By Robert W. Bradford, CEO/President
The other day I was talking with a CEO about building strategic alignment between business units in his organization. I was intrigued, because my questions about the company’s strategic competency yielded a history of the company – but no clear sense of strategic competency. In other words, the CEO knew WHY the company had the dozens of different products and markets they had – but not why it made sense to have all of those business units in one company.
On reflection, many of the business units had elements in common – some sold to similar markets, made similar products, or used similar processes. There were even a few that could be combined into a vertically integrated supply chain. But all of this was the result of opportunistic acquisition – not a clearly defined strategy of building skills, processes and knowledge around a true strategic competency. Without question, in this situation, the key to good strategic alignment – getting the business units pulling together into a company with a unified strategy – is a clear, concise definition of a true strategic competency.
Those of you who have been to our Simplified Strategic Planning seminar will recall that a strategic competency is a combination of skills, processes and knowledge that create value for your customers, differentiate you from your competition and are difficult to copy. As the global economy makes the world smaller and more commoditized, true strategic competency is the key to profitability for any successful company you can name. I can name small delis that have a strategic competency…and large multinationals that do not. Interestingly, the existence of a true strategic competency seems to correlate with long term profitability and – perhaps more importantly – the ability to weather ups and downs in your market environment.
When considering questions of strategic alignment, it’s always a good idea to start with a clear understanding of your strategic competency. If it’s real, everyone in your company will “get it”, and it will be simple to focus on building your business around it. If you try to work with an unrealistic strategic competency, it’s very likely your people will fail to support it because they simply can’t believe in it. A workable strategic competency does not have to be something you are the best in the world at – but you do have to have a realistic shot at that title. If you do, everyone in your organization will have something they can align with and strive for. If you don’t, your strategies can be just another “make believe” exercise that fails to garner the necessary support below the top level of your organization. The larger your company is, the more important this characteristic of strategic competency becomes.
In the case of the CEO I spoke with at the top of the article, the key for his organization is to: first, arrive at a clear understanding of the company’s strategic competency, and then realistically assess the relationship of each business unit to that competency. It’s likely some business units will not support the ultimate competency – and those units should be spun off, sold, or (in the worst cases) closed down. In the best of all possible worlds, each business unit would find a place supporting a strategic competency either independently, or as part of another company whose strategic competencies are well served by the skills, processes and knowledge present in that business unit. This approach would lead to greater profitability for each business unit, and a much clearer shared sense of direction for the company as a whole.
Robert Bradford is President/CEO of the Center for Simplified Strategic Planning, Inc. He can be reached at .