Achieving top-to-bottom alignment on strategic direction is one of the most vexing problems facing leaders of any organization. In this case study we illustrate how any for-profit or not-for-profit organization can create a strategic plan with measurable goals that can be easily understood and carried out by staff.

In our work helping for-profit and not-for-profit organizations with strategic planning, we’ve noticed the tendency of work cultures to operate in a multiverse.

The first alternate reality is the utopian world presented to the board by the executive committee, which the board interprets and feeds back to the executives in the form of strategic guidance. The second realm is the one-eyed kingdom of executive leaders and senior managers, whose reign requires managing up to the board and down to the broader staff. The third plane, of course, is stark reality, comprised of the middle managers and staff who actually carry out the activities of the enterprise ­– and then, of course, the customers, who seek only to be continually delighted at a fair price.

Like any bad sci-fi movie, problems arise when worlds collide. Company leaders who give the board only the rosiest interpretation of how things are going deny directors visibility into looming crises. They then complain that their board issues strategic directives that are vague or unattainable, meddles in their operations, or both. Staff, meanwhile, see little in their superiors’ strategic plan that connects to what they do every day – and they don’t feel empowered to speak up about it.

Leaders of legacy enterprises who understand the imperative to transform quickly to stay viable in today’s digital economy find it particularly difficult to navigate this multiverse. That’s because, over time, the routines of providing the same goods or services, and suffering through poor communications at every level, become embedded into the culture.

It’s little wonder, then, that achieving top-to-bottom alignment on strategic direction is one of the most vexing problems facing leaders of any organization.

A portfolio approach

One client we’ve been working with for several years has come closer than most to figuring out how best to manage its multiverse and align its strategic plan with daily operations. It happens to be a nonprofit professional society, but its lessons are equally applicable to for-profit organizations.

This organization needed to shift its strategic direction to make its services more relevant to the changing needs of its members and broader audience. Because this was a major initiative and involved allocation of capital funds and resources, transparency to the board was critical. Another goal was to instill a new regimen and culture of interdepartmental collaboration.

We helped this society to organize its entire operation into a half-dozen “portfolios,” named after strategic themes developed and endorsed by the board and executive committee (the specific  themes were environmental “Sustainability,” professional “Knowledge,” membership “Prosperity”, “Workforce” development, industry “Influence” and operational “Excellence”). We also helped the organization analyze which programs and services must change to conform and contribute to each newly defined portfolio’s strategy and theme.

Using a cloud-based tool called Cascade , we introduced a new way of writing, sharing and tracking annual goals. Each portfolio developed three to four (no more) high-level goals written annually at an aspirational, strategic level. These high-level goals were then supported by a larger number of very specific tactical and measurable sub-goals. Because the achievement of both strategic and sub-goals goals often depended on multiple departments working together, improved communications and collaboration was inherent to the system.

Throughout the year, senior managers would go to Cascade and update the status of each sub-goal – by indicating percent of completion as well as writing a quick one-sentence update. Those updates flowed nicely into a monthly report, allowing senior executives to see how well the organization was performing and progressing towards its stated objectives. Executives were then able to share a more abstracted version of these reports to the board on a quarterly basis, providing essential transparency while taking care not to get mired too deeply in all of the details. By doing this regularly over time, the board developed confidence in the metrics and the tendency to micro-manage was greatly minimized.

Outcome-based goals

A quick point about goals: We’ve learned that writing measurable goals is the most difficult part of the process. We encourage staff to adhere to the SMART rubric (Specific, Measurable, Achievable, Relevant and Time-Based). But we also would add an “O” to that acronym, for Outcome-based. It’s not enough, in other words, to set a goal measured by the accomplishment of certain tasks (such as number of events or press releases issued, etc.). An accomplishment is not an outcome. The better way to write a goal is: How will achieving this goal move the needle on a Key Performance Indicator (KPI)?

To further illustrate the difference between a goal and a KPI: Your goal may be to quit smoking, and it can be measured (number of cigarettes per week). But that’s merely a tactic to achieve a more measurable and meaningful KPI, such as lowering your blood pressure or improving your cardio-pulmonary capacity. Both measures – good, outcome-based goals and KPIs – are essential to the execution of any strategic plan.

I should note that KPIs are fairly easy to track for most for-profit businesses (units sold, revenue, expenses, etc.), but are much more difficult for nonprofits, whose success is based on the “double bottom lines” of remaining fiscally sustainable while carrying out a mission where it is often difficult to quantify impact on a monthly or quarterly basis. There are ways to measure what I call “return on mission” – but it requires collecting good baseline data on levels of engagement, customer satisfaction, influence and the like, and measuring it over a longer time period.

Our client has been using this approach now for close to four years. Each year, the process is refined and improved – and it’s still not yet perfect. But, without question, everyone  involved – the board, the executive and senior team, and the staff – now agree on the organization’s strategic direction and priorities, and the steps being taken to achieve them. The “many universes” of the former organization now operate in relative harmony, while moving ahead with a common mission.

Interested in learning more about aligning strategy with execution? Write us at info@dprism.com .