Ensuring Everyone Agrees on the Diagnosis: The First Step to Strategic Alignment

Aligning individual goals

Organizations often focus on “what” the strategy should be—pursuing growth, entering new markets, or restructuring operations—without spending enough time on “why” and “how.” But before you can align individuals around goals and execution, you must secure agreement on the underlying diagnosis of the situation. In many companies, this step remains largely a “C-suite thinks; everyone else follows” exercise. Below, we explore why that happens, who the key players are in forging a shared diagnosis, and how different strategic thinkers might weigh in on creating this foundational alignment.

1. Why Getting the Diagnosis Right Matters in Alignment

A diagnosis explains the problem or opportunity an organization faces. If you start implementing solutions without a clear, shared understanding of why you are making those decisions, you risk misalignment, wasted resources, and frustrated teams.

Richard Rumelt, Good Strategy/Bad Strategy [1], argues that a good strategy starts with an honest diagnosis—recognizing the challenges and opportunities. Without an agreed-upon perspective, the subsequent guiding policies and coherent actions risk being disconnected from reality.

Yet, in many companies, the diagnosis is done quickly at the top, then rolled out in large “town hall” style meetings. The assumption is that once the top team has decided on the “real story,” everyone else will naturally follow suit. The problem? Business lines, functions, and front-line employees may not fully accept—or even understand—the rationale behind the top team’s assessment.

2. The Main Players in the Shared Diagnosis Game

Shared diagnosis is not just about passing information downward; it also involves capturing upward insights. The main players include:

1. C-Suite (Executive Leadership)

   • Role: Shapes the broad narrative and underlying assumptions about the external environment, competition, and internal capabilities.

   • Mindset: Often under time pressure and stakeholder scrutiny—especially from boards, investors, or the press. This drives a top-down approach: “We don’t have time to consult everyone.”

   • Risk: Overlooking valuable ground-level insights that could refine or challenge the diagnosis.

1. Middle Managers and Functional Leaders

   • Role: Operationalize strategy in specific areas—marketing, finance, operations, HR. They own “local” diagnoses informed by daily realities.

   • Mindset: Caught between ensuring day-to-day execution and interpreting top management directives.

   • Risk: Feeling mandated to align with a diagnosis they had little role in shaping, causing them to quietly resist or misinterpret it.

1. Front-Line Teams and Individual Contributors

   • Role: Carry out tasks that directly impact customer satisfaction, product quality, or service delivery.

   • Mindset: Possess practical, on-the-ground knowledge. They know what actually works or fails in real time.

   • Risk: Losing engagement if they believe top management’s diagnosis is disconnected from the day-to-day realities.

1. External Stakeholders (Customers, Partners, Regulators)

   • Role: Influence or validate the company’s assumptions about market trends, compliance, and customer behavior.

   • Mindset: Provide important feedback loops—especially if their perspectives on the company’s situation differ from internal beliefs.

   • Risk: Being ignored can lead to a flawed internal diagnosis that neglects actual market signals.

3. The Traditional (Vertical) Diagnosis Approach

Historically, companies have taken a “vertical” approach:

1. Executive Offsite- The CEO and top leadership (inspired by Michael Porter’s competitive analysis [2] or Bruce Henderson’s portfolio thinking[3]) analyze external trends, competition, and internal data.- They lock in on key assumptions (“Our low-cost advantage is eroding” or “We need to pivot to digital channels”).

2. Internal Memo or Town Hall- The diagnosis is announced: “We’ve concluded that X is our critical problem/opportunity.”- Functional heads and managers are expected to accept and act on it, setting their own objectives accordingly.

3. Narrow Input- The C-suite might solicit some feedback from handpicked individuals, but broad participation is limited—due to time, resource constraints, or fear of losing message control.

4. Rollout & Resistance- As the new “party line” hits the organization, minor or major pushback occurs: “Those people at HQ don’t get what’s really happening here.”- Misalignment ensues if local realities contradict the top-down story.

Why the C-Suite Prefers This Model

• Speed: As Alfred Chandler famously noted, “structure follows strategy,” and executives want to execute quickly. They worry that a wide, deliberative process with many managers would cause delays.

• Clarity of Command: A top-down diagnosis aligns with a Command & Control mindset, as if to channel Peter Drucker’s Management by Objectives in a simplified version: “We define objectives; you meet them.”

However, Henry Mintzberg criticized traditional strategic planning for ignoring “emergent strategy” from the grassroots. The purely vertical model can miss unforeseen threats or opportunities recognized only on the front lines.

4. The Risks of a Top-Down Diagnosis

1. Loss of Engagement

   • People support what they help create. If the diagnosis is seen as “fait accompli,” middle managers and employees might disengage.

2. Incomplete View of Reality

   • James March and Herbert Simon taught us about “bounded rationality.” A handful of executives may not see the entire complexity of the organization, leading to oversimplified or biased diagnoses.

3. Limited Adaptive Capacity

   • Companies must remain agile in a volatile, uncertain, complex, and ambiguous (VUCA) environment. If diagnosis remains top-down and static, the firm struggles to adapt when conditions shift.

5. Toward a More Collaborative Diagnosis

1. Cross-Functional Diagnosis Teams

• Borrow from Robert Burgelman’s idea of internal “strategic adaptation.” Create task forces that cut across silos—R&D, Operations, Marketing—to surface conflicting viewpoints and unify them into a shared perspective.

• Benefit: More robust data and a richer understanding of the challenges.

2. Periodic Check-Ins and Real-Time Feedback

• Following Rita Gunther McGrath’s approach to “transient advantage,” [10] keep a rolling diagnosis process. Leverage digital platforms, internal social networks, or short pulse surveys to gather insights across levels in near-real time.

• Benefit: Early detection of shifts before they become full-blown crises.

3. Dialogue & Sensemaking Sessions

• Rooted in Henry Mintzberg’s emergent strategy perspective, hold facilitated sessions where front-line teams share market or customer insights. Encourage managers to challenge the initial hypothesis.

• Benefit: Surfaces hidden risks or innovations and fosters collective ownership.

4. Shared Data Dashboards

• Taking cues from digital-era strategists like John Hagel (platform thinking) [9] or Ben Thompson (Aggregation Theory), unify information on a single platform.

• Benefit: Ensures everyone sees the same “facts on the ground,” reducing disputes about fundamental data.

5. External Perspectives

• Engage customers, analysts, and even vendors to gather outside-in feedback—an idea consistent with Chan Kim and Renée Mauborgne’s Blue Ocean Strategy [12], which advocates looking beyond traditional boundaries.

• Benefit: Expands the lens on the organization’s situation, preventing insularity.

6. Example: A Manufacturing Company Facing Disruption

Scenario:

• The C-suite of a large manufacturer sees a shift toward sustainable materials as a key market trend. They diagnose the situation: “We must reduce carbon footprint quickly or risk losing market share.”

Top-Down Rollout:

• They announce a new sustainability initiative, mandate R&D to switch raw materials, and instruct Supply Chain to source greener inputs.

• Middle managers, however, balk: “We don’t have the suppliers or the skill sets to shift so quickly.” Front-line staff resent the extra workload. The organization stalls.

Collaborative Approach:

• Cross-functional teams including Supply Chain, R&D, Marketing, and Finance come together to validate the shift in raw materials. They invite suppliers and select customers to early workshops.

• They uncover that certain “green” materials are not yet at industrial scale, so the timeline must adjust or consider partial adoption strategies. The final shared diagnosis includes market demand data, ROI projections, and pilot feedback.

• Buy-in is higher, and everyone has clarity on the urgent need, but also on realistic next steps.

7. Conclusion: The Time Spent Building a Shared Diagnosis is an Investment

Yes, involving more stakeholders in the diagnosis phase does consume time. The C-suite often fears that a broader consultation slows decision-making. However, Gary Hamel and C.K. Prahalad [11] famously argued for harnessing the “collective wisdom” of an organization to identify core competencies and future competitive advantages. That wisdom remains untapped if the top alone decides the diagnosis.

Balancing Efficiency and Accuracy

• Engaging multiple layers early can reduce costly realignment or resistance later.

• Agile techniques (short sprints, iterative feedback loops) can accelerate the process while maintaining broad input.

Leadership Imperative

• A real leader, as we often say, is the one who ensures the diagnosis isn’t just “the boss’s idea” but a truly shared understanding. In this sense, diagnosing the situation becomes part of ongoing leadership—much like Peter Drucker’s insight that management is about enabling people to perform.

In a world where “the only constant is change,” forging a common view of the situation is crucial to navigating uncertainties. When diagnoses remain top-down and insufficiently tested with ground-level realities, organizations risk misalignment and stunted execution. But when diagnosis becomes collaborative—blending the vantage point of the C-suite, the realities of middle management, and the insights from front lines—companies create a robust launching pad for strategy, performance, and innovation.

Picture by freepik.

[1] Rumelt, Richard. Good Strategy / Bad Strategy: The Difference and Why It Matters. Crown Business, 2011.

[2] Porter, Michael E. Competitive Strategy: Techniques for Analyzing Industries and Competitors. Free Press, 1980.

[3] Henderson, Bruce D. The Boston Consulting Group on Strategy: Classic Concepts and New Perspectives. (or his work on BCG growth-share matrix)

[4] Chandler, A. D., Jr. (1962). Strategy and Structure: Chapters in the History of the American Industrial Enterprise. MIT Press

[5] Drucker, Peter F. The Practice of Management. Harper & Row, 1954.

[6] Mintzberg, Henry. Mintzberg on Management: Inside Our Strange World of Organizations. Free Press, 1989. Or Mintzberg, Henry. The Rise and Fall of Strategic Planning. Free Press, 1994.

[7] March, James G., & Herbert A. Simon. Organizations. John Wiley & Sons, 1958. Or March, James G. A Behavioral Theory of the Firm. Free Press, 1963. Simon also: Administrative Behavior.

[8] Burgelman, Robert A. Strategy Is Destiny: How Strategy-Making Shapes a Company’s Future. Free Press, 2002. Or Burgelman, Robert A. “Internal Corporate Venturing and Strategic Management.” California Management Review.

[9] Hagel, J., III, & Brown, J. S. (2005). The Only Sustainable Edge: Why Business Strategy Depends on Productive Friction and Dynamic Specialization. Harvard Business School Press.

[10] McGrath, R. G. (2013). The End of Competitive Advantage: How to Keep Your Strategy Moving as Fast as Your Business. Harvard Business Review Press.

[11] Hamel, G., & Prahalad, C. K. (1994). Competing for the Future. Harvard Business School Press

[12] Kim, W. C., & Mauborgne, R. (2017). Blue Ocean Shift: Beyond Competing—Proven Steps to Inspire Confidence and Seize New Growth. Hachette Books.