Strategy for software Dummies – part 16
The title for this series of posts is inspired by the extensive series of instructional/reference books, which serve as non-intimidating guides for readers new to the various topics covered, or for readers who need a solid brush up. The title doesn’t imply that software CEO’s are Dummies; only that there is a need for a new type of “strategy framework” that produces more than fluff and which can be completed in a very short time.
This post deals with the price of management misalignment.
You can find a list of all posts in the series at the end of this post.
Is disagreement in the management team a good thing?
First of all it is unavoidable. No way can you have a team of people sharing the same views on all issues all the time. Next, you don’t want a team of people who all think alike. You deliberately want to challenge positions and point of views. You want diversity and you want people who dare challenge conventional wisdom.
Working in a management team is an ongoing process of reviewing issues, discussing solution options, choosing a direction, action and follow up. The outcome of this process should always be a value improvement.
However, there are a set of issues we do NOT want to continuously disagree on: Mission, vision, values, objectives, strategy, plan and budget. These framework conditions are reviewed from time to time, but not all the time.
Is the board of directors and the executive team aligned on the basic strategic framework?
95% will answer yes (5% will admit that there is an issue).
How do you know?
You need a method to ensure that you don’t have an ongoing discussion of the basic framework and to ensure you really agree (or at least understand and accept) on the basic framework . ValuePerform is such method.
What if you do not have a formal method to ensure alignment?
Then you must rely on hope, presumptions and beliefs.
The price of misalignment
The ramifications of and the price you pay from misalignment is obviously very individual. How much and which type of misalignment do we have? What would be different if we were aligned?
From the law of physics we know that forces on an object applied in different directions will have an impact on both speed and direction. We can even calculate the net impact. In Fig. 1. we have shown the net effect of two equal forces of 5 driving in slightly different directions. Had the two equal forces been driving in the same direction they would have arrived at the intended position with a power of 10.
The net impact is a new direction, another position and the reduction of the power with 16%.
Let’s assume that all the forces applied in the same direction would have yielded a revenue of €100M over 12 months and created a certain position for the company. The impact of driving in a slightly different direction would have been a reduction of revenue with €16,4M AND a different position.
The law of physics may not be applicable 1:1 on human and organizational behavior, but we don’t know if this is good news or bad news. Does misalignment in organizations have a much higher impact on speed and direction than in the physical world? Maybe!
Checking alignment takes 10 minutes
You can perform a quick check of the degree of alignment/misalignment by applying this simple test: The Magical 10 minutes.
Warning!: If you apply the test and all lights are green then you can carry on with a good feeling in your stomach. However, if the degree of misalignment is considerable, then you MUST do something about it. For a lot of people that’s as scary thought making them prefer to rest in the hope, presumption and belief scenario.
Other posts in this series:
Post #1: Strategy? – oh no, not again!
Post #2: Introducing ValuePerform – a lean approach for strategy analysis and alignment
Post #3: The 6 sources for financial growth
Post #4: Why do management teams disagree?
Post #5: Getting the priorities in place
Post #6: The Customer Value Proposition
Post #7: The Customer Value Proposition TODAY
Post #8: The Customer Value Proposition in the FUTURE
Post #9: The Market Situation
Post #10: ValuePerform and the 15 Management Areas
Post #11: What is important and what is not?
Post #12: How are we performing?
Post #13: Identifying the important and the urgent issues
Post #14: The Action Plan
Post #15: Why does misalignment occur?
Post #17: Avoiding invisible or suppressed misalignment
Post#18: The cost/benefit ratio of ensuring alignment