No One Knows Your Strategy — Not Even Your Top Leaders

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.1 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.2 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.3

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.4 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.5 Top executives rate their company higher on all of these dimensions than managers lower down the organization do.

The exhibit “Top Teams Overestimate Alignment” summarizes the strategic alignment gap. To interpret this chart, start with the first assessment statement, “Our organizational priorities support our strategy.” If supervisors, managers, and executives outside the C-suite assess their company as average (the 50th percentile in this figure), the typical top team will rate their company at the 67th percentile — well above average. The pattern repeats across every single measure of strategic alignment.6

2. Agree at the top. Lack of strategic alignment often starts at the top. In developing strategic priorities, the top team should agree on a single set of objectives for the business as a whole, rather than each leader pursuing his or her own agenda. Unfortunately, most top teams we have studied fail to agree among themselves on company-wide priorities. For the typical organization we studied, just over half of senior executives converged on the same list of strategic objectives. Bear in mind, we did not measure whether the team members were committed to achieving the strategic priorities; we measured only whether they agreed on what they were.

The results from Generex were typical of the companies we have studied. Just over half of the top team could list all or all but one of the company’s five official priorities. But the other half of the team was completely out of touch. (See “Lack of Agreement on Strategy at the Top.”) Three of the top team members could list only one of the company’s strategic priorities, and two executives did not get a single objective correct — despite having five tries. Between them, these C-suite members listed a total of eight additional priorities that were not among the company’s official objectives.

Of course, not every top team shares Generex’s problem of half the members flying blind. Some teams we have worked with produce a more normal distribution, where most of the senior executives know some of the priorities with a few executives (usually including the CEO) knowing all of them, and others who can name a few or none. The Generex example does, however, underscore the importance of checking whether everyone in the C-suite is on the same page strategically. If executives are not aligned, it is critical to understand why not and address the issues before communicating the strategy more broadly throughout the organization.

3. Bring level two along. Strategic misalignment often starts at the top, but it doesn’t end there. Managers’ ability to correctly list their company’s strategic priorities continues to drop as you move further down the organization, but the rate of decline is not what you might expect. You might predict a steady decrease in alignment as you move down the organizational hierarchy, or perhaps a sharp drop-off among the frontline supervisors who are furthest from the C-suite. In fact, our data suggests the opposite — the sharpest plunge in alignment occurs between the top team and their direct reports, and is more gradual thereafter.

“Alignment Plummets Between Top Executives and Their Direct Reports” plots the average number of managers, at each level in the organization, who can list the company’s top priorities. For the typical company, just over half of top team members can do so. It is pretty bad when only half the C-suite agrees on the same objectives, but things look even worse for their direct reports. Strategic convergence drops off a cliff between the top team (51% agreement) and senior executives who report to the top team (22%).

The gap between the top team and its members’ direct reports is less surprising than it seems at first glance. Top team members oversee their own function, business unit, or geography, but also serve on the enterprise-wide leadership team that charts the course for the company as a whole. Their direct reports, in contrast, are not privy to discussions in the C-suite, and tend to view the world through the lens of the organizational silo they are charged with managing.

Rather than hosting another town hall, top executives should focus first on their direct reports, making sure they understand the company’s overall strategy and how their function, geography, or business unit fits into the bigger picture. One powerful way to do this: Each top executive should consistently explain why his or her unit’s objectives matter for the team and for the company as a whole.

In our sample, half of executives who reported directly to a top team member said that their boss consistently explained how their goals supported the company’s overall agenda. Of the rest, 37% said their boss framed their activities in terms of their team’s objectives without reference to corporate strategy, or their boss struggled to explain why their priorities mattered (12%). Many top team members need to do a better job explaining to their direct reports how their department, function, or regional goals fit into the company’s overall strategy.

To communicate strategic priorities throughout the organization, leaders at every level in the hierarchy should explain why their team’s goals matter — both for their team and for the organization as whole. Across 69 items included in our execution survey, the single best predictor of strategic alignment was how consistently managers — from top executives to frontline supervisors — explained their team’s priorities in terms of their unit and the entire company.7

To quantify the impact of this behavior, imagine a company that is average on every survey item except for one — all the managers explain why goals matter for their unit and the company. A high score on that single item would propel an average company to the top quartile in terms of strategic alignment.

A shared understanding of strategic priorities among key leaders does not guarantee successful execution. But it is a good first step. Widespread confusion and disagreement about what matters most undermine the prioritization and coordination across teams necessary to implement strategy. If managers do not understand what the company as a whole is trying to achieve over the next few years, they cannot align their actions with the organization’s overall direction.

To increase the odds that their strategy is understood throughout the company, top executives should acknowledge that they may have a problem with alignment, agree as a team on strategic priorities for the entire company as a whole, make sure their direct reports understand these objectives, and ensure that leaders at every level in the organization communicate what corporate priorities mean and for the company overall.

MIT Sloan Management Review

The internet knows a lot about you … and your kid

How much of our data is for sale?

A little less than half of 190,000 people surveyed around the world by Mozilla said that the loss of privacy was their biggest concern about living in a connected future. The 45% of people who are worried are presumably adults, but a new paper asks “what about the children?”

Two UNICEF researchers drilled into the privacy implications for children as we connect more things and apply data analytics to the information those things collect. The resulting paper is a summation of everything we fear about data collection only applied to children.

The paper raises multiple points about the need to safeguard children’s interests as we connect more devices to the internet, create digital footprints and hand over more and more of our lives to be divvied up as bits of data to be bought and sold. It also claims that the solutions we have in place, such as the Children’s Online Privacy and Protection Rule (COPPA) in the U.S. or the EU’s General Data Protection Regulation (GDPR), are geographically fragmented and not up to the task.

Some of the concerns are ones that parents have been thinking about for a while. For example, children can’t give consent to the use of their photos and personal information when their parents post it on social media. The same goes for schools, camps and friends’ parents who also gather and post data on children. Parents also have a role to play in signing kids up for services.

They should read the terms of service and consent to them on behalf of their offspring. But that’s where the role of parents comes to an ignoble end. That’s because many adults can’t understand the implications of data mining from those who might get their hands on childrens’ data and to how that data can be used to make sweeping (and incorrect) generalizations about a population. They also may not understand the risks of their children growing up digital; with a larger digital footprint made over more of their lives, children are at a greater risk of deanonymization because there is more data to work with. From the paper:

While these negative experiences are not limited to children, this generation will be the first to experience these issues throughout their life cycle, and particularly at early life stages and critical junctions in their personal development and public life. Furthermore, ensuring privacy – even with appropriate anonymization in longitudinal data – is also extremely difficult, given the fact that such data will have multiple transactions per individual; hence indirect identifiers will be greater than eight – the recommended maximum to prevent reidentification (El Emam, 2016).

So children could be targets of data collection and mining their entire lives without ever giving their consent. Even if their parents consent on their behalf it’s a crapshoot as to if the parents understand what they are giving up.

To solve these challenges the paper discusses familiar elements such as the right to be forgotten — which is now part of the GDPR legislation — creating a framework for companies that offer services to kids letting them revoke consent as they age and even respecting that children are not kids on the day before their 13th or 18th birthday and adults the day of. Instead, consent throughout childhood should probably evolve on a continuum that respects the maturity of the kid.

The final point the paper brought up, which is worth considering by all of us, is the looming prevalence of passive data collection. Devices such as the Nest thermostat, that track when we’re home, or our phones that can create a digital trail of where we’ve been without our taking any actions, are just the beginning. More devices will track us and more complicated algorithms will allow them greater insights into our lives.

For example, a company called Klue makes software for fitness trackers that can track our hand movements to see if we’re drinking a glass of water or wine simply by the way we hold the glass. That’s a convenient way to track food intake, but it’s also a window into all of our hand motions should the company decide to tweak their algorithms.

The risk in this passive data collection is that none of us will be able to consent to it because we won’t realize what’s being collected and how. It’s a brave new world and our kids will be the first ones to grow up fully immersed in it. And as this paper explains, that’s a scary thought.

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