You Have A Strategy? So What! Strategy Without Business Alignment Fails To Get Results
“We are your engineered solutions provider,” stated the brochure in bold print above a list of their equipment and a description of their facility. They expected their customer to know that his or her problem could be solved by a 250 ton stamping press with a 96 inch bed, for example. They expected the customer to do the work: to connect the problem with a specific manufacturing process. The brochure or web site described the company history, equipment, and quality policy, rather than describing the types of problems they were best at solving and demonstrating that capability with real examples. If the customer knew the solution was a particular stamping press, it wouldn’t be the engineering department looking for an answer to a problem, it would be the purchasing department that would be shopping for a commodity stamping. The same company had a sales capture process that collected RFQ’s and responded to every one of them. The sales staff was not especially technical, and primarily called on buyers –who weren’t in the business of finding solutions to technical problems. These are the behaviors of a low-cost producer of commodity products, not an engineered solutions company. This is just one example where simply stating a strategy is not enough to drive the business in that strategic direction.
Not only were the sales and marketing behaviors mis-aligned, so was the organization structure. The vice president of sales was responsible for driving engineered solution sales, but did not have any technical resources with which to develop solutions. Those technical resources were under an engineering manager who’s performance metrics were based on plant engineering project completion and turnaround. Therefore, the engineering manager viewed the solutions opportunities as fishing expeditions that drained scarce resources to complete plant improvement projects in a timely manner. Not only did the design of the organization structure thwart the strategy, but so did the performance management metrics.
Manufacturing performed exceptionally well on products they had been producing for years. Quality and delivery performance metrics exceeded expectations. The manufacturing organization thrived on continuous improvement techniques to reduce problems over time. However, the plant manager cringed when “solutions” products were won. The launch processes were weak, resulting in fire-fighting mode across the plant for the first several months. The IT system lacked the means to record all of the customer expectations for inspection or delivery that had to be learned over time, let alone assist in developing accurate cost estimates for a new product where no history existed.
An engineered solutions strategy was a wise choice based upon the customers, competitors, and capabilities of the company. However the strategic goals of the plan failed to include the enabling structrues and systems necessary to execute the plan.
It’s the Follow-Through That Counts
Misalignment between the documented strategy and the actual behaviors of the company ultimately undermines realizing the benefits a well constructed strategy can provide. Our financial and operational benchmarking studies have consistently shown high profit suppliers not only have a clear focus, but also activities, processes, resources, and costs aligned with that focus. Those successful companies understand what it is they must be great at to make money, and the remaining business processes are executed at threshold performance for minimal cost, or not done at all. This lean enterprise from strategic alignment is demonstrated throughout the business, originating from the strategic plan and executed through to the fulfillment of orders. It includes sales and marketing, product development, product launch, manufacturing, customer service, information systems, and most importantly, the performance management system.
In contrast, companies that continue to engage in activities or practices not aligned with their strategy do not achieve the full potential of their strategy. They may be reactive to customer requests by providing a broader range of services to the customer that doesn’t provide value to the company or the relationship. Or, they may structure their business around the people and resources they presently have, rather than around the skills and functions they need to execute their selected strategy well.
Once a strategic plan is formulated, it is up to management to identify what behaviors, processes and systems must be addressed within the organization to enable execution of that strategy. Then, it is up to management to diligently measure, monitor and manage actions and infrasturcture changes to execute the strategic plan to realize the desired profitable growth and market repositioning.
Jason C. Brewer, P.E., is a Manager in the Strategy & Global Services Practice of Plante & Moran, PLLC focused on assisting manufacturing companies with strategic planning, marketing strategy, and enterprise alignment issues. He has worked with contract manufacturers in automotive, commercial vehicle, medical and other industries in North America, Europe and China. More articles and information can be found at http://www.plantemoran.com/Services/Consulting/StrategyGlobalServices/
Tags: business processes, execution, organization design, strategic planning
