No One Knows Your Strategy — Not Even Your Top Leaders
The CEO of a large technology company (let’s call it Generex) recently reviewed the results of her company’s annual employee engagement survey and was delighted that strategic alignment emerged as an area of strength.1 Among the senior leaders surveyed, 97% said they had a clear understanding of the company’s priorities and how their work contributed to corporate objectives. Based on these scores, the CEO was confident that the company’s five strategic priorities — which had not changed over the past two years and which she communicated regularly — were well understood by the leaders responsible for executing them.
We then asked those same managers to list the company’s strategic priorities. Using a machine-learning algorithm and human coders, we classified their answers to assess how well their responses aligned with the official strategic priorities.2 The CEO was shocked at the results. Only one-quarter of the managers surveyed could list three of the company’s five strategic priorities. Even worse, one-third of the leaders charged with implementing the company’s strategy could not list even one.
These results are typical not just in the technology industry, but across a range of companies we have studied. Most organizations fall far short when it comes to strategic alignment: Our analysis of 124 organizations revealed that only 28% of executives and middle managers responsible for executing strategy could list three of their company’s strategic priorities.3
When executives see these results, their first instinct is to schedule more town hall meetings or send another email blast describing the corporate strategy. The impulse to double down on existing corporate communication strategies is understandable, but unlikely to solve the problem. Our research has uncovered three nonintuitive causes of strategic misalignment and concrete steps that top leaders can take to improve how well the strategy is understood throughout the organization.
1. Acknowledge you have a problem. The first step in solving a problem is recognizing you have one. C-suite executives often assume that the entire company is on the same page when it comes to strategy, but this assumption is usually wrong.4 Our strategy execution survey includes a series of questions designed to measure whether a company has a shared set of strategic priorities, how well those objectives are understood, and whether they influence resource allocation and goal setting throughout the organization.5 Top executives rate their company higher on all of these dimensions than managers lower down the organization do.
The exhibit “Top Teams Overestimate Alignment” summarizes the strategic alignment gap. To interpret this chart, start with the first assessment statement, “Our organizational priorities support our strategy.” If supervisors, managers, and executives outside the C-suite assess their company as average (the 50th percentile in this figure), the typical top team will rate their company at the 67th percentile — well above average. The pattern repeats across every single measure of strategic alignment.6
2. Agree at the top. Lack of strategic alignment often starts at the top. In developing strategic priorities, the top team should agree on a single set of objectives for the business as a whole, rather than each leader pursuing his or her own agenda. Unfortunately, most top teams we have studied fail to agree among themselves on company-wide priorities. For the typical organization we studied, just over half of senior executives converged on the same list of strategic objectives. Bear in mind, we did not measure whether the team members were committed to achieving the strategic priorities; we measured only whether they agreed on what they were.
The results from Generex were typical of the companies we have studied. Just over half of the top team could list all or all but one of the company’s five official priorities.
