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The Denver Broncos:

A Lesson on the Importance of Strategic Alignment

January 28th, 2016

One of my current clients has offices in the Denver and Boston areas, so while a die-hard Patriots fan, I had to hold my loyalties in check at a meeting the Friday before the AFC Championship game. Now that the game is over, I can say how much the game pained me. Though closer than it should have been, it never really felt like the Patriots were in control at any point. While the Denver defense is very good, I don’t think they are quite the 1985 Bears, the 2000 Baltimore Ravens or the 2002 Tampa Bay Buccaneers. Then again, Denver was up against Tom Brady — not Tony Eason, Kerry Collins or Rich Gannon.

I believe, to apply a metaphor from a different sport, Denver “punched above their weight class,” and the reason for that was perfect strategic alignment. One week earlier, the Pats beat the vaunted Kansas City Chiefs’ defense (Editor’s Note: Lamar Hunt Jr. is a neighbor here in suburban KC. Sorry, Lamar.) by getting the ball out in short, crisp passes in about 2.5 seconds. In the championship game, Denver focused on three integrated strategies.

First, they believed their defensive front was so good — and the Pats offensive line so injured — that they could disrupt Tom Brady in 2.5 seconds or less without blitzing regularly. In their minds, their advantage over the competitor in this aspect of the game was such that they did not need to “overinvest” resources.

Second, they believed the Pats’ running game was so weak that they could “underinvest” against it. When facing a strong running team, defenses invest by putting “eight men in the box,” meaning the defensive line, linebackers and one safety play up close to stop the opponent’s running back. By not fearing the run, AND acting on that, the Broncos could free up the safety and the linebackers to drop back in pass coverage.

Third, by having seven men available for pass coverage, the Broncos could “overinvest” in guarding the main Patriot threats: tight end Rob Gronkowski and wide receiver Julian Edelman. The Broncos had seven or eight defenders to cover four or five receivers, with that coverage starting right at the line of scrimmage. If a Patriot receiver beat his man at the line of scrimmage, there would be another Bronco right there to pick up coverage.

The result? In the first second or two after most snaps, Tom Brady saw none of his receivers open. In the next two seconds, he saw or felt the Denver pass rush about to hit him. Patriot receivers were rarely uncovered, and if they were, Brady was often unable to throw the ball accurately to them because of the pass rush.

Regardless of your feelings about football, there is a lesson here for management and boards. Companies must not only articulate a sound strategy after careful study, they must also align the elements of that strategy and have commitment behind those elements. Strategy is fundamentally about resource allocation. Unfortunately, managers often talk in whispers about “peanut buttering” when it comes to resources (e.g., all operating costs need to be held to 2% growth; capital expenditures are limited to depreciation expense across all business units; retail store capital must be spent equally for remodeling and for new stores).

The Broncos’ success in the AFC Championship game illustrates the benefit of a sound strategy backed by the conviction to allocate resources in accordance with that strategy. Don’t overinvest where it is not needed; do underinvest opportunistically and overinvest in those areas that give you the greatest chance for success. At the highest level, corporate strategy is about differentiated resource allocation across a portfolio of business opportunities. Absent the alignment between the stated strategy and resource allocation, implementation of the strategy cannot succeed.

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