staying on course with c12’s five-point alignment...

Christian CEOs & Owners Building GREAT Businesses for a GREATER Purpose©2011, The C12 Group, all rights reserved

1

WORKING ‘ON’ MY BUSINESS

Staying on Course with C12’s Five-Point Alignment Matrix

B0711.103

Time Horizon Leadership Element Explanation

Week/Month/Quarter/Annual

3-5 Years

10-30 Years

50-100 Years

Timeless

Plans/ Goals

Strategy

Long-term Vision

Purpose/ Mission

Core Values

Delegation/Accountability

How to Achieve Vision

What We Hope to Achieve

Our Life Goal/Why We Exist

Convictions/What We Stand For

Our previous two business segments discussed the vital role of core principles (i.e., values, purpose, vision) in helping us to communicate, gain buy-in, shape and

moti vate our team, and plan and execute more eff ecti vely. The alternati ve is to merely ‘bump along,’ reacti ng to events while busily lost in acti vity, and conti nuing to operate and act as we always have. As leaders, we know more is possible – even necessary – for the long-term health and stewardship of our companies. Yet, across the business landscape, it’s clearly documented that less than one out of four CEOs lead in such an intenti onal way. When we surveyed C12 members, more than 95% say that they want to improve their strategic planning performance. Further, more than 95% also say that they’d like to have a greater eternal impact based on their ministry through the business.1 Just one-third of C12 members express some level of sati sfacti on regarding their leadership when considering both temporal business and eternal dimensions. Today’s segment is all about bringing these two worthy desires together as we develop a unifi ed team and pursue the executi on of a compelling strategic plan.

It’s our hope that all C12 members will (1) crystallize compelling core principles, and (2) integrate Christ-honoring ministry into both their long-term business thinking and short-term acti vity. In fact, if a porti on of our team’s eff ort in a typical 40-50 hour workweek isn’t spent intenti onally pursuing goals related to our purpose and envisioned future, we’re squandering our most valuable resources. Today’s segment provides a unique C12 framework that many have found to be helpful in this pursuit.

Constructi ng Our Launching Pad

First, let’s pause to remind ourselves of the ‘bott om-up’ fl ow in which our enduring core principles feed into the development of a strategy looking out three to fi ve years which, in turn, drives shorter-term plans, goals, and related metrics.


2


B0711.103

Last month, we were encouraged to test our company’s purpose or mission statement according to six vital characteristics – enduring/timeless, inspirational, arbiter, concise/memorable, personal/visceral, and stirs ministry – and to consider whether the long-term vision of the firm reflects a BHAG that embraces the “genius of ‘the and.’” Finally, we need to be sure that our purpose and vision are firmly founded on an unshakeable set of worthy core values which are consistently modeled, communicated, and reinforced. The reality is that companies lacking such clear direction suffer from compromised performance, unnecessary confusion among competing agendas, and needless employee frustration. Since the balance of this segment relates to alignment around our core purpose and vision, let’s take five minutes to go around the table and briefly share where each of us are in the process of defining and communicating compelling mission/vision statements for our companies. Remember, today is just one step in our journey. God’s grace and truth is sufficient to take us forward from wherever we are at this moment!

Getting in the Game

Across C12, there are many examples of members who have, after years of toiling in the business, begun to lead by working on the business in a way that breeds alignment, strategic thinking, team execution of a shared plan, and integrated ministry. One of the most exciting aspects of C12’s Leaders Conferences is seeing these real life case studies through the personal testimonies of our peers. Beyond the beneficial business impact that clear expectations and objectives bring, thoughtfully developed core principles help us to shape a loyal, winning team over time. Along the way, we can help our team pursue more than just a paycheck by providing an opportunity to enjoy true purpose at work through sharing the love of Christ with those they serve. Unless senior company leadership, beginning with the CEO, decides to take this on and see it through… this won’t happen! Core principles can’t be defined or made ‘real’ by committee. Although it takes hands-on leadership to ‘jump-start’ such an effort while managing the day-to-day business, this isn’t nearly as intimidating as many seem to think.

Once God-honoring core principles are defined, it’s important to retain credibility and momentum by quickly following-up to drive company planning, execution, and organizational development with these tenets in mind. In the ministry dimension, C12 companies often begin with the CEO simply ‘coming out of the closet’ and making it safe for others to also live an integrated life. Introducing a company chaplaincy program makes an immediate impact and a clear statement about what we believe to be true and best by “putting our money where our mouth is.” Optional on-campus Bible studies, prayer, discipling resources, and evangelistic outreach generally follow. The possibilities to bless and inspire our team and to have fun along the way as we minister to our stakeholders are endless! Moreover, all these things can be done in the midst of a sharpened business focus by associates who are glad to be on board!

It’s vital to remind ourselves and our people that strategic planning isn’t a “once and done” event, but an on-going process in which we sharpen our plans and execution consistent with the vision, purpose and values of the firm. If we don’t define these things by writing them down, and frequently discussing them, then our hopes of achieving them will at best be a “shot in the dark”! Each member of our team spends 40-50 hours a week at work. If, through concerted effort and teamwork, we can move the amount of time we spend on activities helpful to achieving our vision, strategy,


3


B0711.103

and goals, up from, say, 30% to 70% over time, we’ll radically enhance our company’s performance. Unless we do, our people may spend much of their discretionary time and effort aimlessly or dysfunctionally, with each one pursuing what they’re most comfortable with. Remember, multiple agendas kill companies!

So, how do we make it happen? It’s easy to over-complicate things by envisioning elaborate ‘enterprise-wide’ systems, when simplicity should reign. This is especially true in the first year or two of making our clear, compelling core principles real and personal! For example, the reports of gross project failures among larger companies who thought that expensive enterprise-wide software (e.g., SAP, Oracle) would be beneficial are legion! Those who take the multi-million dollar plunge (ignoring the even greater costs of time and distraction) nearly always underestimate the cost while overestimating the benefits of such projects. Large systems projects inevitably become and end unto themselves and a magnet for team cynicism and blame-shifting.2 We must guard against this same syndrome in our planning efforts. Planning should not become an end unto itself, accompanied by expensive consultants and thick volumes of analysis. Rather, it’s an opportunity to benefit from the experience and perspective of our entire team as we frankly discuss issues and opportunities, and then jointly commit to a plan that will guide our efforts going forward.

We pursue our vision and purpose in business through strategic planning. While our envisioned future may be a decade or more away, and our purpose is an enduring career-long commitment, strategic planning typically uses a three to five year horizon. Simply stated, the strategic planning process involves three basics steps as discussed more thoroughly in our February 2011 segment, Closing the Gap in Business:

1) Define where you want to go/be in the long-term This step comes first to excite and motivate our team

2) Critically assess where you are today based on objective data Identify key issues and factors to be addressed using industry benchmarking, surveys, and SWOT analysis3

3) Decide how you’ll address the ‘gaps’ Establish overall projections, plans and goals (human, technological, financial, market, product lines, etc.) according to a timeline

A slightly more expanded version of this flow, in the conventional ‘language’ of strategic planning, is as follows:

De�ne & Communicate Core Principles

Vision (what mountain are we climbing?)Purpose (why are we climbing it?)Values (how will we conduct ourselves along the way?)

Conduct Situational Analyses

Market Analysis (customer needs, growth rates, niches)Competitive BenchmarkingSWOT Analysis (Strengths, Weaknesses, Opportunities, Threats)3

De�ne Critical Success Factors for achieving our mission

De�ne Strategic Objectives (3-5 Years)

Break into Annual Operating Plans/budgetsDe�ne Tactical Action Plans (timetable/resources)Establish Key Performance Indicators


4


B0711.103

Once a strategic plan is developed (see our Jan/Feb 2011 business segments and the resources listed in the footnotes for more details), we begin chipping away at this strategy by incorporating specific initiatives and key objectives in the first year’s operating plan (i.e., the basis for our financial budget and projections). This annual business planning process is repeated annually and also involves updating the three-to-five year strategic plan in a continuing process which, when done well, engages much of the organization and promotes company-wide learning, buy-in, and accountability (see C12’s Annual Business Planning Process template).

Don’t be intimidated by all the ‘consulting speak’ on this topic as many straight-forward resources exist which can help you get started and by diving in and getting better at it as you go.4 A really refreshing read for those intimidated by the thought of strategic planning is The One Hour Plan for Growth (Joe Calhoon, Wiley, 2011). The key is our commitment to engaging our team in the process, producing a shared plan, and holding everyone accountable for results along the way. Such engagement is critical as studies show that nearly three quarters of the workforce isn’t engaged in the process of helping their company move forward!5 Imagine our competitive advantage if we truly enlist the support of our entire team in creating and attaining our strategic plans!

Keeping Everyone on the Same Page

Most CEOs love to either start and end with the big picture, or become lost in the details while ignoring strategy altogether. As a result, most new initiatives quickly fall by the wayside due to confusion or distraction and we return to old habits. Ever since the 1950s, when Peter Drucker first popularized the importance of business strategy, there have been vastly more strategies conceived than successfully implemented. Lots of attention has been paid to devising better strategies over the past half century, but there’s been far too little focus on implementation, where the big pay-off occurs. Beyond simple financial accounting, we need key goals and related measures to drive the business forward.

Many companies have “gotten their arms around” planning and execution discipline by using a version of the ‘balanced scorecard’ approach. First popularized by The Balanced Scorecard (Kaplan & Norton, Harvard Business Press, 1996), balanced scorecards help with alignment, coordination, and implementation by simply keeping essential company goals and metrics across various functions clearly in view. Generically, this framework asks us to evaluate our issues and capabilities, and define our goals and measures across four basic areas: customer, financial, employee, and operational. This discipline helps with overall company efforts to teach business, share information, communicate plans and accountabilities, and celebrate/reward progress.

C12 has enhanced the balanced scorecard idea by incorporating the centrality of our values, purpose and vision, and integrating ministry as a major area for goal-setting and tracking. The C12 Five-Point Alignment Matrix is shown below:


5


B0711.103

MINISTRY

OPERATIONSMANAGEMENT

ORGANIZATIONDEVELOPMENT

FINANCIALMANAGEMENT

REVENUEGENERATION

To those touchedby the Business,

Eternal Fruit

Product/Service Supply Chain, Order Fulfillment, Technology

& Administration

Recruiting, Hiring, Training,Personal Growth,

Compensation, Succession

Topline Growth, Sales, Marketing, Product Line Management &

Customer Relationships

Profit/Return, Projections, Metrics, Controls, Reporting,

Cash Management

Purpose, Vision,& Core Values

‘Alignment’ brings component parts of a business into harmony where each function works in concert with others to produce a worthy overall result. A symphony orchestra best exemplifies this when all instruments play on key and in synchronization according to an overall plan. When just one instrument or section plays off-key or out-of-time, the quality of the performance is sharply diminished. If several play to ‘their own beat,’ chaos reigns!

Chief executives are like orchestra conductors, responsible for the overall team direction and harmony. Like orchestras, our businesses combine different players and disciplines to produce an overall performance. By leading our organizations to achieve and maintain alignment, we’ll produce less friction and waste, improve our results, and maximize our odds of long-term success. This concept is simple to grasp, but more difficult in practice. Because we’re so often busy working in our businesses to put out fires, ‘soft’ issues like alignment always seem to be waiting for a future time when we finally have the more pressing issues under control. Of course, this never happens, since choosing to live with chaos is a self-fulfilling prophecy! It’s tough to be disciplined enough to work on our businesses while working in them, but this type of leadership and integration is what C12 is all about. This is also true of the integration of our ministry in business, another ‘soft’ issue that’s easily pushed aside due to the press of everyday concerns. However, ministry, like alignment, is of critical long-term importance to us!

Let’s pause to consider what alignment could look like in our companies and how we might measure it. How does it relate to what our people are busy doing every day? Is alignment just an elusive concept or is it truly possible to define an overarching process that produces alignment? For businesses of all types and sizes, alignment can be intentionally pursued without complicated systems or consulting. With persistent effort, we can honestly and intelligently work towards achieving and maintaining it. Let’s look further at the components of our Five-Point Alignment Matrix to see how:


6


■ Revenue Generation includes everything we do to define, understand, attract, retain, communicate, measure, and build on our customer relationships to achieve growth.

■ Financial Management deals with all aspects of our financial strength; assets, profitability, cash flow, funding sources, projections, controls, and reporting.

■ Operations Management includes the internal/external supply chain, technical, and administrative processes that produce work and deliver client value.

■ Ministry encompasses activity that serves to spread or support the Kingdom of God as we serve, equip, and encourage our stakeholders in Christ’s love and truth.

■ Organization Development supports doing the above things well by attracting and equipping team members who are talented and motivated to support our core principles, and by maintaining a supportive learning environment that encourages innovation and both professional and personal development.

■ Our shared Core Principles are the heart of the matrix. The arrows emanating outward from this hub indicate that our shared purpose, values, and vision guide everything we do (i.e., policies, practices, processes, priorities, decisions, goals). The arrows pointing inward to the center signify the contribution each area makes toward achieving our shared vision God’s way.

Using the Alignment Matrix

Seeing things on paper has a clarifying effect that aids company-wide communication, understanding, and day-to-day operations. Applying the matrix helps us to keep initiatives, practices, goals, and metrics for each area consistent with our shared principles. And, unlike most ‘balanced scorecards,’ this matrix integrates our ministry as well!

Practically, the matrix works like this:

■ First, we define the specific goals or initiatives in each of the five categories to support the top strategic objectives that came out of our earlier planning efforts. These initial lists of 5-10 goals each are later refined by using the matrix in an iterative fashion.

■ Next, we look at each item, one at a time, through the lens of the other four categories and our core principles to see if it ‘aligns’ with them. This takes significant and thoughtful effort, but it has enormous benefit. The process of using the matrix is dynamic in that we grow in our ability to understand and use it over time. By challenging ourselves to understand the cause and effect links between elements of the matrix, we’ll be much more likely to produce a ‘harmonious’ set of objectives and action plans to achieve our vision.

■ Importantly, C12’s alignment matrix is unique in that we examine every area in relationship to every other, including the ministry component! If we’re serious about our calling and eternal impact, we’ll never skip this step! This is necessary if we’re to achieve our vision, engage our stakeholders for maximum benefit, and properly prioritize our use of resources!

It isn’t easy to apply a process that enables us to look at every part of our business in the light of what’s truly most important and its impact on other key areas… but it’s simple to grasp. You can expect to spend at least two years of persistent effort with your key team to internalize this way of thinking and begin seeing significant benefits. As you begin to look at your business and its elements in this systematic way, you’ll notice things you

B0711.103


7


B0711.103

would’ve never otherwise seen. You’ll make improvements that you would’ve never considered and – best of all – you’ll gain alignment within your business consistent with your eternal destiny in Christ. That’s the real benefit to be gained from applying the C12 Five-Point Alignment Matrix instead of a generic balanced scorecard approach. You’ll bring alignment where it matters most; beyond mere temporal issues to infinitely more important eternal matters!

When completed, your version of the matrix can be printed on laminated cards, distributed to all team members, and displayed as a poster in meeting rooms to reinforce what’s most important. As a visual representation of a clear management philosophy and roadmap, it helps us “see” the big picture and stay on course based on the core principles and strategic planning which precede it. For more help with this concept, see pages 3-4 of C12’s Annual Business Planning Process template.6

In our next business segment we’ll get a little practice with the matrix by looking at a typical example or two. We’ll also talk more about goal-setting and using key performance indicators as a way to stay on top of both current and strategic issues.

Let’s talk!

1Nationwide C12 member web survey taken October, 2008 with more than one-third of all members responding.

2Analyst firm Gartner (gartner.com) estimates that 55 percent to 75% of all enterprise-wide software projects fail to meet their objectives. Research firm Standish Group (standishgroup.com) has been doing surveys on all types of IT projects (1994-2010). Their research, published under the title CHAOS, reveals some surprising facts. The CHAOS research and database shows a staggering 31% of projects being canceled before completion and 53% running well over original budget (typically nearly double). A small fraction of projects are delivered on-time, on-budget, and according to original planned deliverables. IT project failures in companies account for an astounding $75 billion in losses each year, according to Gartner.

3See today’s Appendix for more help with SWOT Analysis

4Resources which emphasize the inherent simplicity that’s possible with strategic planning include (1) C12’s Annual Business Planning Process template (see the Appendix in the February 2011 business segment, Closing the Gap in Business, (2) such helpful books as The One-Hour Plan for Growth (John Calhoon, Wiley & Sons, 2011), Mastering the Rockefeller Habits (Verne Harnish, Select Books, 2006), and The One Page Business Plan (Jim Horan, 1997/2007), (3) several other C12 segments on growing the topline and bottom-lines (see C12 segment web archives under the headings ‘Strategy’, ‘Execution’, and ‘Vision, Mission, Core Values, and Alignment’) and (4) M3 Planning’s on-line strategic planning suite (customized and discounted for C12 members, www.m3planning.com).

5Gallup Research Poll of employee engagement (www.gallup.com) taken over the past 30 years.

6Also consider reading our earlier business segment, The Easy Way to Alignment (July, 2006).


8


AppendixConducting a SWOT Analysis

The first thing needed to begin an effective strategic planning process is to be informed by the ‘brutal facts.’ Objectivity regarding our true situation, issues, concerns, opportunities, markets, offerings, strengths and weaknesses are vital if we’re to properly identify and prioritize our actions going forward. One fun, informative, and orderly way for our key team to establish the internal and external realities of our business is to conduct a SWOT analysis (i.e., strengths, weaknesses, opportunities, threats).

In advance of pulling together a cross-functional group of as many as 10-20 people, ask the participants to prepare by getting a truly objective handle on industry trends and the company’s relative standing versus ‘best-in-class’ in their areas of responsibility. Be sure that you engage a ‘balanced’ team regarding customers, technology, internal operations, suppliers, owners, employees, etc. Commit a couple of hours of uninterrupted time to a SWOT event which you or your designee will facilitate. See page 2 of this Appendix for specific preparatory inputs and helpful questions during the SWOT brainstorm as taken from C12’s Annual Business Planning Process template.

Essentially you will engage the group in brainstorming around the four SWOT categories, beginning with ‘strengths’ to get everyone off to an enthusiastic start! The key to brainstorming is to go fast, have fun, and “let it all hang out.” You can clean-up the ideas and redundancies later. Give participants a couple of minutes to write down as many company strengths as they can think of (one per Post-It Note) and hand them in to your helper. While the group then moves to ‘weaknesses’ with the same approach, the helper organizes the individual strengths into categories by sticking them to the wall in ‘affinity’ groupings (e.g., labeled as technical/product expertise, project management discipline, financial strength, loyal customers, etc.). This process is repeated for each of the four SWOT categories. Then, based on the number of affinity clusters (i.e., multiple mentions) within each category, make a list of issues for each of the four categories on a white board or flip chart paper. Unless an ‘orphan’ idea (i.e., only one mention) comes from the CEO/Owner who insists on retaining it, simply drop these from further consideration.

At this point, you’ll likely have four lists with several items on each. For example you might have 8-12 items under each SWOT category, totaling 40 individual items overall. It’s OK to have the same issue appearing on more than one list. Now, your task is to select the most vital issues to focus on by prioritizing the items. To boil the list down to the handful of most pressing issues and/or opportunities, give every participant a fixed number of votes to use (say one-third of the total number of items, or 13 in this case). Allow them to use up to three of their votes on any one item they feel strongly about. They should write their votes down so that they won’t be tempted to change them based on popular opinion. After all the votes have been recorded next to each flip chart item, you’ll begin to see the handful of items that have risen to the top. This will typically be less than 10 and perhaps just five or six will dominate the voting. Group buy-in to the process is vital, but the CEO/Owner must also be satisfied that the final grouping captures the best thinking on key issues.

B0711.103


9


Armed with these top SWOT issues, you’re now ready to begin to address them as you develop your strategic plan. Look for synergies. Sometimes, particular issue combinations can be addressed by a single strategy. For example:

■ S-O strategies pursue opportunities that leverage current company strengths ■ W-O strategies overcome weaknesses to pursue opportunities ■ S-T strategies use company strengths to reduce vulnerability to external threats ■ W-T strategies devise a defensive plan to minimize the chance of weaknesses being exploited by external threats

Challenge each functional area to consider ways to address areas of competitive weakness and to sharpen and protect areas of strength. These can be formulated as department or product line objectives that support higher level or longer-term company strategic objectives.


10


Application Worksheet

Priorities are what we do.Everything else is just talk!

C12

1. Review your existing Mission or Purpose statement, asking yourself the question, “Can I use this to make the decisions I must make in each of the five alignment categories as I understand them now?” Do this with each of the five categories, one-at-a-time. If you have any doubts, begin to look at what might need to change in your Mission Statement to make it more workable for you.

2. Consider taking one category and perhaps one key goal or initiative. Attempt to identify the cross-functional linkages that are the most important for that issue. You can do this alone or with your management team. Record any questions or ideas you surface for later follow-up action.

3. If you have time, take each of the initiatives/goals you’ve identified across all five categories and ask yourself the question, “Where are we against this item now?” If need be, firm-up targets and determine how you’ll measure progress. Even though it’s mid-year, consider using this opportunity to complete the matrix as a helpful team-building exercise with your management team. When finished consider making copies for all employees as a way to clearly communicate what’s most important to the achievement of this year’s objectives.

KP1. Consider reading one or more of the books and segments referred to in the footnotes.

2. Ask your sponsoring CEO how you might help to implement the C12 Five-Point Alignment Matrix in your company.

B0711.103

staying on course with c12’s five-point alignment...

Documents