Why executives sabotage their own innovation programs

Two Dimensions of Top Team Alignment

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This article is an excerpt from a forthcoming book Leading Strategy Execution by Richard McKnight, Tom Kaney and Shannon Breuer.
Click here for a free download of an additional excerpt from the book.

It’s crucial to strategy execution.
Now, what is it exactly?

©2010, Richard McKnight, PhD
Principal, McKnight • Kaney • Breuer

According to a decades-long study of failed strategies conducted by Michael Beer and Russell Eisenstat at Sloane Management School, nothing is so injurious to an organization’s success than a lack of alignment at the top. Others, too, have found top team alignment to be crucial to a company’s success, so crucial, in fact that when reviewing a potential buy, most stock analysts will look here—to a company’s ability to execute its strategy in a coordinated way—before examining the quality of the strategy itself (Huselid, et al., 2005).

If senior team alignment is so important, exactly what is it? This article answers the question in two ways: from the standpoint of team member agreement on the content of the strategy and from the perspective of group dynamics. One might employ the terms rational and emotive to refer to the two realms, the former referring to the intellectual aspects of the team’s work, i.e., sifting through strategic options and setting priorities, and the latter referring to the interpersonal dynamics that affect the work of the group. Alignment in each domain is essential. It’s unusual to see alignment in either domain and it’s extraordinary to see it in both.

In the most successful companies, the top team not only creates the organization’s business strategy but also executes on that plan in a collaborative way, i.e., it marshals and manages the resources required to achieve those goals. If the organization has a vague formula for winning, employs run-of-the-mill business processes, and cannot make the best use of its talent and other assets, the senior “team” is probably not truly functioning as a team.

Having said all this, we hasten to point out that alignment in either domain is never fully realized and is not accomplished once-and-for-all. Alignment ebbs and flows with interpersonal dynamics and across strategic objectives and thus, must be strived for continuously.

Alignment: A Content Perspective

From a content perspective, there are the three key tasks that the senior leadership teams accomplish, which together make up an operational definition of strategy formulation and execution. The team…

1. Defines the business the organization is in. This includes articulating the organization’s:
Mission: Its reason for existing
Vision: The image of the future the organization intends to create
Values: How those in the organization choose to operate and what they hold as
     most important as they go about fulfilling their mission and vision
2. Develops business strategy, i.e., the plan by which the firm will create and deliver value, showing how this will create financial results.
3. Builds the organization required to deliver on the strategy including developing the talent required to execute on the strategy. By this we mean vertical structure, lateral processes, and people practices supportive of the strategy.

Alignment: A Group Dynamics Perspective

Now, let’s look at a senior team from a group dynamics point of view. After 30-years of working with senior teams, here is how our firm defines an aligned strategy execution team:

1. A team is aligned when the team members see its purpose as a stewardship group, i.e., as the organization’s caretakers and overseers as well as the primary drivers of its success.
2. Such a team creates and executes strategy, which includes identifying, and developing the organizational capabilities required to execute the strategy (vertical structure, lateral processes, people processes, etc.).
3. Members see the team as their primary affiliation, not the functional organization that, by title, they oversee (marketing, operations, sales, etc.).
4. The members behave with one another in an open, collaborative, and supportive way.

Typical “Teams” at the Top

Most leadership groups operate quite differently from the description above. The box (on page four) lists several common manifestations of leadership teams that we see in our practice—all of them dysfunctional. If one of these descriptions fits your situation, the team is probably a handicap to strategy execution in your company.

Constraints to Alignment

Sometimes top team misalignment shows up in the form of competitiveness—either covert or overt—sometimes in the form of out of sync priorities. When powerful people drag their feet instead of actively supporting one another, everyone loses. This is also true when executives appear to agree on strategic objectives but really don’t because they haven’t talked the strategy through enough.

One of the most powerful constraints to teaming at the top is the incentive system, which often is built to reward individuals, not teams. Many reward systems are so strategy- misaligned that they literally reward competitive behavior between executives. A second and related complication is that senior leaders tend to be competitive individuals who have been rewarded for competing, not cooperating. Many executives are effective team leaders but poor team members. Many can foster teamwork among those who report to them, but struggle to cooperate with those at their level.

A third impediment has been identified by Richard Hackman and his colleagues at Harvard Business School, one that may surprise you as it did us: not everyone agrees who is even on the team! When Hackman and colleagues asked members of 120 top teams who was on the team, only 10% agreed who was!

Building the Team

Top team building, at least as we see it, yields benefits of at least two kinds: the rational kind, e.g., plans, scorecards, strategies, initiatives, and the like, and the emotive kind, e.g., commitments, agreements, and trust. As we’ve been saying throughout this book, plans are necessary but not sufficient. Also needed are the loyalties and goodwill of the members, individually and collectively towards team and organizational success. The path begins with a team charter: who are we and why are we here? What’s our work and how do we do it? That discussion has to begin and end with the strategy, but in the middle, there is rich discussion of how that strategy can be rolled out and measured. At every turn, non-team behavior has to be called out and team effort rewarded. The good news is that teams can be built while they do the work that teams at the top do: devise strategy and design and equip their organizations with the capabilities to execute them.

The best approach to top team building balances task- and process-focused work. When we propose to work with senior teams, we target the following results:

1. Agreement on the strategy and direction for the enterprise.
2. A diagnosis of the current capabilities of the organization, guided by the question, “To what extent can the organization support our strategy?”
3. A mission and charter for the team that specifically calls out their primary role as strategists and strategy implementers.
4. A detailed strategy execution plan that includes:
What organizational changes need to occur to support the strategy and why they’re necessary
What business processes, if any, have to be changed or improved
An employee engagement strategy that turns employees info partners with management in the strategy execution process
A compelling “story line” to use in communicating the strategy
Teams formed to pursue each aspect of the execution plan trying not to lose.

Five Sub-Optimal (But Common) Senior Teams

Information Exchange. This group gathers principally to provide one another with an update of current activities. When asked to describe their team, the members of a group like this often say, “Oh, we aren’t really a team.” And they’re right: they don’t make decisions or oversee any collective work at all. They are a collection of individuals.

Debating Society. A step up from merely exchanging information is a senior group that devotes time to grappling with issues that affect the organization. Driving the debating society is a boss who believes that a vigorous competition of ideas is necessary to promote good thinking. Good news: they’re actually attempting to bring their collective brainpower to the challenges at hand. Bad news: quite often these debates are fruitless or worse: they reveal positions, but they also polarize positions.

Royal Court. The purpose of the group is to pay homage to a central power figure, usually the CEO. In this collective, the boss is often domineering and narcissistic. It’s as if the group’s sole reason for existence is to listen to the boss expound.

Commiseration Group. The team is hapless; it sees itself as unable to engage the next levels in the work of strategy execution. As a result, this group believes the organization is sliding downhill because those others won’t pull their weight. There is camaraderie in a Commiseration Group, but for the wrong reasons.

Inquisition Panel. Some domineering CEOs believe that only when executives from the next level are brought before the senior group and vigorously challenged will they do their best thinking. The meetings held by such a person are a bit like a rude reality show, only instead of the possibility of winning something; the contestants face only the opportunity to escape punishment.

This article is an excerpt from a forthcoming book Leading Strategy Execution by Richard McKnight, Tom Kaney and Shannon Breuer. Click here for a free download of an additional excerpt from the book.