Alignment to the critical few strategic priorities is key. No one has unlimited resources. Every CEO knows it. Every CEO wants it in their company. Most Direct reports will say it. “We are aligned.”
But how can you put your team to the test to visually and collectively check it?
Before you hang up the phone – for context – we know many companies’ employees, managers and C-suite executives are generally aligned and can recite the key priorities, but the best financially performing companies we work with look for ways to test and fine tune alignment because even a few degrees can make a difference.
You may only be off or even above budget by 1 or 2 percentage points on EBITDA after Q1, but if you don’t pinpoint where and why you are over or under, this of course can have great impacts as it's amplified during the year.
Example in point – Apollo Missions’ had a 2-degree approach corridor to return to earth. Robert Frost, an engineer / instructor at NASA said it best in his blog and provided an illustration:
“For return to Earth, the acceptable approach corridor was two degrees wide. The vehicle had to enter between 5.2 and 7.2 degrees. If it came in shallower than 5.2 it would skip off and overshoot the Earth. If it came in steeper than 7.2 degrees it would decelerate too quickly and burn up in the atmosphere”
While your business might not have the dramatic implications of a 2-degree window, you might consider that relative to your budget performance (Revenue, Cost and Profit) "close is maybe not good enough."
2. A Simple Test
So if you your Q1 Budget is over or under by a “few percent,” consider dialing in with this simple yet telling exercise. (See illustration below –note that you replace the data with your product and market categories)
- Outline a Matrix with Products on top and your Markets down the side – we call this a PMC engine.
- Kindly ask each member of your leadership team to write where they believe overall resources of the company are currently being spent.
- Ensure the matrix totals 100%.
Collect their responses and compare. SAME? Or DIFFERENT?
THEN – hold your strategy meeting to or performance checkup to:
- Assess alignment
- Uncover gaps
- Discuss to confirm, move to change - where resources and time are for the next quarter relative to the performance of the business.
You may be surprised how powerful making thinking visible is and helpful to fine-tune what each of your leadership team members is focused on.
If you would like more information on how companies we work with PROFIT from CLARITY through our simple yet powerful decision-making tools I invite you to comment or contact me to share your thinking.