Strategic alignment in the age of AI: The 7 foundations of competitive success

The strategy must align with the capabilities of the organization and the competitive reality of the environment. Such an alignment has never been more important, as artificial intelligence (AI) and other changes disrupt industries and sectors. Before rushing to adopt the latest AI tool, whether it is deep learning or large language models, organizations must assess whether the new tech is strategically aligned.

There are many companies, for example, whose strategy is to be the “Google of X” or the “OpenAI of Y” (insert technology or sector). Unfortunately, those companies are frequently not the best suited to achieve that position. Often it is Google or Open AI themselves who are best positioned to be the “Google of X” or “OpenAI of Y”. Does your organization have unique capabilities that are internally aligned with one another and externally aligned with the competitive position in an AI world to which you aspire?

Industries are becoming more knowledge intensive, requiring people to operate at a high level of abstraction and complexity. They are becoming more geographically spread across countries and cultures. Under these conditions, achieving alignment must be correspondingly intense and, likely, highly multilayered. You will need to pay even greater attention to making complex strategies easy to understand and execute.

Are the members of the organization well aligned on the mission and strategic vision for AI in your organization? Success accrues when team members are united about their “true north,” aligned on and executing against the strategy. There is beauty when such alignment occurs. These moments may be fleeting but when they happen, magic can result, and remarkable achievements take place.

Also read: A simple corporate strategy for a better political game

Three Types of Alignment

Strategic alignment is critical in at least three dimensions:

•     Alignment of strategy with mission and values, the capabilities of the organization, and the opportunities provided by the competitive environment. Such alignment is what we refer to as the Strategist’s Challenge. Too often, businesses and organizations look to follow industry leaders to adopt best practices. This is very much the case in the age of AI. This very well could lead to strategic misalignment as you pursue strategic positions that you are not best suited to attain.
  
  
•     Consider the highly successful University of Alabama football team. If your strategy is to mimic their actions, to follow their best practices, good luck! You likely do not possess the same set of capabilities they possess. Many successful organizations have built reputations and competencies over years of investment. Simply copying them is unlikely to prove fruitful. Jumping on the latest AI fad is likely not going to lead to success if it is not tightly aligned with your strategy.
  
  
•     Capabilities need to be internally and externally aligned with your aspired strategic position. Such alignment refers to the degree your capabilities work as a system that reinforce one another and your overall strategy.
  
  
•     Consider BMW. They position themselves as the “ultimate driving experience.” From engineering and design to manufacturing to sales and service, BMW possesses a set of complementary capabilities that align with their external value proposition. How can you lever AI to enhance your current capabilities and deliver on your value proposition? The success of BMW would not be possible if not for alignment along our third, and arguably most important dimension: people.
  
  
•     Aligning people with the desired strategic position and vision for the organization is critical. In high-performing organizations, employees and members understand their strategic mission and vision and are dedicated to achieving it. They become acolytes of their leaders and passionate advocates for their organizations. They see how their role contributes to the strategy of the organization and execute with a sense of purpose and teamwork. How many of your employees can articulate how your AI efforts advance your strategy?

Seven Foundations of Alignment

So how does one build such strategic alignment in an organization? Here are seven foundational conditions of success:

1.     Focus. Well-aligned organizations often have a simple and easily communicated strategy. They focus on an attractive but achievable competitive position. They aren’t distracted by the latest fad, only pursuing new opportunities that advance their core strategy.
2.     People. These organizations recruit and empower people who buy-in. Leaders build alignment by drafting those who have both the capability and the intent to execute. Similarly, they are willing to “trade” those who are unwilling to commit to the plan. Not doing so is a choice with consequences.
3.     Incentives. Well-aligned organizations ensure that metrics and incentives align with strategic objectives. They reward people who help advance the strategy and they craft collective incentives to make sure everyone is working together to achieve organizational ends.
4.     Honesty. Nothing kills the credibility and willingness of others to follow an executive team than an obvious falsehood. This includes sharing difficult news about the current situation or the competitive realities facing the organization. Well-aligned organizations, especially their leaders, tell the truth.
5.     Unity. Members of a well-aligned organization’s leadership team may disagree in private, but they stand as one in public. Leaders set and enforce norms of engagement. This does not mean criticism is not tolerated. Quite the opposite. Leaders must create the conditions under which healthy debate and dialogue is encouraged. If they do this, there should be no need to go public with disagreements.
6.     Celebrate. Well-aligned organizations celebrate achievements and milestones. They empower individuals by highlighting their contributions to the overall strategy. Leaders and members alike tell stories to highlight the values of the organization and their dedication to the mission. These stories help build and sustain alignment across the organization.
7.     Humility. These organizations understand that you cannot perfectly predict the future and may need to pivot. Your strategy needs to be dynamic, evolving as the world evolves. Leadership must embrace that that they cannot do this alone. They must have the humility to be wrong and to let everyone in the organization shine.

The Beauty, Power and Magic

In truth, strategic alignment may be rare. If you are fortunate, you can recall a situation where alignment occurred, allowing you and your organization to achieve incredible heights. These often happen in periods of great adversity where the need for alignment and action is very clear.

Perhaps you recall one of these where great achievements happened. What if that could happen most of the time? When strategic alignment occurs, it can be a thing of beauty as organizational members support one another and their mission, pulling together toward a common end. There is power when strategic alignment occurs, a certain magic that makes the possible real and the aspired achieved.

Mike Lenox is the Tayloe Murphy Professor of Business at the University of Virginia Darden School of Business, Senior Faculty Fellow at UVA's Miller Center and the author of Strategy in the Digital Age: Mastering Digital Transformation. Tom Schaumburg is an independent consultant with decades of experience as a practitioner in industry and decades of selling technology. He is a 1983 graduate of the Darden School of Business.