Unlocking Hidden Profitability in Leadership
Helping clients unlock hidden profitability is my expertise, and I have written previously about how it can be found in the three primary components of any business…leadership, people, and systems.
The more I have worked with organizations, particularly large ones, the more I have found the greatest source of untapped profitability is with leadership. It isn’t because leaders aren’t smart, passionate, energetic, and full of ideas. They’re all of those and more. I’m continually amazed by the brilliant leaders I meet.
The primary reason I see for the hidden profitability within leadership is the tyranny of the urgent. By that I mean they are flying around from meeting to meeting, working on numerous initiatives simultaneously, and putting out daily fires. That frequently squeezes out any time they may have to focus on strategic issues like corporate identity, customer needs, employee engagement, and communication.
In this post I am going to showcase one leader who has made the deployment of a focused strategy priority number one in his large organization, and give you a path to accomplish similar results.
The 8 Pillars of Strategic Alignment
Several months ago I had a discussion on leadership with James Schenck, CEO of Pen Fed, which at $18 billion in assets is the nation’s third largest credit union.
When I think of how James leads Pen Fed, the thought that immediately comes to mind is tight strategic alignment around a very focused strategy. The diagram below shows what I call The 8 Pillars of Strategic Alignment.
As James said, it all starts with knowing who you are, and who you are not. You cannot be all things to all people, and all the other 7 strategic pillars flow from Pen Fed’s identity.
Pen Fed has built their strategy based on their identity, and member needs and experience are assessed and developed within that strategic context.
Pen Fed’s identity, strategy, member needs, and desired member experience are communicated constantly throughout the company. This communication brings clarity and focus to employees, and their performance is measured by metrics reflecting the desired strategic outcomes.
Innovation is a significant part of what Pen Fed does, but of course it is within the context of who they are, what their strategy is, and the type of member experience they want to achieve.
If you consider these 8 Pillars of Strategic Alignment as a process that cycles continually, it is not difficult to imagine significant velocity and momentum building and increasing as Pen Fed grows in their knowledge of members and how to serve them while holding fast to their identity and focused strategy.
The 8 Pillars of Strategic Alignment
Misalignment Breeds Hidden Profitability
What Pen Fed has achieved with their strategic alignment is challenging for any organization, let alone one as big as them. However, simply because something is difficult does not mean it is not worthwhile. My son complains about his basketball practices being hard, but so what? That’s how we all get better.
There are great perils to not having Pen Fed’s level of strategic alignment. For one, it is impossible to build the cycle of increased velocity and momentum if an organization is out of alignment, because out of alignment means out of control.
As you can imagine, misalignment can occur in any of the 8 Pillars. Not having clarity on your corporate identity can leave everything else in disarray. A clear identity with an unfocused strategy is no better, and so on.
Misalignment causes what I call hidden profitability. This is like earnings available to a company but inaccessible because they are locked in a vault and the door won’t open. Strong strategic alignment opens the door and lets the hidden profits accrue to your company.
While I have worked for and with large and reputable financial institutions ranging from 5,000 to 50,000 employees, not one of them came remotely close to Pen Fed’s level of strategic alignment, and they all fell short of what they could have been.
What about your organization?
Strategic Alignment Exercises
Answer each of the five questions below yourself, then ask your entire board, management team, and a sampling of front line people to do the same exercise. Now compare answers with your board and management team. If the answers are similar, your alignment is probably strong. If the answers vary widely, you have some work to do.
- Who Are We? What are our strengths? What is our brand?
- What is our strategy?
- Who are our customers, what are their needs, and how do they rate their experience with us?
- What positions need to be in place to execute our strategy, and how is the performance of each role measured against strategy?
- What new ideas, investments, or acquisitions are we considering? How strongly do they correspond to our identity and strategy?
- A more detailed discussion on hidden profitability and its impact on velocity is available if you desire to read further.
Free Velocity and Hidden Profitability Assessment
CEOs of qualified companies can receive a free 60 minute velocity and hidden profitability assessment. This could be just what you need to more tightly focus your direction, increase your speed, and have an amazing year. Call 479.263.0774 to see if you qualify.
Scott McClymonds blends strategy, insights, and execution to help CEOs and their teams dramatically increase profitably, delight customers, and build strong competitive advantages. He is an expert at creating business velocity and converting hidden profitability into real profits. Scott can be reached at 479.263.0774, [email protected], linkedin.com/in/scottmcclymonds, or @ScottMcClymonds.