Corporate strategy and crisp execution are top of mind with business leaders. Businesses operate on models designed for value creation that are in alignment with their competencies, capabilities and stated value propositions for each class of product and service they offer. While the value proposition helps communicate the marketing and sales message, the business model must deliver the value promised by correlating strategy with market expectations. Crisp execution requires business strategies to be aligned with methodically planned actions. This article addresses eight key areas where alignment to corporate strategy are essential to business effectiveness.

1. Strategy and mission alignment
If organizations cannot succinctly explain what they do, how will their marketplace consumers understand it? An organization’s mission statement must be defined broadly enough to allow room to maneuver, yet be direct and purposeful in defining the market(s) served, the products and / or services provided by the firm and the distinguishing characteristics of those offerings. 

Let’s look at Target’s mission statement as an example and then break it down into parts.

Target’s Mission:  “Our mission is to make Target the preferred shopping destination for our guests by delivering outstanding value, continuous innovation and an exceptional guest experience by consistently fulfilling our Expect More. Pay Less.® brand promise.”

What are the key elements?

Market Served: economy and quality minded shoppers
Contribution: exceptional guest experience
Distinction: outstanding value, continuous innovation and an exceptional guest experience by consistently offering more for less
This same information must align with the strategy of the organization. Strategies are broad in scope, but should also be capable of being summed up in strategy statements that employees will understand and embrace. A strategy statement, while being simple in structure, must also anticipate the need for adaptability. Too much specificity in the statement will undermine flexibility down the road.

At a minimum, for strategy to yield competitive advantage, it must address three key questions:

"What do we do?"
"Who are our customers?"
"How do we do what we do better than our competitors?"
The aligned strategy statement “shell” for one of Target’s brands might be stated as follows:

“Our strategy is to _____ by offering _____, at a cost that brings value to
our customers unmatched by our competition through  ___ and ____.”

Note the alignment of elements in the mission and strategy:

Contribution = "What do we do?"
Market Served = "Who are our customers?"
Distinction = "How do we do what we do better than our competitors?"

2. Strategic goals and core values alignment
Strategic goals and organizational core values are both extremely important aspects any business, so overlooking the alignment of these elements is a serious mistake. 

Strategic goals should define the outcomes the organization desires to accomplish in measurable terms. 

Core values serve as the compass to help steer strategic decision making. Businesses should know what these values are and state them in no uncertain terms.

If a core value of the organization is to respect employees and promote quality of life, then setting goals that are unrealistic and are sure to drive employees into the ground is a violation of that core value. Such a violation represents an alignment issue. While super-human feats may bring about short-term benefits, sustaining them over time is not realistic - therefore, no long-term advantages will be gained.

3. Strategic goals and operational capacity alignment
The best way to ensure alignment between strategic goals and operational capacity is to face realities during planning and do not allow over zealousness projections to take over. Ask questions.

Do our internal systems have the ability to support goal achievement?
Will suppliers, distributors and partners be able to keep pace in support of goal attainment?  
Can our managers and employees step up to the added workload an pressure we will be asking of them?

4. Strategic goals and core competencies alignment
Strategies should follow a simple alignment rule related to business core competencies. Compete where you have an advantage, otherwise do not. Do the skills and knowledge exist in the right levels within the organization to accomplish the strategic goals? In strategy development, the question of “what should we do” is a corollary to the “what we do” question.  This perspective relates to building competitiveness in your offering and exploring tangential markets that might be exploited, provided that the barriers to entry are not too high and organizational capabilities match the opportunities being evaluated.  Truly gauging core competencies is key to ensuring alignment exists in this area.

5. Strategy and operational execution tactics alignment
Operations-level planning describes the tactics of execution, correlating strategy to action. Misalignment often occurs here, primarily because companies skip over operational planning altogether or do a poor job of paying attention to details.

The goal of the operational planning is to create realistic and comprehensive work breakdown structures (project plans) for the work entailed in all identified initiatives related to the strategic goals of the client. Additionally, accountability and responsibility structures get established at the initiative and project levels when operational planning is done correctly. This activity has an important alignment to budgets, as it affects resource plans, infrastructure and schedules that might have downstream consequences to sales, marketing and other functions.

6. Alignment of business process to strategy
Business process and strategy execution go hand-in-hand, but natural alignment between strategy and process cannot be expected to occur on its own. Processes must support business goals, integrating organizational capabilities that enable the business to deliver consistent customer value while keeping pace with demands of the strategy.

For instance, a strategy calling for the introduction of new products in a growing market segment may require outsourcing, more modularity and improved standardization in order to meet the goals specified in the strategic plan. There are massive business process implications to each of these. Likewise, acquisition strategies must be thought through in terms of business process congruence and integration. Many organizations fail to do so, compromising much of the expected value from their strategic acquisitions and yielding unintended consequences.

7. Alignment of metrics / measures to strategy
Closely linked to business process considerations are the metrics and measures of process effectiveness. Again, this relationship forces a close alignment with strategy - more specifically with the strategic goals related to the strategy. 

Not all strategic goals are going to be financially oriented, in fact they should not be. Regardless, they must still be quantifiable (see item #8 in the linked article to learn more about minimize or increase types of statements) so that they can be measured. Metrics can then be associated with timeframes to accomplish, then measured for management to track progress.

As with the development of strategy, the relationship of strategic goals to metrics and measures can be tricky. For instance, a strategy might have a strategic goal related to “increasing productivity by X% over X quarters” and another related to “increasing profitability by X% over X quarters”. Setting the wrong metrics might help accomplish one goal, but simultaneously compromise the other. How? 

Assume the following:

Volume metrics for production are encouraging managers to seek higher labor productivity
The contribution of labor to profitability is 10%
The contribution of materials to profitability is 60%
In this case, a 10% increase in labor productivity will create a decrease in material management efficiency - as inventory levels must increase to address the volume change. That could easily translate to a materials efficiency decrease of 2% or more to support the 10% labor efficiency increase. 

Give the profit contribution assumptions above, the net result is as follows:

a 10% labor productivity improvement times 10% profit contribution equals a 1% profitability increase
a 2% materials productivity decrease times 60% profit contribution equals a 1.2% profitability decrease
As you can see, net profitability actually decreases when high volume production is encouraged by metrics misalignment - compromising the strategic goal of “increasing profitability by X% over X quarters”.

8. Alignment of governance to strategy
Lastly, governance and strategy are inexorably linked during planning and in the midst of execution - therefore alignment of these two business components is once again critical.  Governance must first exist, then it must be aligned to planning in order to build in realistic strategic expectations and to measurement cycles in order for real accountability to exist. These are required in strategic planning and strategy execution.

Governance should address, at a minimum: master scheduling, metrics and measurements, plan rejuvenation, project planning and plan accountabilities.

Summary
When strategic planning is done well, with a mature and robust process that guides the effort to ensure completeness - the outcomes can be powerful and position an organization to dominate the competition.  Yet only a small percentage of organizations operate with mature planning models that yield complete and comprehensive strategic plans addressing alignment to key dimensions of the business. 

It is critically important to build alignment into strategic plans as they are constructed and each time they are refreshed. Alignment refers to sensibly attaching strategies to actions while remaining true to the organization’s mission, core values, actual operational capabilities and core competencies along the way. As discussed, business process and strategy execution go hand-in-hand, but organic alignment between strategy and process cannot be expected. Closely linked to business process are metrics and measures of effectiveness, again requiring close alignment with strategy and more specifically with strategic goals of the business. Lastly, governance and strategy should be joined at the hip during planning and in the midst of execution — therefore alignment is once again critical.

This article originally appeared on the Method Frameworks website.