Why has goal cascading gained such interest recently? Primarily because of the promise of an organization aligned to the strategy. An aligned organization performs better by creating less waste and by achieving the desired outcome sooner and more accurately than an unaligned organization.
The past: A goal Tower of Babel
In some organizations of the past, goal communication (or should we say mandate) was one way. It all starts with the executive planning session where the strategy is defined or refined. The executive team leaves the meeting energized from the discussion and they head in their different directions. It is up to them to implement these new strategic intents throughout their individual organizations.
That’s where things start to break down. Each group has its own approach for creating that next level of goals in their organization. And their staffs each have their own approach for setting goals--and so on, and so on…
What is the result? The executives from the original planning session probably won’t recognize the strategy that is implemented throughout the organization. The good news (sort of) is that they have no way to see how the strategy has been implemented throughout the organization. I like to call this the “Say and Pray” method of strategy execution.
Further down the organization, employees have a cloudy view of the strategy and often have little or no understanding of the impact of their own performance on the strategic goals. As a result, they are either disengaged or diligently working on something that may be at odds with the overall strategy.
Current practice: Goal cascading
To mitigate these problems, many organizations have implemented a more formalized process for cascading goals throughout the organization. In some cases, these processes are technology facilitated--but more often than not, the processes are still manual.
Cascading is pretty simple in theory: Starting with the strategic goals, identify the “next level down” goals in the organization. Taking these “next level down” goals as the new starting point, repeat the process through the organization, so that each goal is supportive of the company strategy.
The cascading process solves part of the problem--but not all of it. There are some fundamental problems with goal cascading:
1) Cascading is a one-way street. When you hand down goals to the next level--the “key” that is used to pass the goals along is the organization chart. That’s fine when you are looking up the chart. An employee can easily follow a single path up the organization all the way to the CEO. It’s much more complex looking down. In a 10,000-employee organization--there are thousands of potential paths for each individual goal. It is impossible for executives to use the goal cascade to see how their goals are progressing – or even understand who is working on the goals--and the problem gets worse as the organization gets bigger.
2) Cascading can’t accommodate change. In Strategy Or Organization. How often do strategies get adjusted? The answer is, ‘usually once a year; because that’s the only time I can roll out the strategy.’ How often would executives like to adjust strategy? Probably quite a bit more frequently. The more pervasive problem is organizational flux. In a company with thousands of employees, there are organizational changes every day. When the inevitable changes occur, what happens to that nice, neat set of cascaded goals? Oops.
3) There is no horizontal visibility, just up and down. Because goals are tied to the organization chart, there is no way for parallel organizations to see what the other group is working on. Even though your group may be aligned to the corporate goals, your goals might be at odds with another department’s goals--or duplicated.
Goal cascading is clearly an improvement over the “Tower of Babel” approach, but there is still a better way.
The future: Connecting goals to create a "Strategy Nervous System"
The future of strategic goal alignment involves connecting goals throughout the organization. The goals that are distributed throughout your organization should not only accurately describe the plan to deliver on your strategy--they should also “know” that the other goals exist.
Goals and people have a complicated relationship: people should be accountable for goals, but they do not “own” them. It’s closer to a lease or rental arrangement. For example, Bob the marketing manager has a goal to develop a segmentation strategy for the consumer products division. If Bob moves to a new role in the organization, where does the goal go? In the real world, Bob’s manager may take the goal, or it may be reassigned to someone else in Bob’s old department. Bob’s performance should be judged in part based on his progress toward attaining that goal, but the new “shepherd” of the goal is now accountable for delivering on that segmentation strategy.
When this complex relationship between goals, strategy and organization is accurately captured--it becomes the “strategy nervous system”. Goals are connected throughout the organization and each piece of the system is aware of important issues that other pieces of the system encounter along their way. As the plan adjusts – or the system changes--the strategy nervous system adapts and maintains its heading toward the strategic goals.
Can your organization evolve?
Most organizations do not have an effective “strategy nervous system”, but that is clearly the direction for leading companies. How can you prepare for this evolution? Assess your current practices in strategy alignment. If you are thinking about goal cascading, be careful about approaches that are inexorably tied to the organization chart. In the worst case, this kind of approach can actually create silos in your organization.
If you don’t do any kind of alignment between the organization and the strategy, it’s time to introduce the head of strategy to the head of operations and head of human resources. If you don’t introduce them soon, don’t worry - they may be exchanging résumés in the unemployment line.
Peter S. Mahoney is vice president of marketing for Performaworks.