Building a Strategy Pyramid
Marketing guru Seth Godin addressed alignment in a piece about iTunes falling over its own words and intentions. After reading it, I did a quick Google search on "strategic alignment," which brought up a lot of results and a lot of different meanings.
To me, strategic alignment means lining up the details on the ground with the strategy up in the sky. For example, suppose a retail computer business says it focuses on "service seeker" small businesses. Revamping the physical location to create a long and inviting service counter is strategic alignment. Staffing it with friendly technicians in white service coats, like the auto dealers, is strategic alignment. Buying a white van with a huge sign on the side saying, "Installing Another System," is strategic alignment. Doing nothing but talking about it at meetings is not strategic alignment.
It was strategic alignment, or the lack of it, that led me to develop the strategy pyramid back in the mid-'80s. I was consulting with the Latin American group of Apple Computer, led by Hector Saldana. I had done the group's annual business plan for three years when Saldana issued a challenge: "We want you to manage our annual plan again this year, but with a difference. This year we want you to sit with us the rest of the year and make sure we actually implement it."
The repeat business was, of course, good news, but there was a catch. The Apple Latin America group at that time was a collection of a couple dozen young, well educated, brilliant people. Saldana and I were the only ones over 30 years old. It was hard to keep that group focused. Strategy takes boring consistency to implement. The strategy was desktop publishing, but we'd been working with that for so long that multimedia was much more interesting--to the managers, but not to the market.
So I came up with the strategy pyramid, which made it possible to track implementation and work on strategic alignment. We used it to build a database of business activities that we called "programs" and track them back up through tactics and strategy. One strategy, for example, was to emphasize desktop publishing. Tactics used included advertising, pricing of bundles and distribution channels. The detailed programs were things like advertising insertions, seminar marketing, bundling of hardware and software, and distributor pricing. Each program had a manager responsible, a start date, an end date and a budget. Sometimes the budget was zero, but there was room in the database for the amount.
The result was strategic alignment. The next year we were able to sort and manage programs according to strategies and tactics. We could show a spending pie divided into pieces representing each of our strategic priorities. We could also track implementation to the level of specific tasks assigned to specific managers, with performance on start date, finish date and budget. In some cases we could even track sales back to projections in the plan. So seminar programs that began with sales projections had to live with sales results.
You can use the strategy pyramid in your own planning. Focus on three or four main strategic priorities and build a conceptual pyramid for each one. Don't sweat the details like definitions of strategies and tactics; just make it work for you, in your business, with your pyramid. Do sweat the details like making programs with specific responsibilities, budgets and projected outputs when possible.
You don't have to be a big company. Apple was a huge company to me in the mid-'80s, because it had more than 1,000 employees; yet the Latin American group had less than two dozen people. We made the pyramid work because we wanted to make it work; we wanted to build strategy, not just great parties.
Remember, good business planning is nine parts implementation for every one part strategy.