February 24, 2014 00:00 By Larry Chao 2,052 Viewed
Wave after wave of political strife in Thailand is forcing companies to reassess how they will manage their operations and stay on track. What they are discovering is something successful multinationals have long known: In turbulent times, rigorous goal a
Goal alignment can be a cumbersome process, but big multinationals know that the benefits far exceed the costs. They have learned that systematic goal alignment at the beginning of the year is the best way to start and deal with the rocky road ahead.
“Goal alignment forces us to make choices about where we focus resources and what we should stop doing,” commented a senior executive at a US$90-billion (Bt2.9-trillion) food and beverage firm. “It clarifies the few priorities we need to achieve to be successful, regardless of changes in the market.”
Indeed, as increasing competition and market disruptions have become commonplace in Asia, companies are scrambling to bring global resources to bear on individual market challenges. With each new resource comes a new set of goals. These new goals have to be integrated into existing operations, otherwise there is confusion and conflict.
The goal-alignment process is intended to ensure goals mesh well and are aligned down through the organisation. It is designed to simplify and clarify what people need to do and to keep people on track during disruptions, such as the political unrest that is plaguing Thailand today.
“Goal alignment is especially essential in a matrix organisation where there are often conflicting goals from different functions with different interests,” the executive said. “Often there is confusion about what is important and who does what.”
So what is a practical approach for conducting goal alignment?
Goal alignment must first be put in perspective. It is a tool to guide management decision-making, but does not replace sound business judgement. Goal alignment fosters mutual understanding about company targets, what success looks like, and how these targets will be achieved. It ensures everyone knows his or her role and how their efforts contribute to the big picture. Since markets change, the goal-alignment process must also be flexible to cope with these changes, yet still achieve desired results.
The goal-alignment process itself is straightforward. There are three steps:
First, the business defines three or four strategic priorities it must achieve over the next 18 months to achieve its financial targets. Next, it agrees on the key activities that will drive each priority – usually two or three activities per priority. Each activity is assigned a measure or a description of what success looks like.
Finally, each activity is broken down into logical steps with target milestones.
Take, for example, how one yoghurt-beverage company used goal alignment to accelerate growth. One of its strategic priorities was to increase “share of throat” in young adult consumers. To achieve this priority, it defined three key activities – re-launch a new nutritious formula; develop an on-campus college promotion programme; and increase consumption in the afternoon and evening.
The company defined what success looked like for each of these activities, so that everyone understood exactly what needed to be done. In some cases, quantitative measures were used to track progress, such as consumer preference ratings for the new formulation. People then decided how each activity should be completed and who would do what.
As simple as goal alignment sounds, many companies over-complicate it, which makes it difficult to complete. They have too many priorities, too many activities and too many measures to track. It becomes an arduous process and handcuffs people to a plan that is impractical to implement. An effective, realistic goal-alignment plan has to be straightforward and flexible to accommodate market shifts, timing and capabilities.
“You can’t lose sight of the forest for the trees,” warned the executive. “Goal alignment can just as easily cause you to miss your mark if you get too wrapped up in following the process and lose sight of where you are going.”
Larry Chao is managing director of Chao Group Ltd, an organisation change and training consultancy based in New York and Bangkok (www.chaogroup.com).