The Healthy Business Series: Organizational Alignment

Image: Minimalist Photography via flickr

Nearly 20 years ago management expert Thomas Powell wrote a piece for Strategic Management Journal entitled "Organizational Alignment as Competitive Advantage." In this piece, Powell discusses the importance of "integrating" an organization's objectives into its culture for its long-term sustainability. Bottom line, alignment can help boost an organization's ability to thrive.

So, what exactly is the culture of an organization? John Kotter describes this notion of culture as the "norms of behavior and shared values in a group of people." It is exemplified in the way that an organization's individual members act on a day to day basis. Suggests Kotter, "A good test of whether something is embedded in a culture is if our peers, without really thinking, find ways to nudge us back to group norms when we go astray." When an organization's raison d'être is embedded in the very way that its employees act on a day to day basis, i.e. when its mission statement and organizational objectives become a living, breathing reality, then its culture is aligned.

The word culture comes from a Latin stem meaning "to till, cultivate, attend to." MIT's Edgar Schein argues that an organization's culture involves three levels, which include its behavior and artifacts, its values, and (most deeply) its assumptions and beliefs. Those deep down factors that influence actions and often go unnoticed are the very stuff of culture that organizational alignment is most concerned with. As Schein has noted, "Most managers are quite blind to the fact that their strategy and structure are dominated by cultural assumptions and that a history of success and failure hardwires these cultural assumptions into their thinking."

Its easy enough to imagine what might result from a misaligned organizational culture: disengaged employees, weak leadership that is not respected by subordinates, poor quality work product, rapid turnover, the list goes on. But how exactly might an organization go about aligning itself, particularly if it seems to be bleeding at the hip? Schein suggests that cultural change takes time and should not be expected to come quickly. Like the Latin stem for the word culture might suggest, cultural leaders must spend time nurturing, cultivating, attending to, their cultures if they want alignment. Far too often, when leaders realize that their organizations are not aligned, they immediately jump into rebranding or reorganization schemes without first learning from and listening to the existing organization. Instead of leaping blindly into a series of recalibrations, Schein recommends that organizations develop the tools necessary for cultural assessment. Change starts by learning from the existing organization and drilling down to the assumptions that are driving its actions. Then, and only then, can a true plan for change begin.

Works referenced:  Kotter, J. and D. Cohen, The Heart of Change. 2002 Schein, E. "Coming to a New Awareness of Organizational Culture." MIT Sloan Management Review, 1984. Schein, E. "Sense and Nonsense about Culture and Climate." 1999.

Colin Price on Organizational Health

In this video from the Management Innovation Exchange, McKinsey and Company's Colin Price highlights many of my own beliefs about what caused the Great Recession and what is needed to sustain businesses in the future.



Building a sustainable business isn't just about towing the financial bottom line. And competitive advantage, says Price, is about much more than productivity. In this video Price underscores three "elements" necessary for organizational health (read: organizational sustainability): alignment, execution, and renewal. Alignment is about tying the organization's objectives with what its employees actually believe about the business; execution is about translating ideas into realities; and renewal is about rapid and repeated innovation. I'd like to elaborate further upon each element discussed here in the coming week, but for now, enjoy Price's musings!

Yvon Chouinard and Walmart, Really?!

About a year and a half ago I was watching a college basketball game with a bunch of friends when the first green Walmart commercial ever popped up. My immediate reaction was: you have got to be kidding me! In my book, and perhaps at the time, Walmart was one of the furthest things from green that I could possibly imagine, much less a socially viable purchasing option. From the looks of the commercial, it sounded like Walmart was just jumping onto the eco-friendly train to sell more products, and maybe they were at first but the message is now more than marketing hype. Almost two years later and Yvon Chouinard, founder of the eco-mecca for urban elites and outdoorsy folk known as Patagonia, is now working with Walmart to translate image into principle. Chalk it up to market need or market niche, but Walmart has decided to put a new spin on their products.

Whereas previously most of the wares at the typical Wally world might hail from the hands of Chinese laborers, or represent one of the worst eco-footprints in terms of fuel usage (ala massive global transit schemes to get those goods from one end of the world to your own), today Walmart is taking a hard look at its business plan and rethinking the future. This will certainly take a lot of time and effort, but the result will be incredibly powerful given Walmart's immense purchasing power. It seems Chouinard may be as shocked as I am, but this is no joke. See more below:



You can also learn more here: http://www.bloomberg.com/apps/harvardbusiness?sid=H2c7e044be78a5e6d144f9b45ab085921

Spotlight on Sustainability

The phrase "sustainable" is currently en vogue. But what does it mean? How do we live in a way that fosters not just our own prosperity, but the prosperity of our neighbors around the world and the prosperity of future generations? The very process of beginning to make sustainable choices, despite one's good intentions, can sometimes be exhausting.

Even companies like Walmart promote their green practices these days, offering everything from organic products to energy efficient bulbs. Goodness knows, everyone is making strides. And so, for many who begin the journey towards awareness on this issue, the natural conclusion may be why worry about carbon footprint, ethical production, or "green status" when it seems like everyone's doing it? Well, first off, most people are not doing it. And second of all, many campaigns are misleading. The number of truly sustainable middle-market options is still fairly slim.

While going green or being sustainable might be all the rage, sustainability really should be looked at as more than mere trend. Thankfully, a handful of organizations are working hard to create real standards and criteria to which companies, organizations, and other producers will have to measure up when it comes to labelling their products as sustainable. Take one example, the Pharos Project: "The Pharos Project seeks to define a consumer-driven vision of truly green building materials and establish a method for evaluation that is in harmony with principles of environmental health and justice." (Pharos Website) The goal behind Pharos' Lens and Label is to help people make wise and educated purchasing decisions and, although still fairly unknown in its ambitious forays, Pharos stands poised to add real value to the marketplace-go here for more info. Pharos is developing a labeling system that will help consumers cut through the profit-driven chaff to explain the process behind the product (before and after consumer use). In case you're wondering where the name came from, Pharos is one of the Seven Wonders of the Ancient World, the first lighthouse, which once sat on the island of Pharos just outside Alexandria warning travelers of impending doom if they erred too close to shore. Like LEED, a term completely foreign to most citizens' ears only a few years ago, I think we can expect big things from Pharos. Perhaps it's the name, or perhaps it's the aim, but I'm all for any organization that gives consumers more clarity in the marketplace, and encourages us to think bigger than today, tomorrow, and our 1000-some odd square feet of living space.

To learn more about the ancient Pharos, check out YouTube videos here or here.

Investing As More Than Just Dollars and Cents

After starting a new job recently and finally getting a 401K, I have been thinking a bit about where I would like to invest my money and what the things I believe most deeply about myself and the world might have to do with that. It is worth saying at the outset that I am a long-term thinker. I think in decades rather than years and am more interested in something making it through the long haul than giving me a quick bang for my buck. Hence, I have taken a significant amount of interest in socially responsible business practices. When it came to figuring out where to put my retirement money, I naturally looked for a socially responsible investing option. SRI funds are fairly new, and even some of the most savvy businessmen still aren't quite at their A-game when it comes to the topic of which funds are good, better, and best. When I went hunting for more information on the topic a few weeks ago, I found a scattering of articles but turned up few real results from the kind of business minds that I would trust.

However, today I came across a very intriguing article on the subject of socially responsible investing, which is absolutely worth a quick read. Entitled "A Walled Garden for Capital," the article addresses the fact that both companies and investors are more readily turning to socially responsible options in light of the recent financial crisis, which has highlighted the glaringly short-term mindness of many big businesses. The mantra of these businesses?: "Why worry about the environment now; it won't really affect us...Maybe our children's children's children, but we'll be fine;" OR "Oil is making a lot of money right now, even more because it is becoming scarce, who wouldn't want to put their money there?"! Meanwhile, the public is increasingly demanding more sustainable options-options that look not just to financial bottom lines. These options, says "Walled Garden" author Hazel Henderson,

base their attractiveness to investors on a long-standing perception that financial trustworthiness, commitment to environmental and social accountability, and high levels of long-term performance tend to go together. As they grow, they could have immense impact, not just on the portfolios of their investors and the balance sheets of the companies involved, but on the financial system as a whole.

This newly-trended approach to doing business is cropping up everywhere. Take, for example the spinach I bought recently from Whole Foods: the box proudly declares that the company that sells it donates a portion of profits back to struggling children. This sort of thing, however, is more than mere trend. Things like the Whole Foods model are not just for the socially aware anymore. More and more people are realizing that if we want people to keep living on this earth, we have to look out for more than just ourselves.

Merely thinking about being socially responsible is often enough to raise a few hairs. Converting one's ways to ones that are more environmentally and socially conscious isn't always easy, and the procedure doesn't fit into a nice, simple box that can be drawn upon at a moment's notice. Instead, the process of becoming more socially responsible involves a great deal of thoughtfulness and care. Hence the rise of "the walled garden" referred to in the aforementioned article. This "garden," if you will, involves set standards that businesses have to maintain in order to stay inside the confines. They can grow and thrive, as long as they don't go outside certain boundaries. It similarly means that consumers do not have to blindly trust what companies and businesses tell them, but instead trust the word of a larger entity that is holding both businesses and investors accountable. A great example of this kind of monitoring entity is the US Green Building Council's LEED Accreditation System, which "provides building owners and operators a concise framework for identifying and implementing practical and measurable green building design, construction, operations and maintenance solutions." (USGBC website) Green buildings are popping up everywhere and showcasing some really unique features, such as green roofs, and solar-powered LED lights. And with the LEED standards in place, building something green has become much more than an idea or a cause for the sake of cause-mindedness. It has pushed builders to consider ways to make buildings more livable, and subsequently helped people think about how to thrive instead of merely survive. For a really cool look into this topic at USGBC, check out the relatively-new LEED for Neighbhorhood Development rating system.

When it comes to SRIs, sustainable practices, and eco-friendly wares, there are rules; there is right and wrong; and there is effort to look more deeply into the grey areas. Yes, this sort of thing is nothing short of business ethics. But while some may groan and gripe, today's marketplace is starting to show that this approach works-that thinking about more than profits can actually prove better for the business in the long-term than hard-nosed adherence to a single-bottom line. Myopism might have worked in the past-worked, mind you, in the sense that it got businesses through one day and to the next-, but that sort of simple-mindness just isn't going to cut it anymore. If financial upheaval is any indication of future trends, we'd best heed the warnings of those once-considered crazy hippies and start making a few changes. Instead of simply plowing forward thinking only about what is good enough for now, the time is ripe to start thinking about what is good enough for those children's children's children, all those things that can't always be quantified by mere dollars and cents, but are consequently worth infinitely more.