the executive management team and socialized with the board and investors. Strategy, elements of culture, and management systems can be developed up and down the management team. The key to this method is to have it facilitated or moderated to ensure top/down alignment and that iterations include at least the board’s objectives and thinking, usually via the CEO and possibly the COO or CFO.
Once defined, culture and management systems usually require the most implementation. Each level of the management team should be thinking about how best to demonstrate and cultivate the desired culture. What behaviors should they ensure they align to in their behavior, what rituals should they observe to reinforce the desired culture? Here too, iteration and team involvement can be used to refine these answers. Management systems include organizational structures, team skill composition, tools and processes, and measurement systems. Ensuring aligned management systems is critical to the success of any strategy, it is this element that ensures the team has the skills, tools, and feedback they need to excel.
Once these tools are created, they must be used in daily, weekly, and monthly exercises as well as continued to be refined on monthly, quarterly, and annual cycles. Using these tools in performance reviews that are informal and formal drives home the validity of the tools as well as enables teams to have a meaningful measure of what’s working and what isn’t. Making the practices of measurement and refinement along with the cultural reinforcement of their validity and meaning are the final mandates of achieving first level alignment.
Running a startup can feel a great deal like being the fire chief in Rome as Nero fiddled. It doesn't feel like you have time for traditional management tools and there's a lot of noise telling you that running around breaking stuff is more important than building a team and aligning them. However, the key to successfully transitioning to a scaleup is focus, and focus comes from alignment. In matters of alignment, the difference between startups and large companies is the scale of the process and the frequency of tuning, rather than the necessity of the process itself.
A recent startup to scaleup client had been purely focused on top line customer count. They were growing quickly, but burning cash even more quickly, were seeing growing churn, and didn’t have a clear picture of how long it would take to turn cash flow positive or how easily they could raise more capital. The strategy was unstated but simplified to growth at all costs and was unfocused across a broad market. They had a strong sense of purpose, but no long term roadmap, haphazard culture, and marginally aligned organizational structure with growing employee churn. A quick analysis showed that many customers bought but did not use the product, setting the company up for significant churn, and that costs incurred to service customers were highly variable but, on average, drove significant negative margins. By restating the strategy to focus on growth, customer value, and a cost of goods sold target, the company was able to realign around the mandate of its current state. The culture shifted to a focus on product innovation balanced with reliable execution, of both growth and product. This was entirely consistent with the roadmap that was developed and where they were on that map, which was pre-economic-model-fit. The result was a transition to predictable growth (4 year 95% CAGR, post change), high customer and employee retention and satisfaction, and reaching cash flow positive in less than two years.
This first level of alignment is a minimum level of performance that any good executive team should be able to produce. However, there are deeper levels of alignment that are possible and they can yield even greater results. In my next article, I will talk about aligning the behavioral composition of the team to the strategy.