When formulating and executing your business strategy, it is important to ensure that everyone in the company understands the overall direction and that their work is linked with the business’ objective and goals. But how to achieve that exactly? This is where cascading strategy helps to create results.
Cascading the business strategy means arranging and translating the strategy along the organization’s structure or processes so that everyone in the organization is fully aligned behind the business’ objective and goals and works together to achieve them.
Effectively cascading your strategy can be the difference between a strategy existing only on paper and moving an organization to action – and to results. However this is much easier said than done. Read on to learn how 3 considerations help you cascade your strategy and deliver excellent results.
The Merriam-Webster dictionary defines a ‘cascade’ as “something arranged or occurring in a series or in a succession of stages so that each stage derives from or acts upon the product of the preceding” (source).
In business, cascading means translating strategic priorities from a higher hierarchical level to a lower level or from one function to another. It is a way of aligning the strategy throughout the organization and engaging people in the strategy process.
Engaging everyone in the business is not only important to communicate the strategy and create transparency, but also to connect each function and job role with strategy execution. Nowadays, people really want to be involved. And a higher level of involvement and engagement has tremendous benefits.
A 2016 meta analysis by Gallup found that organizations with high levels of engagement achieved 20% increase in sales, were 21% more profitable and 17% more productive than organizations with low levels of engagement1.
A study by LSA Global went one step further and found that highly aligned organizations grew their sales 58% faster and were 72% more profitable2.
These are astounding findings. However when reflecting about what happens when people are involved and when they feel fully engaged, the findings are not so surprising at all. Consider the following questions:
- Do you remember the last time you felt that you were really clear about how you contributed to the overall business goals?
- Can you recall an instance when you felt that the work you did contributed to a larger cause?
- Or can you remember how you felt knowing that what you did had meaning to your customers, to your business or to the people you work with?
I remember such times vividly. And in most of these occasions I felt significantly more effective. When I am working on tasks that are directly linked to the success of the business or when I know the meaning of the work I am doing, I am significantly more productive and more happy at work.
Cascading ensures that each person’s role is connected to the overall business strategy and that everyone has a stake in its implementation and the success of the business.
Now that’s profound. How do you create such levels of clarity and engagement via cascading strategy?
3 considerations for cascading strategy
There are three important considerations for cascading your strategy throughout your business:
- Cascading can take place vertically and/or horizontally
- Alignment can be direct and/or indirect
- The process of cascading is reiterative
Vertical and Horizontal Cascading
Vertical cascading means breaking down the strategy from a higher level of the organizational hierarchy to a lower level.
For example, the corporate strategy is broken down into the divisional strategies or the divisional strategy into departmental strategies. Cascading means that the individual lower level strategies together roll back up into the higher level strategy. Hence, successfully achieving the divisional strategies would result in the successful delivery of the corporate strategy.
Horizontal cascading means breaking down a business strategy into the various functions that work together to deliver the business strategy.
For example, a divisional strategy is broken down into the sales & marketing strategy, production strategy, sourcing strategy and people strategy. Again, delivery of each of the functional strategies would ensure that the overall business strategy is achieved.
In practice, cascading a strategy is typically a mix of vertical and horizontal cascading. The important part is that the strategies perfectly align to ensure that the organization works together to achieve the overall business objective and goals.
When cascading the strategy, each division, department, team or individual should ask the following questions:
- How can I contribute to the achievement of the higher level strategy?
- What initiatives and actions can we/I take that result in the achievement of the objective and goals?
Direct and Indirect Alignment
Direct alignment means that everyone is working towards the same goal: a team or individual directly contributes to the achievement of a goal.
Consider for example a sales goal. The business aims to achieve $1 million growth in revenue or +10%. The goal is broken down into a sales goals for each business unit or product line as follows:
|Product Line 1||+ 500,000|
|Product Line 2||+ 300,000|
|Product Line 3||+ 200,000|
|Total Sales Growth||+ 1,000,000|
Each of the product lines are now directly aligned with the overall $1 million growth goal.
Indirect alignment means that different teams or different individuals are working towards an overall goal in their own specific ways.
For example, consider the goal to improve customer satisfaction by 10 points. This is a goal several functions need to contribute towards in their own ways, including Sales, Operations, Product Quality etc.
- Sales may target to increase customer interactions.
- Operations may set a supply chain fulfillment target.
- Manufacturing or Product Quality may set a yield or defect rate target.
- …and so on.
No single function may be able to achieve the overall goal by itself, it takes a concerted effort of indirectly aligned goals and initiatives.
The process to cascade goals and strategies is reiterative and truly a team effort.
In my experience, cascading is most effective when it is not a one-way street. All too often goals are set top-down by a superior passing down her goals to her team. And the team leaders then pass down their goals further to their team members. This way may be quick but may not lead to engagement or buy-in.
A more effective way to cascade goals is to build in a feedback loop. The higher organizational level engages in a discussion about its goals with the lower level. Priorities are discussed and clarified. The lower level asks questions and proposes initiatives to achieve the goals and in turn sets goals for its own actions.
This reiterative process can be performed vertically, cascading the strategy down the hierarchy, and horizontally, aligning the strategy across functions or divisions.
As noted above, people are much more productive when they are engaged. And including everyone in the strategy process is a great way to increase engagement through involvement.
Ok – enough theory. So how do you actually cascade? A simple strategic tool such as OGSM can help to document the business strategy and cascade it throughout the organization. Let’s start with what OGSM is and how it can help.
Cascading strategy using OGSM
OGSM stands for Objective, Goals, Strategies and Measures. It is a one-page business plan which depicts what you are aiming to achieve and how you are going to achieve it.
Whether you are defining a 3-5 strategic plan or an annual operating plan, the OGSM aligns the objective and goals with the strategies, initiatives and actions needed to execute the business strategy. This creates clarity in the organization about the business’ priorities.
In addition, the structure of the OGSM excellently lends itself to cascading the strategy. The objective and goals jointly describe what the organization targets are. The strategies and measures jointly define how they are going to be achieved. At the same time, objectives are qualitative, goals are quantitative. Strategies are qualitative, measures are quantitative.
When cascading the OGSM, the higher level’s strategies and measures become the lower level’s objectives and goals. The following graph depicts this relationship.
This allows cascading the business strategy both vertically and horizontally and links every division’s and team’s objectives, goals, strategies and measures with the overall direction of the business.
When cascading the OGSM this way, build in the 3 elements above including vertical and horizontal cascading, direct and indirect alignment, and designing the process in a reiterative way in your team.
If you would like to learn more about OGSM, click here to read our introduction to the OGSM methodology or explore our OGSM examples.
Teams that are clear about the business strategy and understand how they can directly contribute to its implementation are more productive and achieve better results.
Cascading your strategy throughout the business ensures clarity and alignment.
When cascading your strategy consider vertical and horizontal cascading, direct and indirect alignment, and building in a reiterative feedback loop.
The OGSM methodology is a great way to engage your team in the strategy process and effectively cascading the strategy throughout your organization.