You may formulate a very sound strategy – well thought out and well written. However, if you fail to implement it successfully, your sound strategy will remain in black and white with yields. This is the reason why management specialists place equal importance on both the formulation and implementation of the strategy.
Strategy formulation and strategy implementation are two sides of a coin. And organizational managers create, hold, and maintain this coin with a careful look at both sides. In an endeavor to avoid organizational drift and lackluster results, managers of today’s organizations must proactively shape their organization’s business.
To build a clear road map to competitive advantage, business organizations need to develop a sound strategy but also must successfully implement the strategy. They need to be savvy in strategy execution. A strategy comes to be known as a winning strategy only when it is well executed.
However, strategy implementation is very complicated and time-consuming. As Thompson and Strickland put it, “Depending on how much consensus building, motivating, and organizational change is involved, the implementation process can take several months to several years.”
The top managers have to take the lead responsibility for both formulating and implementing strategy.
However, the board of directors of a company must exercise vigilant oversight over the implementation of a strategy to ensure that the strategic management process is carried out by the managers that would benefit the stakeholders, especially the shareholders/owners.
They should act as supportive critics and proactively evaluate the caliber of top-level managers’ strategy implementation skills (strategy formulation).
Needless to say, competent implementation and superior strategy-making make an organization distinctively different from other organizations.
Organizational performance is affected by both strategy-making and competent strategy implementation, and a business organization can highly expect to become a leading performer in the industry if its managers can proficiently implement its well-conceived strategies.
Since strategy implementation is an action-oriented activity, it revolves around the management of people and business processes.
Successful implementation of strategy depends on the following;
- resolving several issues,
- creating sound organization structure,
- managing organizational change,
- developing core competencies,
- creating valuable capabilities,
- leading people effectively,
- building people-management skills,
- integrating the work efforts of many teams of employees,
- working out measures to overcome ingrained inertia and the traditional attitude toward staying with the present practices,
- overcoming pockets of disagreement,
- securing the cooperation of all those who matter in the strategy implementation,
- motivating people,
- achieving continuous improvement in business processes,
- allocating adequate resources to various work teams,
- establishing strategy-supportive policies and corporate culture, and
- installing support systems.
10 Strategy Implementation Tasks
Although strategy implementation requires a customized approach, managers must perform some general tasks to implement the strategy successfully. Based on the eight-task prescription Thomson and Strickland provided, we describe the major strategy-implementing tasks.
However, from the lessons learned from experience with strategy implementation in different organizations, we suggest nine tasks for competent implementation of the strategy.
In this connection, managers need to gear their activities to meet company-specific situations. Company-specific consideration is inevitable due to the existence of a unique organizational climate and resource availability in each company.
Managers need to recognize that no two organizations are exactly similar; every organization has its philosophy, management styles, culture, policies, work procedures, strategies, and unique taboos (prohibitions/restrictions).
Dissimilarities of organizations in these issues require tailoring actions to meet the specific needs of each organization.
Exerting Strategic Leadership
Strategic leadership is a potential source of competitive advantage and, therefore, highly essential for successful strategy implementation. Strategic leadership is construed as the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary.
It is concerned with managing the entire organization and addressing the environmental changes in and outside the industry.
Successful strategic leaders in organizations effectively and gainfully influence the employees’ behavior and thoughts. They are capable of creating intellectual capital.
Strategic leaders have to perform their substantial decision-making responsibilities by themselves.
Although the main responsibility of strategic leadership rests with the CEO, other strategic; leaders include the board members, top management team, and often divisional general managers.
Without effective strategic leadership of these people in the organization, it is unthinkable to formulate and implement competitive strategies. The/must provide the needed leadership for strategy execution.
The winning leaders perform several tasks about effective strategy implementation:
- They keep themselves well-informed of everything that happens |n the organization.
- They closely monitor and review the progress in the process of strategy implementation.
- They learn lessons from success and obstacles.
- They develop a broad network of contacts and sources of information, both formal and informal.
- Many leaders practice MBWA (Management by Walking Around) through regular visits to the field and talking with people at different levels.
- They keep their organization responsive to changing conditions by encouraging people to be creative and innovative.
- They anticipate changes in market requirements and proactively develop new capabilities.
- They encourage compliance with ethical standards and remain committed to moral conduct.
- They lead the process of making corrective adjustments – deciding when and what to make.
Building a Capable Organization
A very high priority is given to building a capable organization in strategy implementation.
Giving top priority to this issue is justified because successful strategy implementation depends greatly on a sound organization.
And, an organization becomes sound when its employees are competent, its management structure matches its requirements, and it has high competitive capabilities. These are organization-building actions concerned with effective strategy implementation.
- Component-1: Developing competent personnel.
- Component-2: Competitive organizational capabilities.
- Component-3: Dynamic organization structure.
Linking Budget to Strategy
Effective strategy implementation requires reallocating resources to ensure that relevant business units/divisions/departments have sufficient budgets to do their work successfully.
Managers need sufficient funds to carry out their activities related to the strategic plan.
Senior managers responsible for preparing a budget in the company must take care of each unit’s budgetary requirements for strategy implementation.
Budgetary requirements must be determined carefully to make fund allocation judiciously.
This is very important because too little funding slows progress’ and creates obstacles on the way to implementing a strategy. Also, excess funding leads to the wastage of resources.
When managers change a strategy, resource reallocation becomes a necessity. If a particular unit has to play a more critical strategic role due to the changes, it may need more personnel, equipment, and facilities. Thus, there will be a need to increase the unit’s operating budget.
Sometimes, companies shift resources from one unit to another, downsize some units and upsize others to match the budget with the strategy.
For example, in a University, there was a practice of shifting officials/employees from area to area to organize and promote a new educational product or expand academic facilities.
Establishing Strategy-Supportive Policies and Procedures
The organizational policies and operating procedures/work procedures must ensure conformity with strategy. If deviations exist, .strategy implementation will be constrained. Strategy-supportive policies are essential, as they provide useful guides for decision-making.
Similarly, strategy-supportive work procedures or work practices are unavoidable as any deviation from the existing ones may create resistance from employees.
It is this important for managers of the company to formulate policies and procedures in such a way that they can provide support for effective strategy implementation.
Each change in the organization calls for a revision in policies and procedures if these are not in congruence with the new strategy.
When a company embarks on implementing a new competitive strategy, the senior managers should comprehensively review the company’s existing policies and procedures. They have to revise the policies if there is a need proactively. The policies that are incompatible with the present requirements should be discarded.
This sort of action is essential because every change in strategy or initiative for better implementation of strategy requires changes in work practices and in the behavior of employees.
A select set of policies and procedures is likely to steer the actions and behavior of employees in a direction favorable to strategy implementation.
New policies and work procedures help in strategy implementation in several ways.
First, they provide top-down guidance about how certain things need to be done. They help align employees’ actions and behavior with the requirements of effective strategy implementation.
They place limits on the independent actions of employees. They channel the efforts of people in the organization in a way conducive to good strategy implementation. They further help in overcoming resistance to change.
Secondly (in the case of a company having geographically scattered operating units), new policies and procedures facilitate enforcing consistency in how strategy-critical activities are performed.
The company can deliver consistent product quality and service to customers when there are consistencies in the operating practices of different plants, divisions, regional offices or customer service centers.
Thirdly, new policies and procedures promote the creation of a work climate that facilitates effective strategy implementation.
However, the creation of a conducive work climate essential for strategy implementation requires well-conceived policies and procedures.
Instituting Best Practices
Best practices refer to the innovative manner in which activities or business processes are performed by companies that are considered ‘best-in-industry’ or ‘best-in-world’.
To put it differently, best practices are those business activities of competitors or some other organizations that have successfully achieved business goals.
A company may have best practices, for example, in exceeding customer expectations or in motivating employees. A rent-a-car company, such as Cab One Limited of New York, can be proud of its best practice in the sophisticated use of information technology.
It might have developed its technology in such a way that the ‘station manager’.can see the location of any taxi cab in New York City on a computer screen and identify each taxi’s speed and direction as well as roads.
A company can identify the best practices of other companies through benchmarking.
Benchmarking is searching out the best practices of other companies. It finds out how well a company performs particular activities and processes against the best companies in the industry ‘(sometimes the best in the world). Benchmarking best practices and then adopting them is important for successful strategy implementation.
Best practices provide useful performance targets’ for a company to compare itself against other best performers. Such performance targets also help a company consider achieving them.
However, there is a caveat.
Exact copying of best practices is not desirable’ and also not feasible in most cases. Adaptation to company situations is .essential.
The best practices of other companies need to be modified to make them adaptable. As time passes on after adaptation, these adapted practices can be gradually improved.
The unique advantage of adopting the best practices of other companies is that they help develop distinctive competencies. These competencies, in turn, “contribute toward superior efficiency, quality, innovation, and customer responsiveness.”
However, the success in instituting best practices mostly depends on the mindset of the frontline employees who must agree to work as agents of change. They must be ready to abandon the old ways of doing things and, at the same time, must be willing to switch to a best-practice mindset.
Many large organizations, especially those competing globally, Involve themselves in benchmarking of best practices.
For instance! Xerox – the giant photocopier manufacturer – instituted a benchmarking policy in the 1980s and 1990s to identify ways to improve its operational efficiency.
It benchmarked one company for H distribution procedures, another for central computer operations, the third for marketing, and a different company for TQM.
Instituting Mechanisms for Continuous Improvement
Mechanisms for continuous improvement of business operations and processes (including products and services) are many.
Of them, three are widely used by corporate giants. These are;
- Business Process reengineering (simply called reengineering),
- Total Quality Management (TQM), and
- Six Sigma.
These continuous improvement techniques need elaboration. We provide a short explanation of them for a broad understanding of the readers.
Installing Support Systems
Successful strategy implementation entails the establishment of several support systems to carry on business operations.
Well-established support systems strengthen company capabilities and, at the same time, facilitate better implementation of the strategy. In the age of hyper-competition (shaped by globalization and the information revolution), companies need to install cutting-edge information systems and other relevant systems/operating capabilities.
Unless this is done wisely, they will fail to compete against their rivals with any strategy. State-of-the-art support systems provide a competitive edge over competitors.
Successful companies have a practice of installing required support systems for better execution of their business strategies.
For example, a company’s internet-related support systems include attractive websites, reliable server capacity, a credit card payment system, hardware, and software systems to handle order processing/invoicing/accounts receivables/inventory, etc. warehousing systems, and many more.
Designing Strategy-Supportive Reward Systems
The reward and motivation systems in the company need to be such that they promote better strategy implementation.
Strategy-supportive incentive systems substantially help in gaining employee commitment for strategy implementation. The reward systems should be linked with strategy-related performance.
High performers (i.e., employees with good performance) should be rewarded adequately to boost up their commitment Rewards can be given in the form of financial or non-financial incentives. Successful managers can effectively use motivational incentives/rewards as a tool for strategy implementation.
To effectively apply reward systems, managers need first to emphasize more financial incentives (such as higher salaries, bonuses, pension, provident fund facilities, gratuity, and stock options).
However, non-financial incentives are not less important.
Non-financial positive incentives include better job security, recognition of employees publicly, praising employees for good performance, good words about an employee in the company’s newsletter, challenging assignments, growth opportunities, rapid promotion, employee empowerment/decision-making autonomy, etc.
The reward system should be designed with careful consideration of several factors;
- The monetary payoff should be a major percentage of the compensation package.
- All managers and workers should get incentives.
- The reward system should be administered with care and fairness.
- The incentives should be linked to performance targets, which have been spelled out in the strategic plan.
- Each employee’s outcomes should determine the performance targets of each employee that he/she can personally influence in his/her arena of activities (not outside the arena of influence).
- Rewards should promptly be paid after the determination of good performance.
- Monetary rewards should be supplemented with the Hberal use of nonmonetary rewards.
- Skirting the system to reward nonperformers should be avoided. (It may be wise not to punish failure If the failure originates from circumstances beyond the employee’s control).
Building a Strategy-Supportive Corporate Culture
Strategy implementation becomes easier whenever a company’s culture is compatible with strategy. If there is a mismatch between the two, obstacles are created.
Managers need to change the culture when a corporate culture does not fit the new strategy. But it is easier said than done. Managers face a real challenge while transforming the existing inbuilt culture into a strategy-supportive culture.
Managers have two options:
- Change those facets or aspects of culture that have a misfit with the strategy’s requirements, or
- Modify the strategy to align with the existing culture if that culture is not an obstacle to strategy implementation.
Where does corporate culture come from?
Corporate culture originates from the sociological forces in the organization. Many components of corporate culture originate with the company’s founders(s) and other strong leaders. Corporate culture consists of values, beliefs, norms, work practices, management styles followed, and the overall company work environment.
All employees commonly share these. As defined by Hills and Jones, Organizational culture is the specific collection of values and norms that are shared by people and groups in an organization and that control the way they interact with each other and with stakeholders outside the organization.”
Values (i.e., beliefs and ideas) and norms govern how employees can behave inside the organization.
A company may have a dominant culture and subcultures. When most employees share the organization’s core values, the culture is dominant.
It is the macro-view of culture. When a particular department, unit, or company office has its value system, then subculture develops in that area.
However, in ‘subculture, core values are retained, but some additional values unique to that area are blended. Again, culture can be strong or weak.
In a strong culture, core values are widely shared. In a weak culture, core values are not intensely shared, which has less impact on employee behavior.
Research indicates that strategy-supportive corporate culture motivates employees to implement a strategy with their hearts and souls.
They are motivated because they find an environment where they feel enthusiastic about performing their duties: A strategy-supportive culture also provides a system of informal rules and peer pressure to do jobs.
Strategy implementers should keep in mind that conflicts between strategy and culture can result in perils by weakening employees’ commitment. Thus, for strategic success, culture has to be changed rather than making changes in strategy.
In a turbulent business environment, strategic success requires a culture that can support the company’s efforts in implementing a strategy.
That means an adaptive culture is a necessity for effective strategy implementation. It is the prime responsibility of the CEO/top leaders to ensure an adaptive cultural milieu so that employees find a strong fit between strategy and culture.
Designing Strategic Control Systems
An important task of managers is to design strategic control systems for successfully implementing a strategy. Strategic control systems provide managers with the tools to regulate and govern their activities.
In strategic control, managers first select strategy and organization structure and then create control systems to evaluate and monitor the progress of activities directed toward implementing strategies.
Finally, they adopt corrective actions through adjustments in the strategy if variations are detected. Strategic controls can be both proactive and reactive.
When proactive, control systems help in keeping an organization on track, anticipate future events, and respond to opportunities and threats. When reactive, strategic controls detect deviations after events have occurred and then take corrective actions.
Strategic control systems further help managers achieve superior efficiency, quality, innovation, and responsiveness to customers. Strategic managers can measure efficiency by comparing the total inputs with the total outputs (how many units of inputs are used to produce a unit of output).
Strategic managers create a control system to monitor the quality of products. When customers’ complaints are nonexistent or negligible, and customers hardly return the product (such as machinery/equipment) for repair, managers indicate the quality of products.
The strategic control system can also help in encouraging the employees to think about innovation through the decentralization of authority, empowerment of employees, and monitoring of the performance of each workgroup/team.
Lastly, the strategic control system makes employees more responsive to customers by evaluating and monitoring employees’ behavior and contact with customers.
Strategic controls are mainly of three types:
- Financial Control.
- Output Control.
- Behavior Control.
Managers use a financial control system to measure a company’s financial performance.
For effective financial control, they establish financial goals (e.g., growth, profitability, return to shareholders) and then measure the actual achievement of those goals.
In the case of the output control system, managers forecast performance goals for each unit and employee. They measure the actual performance of the units and employees.
Lastly, they compare the actual performance against the goals already set for them.
When the performance of employees or units is linked to the reward system, the output control itself provides an incentive structure for employee motivation in the organization.
A behavior control system refers to a comprehensive system of rules and procedures. These are prescribed to direct the behavior/actions of employees at each level of the organization.
Rules and procedures standardize the way of reaching goals.
Two forms of behavior control are;
- operating budgets and
- standardization of inputs, conversion activities (programming work activities so that they are done the same way time and again), and outputs.
Successful strategy implementation requires, among others, a control system that matches the organization’s strategy. Strategic managers should ensure that financial and output controls are supplemented with behavior controls to efficiently achieve goals.
Conclusion
This chapter deals with the Various strategy implementation tasks that strategy implementers need to take care of. Also, they must pay careful attention to the emerging changes that regularly occur in the organization.
The strategic management process in a business organization reaches the finishing line (although practically it never ends because of its ongoing nature due to continuous developments in the business environment) when the strategy managers undertake an evaluation of the strategic actions and make corrective adjustments wherever necessary.
This concluding issue will be addressed in the last chapter, and with that chapter, you will reach the end of the strategic management process.