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1 Organization Alignment (An Effective Innovative Model For SMEs) Nitin Sethi

Organization Alignment

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Something that We implemented in my Previous Organization. It was very effective and went down really well through out the Organzation.

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Page 1: Organization Alignment

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Organization Alignment (An Effective Innovative Model For SMEs)

Nitin Sethi

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Ultimately, there may be no long-term sustainable advantage except the ability to organize and manage.

~ Galbraith and Lawler (1993)

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Contents

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I. Key ChallengesII. Lack of Organizational AlignmentIII. Importance of Organizational AlignmentIV. Case StudiesV. What Next?VI. WaterHealth WayVII. Alignment Map

I. Circle of MeansII. Circle of EndsIII. Circle of Life

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Key ChallengesAlthough the below given challenges are not mutually exclusive and collectively exhaustive, the real challenge is to overcome “lack of organizational alignment”.

Initiative overload

Lack of discipline, accountability and follow-up

Lack of coordination and teamwork

Conflict/differences between key people

Department, function or process bottleneck

Transmission loss due to ineffective communication processes

Inability to manage cultural change as Organization grows

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Lack of Organizational Alignment

Lack of Organizational Alignment

Most discussions

end at strategic planning

Planning and leadership not being part of

Organizational System

Execution Lacks synergy with Strategic

Plan

ReasonsFindings

60 % of organizations don’t link strategy to budgeting

75 % don’t link employee incentives to strategy

86 % of business leaders spend less than one hour per month discussing strategy

95 % of workers don’t understand their organization’s strategy

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Though most of us agree that strategic planning is no rocket science but studies have shown that up to nine out of ten strategic plans fail1

1Source: Fortune Magazine

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Importance of Organization Alignment

Essential for:

Ensuring:

•It helps management to ask the right questions

•It changes and improves the way information flows between the board, executive leadership, senior management and rest of the organization

Easing:

•Organizational performance

•Harmony between strategy, culture and processes

Importance of Organizational Alignment can be summarized through 3 Es i.e. What it is essential for, what it ensures and what it eases.

•Clarity of direction•Agreement on company’s values, vision , mission (VVM)•Creating unique market position•Achieving strategic and operational goals

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Case Studies – I. Britannia IndustriesBackgroundThis case study highlights the problem faced by Britannia during business diversification due to lack of ‘Organizational Alignment’Organization GoalTo emerge as a successful food company that provides high quality and tasty yet health foods and beverages.Brief Story Company was market leader in biscuit category Company was facing high competition and increase in raw material cost which was pushing down margins

Decided to increase its product offerings by entering allied food categories This change was not articulated down the level efficiently as the strategic and operational objectives laid down for the same were not cascaded properly

There was misalignment between different business units, functional units and trade partners.

Lost focus on core market as well due to lack of clarity Due to this misalignment the company faced declined market share in biscuit category from 58% in 2001 to 38% in 2007, although 90% revenue were still coming from core business i.e. Biscuits category.

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Case Studies – II. HCL TechnologiesBackgroundThis case study highlights the problem faced by HCL Technologies due to increase in competition, reducing margins and high attrition.Organization GoalTo turnaround and bring change in the Organization in order to ensue sustenance and growthBrief Story Once considered a pioneer ten years ahead of the competition, in 2005 HCL’s turnover was $ 565 million and growing at 35% YoY

Faced challenges due to increase in competition, reduction in margins and high attrition.

Rolled out radical new strategy “Employee First, Customer Second” (EFCS). Strategic objective was to create unique employee organization, drive an invert organization structure, create transparency and accountability and encourage a value driven culture

Identified and addressed following issues–HCL Technologies was in service business and it was first level employees not managers

who played the critical role in creating value. –Top down management model which exalted those with hierarchical power rather than

those who create customer value. Key changes made

–Empowering front line employees–Create reward system that recognizes customer centric behaviour– Removal of extra hierarchical level in the organization

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What next?

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To ensure seamless organizational alignment, strategy must be complemented with an alignment process - “The Alignment Map”. Following are the check points for “The Alignment Map”

•The corporate office defines strategic guidelines to shape strategies at lower levels of the organizationEnterprise value

proposition

•The Corporation’s board of director’s reviews, approves, and monitors strategic planBoard and shareholder

alignment•The strategic plan is translated into corporate policies that will be administered by support unitCorporate office to

corporate support unit

•The corporate priorities are cascaded into business unit strategiesCorporate office to business units

•The strategic initiatives of the business units are incorporated in the strategies of the functional support units

Business units to support units

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The WaterHealth WayAt WaterHealth India we have created and implemented “The Alignment Map” that ensures seamless alignment between Organization’s objectives and initiatives with Values, Vision and Mission. Through the Alignment Map, we try to achieve synergy between scarce means and elusive ends.

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Circle of

Means

Circle of

End

Circle of Life

“The Alignment Map

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Alignment Map: Circle of Means

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Operational Initiatives

Dynamic Initiatives

Mission

Vision

Values

Quarterly Review

Annual Review

Tasks + Projects

Strategic Initiatives

“Circle of Means”

Strategic Objective

AOP

The operating part of the Strategic plan is developed at various levels leading finally as a feedback to the Strategic Planning process.

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Alignment Map: Circle of Ends

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Operational

Initiatives

Dynamic Initiatives

Mission

Vision

Values

Strategic Initiatives

“Circle of Ends”

Budget

KRA

Annual Appraisal

Feedback

Strategic Objective

Generally known as the budgeting process, this loop lays out hard and measurable metrics for performance for the entire organization.

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Alignment Map: Circle of Life

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Operational

Initiatives

Dynamic Initiatives

Mission

Vision

Values

Quarterly Review

Annual Review

Tasks + Projects

Strategic Initiatives

“Circle of Means”

“Circle of Ends”

Budget

KRA

Annual Appraisal

Feedback

Strategic Objective

AOP

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BenefitsImplementing Alignment Map has helped WaterHealth in following ways:

30 % increase in EBIDTA Margin YoY in 1st Half

Increase in Employee Satisfaction score(ESAT)

Inculcating a meritocratic culture within the Organization

No transmission loss due to seamless alignment across the levels

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Thank You

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Strategic Objectives

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Back

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Strategic Initiatives

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Back

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Operational Initiatives

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Back

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Personal Effectiveness (PE) Map

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Back

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Special Project Brief

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Back

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KRA

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Back