Aligning Departments with Strategy – Part Three
Note: This post is the final in a series of posts from Robert Bradford’s article Aligning Departments with Strategy originally posted in Compass Points in November 2002. Part One (click here) introduced the topic and discussed the affect that the Purchasing and Accounting departments have on strategy. Part Two (click here) discussed the affect of the Operations, Sales, Human Resources and Customer Service departments. This part will discuss the affect that the Research and Development department has on strategy and will summarize the series.
Research and Development — Since R&D is often responsible for innovation in a company, it’s easy to see how it can support strategy. Strategic alignment in R&D may go even farther than we think. For example, the way the R&D department works may affect whether it develops a few big innovations, many small ones, or nothing at all.
It should be clear from these examples that you can find support or hindrance for your strategic vision in almost any department of your organization. As a general rule, the nature of this interaction boils down to five things:
- The department has direct contact with the customer, or affects the employees who do.
- The department has a direct impact on the attractiveness (quality, features, etc.) of your product or service, or affects the employees who do.
- The department affects our ability to measure and/or manage any of the above.
In most of the examples above, I’ve pointed out that you will see marked differences between departments that serve specialty customers well and those that serve commodity customers well. Clearly, this means that departments must support strategy by being aligned with the type of customer you are targeting. This also means that, in those unusual cases where a company is pursuing both specialty and commodity customers under one roof, you may well need to separate some departments into specialty and commodity support units. Let me illustrate this point with an example.
For years, I have done business with a company that specializes in driving businesspeople to the airport from my hometown. They run a fleet of nice cars and vans which, for about the price of a cab ride (or two days’ parking at the airport), will reliably deliver you to the airport on time. Recently, this firm merged their phone lines with a taxi company that services a much broader clientele. As you might expect, the telephone service for the cab company was far below what one might expect from an airport limo service. Long waits on hold, dispatchers who didn’t know which customers had corporate accounts and mix-ups where cabs were sent in place of vans became common. While this was a slight headache for the taxi business, the limo business lost a significant number of their customers to a competing firm because the operational change was made strictly on the basis of financial merits, rather than strategic ones. Did this have a financial impact on the company? People at the competing firm — the only other one in town — reported significant growth in sales during a period when business travel was declining. I can only assume that this increase was the result of many specialty customers voting with their feet.
So how about your company? Are your departments looking at optimizing just one result, or are they asking how they can support your strategic vision? Here are a few steps that can help them move in the right direction:
- Share the relevant strategies with each department.
- Ask each department to enumerate how they are supporting your strategies
- Ask each department to identify ways they might fail to support your strategies, and how to avoid such failures
- Ask each department to think about ways to measure how well they are supporting your strategies.
Each of these steps can be as involved as you like. I have seen companies productively create separate strategic plans for individual departments, and I have also seen good results come from a two-hour coaching session where we asked the above questions. Clearly, you should match the effort here to your resources, as well as the potential payoff from increasing strategic alignment. The underlying concept — that increased alignment with strategy can improve the effectiveness of your strategy — will work either way.
How well are your departments aligned with your strategy? Attend the Simplified Strategic Planning Seminar for more instruction on how to achieve alignment from your departments as well as all other aspects of Simplified Strategic Planning.
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