Understanding what strategic alignment is, first and foremost, demands understanding what a strategy is. A company’s strategy should not be confused with its mission or vision.
A company’s mission often has a rather philosophical aftertaste and is the ultimate goal a company strives towards. But how can that goal be turned into reality? This is where strategy and its implementation enter the stage – a strategy answers the “how” questions.
Strategic alignment goes even beyond that. It translates into aligning all actions and decisions within all departments of a company to make sure that strategic goals can be reached. Strategic alignment ensures that what people do on a daily basis supports the strategy and leads the company towards reaching its mission goals.
Thus, a chain of actions to reach the goal is set up: from mission to strategy, to strategic alignment, to tactical alignment, to day-to-day operations.
Strategic alignment can make the difference between being a successful company and failing. This is supported by extensive research. For example, up to 80% of the difference in performance between two companies can be explained by (the lack of) strategic alignment. Strategic alignment is thereby closely connected to business results and overall success.
In setting up an organizational strategy, a hierarchy of objectives needs to be established. Most important is thereby the corporate strategy. If the corporate goals (and how to attain them) are unclear, underlying layers will have troubles striving towards a unified goal and will start pulling into different directions, prioritizing their own departments.
Due to its complexity, strategic alignment is particularly important within the supply chain. Understanding the supply chain as a horizontal line across multiple departments or companies, vertical alignment between hierarchical actors needs to exist as well.
Often departments do not have the same goals. However, ultimately, they sit in the same boat and must steer towards a common direction. Within companies, employees are often rewarded for constantly pushing forward within their own functional silos without regard for the other departments. Sales might promise its customers products, while purchasing might face troubles sourcing enough to keep up with the demand.
Strategic alignment translates a company’s organizational strategy into concrete actions, making sure all departments work as one, pursuing the same goal. Strategic alignment is indispensable for a company’s success and it is particularly the supply chain that suffers under a lack of alignment. At Inchainge, we value working together as a team to reach true alignment!
Now you know everything about strategic alignment. However, Inchainge can provide you a way to experience strategic alignment by participating in one of our business games. For instance, our business simulations help you understand why a lack of strategic alignment is harmful. At Inchainge, we strive for cross-functional alignment. Only by working together as a team, you can play our simulation games successfully! Furthermore, you can read more information in our articles about topics such as sales and operations planning (S&OP), integrated business planning (IBP), total cost of ownership (TCO), key performance indicators (KPIs) or collaboration.