Final Deliverable: Aligning Strategy, Capabilities, and Culture.

Culture is a curious beast. It is difficult to define, harder to manage; yet, always present. Culture

has been described as the "invisible hand" that guides our behavior in the absence of leadership.

At any given moment, it suggests the behaviors that are appropriate and inappropriate, the

compromises we should make or not make, and filters our view of others and the world around

us. Culture also binds us into a collective and represents an important component of the identity

of an organization. As esoteric as culture is, it is also the single most important strategic

component of any organization. If you get culture right, all good things follow. If you get culture

wrong, you will struggle with unproductive behavior misaligned with your strategic goals,

disengagement, lack of commitment, and consistent human capital problems.

For too many organizations, culture is unintentional. It develops over time without much thought

to the strategic needs of the organization as a by-product of the decision-making process of

leadership and the personal desires of employees. Being intentional about culture begins with

an understanding the relationship between strategy, core organizational capabilities, and culture

as the starting point for designing a change process to embed or strengthen culture.

Organizational Alignment Model

Alignment is a simple concept. Everything must work together and not at odds. Imagine, if you

will, a car made of the engine of a Bugatti, the interior of a Rolls Royce, the suspension of a Ferrari,

and the frame and body of a Maserati. What would you have? Nothing. These components were

not designed to work together. Alignment is the process of bringing the components of an

organization into congruence with one another and with strategy.

The organizational alignment model was developed as a tool to provide a whole-systems

framework for understanding an organization. The framework's value is in understanding the

inherent connectedness of an organization. In brief, the framework suggests that to effectively

understand your organization, and opportunities for enterprise enhancement, you must examine

three essential intersections: (1) Strategy-Core Capabilities; (2) Core Capabilities-Culture; and (3)

Culture-Organizational Design.

In my experience, the linkage between strategy and core capabilities is most frequently left

unstated and, therefore, is frequently uncommunicated. Nonetheless, this intersection is critical.

Occasionally, organizations have strategies that are truly novel and differentiating. However,

more often organizational success is driven by executing an unremarkable strategy flawlessly.

Only by understanding the limited number of core organizational capabilities necessary to allow

an organization to effectively and efficiently execute strategy can we consider how to best align

the organization to those capabilities.For example, if your organization focuses on product design, innovation is likely a core capability. If you are an exploration and production company focused on unconventional resource plays,

speed and agility will be critical. For a manufacturer, operational efficiency is essential.

Regardless, the number must be limited to those capabilities that are truly essential.

Organizations are not designed to support strategies. They are designed to reinforce the core

capabilities necessary for strategic success.

The Process:

Step 1: Defining Core Capabilities

Begin by understanding and codifying the core capabilities essential for the organization to

achieve its strategic priorities. When developing the capability framework, you must consider

the following: Culture,Ambition,Critical Organization,Strategy Capabilities,People,Purpose,Alignment

1. The capabilities should be limited in number. If you identify 10 "essential" core

capabilities, you have gone too far. It would be extremely difficult to optimize an

organization to more than 4-5.

2. Capabilities must be defined in a manner that represents the appropriate heterogeneity

of the organization. Each capability will not have the same relevance for every part of the

organization, nor should it; however, each capability should translate, in some way, to

most of the organization. (This is less of an issue the more "local" your focus).

3. Strategic priorities are not capabilities. Core capabilities are the organizational

"strengths" necessary to achieve strategic priorities. For simplicity of the storyline, you

need to differentiate priority from capabilities.

4. If the relationship between a proposed capability and strategy (or strategic objectives)

cannot be explained, it is probably not a core capability.

5. Capabilities, themselves, are not about differentiation. Rarely do organizations

differentiate on the list of capabilities. They differentiate on how effective they are at each

one.

Step 2: Defining Culture

With the capability framework developed, you can begin evaluating culture. Although most

organizations have an existing list of organizational values, it is important to take a step back and

attempt to define culture relative to the capabilities that have been defined. The outcome will

likely overlap somewhat with the existing list of values. However, this process allows you to

develop a more nuanced list and more specific definitions that highlight the intersection of the

core capabilities and culture. You conclude this effort with a quick evaluation of the current state

of the organization relative to the needed culture. General principles include:

1. Core capabilities cannot simply be renamed as a cultural value. Innovation = Innovative

Culture.

2. Culture is embodied in the collective behavior of leaders. What would you expect leaders

to do to support a capability? This can help define the cultural dimension.

3. The focus will be on culture as it needs to be rather than culture as it is. This is essential.

Step 3: Identify Barriers to Alignment and Opportunities for Improvement

It is time to address the obvious and essential question, what do you need to change to bring

the organization into alignment with core capabilities and culture? The answers to this question

will inform the change agenda. Not everything identified will be a priority and not everything

will be addressed. However, you do need to identify the high priority barriers to embedding

the culture the organization requires.

So, what is a barrier? In short, a barrier is anything in the organization that sends the message

that the culture that is needed is not valued or supports a different culture. These barriers can

fall into three categories (1) behavior of leadership, (2) organizational structures, policies,

practices, and procedures, (3) the needs and skills of the employees.

Here are a few generic examples.

We say that agility (speed) is important; however, we are slow to act due to multiple

layers of hierarchy (barrier between capabilities and structure)

We say we need to value teamwork and collaboration (OneExxonMobil); however, we

are only rewarded individually creating competition. (barrier between culture and

process)

We say we value empowerment; however, the preferred leadership style minimizes

autonomy (barrier between culture and style of management).

We say leadership is a core capability; however, too many people are moved into

leadership roles without proper preparation. (barrier between capability and people's

skills)

While these examples are simplistic, they represent a flavor for the types of barriers that will be

identified. It is important to be comprehensive at this stage.

Although cultural misalignments are frequent, you should also check for other misalignments

(people-organization; organization-capabilities; people-capabilities).

I recognize this seems like a lot of information and analysis. I want you to keep it simple., We would need four pages of single-spaced content. Your description of culture need not be comprehensive in the sense that you cover every single capability. I would list your top 2-3 capabilities and ensure you discuss the key cultural characteristics that are needed to reinforce each. Be focused. You also need only list one or two critical misalignments. I am looking for your application and understanding of the framework rather than comprehensiveness.