Wednesday, October 17, 2007

Strategic Alignment

Coming up with the right strategy is not easy. It involves looking at your customers, competitors, suppliers, and the entire spectrum of forces and players out there. It involves number crunching and looking at trends both in your industry and in the economy.

But another crucial step is looking at yourself and deciding if your organization is aligned to your strategy - and if it is not, what are you going to do to make it so.

Take an example. "Low prices" is a great strategy - example Walmart. So is "premium pricing" like Apple. So which one is right for you ? Take a good hard look at yourself.

What kind of people do you have: creative types who can design products that command premiums ? or hard-nosed realists who can run a tight supply chain. What kind of automation do you have in place: heavily automated to generate efficiencies as you scale ? or semi-automated which cannot be scaled cost effectively. What kind of financial structure do you have: can you survive on the razor thin margins of a low price strategy ? or do you need more slack in your balance sheet and cash flows. What is your distribution like and where is it located ?

In the final analysis, it is the answers to these questions which will ensure that your strategy delivers. You must either have the right alignment across all your functions, or should be willing to create the necessary changes to get the alignment.

If you don't have this alignment then you don't have a strategy yet - you just have a slogan. And slogans rarely have a good ROI.

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