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Understanding Alignment: An Interview with George Labovitz
Written by David Hirsch, Quisic Staff (for more information about
Quisic, please go to www.quisic.com)
Imagine riding in a car that is not aligned. Every bump in the
road is magnified, each jarring movement dislodging another part
of the automobile until, eventually, the vehicle becomes a jangling
collection of metal and plastic parts that barely crawls along.
Noted author and management expert George Labovitz believes that
business organizations can be compared to cars in this respect.
When the parts of a company are not working in conjunction with
the organization's overall goals, claims Labovitz, the organization
falls out of alignment and the complications that ensue can prove
expensive, time-consuming, and ultimately fatal.
Dr. George Labovitz, founder and CEO of Organizational Dynamics,
Inc. (ODI), is professor of management at Boston University and
co-author of the groundbreaking book The Power of Alignment. Recently,
he sat down with Quisic and explained his theory of organizational
alignment as it applies to successful business models.
***
QUISIC: When we hear the word "alignment" most
people associate it with automobiles. How does alignment apply
to business?
GEORGE LABOVITZ: The purpose of any business is growth
and profit. Alignment is the means to that end. Businesses that
are not aligned—not focused—have a very difficult time
being productive, efficient, and effective. They certainly have
a difficult time in meeting and delighting their customers.
QUISIC: What business elements have to be aligned—
processes, people, strategy?
GL: To me, the major components of any well-run business
are a clearly appropriate and articulated strategy that is linked
to people that are capable of executing that strategy. Also of
prime importance are customers and processes. These four elements
need to be in concert with each other—integrated and aligned.
QUISIC: Does alignment occur naturally within an organization?
GL: Alignment is not a natural act. In order to get and
stay aligned requires the ongoing affirmative energy of senior
management. It requires leadership that is not coalesced at the
top, but is distributed down through the entire organization.
The reason that it is not a natural act is the very way in which
organizations are structured—by level, by department, by
function, by location. Whenever you plug human beings into an
environment where they are different from one another, dynamics
get started that, if not controlled, eventually forces an organization
to become less efficient and in many cases to implode. Often the
attitude becomes hostile: It's line versus staff, corporate versus
the field, marketing versus finance. All the problems that organizations
run into because of these "silos" are really the result
of basic tendencies of human nature. They go beyond psychology
to instinct. The affirmative energy that I speak of involves leadership
keeping people continually focused on the main thing of the enterprise.
QUISIC: Doesn't your theory of alignment go against a
whole school of management thought that believes internal friction,
pitting people and departments within a company against each other,
results in a positive competition that is ultimately good for
the business?
GL: That's a fiction. Competition between organizations
is healthy and itŐs the American way. Competition within organizations
is destructive. It forces people to lose site of the main objectives
of the business. Peter Drucker, the great management theorist,
said, "Concentration is the key to economic result."
My favorite quote is from Jim Barksdale, former CEO of Netscape,
"The main thing is to keep the main thing the main thing."
One man is a great management thinker and the other guy a great
management executive. They are both referring to this tendency
of organizations to get diffused internally and to compete with
each other instead of everybody staying focused on the primary
goals and objectives of the business and deploying those goals
and objectives down through the entire organization. That's what
alignment is all about. It's a verb, not a noun. You never quite
stay aligned because conditions change continually. Management
has to always be"on the hunt."
Jim Collins in Built to Last talks about alignment being a never-ending
series of finding pockets of misalignment, correcting them and
continuing. That idea of never-ending captures for me the essence
of affirmative energy.
QUISIC: Once an entity—whether it's corporate, government,
or even non-profit—recognizes that it has problems with alignment,
what needs to happen for it to become realigned?
GL: If you buy into the idea that strategies are executed
from the bottom of an organization and not the top, it's absolutely
imperative that everyone in the organization understands what
the organization is trying to do and what their individual actions,
groups, teams, and departments are doing that contributes to the
whole.
QUISIC: In reality, how common is it that every facet
of an organization knows the company's overall strategy?
GL: It's not common at all. Two professors at Harvard,
Bob Kaplan and David Norton are well known for being authors of
the Balanced Scorecard. They argue that less than ten percent
of people in most organizations know what the strategy is.
QUISIC: But isn't sharing strategy with the whole organization
a little risky? Doesn't one run the risk of letting the competition
know more than you want them to?
GL: Not really. Strategies are really tactics to achieve
organizational objectives. In terms of having everybody in the
organization understand what the organization is trying to accomplish,
all logic says that the people who have to realize the goals have
to know what they're doing and why. In most instances, if you
look at well-led and well-run organizations, they may have expansion
strategies that certainly can be kept confidential. But in terms
of how the business is run, what its goals and objectives are,
everyone should know what those are. Individual tactics and strategies
like that, once they are decided, have to be deployed.
Alignment is all about execution. It's after you decide to do
something that you might have kept secret for a long time because
of competitive reasons, that's when people have to understand
what's now important.
QUISIC: In your book, The Power of Alignment, you
mention something called the "elevator test." Is this
idea of spreading strategy within a company related to that?
GL: Yes. The Elevator Test is a very simple test. You
get on an elevator and ask people "What is this company all
about?" "What's important here?" What you find
out is, most of the time, people flunk the Elevator Test. They
look at you as if you're crazy, but they can't answer the question.
If you got on an elevator at Federal Express, the response to
the Elevator Test would be "People, service, profit. That's
what this company's all about." It's no big deal at well-run
companies like FedEx.
The important thing about alignment is that there is a clear
line of site between what the company says is important and the
way the company acts.
QUISIC: Today's business environment is a challenging
one. Can alignment still be embraced while an organization is
in the process of cutting costs and watching its bottom line,
perhaps even reducing its workforce?
GL: There's even a greater imperative during periods of
turmoil like this. When it comes to laying people off, this is
a reality of business life. We've had so many good years that
we've sort of forgotten that there's an ebb and flow in most businesses—people
come and people go. The great pain is letting people go: no one
likes to do that. It's painful for the person being let go and
it's painful for the people doing the letting go. But after you're
done, you've got to worry about the survivors. You've got a business
to run, objectives to accomplish. As players change, as staff
is reduced, it becomes more and more imperative that organizations
regather, regroup, and refocus. The idea of affirmative energy
becomes more important during tough times than it is when you're
fat and happy.
QUISIC: I understand that you have an example of a well-known
company that was once a great example of alignment but isn't anymore.
What company is that?
GL: Motorola. If you asked people in the Six Sigma consulting
business, where the best place is, where Mecca is, they would
all say, "Motorola." Many of the people in the Six Sigma
consulting companies came out of Motorola originally. However,
Motorola missed the boat when it missed the switch from analog
to digital. They were really late and they had their lunch eaten
by companies like Nokia.
I'm writing another book now, and I'm using Motorola as an example
of what can go wrong. In The Power of Alignment I used them as
a good example. But Motorola's story illustrates the lessons learned
when you lose site of your customer base and you lose site of
staying totally aligned with changes in technology and customer
requirements. They, in a way, have become the most effective buggy
whip manufacturer in the world. Their quality is superb. But they
were not making the right stuff. Now they're starting to catch
up, but itŐs a sad story.
QUISIC: How does a company's culture fit into the alignment
process?
GL: Culture is a very important part of the picture. What
keeps the four critical components of the business— strategy,
people, customer and process—aligned and integrated is leadership.
And leadership creates culture by determining what is being measured.
The basic idea is that measurement drives behavior and behavior
creates culture. If management says, "I want to build a culture
of alignment" how do they do that? It starts with—what
are you going to measure? What's important here? The measurement
and tracking system ODI has pioneered determines if your measures
are being followed and absorbed. If a company says people are
important, what measures are they taking relative to people? If
a company says customers are important, what can be measured relative
to customers?
Above all, how is that tied to performance management? How are
people being recognized and rewarded? Do we say people are our
most important asset but we promote people not on how they deal
with their people but with how much money their particular unit
made? Is there message mismatch? Is there alignment or lack of
alignment?
QUISIC: In your book you distinguish between vertical
and horizontal alignment. Can you explain those terms?
GL: Vertical alignment is when people in the organization
understand the primary goals, objectives and how they relate to
it. A successful enterprise must have a clearly articulated strategy
and it must be connected and deployed down to the people that
execute that strategy. For example, Fred Smith has 137,000 people
at Federal Express. It is one of the best vertically organized
businesses that I know. If Fred Smith sneezes, 137,000 people
say, "Gesundheit!" Now that's vertical alignment.
But what good would that be if FedEx was making the equivalent
of mainframes and the world wanted PCs? So you need to look outside
the organization as well, which is horizontal alignment. Companies
like FedEx actually have customer satisfaction and customer inquiry
companies that reach out daily to their customer base, tracking
how well they are doing with customer satisfaction. They are just
as fanatical about their customers and making sure their processes
and systems are working effectively in the interest of their customers
as they are about making sure everyone understands what's important
within the walls of Federal Express. The reason that I like them
so much as a company is that they do both things—horizontal
and vertical alignment—very well.
QUISIC: What kind of commitment must a leader have in
order to successfully align his or her organization?
GL: I love the phrase "affirmative energy."
It's not my phrase. It was coined by Dr. Dennis O'Leary, President
of the Joint Commission on Accreditation of Healthcare Organizations.
The imagery is great. It's like a balloon. If you don't constantly
worry about your customers, constantly worry about your people,
and make sure that they are well-trained, well-led, well managed,
and everyone understands what's going on, it's like air leaking
out of the balloon. It begins to soften and then explode.
Alignment is hard work. It doesn't happen by accident. There
are so many forces working against you—fostering misalignment—that
you need to overcome those forces with affirmative energy.
That means expense: It's expensive talking to your customers.
It's expensive to make sure that your cadre is well-trained and
that your people have the skills and tools to do the job. It's
not easy. But, boy, does it pay off.
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