Implementing Strategies - the step that differentiates between success and failure of strategic planning.
To discuss in detail, the strategic implementation process and also to understand the management and operational nuances of a successful implementation. The topic spans across vital tools such as annual objectives, organizational structure, reengineering, performance culture and process improvements. The research paper also brings out the challenges of implementation, which are much complex to solve, and makes it even more difficult to implement the formulated strategies. This research also authenticates the fact that there is a pre-requirement for special set of programs/ initiatives etc to prepare an organization towards change - in the terms of people's acceptance towards the new implementation. (www.csuchico.edu/mgmt/strategy/module/sld044.html)
The strategy management process does not end when the firm decides what strategy to pursue. There must be a translation of strategic thought into strategic action. This translation is much easier if the managers and the employees of the firm understand the business, feels as part of the company, committed to the organization's strategic intent.
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Implementing a strategy affects the firm from top to bottom; it also affects all the functional/ divisional areas of business. Even the most technically perfect strategy plan will serve little purpose if it is not implemented.
Many organizations tend to spend an inordinate amount of money, time and resources in developing strategic plans; but lets them wither out once change or uncertainty creeps in, failure of implementation is not only a setback but erodes the confidence of the firm and brings it back to worse than the pre-strategic scenarios leading to management failure and organization chaos.
Research Aims & Objectives
Startegy formulation concepts and tools do not differ greatly between small, large or bigger firms, but the implementation varies substantially among different types and sizes of organizations. As the implementation will affect many aspects of the organization like the altering of sales territories, expanding financial budgets, changes in the pricing model, developing new employee benefits, establishing cost-control procedures, changing marketing approaches, building on infrastructures for ehnaced products and services, better management information systems, launching new organization wide development projects and initiatives. This research paper exactly focusses on these aspects and try to elucidate the managerial and operational perspectives in breif details with respect to strategy implementation.
An individual project research covering many corporate strategies - internet links, strategic business books, executive management journals, the Harvard Business Review magazines and various case studies. Some articles were also used as references in the Strategy Focused Organization written by the Robert Kaplan & David Norton duos. Few were read from various SEM websites, through the search engine Google. It is more of a desktop based literature research and translating the understanding into research paper/ article.
Discussion - Management Perspectives
The transition from formulation to implementation requires a shift un responsibility from strategists to divisional/ functional managers. Managers and employees are motivated more on perceived self-interest than organizational interest, hence it is essential for the top management to translate these goals in alignment with their personal/ functional goals, so a message is sent across that achieving these small set of goals leads to achieve the super ordinate organizational goals. These will let the management focus on establishing annual objectives and then breaking them down to functional objectives, devising policies and procedures to act as a general guideline for steering the functionalities, followed by allocating resources (material, money and men), restructuring and regrouping if necessary to align to the need of the organizations' strategy, structured communication programs to reduce resistance for change, revising the rewards and the incentives plans, developing a strategic support culture, adapting to synergetic operational and production processes and developing an effective HR function.
Management changes are necessarily more extensive when strategies to be implemented move a firm in a major new direction. The managers should start involving in strategy implementation process right from the early stages so as to maintain the commitment towards the end results and transfer the confidence to grass root level so that their team members are also motivated to work towards the agreed objectives - both functional and organizational. Top-down flow of communication is essential for developing bottom-up support. Every employee should be able to benchmark his/her efforts against best-in-class competitors so that the challenge becomes personal, on the other hand the firm should provide the best training for both managers and employees to ensure that they have to acquire and maintain skills necessary to be world-class performers.
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Strategic management should not become self-perpetuating bureaucratic mechanism. Rather it must be a reflective learning process that familiarizes managers and employers in the organization with key strategic issues and feasible alternatives for resolving those issues. It must not become ritualistic, stilted, orchestrated or too formal, predictable and rigid. Always remember to keep the strategic management process simple but effective, jargon-free but content rich. Words supported by numbers should be represented as the medium for explaining strategic issues and organizational responses. A key role of strategist is to facilitate continuous organization change and learning that enhances the next perspective - production & operations (HR, Learning, Culture and Leadership aspects as well).
Discussion - Production/ Operations (Learning, HR) Perspective
The production or operations perspective constitute more than 70% of the firms total routine strategy or operational strategy. These limitations can significantly enhance the risk of non-attainment of the desired objectives as they are back bone of the business development/ market expansion focuses of the organization. Production related decisions on plant size, plant locations, product design, choice of equipments, kind of tooling, size of inventory, inventory control, quality control, cost control, use of standards, job specialization, employee training, equipment and resource utilizations, shipping and packaging and technological innovations can have a dramatic impact on the success or failure of strategy-implementation efforts.
Factors that should be studied before locating production facilities include the availability of resources, make or outsource decisions, margin of production costings, the location of major markets, political risks in the area/ region. For high technology companies, production costs may not be as important as production flexibilities because major product changes can happen more frequently. This also results in cross-training of employees in various production platforms leading to:
- Reduction in substantial investments in training & learning activities.
- Workers skill level gets cross-pollinated and resulting in higher efficiency.
- It can reduce the thrust of managers responsibility in training/ and make them focus more towards coaching and mentoring.
- It reduces time gaps and hence gains on productivity levels are easily expected.
You have to understand your industry well to develop the connection between process improvements and outputs achieved. Take three divisional examples of cycle-time measurement, a common process measure.
For much of our defense business, no premium is earned for early delivery. And the contracts allow for reimbursement of inventory holding costs. Therefore, attempts to reduce inventory or cycle times in this business produce no benefit for which the customer is willing to pay. The only benefits from cycle time or inventory reduction occur when reduction in factory-floor complexity leads to real reductions in product cost. The output performance targets must be real cash savings, not reduced inventory levels or cycle times.
In contrast, significant lead-time reductions could be achieved for our packaging machinery business. This improvement led to lower inventory and an option to access an additional 35% of the market. In this case, the cycle-time improvements could be tied to specific targets for increased sales and market share. It wasn't linear, but output seemed to improve each time we improved throughput times.
And in one of our agricultural machinery businesses, orders come within a narrow time window each year. The current build cycle is longer than the ordering window, so all units must be built to the sales forecast. This process of building to forecast leads to high inventory-more than twice the levels of our other businesses-and frequent overstocking and obsolescence of equipment. Incremental reductions in lead time do little to change the economics of this operation. But if the build cycle time could be reduced to less than the six-week ordering time window for part or all of the build schedule, then a breakthrough occurs. The division can shift to a build-to-order schedule and eliminate the excess inventory caused by building to forecasts. In this case, the benefit from cycle-time reductions is a step-function that comes only when the cycle time drops below a critical level.
So here we have three businesses, three different processes, all of which could have elaborate systems for measuring quality, cost, and time but would feel the impact of improvements in radically different ways. With all the diversity in our business units, senior management really can't have a detailed understanding of the relative impact of time and quality improvements on each unit. All of our senior managers, however, understand output targets, particularly when they are displayed with historical trends and future targets.
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The concept of learning organization (cultural intervention in strategy) is emphasized here as part of the changing business model to suit the strategic intent. Learning organizations are characterized by total employee involvement in a process of collaboratively conducted, collectively accountable change directed towards shared values or principles. (Watkins and Marsick 1992: 118). The basic rationale for such organizations is that in situations of rapid change only those that are flexible, adaptive and productive will excel. For this to happen, it is argued, organizations need to 'discover how to tap people's commitment and capacity to learn at all levels'. While all people have the capacity to learn, the structures in which they have to function are often not conducive to reflection and engagement. Furthermore, people may lack the tools and guiding ideas to make sense of the situations they face. Organizations that are continually expanding their capacity to create their future require a fundamental shift of mind among their members.
When you ask people about what it is like being part of a great team, what is most striking is the meaningfulness of the experience. People talk about being part of something larger than them, of being connected, of being generative. It becomes quite clear that, for many, their experiences as part of truly great teams stands out as singular periods of life lived to the fullest. Some spend the rest of their lives looking for ways to recapture that spirit. For Peter Senge, real learning gets to the heart of what it is to be human. We become able to re-create ourselves. This applies to both individuals and organizations. Thus, for a 'learning organization it is not enough to survive. '"Survival learning" or what is more often termed "adaptive learning" is important - indeed it is necessary. But for a learning organization, "adaptive learning" must be joined by "generative learning", learning that enhances our capacity to create'
The learning organizations require a new view of leadership. He sees the traditional view of leaders (as special people who set the direction, make key decisions and energize the troops as deriving from a deeply individualistic and non-systemic worldview. At its centre the traditional view of leadership, 'is based on assumptions of people's powerlessness, their lack of personal vision and inability to master the forces of change, deficits which can be remedied only by a few great leaders'. Against this traditional view he sets a 'new' view of leadership that centers on 'subtler and more important tasks'.
In a learning organization, leaders are designers, stewards and teachers. They are responsible for building organizations were people continually expand their capabilities to understand complexity, clarify vision, and improve shared mental models - that is they are responsible for learning.... Learning organizations will remain a 'good idea'... until people take a stand for building such organizations. Taking this stand is the first leadership act, the start of inspiring (literally 'to breathe life into') the vision of the learning organization, which is also part of the structural intervention, a part of planned change or Organization Development.
Successful Strategy formulation does not at all guarantee successful strategy implementation, although they are sequential in nature, but the latter simply means 'the change' actually. It is widely agreed that the real work starts after strategies are formulated. It is sometimes frightening to think a single individual, a system failure, a process hiccup or a disturbing structure would completely sabotage the success of the strategic implementation and achievement of the agreed objectives. So the actual grounds have to prepare in terms of managing human resources and political relationships, creating a strategy supporting conducive climate/ culture, adapting to the right kind of systems, operations and processes.
Depending on the size and type of the organization other management issues could be equally important to successful strategic implementation.
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- S. Ghoshal & C.A. Bartlett, Changing the role of management - beyond structure to processes, HBR 73, 1(1995); 88 - 90.
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- Translating strategies into action, course notes on published by HBS - Feb 1990.
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- Implementing Strategies: Management & Operations Issue, Fred R. David, South Carolina University, 2006 Prentice Hall Edition, 245 - 261.
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- Peter Senge on Learning Organizations in the American Management Journal, (Senge 1990: 340)
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- Readings from Strategic Management by Charles W.L. Hill & Gareth R. Jones, 4th Reprinted 2000 Millennium Edition.