New research reveals the surprising reasons managers don’t know their company’s strategy.
The CEO of a large technology company (let’s call it Generex) recently reviewed the results of her company’s annual employee engagement survey and was delighted that strategic alignment emerged as an area of strength. Among the senior leaders surveyed, 97% said they had a clear understanding of the company’s priorities and how their work contributed to corporate objectives. Based on these scores, the CEO was confident that the company’s five strategic priorities — which had not changed over the past two years and which she communicated regularly — were well understood by the leaders responsible for executing them.
We then asked those same managers to list the company’s strategic priorities. Using a machine-learning algorithm and human coders, we classified their answers to assess how well their responses aligned with the official strategic priorities. The CEO was shocked at the results. Only one-quarter of the managers surveyed could list three of the company’s five strategic priorities. Even worse, one-third of the leaders charged with implementing the company’s strategy could not list even one.
These results are typical not just in the technology industry, but across a range of companies we have studied. Most organizations fall far short when it comes to strategic alignment: Our analysis of 124 organizations revealed that only 28% of executives and middle managers responsible for executing strategy could list three of their company’s strategic priorities.
When executives see these results, their first instinct is to schedule more town hall meetings or send another email blast describing the corporate strategy. The impulse to double down on existing corporate communication strategies is understandable, but unlikely to solve the problem. Our research has uncovered three nonintuitive causes of strategic misalignment and concrete steps that top leaders can take to improve how well the strategy is understood throughout the organization.
1. Acknowledge you have a problem. The first step in solving a problem is recognizing you have one. C-suite executives often assume that the entire company is on the same page when it comes to strategy, but this assumption is usually wrong. Our strategy execution survey includes a series of questions designed to measure whether a company has a shared set of strategic priorities, how well those objectives are understood, and whether they influence resource allocation and goal setting throughout the organization. Top executives rate their company higher on all of these dimensions than managers lower down the organization do.
Read the full article on MIT Sloan Management