The cost of strategic disagreement

Think about your organization: Does it sometimes seem like everyone’s doing their own thing and not aligning on strategic objectives?

Are there members of your leadership team who openly disagree with decisions that are made? Or worse—do they disagree, say nothing, and act in opposition to your strategic plan?

These are just two ways strategic disagreement impacts organizations. 

Strategic disagreement has a cost.

There’s a financial cost to lack of alignment on organizational strategy. Take BMW, for example. We recently quantified what strategic disagreement cost the German manufacturer in an e-book—and it was approximately $10 billion. 

Now, not every organization will have such a hefty price tag for misalignment, but we’ve found that strategic disagreement can cost a company up to 25% of its revenue.

Beyond the financial implications, strategic disagreement has hidden costs. It creates confusion down the organization when the strategy isn’t clear or keeps changing. It results in conflicting goals, which decrease internal resources and create frustration. It paralyzes progress, as leadership is unable to make clear decisions to move forward when objectives are constantly revisited. 

There’s also the emotional cost of tension within executive teams. This overt or unspoken disagreement, when left unaddressed, can result in goals being sabotaged by leaders who work against strategic objectives. 

Without a clear business strategy, you can’t develop a talent strategy.

The 2020 State of Talent Optimization Report found that only 37% of companies have a talent strategy. 

Imagine you’re on a sports team (pick your favorite sport): Your goal is to win. But what happens if you don’t have a plan of how to use your people (your team) to get there? Your chances of winning the game are up in the air. Without a talent strategy, you leave business results to chance. 

Talent strategy impacts how you develop employees, make new hires, establish and maintain company culture, and structure your organization to support your business strategy. But without a clear business strategy in place, none of these important people decisions can be made. As a result, your talent may not be aligned with your business strategy—and your objectives may fall flat.

It’s important to have clarity and agreement around a business strategy so you can create an equally clear talent strategy.

How do you identify strategic disagreement?

In our experience, executive teams—before we help them get to alignment—agree on no more than 70% of strategy. Sometimes they only agree on 50%. Before any strategy can be implemented, it must be agreed upon—but you can’t solve strategic disagreement until you measure it.

Using simple tools—such as the PI Strategy Assessment™—you can measure the degree of agreement on strategy among any team. It’s critical to use data to drive this consensus. That data should consist of two things: which strategic activities senior leaders believe should be priorities, and how confident leaders are in the organization’s ability to execute that strategy. 

While that might sound like an arduous process, it’s not. It takes only a few minutes, is painless, and doesn’t require a complex strategy-debriefing exercise prior to surveying leaders. Despite its simplicity, this exercise of gaining agreement can save your business a lot of time, money, and frustration.

How do you align leaders on strategy?

Once you have the data in hand, you can start to look at where there’s disagreement and where leaders are aligned.

A combination of analytical software and experienced facilitation can bring the executive team together to systematically and thoughtfully get to agreement on strategic goals. 

In addition to alignment on strategic objectives, you also want to be mindful of confidence levels. If leaders are aligned on strategic initiatives but have low confidence in their ability to achieve those goals, you must create a plan to address that gap before you can execute.

This is where mapping your talent strategy to your business strategy is critical. Strategies don’t execute themselves; people execute strategies.

With a clear strategy, results can more easily be achieved.

The State of Talent Optimization Report also found that senior leaders spend an average of 61% of their time on people problems. Imagine the progress that could be made if that time were allocated to more strategic work.