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The cost of misaligned business strategies

25 April, 2022
4 mins

All the leaders agree – to win and succeed organizations got to ensure that all of their business strategies align with the greater purpose of their company. Misaligned business strategies will develop friction and dilute your ability to establish high-performing teams and a successful organization. Strategic misalignment for any type of business can be insidious. It results in creeping into the organization silently, tenaciously attacking the roots, and over time begins to undermine even the most successful organizations. 

cost of misaligned business strategies

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The term business strategy is quite amorphous. It refers to the amalgamation of an organization’s defined strategic objectives in support of the vision and mission of its business. Having an alignment in the business strategies refer to the synchronization of strategic objectives with operations and execution tactics. Organizations have now become so accustomed to operating with friction between their departmental teams, they have become numb to the negative effects of misaligned business strategies. Had the costs of misalignment been better understood, every leader would leave no stones unturned in establishing alignment in their business strategies. 

If your organization doesn’t take concrete steps in aligning its business strategies, then sooner or later it will experience hindrances in multiple ways. At the end of the day, even though it can be very feasible to believe the departmental teams are different animals that should never be sharing the same corral than it is to address the circumstances with commitment and purpose, it is no rocket science that the organizations with well-aligned business strategies consistently outperform their competitors who are yet to figure out the alignment puzzle. Such organizations grow at a faster rate, are better at closing proposals, and attain their desired objectives more. Therefore, it is extremely crucial to understand the cost of misaligned business strategies. But before that, let us try to understand how to spot misalignment in your organizational strategies. 

Early signs of misaligned business strategies 

It is extremely critical to identify misalignment in the business strategies as early as possible. Ungoverned issues compound swiftly and result in causing serious problems that can derail the organization from its desired success. 

1. Missed financial projections

Misaligned business strategies will ultimately lead to poor performance – missing quarterly, semi-annually, and annual projections. While missed projections can be traced back to a wide range of different concerns, more often than not the root cause is strategic misalignment. The reason is, that the different areas of the organization react in a different manner to different stimuli that managers and employees experience in their area of the business. 

2. Hindered growth 

As organizations start to misfire due to misalignment, initiatives needed for supporting and sustaining profitable growth start to diminish. It is never the case of the leaders and the managers not wanting to see the organization grow, it is rather that despite their best shots, they cannot sufficiently work together to guide the organization back on track. To ensure that the organization is moving on its desired track towards success and growth, the whole organization has to work unitedly with their best efforts. 

3. Reduced revenue 

The organization’s pocket will ultimately get impacted by the chaotic events that unfold as a result of a misaligned business strategy. A reduction in profitability can be an outcome of multiple reasons, the majority of which trace back to misalignment in the strategies. Whenever new products are delayed in getting rolled out due to unsuccessful initiatives, revenue takes a toll and the overall positioning of the organization can be eroded. 

4. Replication of initiatives and reactive spending

With the lack of clear visibility of the business strategy and the operational plan across the organization, teams can drift into a self-directed mode that takes them away and further from the ultimate objectives. Reactive spending and replication of initiatives can take place as a result of lackluster results being posted, which again is an outcome of misaligned business strategies. In other circumstances, it could be a component of a chain reaction due to inter-dependent initiatives combatting restricted resources. 

The cost of misaligned business strategies

Process cost

Misalignment in business strategies causes havoc and inefficiency. The cost the organization bears as a result of it can be substantial. For instance, when you miss the window that was deemed to be highly effective for rolling out a new product, what is the cost when your competitor beats you to market? When you chase poorly qualified leads, what is the cost of the wasted time? When a certain campaign or your whole website has to be revamped as your teams weren’t moving together strategically, what will be the cost? You can add more similar situations as well. The purpose is to devise a guestimate of the annual cost. 

a. Ineffective spending on marketing

b. Imprecise sales forecast

d. High cost of customer acquisition

e. Long duration of the sales cycle 

Culture costs

As explained above, misalignment leads to friction. In turn, friction results in removing the incentives for innovation and superior performance. Hence, it is significant to consider cultural costs as well. Do your organizational teams take longer than necessary to agree on an idea and implement it? If two of your teams cost you $100k a week and take five weeks to work on a plan which they should do in four weeks, that means you spent $100k unnecessarily. How many of the following are currently occurring or have occurred in your organizational departments?

a. Decreased agility

b. Failing to attain the revenue targets

c. Scarcity of coordination

d. Reduction in responsiveness

Aligning the business strategies is quite possible when the leaders take on the responsibility of championing the initiative. Fostering a culture that revolves around alignment will ensure that your organization unitedly steers towards the desired outcome. For more assistance regarding alignment for organizational strategies, contact us today!