Venn Cubed

Mind the gap: How to align strategy and operations for growth

Mind the gap: How to align strategy and operations for growth

Unlock your organization’s potential by connecting plans to performance, and unleash the power between strategy and operations.

It was Thomas Edison who famously said, “Vision without implementation is just hallucination.”

An intellect well ahead of his time, Edison had no way of knowing this disconnect between vision (strategy) and implementation (operations) would be one of the biggest challenges facing many organizations today.

In the Enterprise Decision Excellence Report™ 2024, which highlighted the power of connectedness in decision-making, we delved into the three core aspects of organizational connectedness:

  • Vertical: From leadership to front line
  • Horizontal: Across functions, business units
  • External: With suppliers and customers

Taking it one step further, we found one key aspect of vertical connectedness is the capability to connect strategic plans with operational plans. We discovered that without this connection, as Edison suggests, strategic vision becomes a pipe dream, and operations become chaotic. Yet, many organizations are still grappling with the challenge of establishing this integration.

The challenges of strategic and operational alignment   

Crafting a successful strategy is a challenge in itself. In a recent PwC report, only 37% of respondents say their company has a well-defined strategy, and only 35% think their strategy will lead the company to success. But even after overcoming this first hurdle, connecting this strategic blueprint with operational realities presents further difficulties.

Our research showed that producing high-quality financial and operational plans was essential to driving connectedness between strategy and operations. Granularity of detail, measurable KPIs, and access to the right accurate data to form a single source of truth all proved to be pivotal challenges that connected organizations had overcome.

Furthermore, while the expansion into diverse regions and markets offers advantages, it also compounds the struggle of connecting strategic plans to operational implementation. Cultural differences and language barriers can pose obstacles, emphasizing the need for a delicate balance between specificity — ensuring teams understand actionable steps while grasping strategic direction — and adaptability to navigate distinct market dynamics.

Mind the gap  

Frequently referred to as the “strategy execution gap,” disconnection between strategy and operational planning can trigger widespread repercussions. At its pinnacle, it becomes nearly impossible to diagnose failures or replicate successes, as models and plans lack the detail needed to pinpoint areas of risk or opportunity.

Propelling the company forward in a unified direction also becomes challenging, leading to heightened potential for resource wastage or duplication, which in turn sparks friction among teams and regions.  

“Breaking strategy goals into specific markets is challenging,” expressed one executive interviewed candidly during our research. “A regional president will have overall P&L and does not care which brand it comes from, opposed to corporate goals for every brand.”

Corporate infighting — or just plain misalignment — is a common struggle, not just confined to regional or market levels but also among product or sales groups. When business functions from across the organization do not understand the implications of the potential strategies, implementation and operations are disjointed, leaving the business struggling against competitors and failing to meet demand.

Our research underscores this impact. We established that organizations lacking in connectedness made inferior decisions, resulting in significant financial underperformance when compared to their well-connected peers.

Unlock the power of connectedness

Conversely, our report also demonstrates that the higher the level of connectedness within an organization, the better it was when it came to improving decision-making, which in turn elevated financial performance.

It’s not solely about financial gains, though they are the ultimate strategic aim. Connecting strategic and operational plans empowers organizations with enhanced visibility, enabling rapid responses to opportunities and threats. For senior management, this alignment facilitates early recognition of progress against both strategic and financial objectives.

This becomes particularly critical when aiming to influence customer or market behavior. Detecting these signals ahead of competitors allows for quicker reactions, fostering a competitive edge.

Furthermore, it guarantees that every division, market, geographical area, and individual, from the CEO to frontline staff, understands where to focus time and resources to achieve strategic objectives. This heightened strategic awareness cultivates a sense of shared responsibility among team members for reaching these goals.

Moreover, it empowers them to raise concerns when obstacles arise that could impede progress. Success often hinges on the last mile — it’s the frontline employees interacting with customers, product design, and suppliers who ultimately determine the success or failure of a strategy.

How to achieve strategy and action

Ensure your strategy is clear and understood. It sounds obvious, but it shouldn’t be taken for granted. Agree on strategy and plans at the top level between the CEO and leadership teams, communicate broadly across your organization to ensure understanding, and then cascade those goals and strategic objectives into the next level, and so on, right down to the frontline warehouse, service, and sales teams.

Encourage feedback. It’s vital to have a dialogue, not a monologue, with teams at every level. This not only helps strategic goals cascade to the operational level, but it also helps employees understand the plans more comprehensively.

Design a mutually supportive framework. This will help reduce business friction within the organization and ensure everyone at every level knows the interdependences as well as the KPIs they need to achieve for the strategy to work.

Set measurable KPIs. Align KPIs with strategic goals, and then constantly track and review progress to quickly identify areas of success and areas requiring improvement.

Develop a robust model of your business. By understanding and modeling key value drivers, revenue streams, cost structures, and operational metrics, management teams can better anticipate market shifts, allocate resources efficiently, and drive growth.

Be flexible. Disruption has always been part of business, so having a culture of adaptability and flexibility within the strategic and operational plans will ensure a prompt response to changing market dynamics and emerging opportunities.

Connecting strategic plans with operational plans is not just a theoretical concept — it’s a practical necessity for businesses looking to enhance agility, drive innovation, and achieve sustainable growth.

Fostering connectedness requires a concerted effort, but the rewards in terms of increased visibility, efficiency, and a unified direction are well worth the investment, and might even lead to a light-bulb moment for the organization, just like Edison.

Source: Mind the Gap: How to Align Strategy and Operations for Growth | Anaplan Blog