Understanding the Importance of Strategic Alignment

In a strategically aligned company, all teams and teams of teams are working on projects that move the organization forward in agreed-upon ways. For organizations lacking strategic alignment, that work is often done in silos and is disconnected from the company’s overarching strategy.

In this article, you will learn about the importance of strategic alignment and why it’s crucial to the long-term success of your organization.

Strategic alignment is the process of working with various teams and individuals to connect their efforts to the organization’s overall goals. To be effective, alignment must begin at the top with senior leaders who share the enterprise strategy throughout the organization.

In high-performing, strategically aligned organizations, every team member has:

• Understanding of the overall enterprise strategy
• Knowledge of where they fit into that strategy
• Understanding of why their work matters in the bigger strategic picture

When organizations have strategic alignment, every member of the team is on the same page and can make decisions and take actions that are consistent with the overall strategy.

A 2023 survey published in Harvard Business Review shows that, on average, responding organizations’ actual strategic alignment is two to three times lower than their leaders perceive.

Figuring out how to boost strategic alignment in your organization can drive long-term, bottom-line benefits for both the enterprise and its workers.

We touched on the importance of strategic alignment and how it can help your organization. Now, let’s look at some of the benefits that come out of aligning the work teams deliver with your company strategy.

Strategic alignment is necessary for ensuring your enterprise is investing its time, money, and resources in initiatives that the company has identified as strategically important.

Strategically aligned organizations operate more efficiently and achieve better outcomes because their teams are working on common goals and objectives.

All the time and resources invested by the organization deliver work returns that are inherently connected to the company’s strategic goals.

In addition, strategic alignment creates a better working environment for the people who work in the organization. Not only does this alignment lead to better work that brings value to the business, but it also can motivate teams and boost morale.

People are less confused about their goals and priorities. They know where they fit in the bigger picture and are empowered to make decisions. They can make those decisions because they understand how their work aligns with company strategy.

Let’s dive a little deeper into those benefits.

Improved efficiency

Organizations that understand the importance of strategic alignment tend to be more efficient.

Wasting time on efforts that don’t match the organization’s strategic goals leads to inefficiency and a lack of productivity. However, when teams are strategically aligned, everyone is on the same page about which projects are worthy of investment because everyone is working towards a unified goal. As a result, teams work more effectively and wasted efforts are minimized.

Working more efficiently and effectively can lead to an increased confidence in strategic investments. It creates more confidence in decisions around allocating resources, because there’s an understanding that those resources will be used to achieve strategic outcomes.

Increased focus on driving value

Strategic alignment helps teams see the bigger picture so they can understand how their work fits into the company strategy. Strategically aligned teams focus on creating value rather than output. That means the work is furthering company goals and driving value for the company, rather than simply producing work for the sake of productivity.

As a result of this focus, it’s easier for strategically aligned organizations to quickly identify high-value projects and low-value ones.

This also helps to ensure that time and resources are spent delivering work that makes sense from a strategic point of view. Teams can prioritize important work more easily, and deprioritize or abandon work that doesn’t make sense strategically. That way, they’re better equipped to focus on driving business value while helping to avoid sunk costs due to strategic drift.

Better planning and work delivery

To further illustrate the importance of strategic alignment, consider the following.

Strategically aligned organizations make more informed choices when planning and executing projects.

Aligned teams have a better understanding of company goals, decision-makers can focus on the steps, practices, and deliverables that contribute to the long-term organizational strategy when planning for the future.

Furthermore, strategic alignment makes sure teams are aligned to common goals, empowering them to make rapid decisions that help reach those goals. That autonomy and understanding of their work’s value to the organization can also create more motivated teams.

In a rapidly changing business environment, successful enterprises often need to be flexible and adaptable. Strategic alignment allows every team member to make adjustments in response to market changes without compromising productivity or efficiency, because they remain focused on strategic goals.

The reason for this is that teams constantly measure successes from the perspective of enterprise goals. Strategically aligned organizations can update practices and respond to changes with nimbleness and agility.

Consequences of strategic misalignment

When organizations are not strategically aligned, they typically waste resources by working on projects that are disconnected from the company’s overarching strategy and vision.

If teams don’t know what work they should do because they don’t understand how their work fits into the bigger picture, employee engagement and performance can decrease. They could also become demotivated if they feel their work isn’t positively and measurably affecting the business.

The results of strategic misalignment include wasted time and wasted financial resources on initiatives that don’t truly bring value to the business. The work delivered has little to no positive impact on the business, because it doesn’t contribute to the company’s overall strategy.

Now that we talked about the importance of strategic alignment and how it benefits your enterprise, let’s look at how you can achieve it.

Firstly, there is no magic formula for ensuring your organization is successful. However, strategic alignment is a strong starting point for making sure your enterprise continues to invest time, resources, and money into projects and initiatives that drive value.

Start building strategic alignment in your organization by following these five steps.

1. Understand enterprise goals and objectives

You can’t create strategic alignment unless you understand to what you’re aligning. That starts with learning your company’s vision, mission, current strategy and goals. It may be a good idea to meet with company leaders to discuss enterprise strategy.

In these sessions, leadership groups should discuss the current state of the company and where they want to see the organization in the future.

Alignment always starts with the leadership team, so it’s crucial to align at the top level of the organization and create a plan.

2. Create a strategic playbook

By this point, everyone should understand the importance of strategic alignment. It’s time to create a playbook for putting it into action.

The organization’s strategy is the detailed plan to get from where you are to where you want to go. Think of the mission as the starting point, the vision as the destination, and the strategic plan as the path that helps you navigate from one to the other.

As leaders develop the strategic plan, the first priority is to make sure that everyone is on board with the direction your company is headed and the plan for getting there. Next, develop strategic goals, which are measurable, specific objectives that will help the organization fulfill its vision over the long term.

However, don’t expect your plans to be set in stone. Work to facilitate a growth mindset that enables you to execute the plan, which means sometimes changing the way you’re used to doing things. This is where taking a page from Agile and embracing continuous planning can help. This will help you plan, prioritize, and, at times, deprioritize work based on its strategic value.

On that note, be ready to accept that failure is okay. If a particular project doesn’t align with strategy, revisit it or stop it completely.

It will be easier to plan and prioritize initiatives if you document a clear understanding of company strategy and goals. As leaders and teams consider projects and initiatives on which to focus, they can always hold those plans up to the company strategy and choose the ones that are in alignment, reconsidering those that don’t help the organization achieve its strategic goals.

3. Inspire and facilitate collaboration

Strategic alignment is more successful when people from across the organization regularly work together, ensuring that various teams are all keeping the same, organization-wide strategic goals at the forefront of their endeavors.

Focus on creating a cross-functional, collaborative environment made of teams with different roles. This collaborative environment should include teams with different business functions or different business groups. Through regular, collaborative projects, those teams come together to support a common strategic goal or priority.

Collaboration inspires transparency between teams and throughout the organization. That helps ensure everyone remains focused on the same strategic goals over time.

4. Get sponsorship from senior stakeholders

Even though everyone recognizes the importance of strategic alignment, implementation can be challenging. Strategic alignment in project management is not going to happen overnight.

For many organizations, creating strategic alignment requires new ways of working, and potentially overhauling the projects on which teams are focusing.

Communicate to senior leaders that their involvement and commitment must be evident in order to ensure alignment. It will take time to change organizational culture such that teams hold every potential initiative up to enterprise goals to determine whether it’s a worthy pursuit. That’s why executive sponsorship is critical for championing strategic alignment across the organization.

If your teams and departments are accustomed to working in silos, allow for time to adjust and go through a learning process for prioritizing and deprioritizing initiatives. Over time, the movement toward investing only in initiatives that align with company strategy will drive long-term success for those teams and for the organization.

5. Track and measure success

As with any important pursuit, tracking and measuring success are vital to the value and importance of strategic alignment. Determine how you will track and measure your strategic alignment and the value teams are delivering to the business.

One valuable option for measuring success is to use Objectives and Key Results (OKRs). OKRs focus on where the company wants to go, how they’ll get there, and how far they’ve come. Rather than focusing on outputs, OKRs focus on value-based outcomes.

When you use OKRs to measure success, you can identify your company’s goals over a specified period of time. The initiatives undertaken to reach each goal may be varied, and if one isn’t working, you can decide to drop it or tweak it at any time. While measuring your progress, OKRs also allow you to make sure your work is designed specifically to meet organizational goals, which is strategic alignment at its best.

Many leaders find that strategic portfolio management (SPM) software can be a valuable tool for helping them foster strategic alignment throughout their organizations. Access the April 2023 Gartner® Magic Quadrant™ for Strategic Portfolio Management to see how choosing the right SPM solution can accelerate your on-strategy delivery. And why Planview was named a Leader in strategic portfolio management.

In today’s rapidly changing world, organizations can be influenced easily by new technologies, market changes, and other outside forces. However, undertaking new projects and initiatives based on a whim will rarely push organizations to achieve their goals.

Instead, strategically aligned organizations focus only on projects and initiatives that move them closer to their overall strategic goals. As a result, they avoid wasting time and resources on initiatives that don’t move the organization forward, and they boost productivity by fostering collaboration and efficiency.

Because they are always focused on creating value, team members in strategically aligned organizations always understand how their personal contributions impact the enterprise—and that often results in more motivated, engaged workers. The importance of strategic alignment cannot be stated enough. It can drive long-term success when it’s based on a solid strategic plan. Download “The 4 Elements of a Strategic Plan” whitepaper to learn more about how you can create a strategic plan that empowers your organization to turn your best ideas into business value.