Imagine this: You are the CEO of a mid-sized company and you have just returned from an expensive, multi-day strategy retreat with your entire management team.You spent hours discussing the intricacies of your strategy, and it made you and your employees feel more aligned than ever.But are you actually on the same page?
Our new research suggests you may not be—and that this kind of strategic mismatch is both more common and more damaging than you think.
Specifically, as part of our ongoing research, we asked more than 500 front-line employees, middle managers, and senior executives in 12 different organizations to indicate how aligned they thought their companies were in terms of corporate strategy.And we found that participants were largely optimistic, reporting on average that they thought strategic alignment in their companies was 82%.But when we analyzed detailed written explanations from these same employees about their company’s strategies, we found that actual alignment (as measured by linguistic overlap in the concepts and words they listed) averaged only 23%—two to three times lower than perceived alignment .
Not surprisingly, this disconnect creates real problems.We found that in organizations with greater differences between actual and perceived strategic alignment, employees were more skeptical about the effectiveness of their company’s strategy and its implementation and reported that their company’s attempts to implement its strategy were more slow and of lower quality.
For example, employees at a technology company in our study rated strategic consensus within their organization at 77%, but analysis of their written responses showed that their actual alignment was only 26%.Reviewing the results, the CEO — a 25-year industry veteran — was surprised: “I felt like we weren’t fully focused, but the level of inconsistency and disagreement surprised me,” he shared.
“Everyone seems to be interpreting strategy based on their functional silos, even our strategy team members.”
Similarly, middle and senior managers at a recruitment firm reported that they believed strategic alignment in their organization was 90%.Yet we found that actual alignment was only 30%, with employees listing unrelated priorities such as product diversification, adding value to the community, and building a powerful platform as the company’s primary strategic goal.In some cases, different employees’ understandings of their strategy were in direct conflict: one respondent described a strategy of focusing on complex, more expensive services, while another described a strategy of investing in larger, simpler projects that would be more easy to deliver quickly.
Too often, executives and employees find themselves in an echo chamber, assuming that everyone shares the same understanding of the company’s strategy, when in fact they are pursuing different or even conflicting goals.This inevitably leads to politics, firefighting, unproductive meetings, and interpersonal challenges, all of which distract everyone from their work and prevent actual value creation.
However, true strategic alignment is actually possible.Our research highlighted three key steps leaders can take to foster alignment and get everyone (in fact) marching to the same tune:
Focus your strategy on driving customer value
First, we found that the CEOs in our study who overcame strategic confusion, transformed perceived consensus into actual strategic alignment, and succeeded in achieving their goals focused almost exclusively on prioritizing their customers.
This trend is consistent with previous studies.A 2023 review of 245 academic papers found that firms that prioritize customer satisfaction perform better in a wide variety of metrics, including sales, earnings, cash flow, stock price, and more.Another recent study showed that companies that build a strategic consensus around supporting the needs of their customers have lower costs and higher revenues, profits and valuations.
When senior executives, middle managers, and frontline employees are united around a customer-focused strategy, they are less likely to spend wastefully or invest in various initiatives that consume resources without increasing customer value.
For example, in 2020, actual strategic alignment at Houston-based supply chain services firm ITI Manufacturing was less than 20%.Three years later, we found that compliance was up to 82%.
Sales also rose 23%, and employees reported spending more than 50% of their time on customer-focused tasks.
What happened? ITI changed its strategy to focus specifically on one factor it identified as most important to driving customer satisfaction: providing customers with weekly updates on the status of their orders.This new approach enabled ITI to achieve strategic consensus across the organization and reduce the time people spend on internally focused activities.As CEO Joshua Robinson explained, “Starting with customer value has helped me and my team focus on the one thing that matters most to our customers: delivering weekly updates.At first it seemed so simple, even trivial.
But today the results speak for themselves.
We can differentiate our introduction to new clients and prospects, and existing clients love to provide referrals on our behalf.”
Weave your strategy into the daily work of frontline employees
Then, after reorienting your strategy to focus as exclusively as possible on customer value, take steps to ensure that this new way of thinking permeates everyone’s daily activities.Strategy can’t just be superimposed on employees’ daily jobs—it must to be done their daily work.After all, field employees and managers are the ones who create value for customers, and therefore their day-to-day work is most critical to the implementation of a customer-centric strategy.
Another business in our study, auto parts distributor Swagelok Southeast Texas, has tried time and time again to solve its strategic alignment problem.President Chris Jones described the many internally focused initiatives undertaken by his team: “We were doing everything for the sake of strategy – except for improving customer value,” he reflected.
In 2021, the organization identified rapid bidding as a critical customer need and completely refocused its strategy around this goal.“We have halted or delayed most of our internal initiatives, focusing our attention, efforts and energy on rapid citation.[We] we provided our customer service representatives with an updated and streamlined computer interface, more training and everything else possible to support their work.It was a series of difficult conversations with my senior executives to stop or delay unrelated initiatives,” Jones reflects.
“But we’ve really made fast quoting the centerpiece of our strategy.Today we have reduced the average quote time from 18 hours to five hours and more than 95% of our customers are satisfied with the quote time.”
Deborah Carpenter, director of strategy and development at Swagelok Southeast Texas, added that this improvement in customer experience has internal benefits as well: “Previously, sales team members spent more than 30% of their time following up on offers – instead of they go about their day’s work,” she explained.“This created a vicious cycle: customers would go elsewhere if they didn’t get a quote on time, and sales couldn’t sell because they were chasing quotes instead of sales.” Weaving a customer-focused strategy into the day-to-day operations of the business allowed workers, managers and executives to stay aligned, ultimately creating value for both customers and the company.
Implement strategy through dialogue, not top-down directives
Finally, managers must remember that strategy is not implemented by top management, but by middle management and front-line employees.Leaders cannot simply announce a strategy and assume it has permeated the rest of the organization.
Instead, they should proactively seek input and feedback from across the organizational chart, truly listening to lower-level employees and engaging in meaningful dialogue.After all, top-down communication from leaders to front-line workers may drive perceptions of strategic alignment, but will not improve actual consensus.
“Listening — not talking — to employees was the key,” explained Margaret Seeliger, global senior vice president of strategy at Sodexo’s energy and resources division, when describing how her team visited more than 50 sites around the world to connect directly with frontline teams.Through these conversations, her team discovered that in order to spend more time helping customers, employees needed more support for certain tasks, and so the organization implemented a strategy that was directly informed by this input to offload frontline employees.
These initiatives resulted in a 24% increase in revenue, a 5% reduction in costs and a two point increase in customer satisfaction.
Reflecting on how impactful this dialogue-based approach to strategy has been for Sodexo, Seeliger comments, “Senior leaders can measure results, create initiatives and hold town halls.But the real work of implementation—creating value for customers—happens on the front lines.” She continued, “How can we offload frontline employees to focus their day-to-day work on creating value for customers? This is the essence of strategy implementation—and it all happens on the front lines.Senior executives have only two options: support them or get out of the way.”
Building strategic alignment in an organization is always a challenge, but the wide gap between actual and perceived alignment makes it much more difficult to get on the same page and implement a strategy effectively.To foster true strategic alignment, leaders must focus the entire company on increasing customer value; weave this strategy into everyone’s daily work; and developing strategic priorities not in a vacuum, but through collaborative dialogue with senior executives, middle managers and front-line employees..
