Tuesday, March 18, 2008

Alignment Drives Sustainable Growth

In my view of the business world, there are two types of growth; Opportunistic Growth and Sustainable Growth. Most executive teams are striving for sustainable growth, but they accept opportunistic growth.

Opportunistic growth is just what the name suggests, growth that is born from opportunities. Often a company will find themselves with a new piece of business resulting from a strong sales effort, a client that “shows” up (the time honored “bluebird”), or just being in the right place at the right time. There is nothing wrong with using opportunistic growth to support short-term objectives.

Longer-term growth, however, requires a company to focus on sustainable growth. Stated a couple of different ways, sustainable growth is repeatable, systematic, and aligned with the goals of the company. Sustainable growth is also born from internal and external alignment of the company’s departments, employees, and market offerings.

The difference between opportunistic and sustainable growth for a company is the difference between being a flash-in-the-pan versus having long-term viability.

As the executive or manager in a growing company, alignment is your critical success factor. First, there is the alignment between the market needs and your product offering. Next, there is the alignment of your internal departments and functions.

External alignment between what the market needs and what you offer is critical for obvious reasons. Many of us have seen the failures of the “Field of Dreams” marketing plan – build it and they will come? Generally, this approach never works. Companies that create innovative new products have determined a market need for a certain solution, even if their offering is a novel way to meet that need. The innovation comes from their creative ability to meet the needs in a way that no one else had previously thought was possible, not from creating something and then hoping the market would buy it.

Internal alignment needs to cover the full length of your organization. Product development and engineering need to create an offering that meets the market needs. Marketing needs to position and promote the offering in a way that generates interest. Sales and business development need to qualify and close transactions turning prospects into clients. Services, delivery and customer support need to help the client implement, install, and start using the product or service. Finance and accounting need to create an invoice that matches the services rendered and collect payment.

Sounds pretty easy, right? Unfortunately, in many companies, especially those that are growing fast, the interaction between the various departments is out of alignment. Product development and engineering create features that are requested by a single client, are easy to develop, or that appeal to the technical curiosity of the development team. Marketing operates in a vacuum and doesn’t interact with the clients to fully understand what benefits they receive from using the product or service. The sales team does what they are supposed to do which is close a deal, even if it is supported by empty promises or exaggerating the capabilities of the product and service. Services and delivery groups then work to fit a square peg into round hole to get the client up and running. Ultimately, the client gets an invoice for products they didn’t buy and services that weren’t rendered. Can anyone else see a championship match of the Blame Game starting at the next management meeting?

Alignment starts at the executive level. Every organization needs a strong leadership team who can set the vision and the destination for the journey. Years ago, I was responsible for developing new business relationships with Fortune 500 corporations for a young, fast growing technology company. After hearing a number of different members of the management team describe our company differently, I posed the following question at a senior management meeting – “How would you describe our company in 30 seconds?” I was looking for the classic elevator pitch, but what I received were 8 different responses. Turning to the CEO, I said, “That should scare the crap out of you.” To which the CEO responded, “I think that shows our flexibility and breadth of problem solving capabilities.”

Actually, I think that shows a management team that is out of alignment. Creating alignment is not an easy task, primarily because every manager in your organization will see the world through their own lens. Engineering will see the technical elements of the product, but perhaps miss the salable features and benefits. Marketing might see the things that work well in advertising, PR, and promotional campaigns but not the expense of creating those features or the complexities of trying to implement the system.

I don’t have all the answers about how to create internal alignment, but it starts with a vision and is glued together with common goals, mutual understanding, empathy, communication, and collaboration. Alignment invokes the concept of movement into a line and movement means changing a position – sometimes physically, but often intellectually or emotionally.

What I do know is that the failure to achieve sustainable growth is often the outcome of not being aligned. If you feel like your business is out of alignment, then you might need to take the company to the shop for some diagnostics and a tune up. Start by initiating a dialog with 10 of your clients, not just your best clients but a range of large revenue, small revenue, long term, new, big, small, and whatever other metric that your company might use to segment your market. The most critical component of creating alignment is to understand what your clients need, want, or desire from your type of products and services.

Armed with this data and anecdotal feedback, have your management team review how their departments can improve what they do to meet the client’s needs, wants, and desires. Also, have them review their intersection points with other departments in the company and determine how to improve their interaction. Get marketing to analyze the way they communicate with engineering on new product features, and have them also review how they interact with sales to assist in the generation of new prospects. You cannot create alignment if the intersection points between departments are broken.

Sometimes, the issue with alignment is not the departments but the individual managers themselves. Many a great team has failed because the star player would not play well with others. Creating a great team requires great talent, but it also requires working well together. You cannot create alignment if one of your star players doesn’t play well with others.

In conclusion, there are many moving parts that need to be managed to create alignment, and the parts can be defined – market, clients, company, departments, functions, and individuals. Focusing on the intersection between these different parts will create alignment and set up the opportunity for sustainable growth.

No comments:

Post a Comment