Are the objectives of the initiative in line with customer values? If customers perceive the organization as trustworthy, might a process redesign that speeds up output damage customer relationships by reducing the level of quality? Or should a consulting firm that is known for its objectivity have a software implementation practice? If a company pays close attention to its social impact, what are the pros and cons of outsourcing manufacturing to a low-income country?

Will the initiative strengthen the link between organizational and customer values? Can the organization turn its profitability analysis process in the back office into a sales tool to make more competitive offers to its customers? Can the organization link its research and development skills into a program to provide water purifiers to third-world countries? Or can the organization turn its passion for on-time delivery into a selling point for new investors?

Furniture manufacturer IKEA is an excellent example of an organization that has aligned its values inside and out. IKEA is the largest and one of the best-known furniture brands in the world. It has 84,000 employees and operates 179 stores in 23 countries. The value proposition that draws customers to IKEA -- its ability to offer low-priced, functional furniture with a distinctive design -- is consistently communicated and carried out. Customers assemble the furniture and accessories themselves in order to keep down manufacturing costs. Customers generally pick up their items from the warehouse themselves (a system that was originally born out of capacity problems). And customers take their items home themselves. Delivery is a separate service that's marketed as being reasonably priced. This self-service atmosphere helps the company keep prices down, which is critical to customers' values.

Aligned with the customer self-service processes is a strong internal focus on cost control. Executives fly only economy class, and they don't have personal assistants, extravagant offices, or access to limousine services. One of the largest cost items is staff, but IKEA is not aiming to minimize employee costs across the board; instead, the company looks for ways to cut its staffing needs by making processes more self-service-oriented. In fact, employees are hired not primarily for their specific skills but because they share the same values as the company.

IKEA's customer and internal values are identical, and they're so rooted in the company that the strategy and value proposition are nearly impossible for IKEA competitors to copy. Having such clear internal and customer values greatly affects performance management. IKEA uses many of the same measures of success as other businesses, but it sometimes approaches performance from an entirely different angle. For example, one obvious performance indicator for a retailer is revenue growth. IKEA tracks revenue growth closely, but not as a measure of increasing shareholder value; rather, revenue growth serves as an indicator of customer satisfaction.

In successful companies, the customer value proposition and internal values are aligned. If they are not aligned, decisions always require a trade-off between customers and the company. IKEA's example shows that the old adage "what gets measured gets done" is not enough. The story behind the metrics is much more important than the metrics themselves. When a company's set of values is well-known, getting the metrics right and relating the story behind the metrics becomes much more of a derivative process.

How To Execute

The execution of a good strategy is at least as important as having that strategy in the first place. A company with no strategy but excellent execution may, in fact, be better off than a company with a good strategy that is badly implemented. Therefore, the first step in developing alignment is to put in place a measurement system to provide feedback on whether a strategy is working. There are many types of measurement systems; each has advantages and challenges. Regardless of which a company chooses, implementing it at the executive level and collecting feedback is not, by itself, enough to create focus and alignment. The measurement system has to be cascaded deep into the organization.