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How to Align Continuous Improvement with Strategic Goals

Posted by Megan Cox

Nov 9, 2022 10:08:00 AM

Conceptual image of asphalt road and direction arrowOne might think that any organization with leadership and employees dedicated to continuous improvement would slowly trend toward success. However, it takes more than a desire to implement positive change to get there. Continuous improvement is part of a strategic process that advances critical goals and objectives. Organizations that demonstrate operational excellence are aligned and working toward the same ends.

Achieving such an ordered state is no small task, but a clear path to organizational alignment is modeled by some of the world’s most successful companies.

Evaluate the Current State 

Business process improvement starts with a clear understanding of the current state. Understanding operational processes and their results is a prerequisite for implementing meaningful change. Without a clear understanding of the current state, you may find that:

  • Team members don’t grasp the urgent need for change
  • The opportunities and advantages of improvement are ambiguous or unevenly understood
  • Key stakeholders are not prepared or able to support the new vision
  • Flawed assumptions and misunderstood root causes lead to delays, rework, and disappointing results

Elements of the current state to consider are:

  • Guiding strategies
  • Organizational structure
  • Cultural behaviors and norms
  • Internal thought leaders
  • Operational processes
  • Connected systems
  • Needs, concerns, obstacles, and interests

To conduct a thorough current state analysis:

Hold Disciplined Feedback Sessions

It is helpful to gather feedback from everyone affected by a change in strategic objectives, but it is important to keep meetings focused on understanding the current state. It can be tempting to skip right to solutions but guard against that tendency until today’s reality is apparent.

Involve Front-Line Workers

While the information in financial and operational systems is essential to a thorough current state analysis, it contains only part of the picture. To truly understand how work gets done within the organization today, it is necessary to get the perspective of those at every level of the org chart.  

Look at Cross-Functional Workflows

An often overlooked or misunderstood part of current state analysis relates to integrating the various functions. It is necessary to carefully analyze each point at which one system, person, department, or function feeds another to document the interdependencies or silos between functional areas.

In addition to these considerations, value stream mapping and SWOT analysis are helpful tools for assessing the current state.

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Establish the Organizational Vision

Once you have a good handle on where the organization is, you can begin to lay out the future vision. A clear vision, sometimes called “True North,” separates companies with an engaged workforce with people ready to roll up their sleeves and make a difference from the rest of the pack. Vision lays out where the company is going. It paints a picture of the future if the goals and strategies are achieved. While the executive team usually defines the vision, communication and collaboration are essential for getting the entire team excited about the future.

It is vital to make the vision as clear and colorful as possible, so that team members buy into it and know that if they achieve their objectives, there will be a direct impact on their work. The vision should be easy to explain and something everyone in the organization can understand and share. Financial metrics are relevant, to be sure, but they don’t paint a picture that inspires hope and action.

The vision should be well aligned with the organization’s purpose. What’s the difference between purpose and vision? Vision is the picture of where you want the organization to be in the figure. The purpose is the reason that it exists. It expresses the positive impact on the lives of customers, workers, the community, and whomever else you are trying to serve. Purpose leads to the proud feeling everyone from the C-suite to the front line gets when you accomplish your goals.

Set Breakthrough Objectives

Once the vision is clear, you can define the objectives that you need to achieve in the next three to five years to get there. Be careful to choose only the vital few so that the importance of each is maintained; usually, three to five breakthrough objectives are appropriate.  

Committing your organization to breakthrough goals can create a sense of urgency that drives action, eliminates narrow thinking, and helps people connect to the bigger picture. When setting your breakthrough goals, ask:

  • Is each goal inspiring?
  • Are the objectives clear, compelling, and easy to understand?
  • Does each goal connect with the organization's vision and purpose?
  • Will each goal be meaningful to a broad base of people beyond just the executive team?
  • Are the goals easy to remember?
  • In ten years, will it be evident that the goals were achieved?

Breakthrough objectives might include expanding to new markets, introducing a new product line, or adopting a new delivery model.

Define and Assign Annual Goals

The next step in the strategic process is breaking the breakthrough goals into annual objectives. Annual objectives are the accomplishments and activities that must be completed this year to ensure the breakthrough goals can be achieved. For example, if a breakthrough goal is to introduce a new product line, it may be necessary to complete market research and prototyping this year.

During this strategic planning phase, define how progress will be measured. The Key Performance Indicators (KPIs) that will help everyone understand the progress against each annual goal should be clear and easily accessible. The KPIs for each objective should cascade down through the organization so that each department can track and report on the relevant metrics to their operations. Standard KPIs are essential for organizational alignment.

In addition to KPIs, each annual goal should have an owner. They will not be solely responsible for the execution, but they will have accountability for ensuring forward movement or sounding the alarm if progress has stalled.

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Identify Known Opportunities for Improvement

Now that we understand what we are trying to do (annual goals), why we are trying to do it (breakthrough objectives), and why it matters (vision), it is time to get to how we are going to do it. This means identifying the known opportunities for improvement that will help activate the annual goals.  

At this stage, getting input from as many stakeholders as possible is best. For each annual goal, you may ask:

  • What is preventing us from achieving X?
  • Are there ways we could get to X faster?
  • Who will need to be involved in reaching X?
  • What additional resources would be helpful?

Of course, identifying opportunities for improvement is an ongoing effort. When employees are clear about the strategic goals and vision, they are better positioned to point out improvement opportunities that fit within the structure and meaningfully impact the core objectives. Organizations collect the most and most relevant opportunities for improvement when implementing a management platform containing the tools and information related to the strategic plan.

This structure for strategic alignment is an ideal approach to ensuring that each person makes intelligent decisions about where to focus their continuous improvement efforts. Several constant improvement techniques can help, but the X-Matrix is a handy visual management tool for this purpose. It helps chart each step, showing the relationships between each element.

When improvement work is aligned with strategic goals and objectives, the organization moves in lock-step, increasing the probability of long-term success.

Topics: Improvement Culture, Hoshin Kanri, Improvement Methodology, Strategy Deployment, Business Transformation

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