The Mystery of Business Alignment

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Whenever a project or program is implemented, there is often mystery about the issue of business alignment. Everyone talks about it, management requires it, and we know that alignment must be accomplished with new projects and programs. But how is it achieved? This article describes a simple approach to achieve alignment.

Figure 1 shows the connection between the initial need for a particular project, the objectives of those projects, and the evaluation of those projects. The process starts at the left side at the top of the figure, the beginning point for the project. It moves through the different levels of needs assessment and analysis until the project is identified. Along the way, the objectives are developed at each level. Finally the project is evaluated at those same levels. These levels of evaluation connect to levels of objectives and to levels of needs assessment. With this backdrop, let's explore the process of business alignment in three specific steps.

In the Beginning

The first question is simple: Is there a payoff opportunity with this project? In this step we are examining the payoff needs. Is this a project worth pursuing? Will it generate enough monetary benefits to overcome the costs? Sometimes this is obvious and other times it is not so obvious. Figure 2 list some rather obvious payoff opportunities.

Figure 3 lists a few not-so-obvious opportunities. In those situations, we need to dig a little deeper, moving to the business needs. What is the actual business measure being addressed? This is the first connection to business alignment.

Specific business measures are identified such as productivity, cycle time, customer complaints, sales growth, absenteeism, and employee turnover. Next, we must ensure that a solution is selected that connects to the business need. Therefore, we ask questions about job performance. What are employees doing (or not doing) that is influencing the business need? The answer identifies what must change in the workplace to satisfy the business need. This begins the development of the solution. After we have identified these performance needs, we must determine what learning is needed to support the performance. (i.e., what do employees need to know that they do not know now to achieve this redefined job performance?) After the learning is defined, determining preference needs is next. What is the best way to deliver this project? How should the employees react to it? When is the best time to implement it? This level is about preferences for the different stakeholders.

Collectively, the five simple levels provide thorough needs assessment and connect the business need to a specific solution and that is the first step in the business alignment.

During the Project

The next business alignment phase occurs during the program, using impact objectives. As the business need is identified, one or more impact objectives are defined. These objectives define specifically how much the business measures should change (i.e., which ones must improve and by how much.) They are conditions that should be met after the completion of a program.

Examples of Impact Objectives are:

• In three months, waste should be reduced from $5,000 per month to no more than $1,000 per month in the warehouse.


• The average number of new accounts opened at Great Western Bank should increase from 300 to 350 per month after six months.


• There should be an across-the-board reduction in overtime for front-of-house managers at Tasty Time restaurants in the third quarter of this year.


• Employee complaints should be reduced from an average of three per month to an average of one per month at Guarantee Insurance headquarters.


• The average number of product defects should decrease from 214 per month to 153 per month at all Amalgamated Rubber extruding plants in the Midwest region.


• The company-wide job satisfaction index should rise by 2 percentage points during the next calendar year.


• Sales expenses for all titles at Proof Publishing Company should decrease by 10 percent in the fourth quarter.

Impact objectives provide the focus needed by all individuals so that they are concentrating on the business alignment throughout the process. Objectives provide business focus for participants (i.e. employees), their immediate managers, various coordinators (if they are involved), the organizers, and the sponsors. Essentially, everyone involved clearly has the business focus needed throughout the project and that is the second phase of business alignment. Now, for the third phase.

After the Project

Data are collected along the same five levels to see how well the project has succeeded: reaction, learning, application, impact and ROI. Business impact is measured from the records, pinpointing the change in the measures. This is the same business measure identified in the business need and highlighted in the impact objectives. In this step we are monitoring a fact -- a measure has changed. To achieve the ultimate validation of business alignment, this fact must be connected to the project. This is where the issue of isolating the effects of the project comes into focus.

In reality, there are many processes that often drive a business measure. While a variety of techniques are available, a simple process often used is estimation. The most credible person involved (sometimes the employee or the manager of the employees), sorts out the various factors that could have driven the measure. The most credible person(s) discusses the impact of the various factors, and allocates a percent of the improvement to each of the factors, including the project in question. Although this is a guess, it is coming from the person who knows it best. However, because it is a guess, the error must be removed by asking one more question: What is the confidence in your allocation on a scale of 0 to 100%? If a person is 80% confident in the allocation, in essence, there is 20% error in their guess. The 20% of the change in the business impact measure is factored out of the analysis by multiplying 80% times the allocation. While there are other methods to isolate the effects of the project, this is always possible. This step should always be tackled to validate the business alignment.

Summary

In summary, business alignment is achieved in three phases of a particular project. First, in the beginning, the project is connected directly to the business measure. Second, alignment through the project is maintained and is achieved with a constant focus driven by the impact objectives. The objectives ensure that business alignment is there. And finally, to validate that business alignment has been accomplished, the effects of the program must be isolated on the change in the business measure. There it is, in simple terms, how business alignment is achieved for a specific project or program.