Strategic implementation

Strategic Management
Strategic Implementation
Prepared By
Prof. Jitendra Patel
Assistant Professor
Prestige Institute of Management
and Research. Indore.
4/1/2020 1
Jitendra Patel, Assistant Professor, PIMR,
Indore

Module Description
1. Definition of Strategic Implementation
2.Operationalzing Strategy.
3. Steps in Implementation.
4. Annual Objectives
5. Functional Strategy.
6. Developing & Communicating Policies.
7. Mc Kinsey's 7s Model
8. Institutionalizing Strategy
9. Matching Structure to Strategy
10. Leadership & Culture.
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Definition
“Strategy implementation is the process by
which strategies and policies are put into
action through the development of programs,
budgets and procedures.”
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The Nature of Strategy Implementation
• Strategy formulation is positioning forces before the action.
• Strategy implementation is managing forces during the action.
• Strategy formulation focuses on effectiveness.
• Strategy implementation focuses on efficiency.
• Strategy formulation is primarily an intellectual process.
• Strategy implementation is primarily an operational process.
• Strategy formulation requires good intuitive and analytical
skills.
• Strategy implementation requires special motivation and
leadership skills.
• Strategy formulation requires coordination among a few
individuals.
• Strategy implementation requires coordination among many
individuals.
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Strategic Formulation Vs Strategic Implementation
Strategy Formulation
1. Strategy Formulation includes
planning and decision-making involved
in developing organization’s strategic
goals and plans.
2. In short, Strategy Formulation is
placing the Forces before the action.
3. Strategy Formulation is an
Entrepreneurial Activity based on
strategic decision-making.
4. Strategy Formulation emphasizes on
effectiveness.
5. Strategy Formulation is a rational
process.
6. Strategy Formulation requires co-
ordination among few individuals.
7. Strategy Formulation requires a great
deal of initiative and logical skills.
8. Strategic Formulation precedes
Strategy Implementation.
Strategy Implementation
1. Strategy Implementation involves all
those means related to executing the
strategic plans.
2. In short, Strategy Implementation is
managing forces during the action.
3. Strategic Implementation is mainly an
Administrative Task based on strategic
and operational decisions.
4. Strategy Implementation emphasizes
on efficiency.
5. Strategy Implementation is basically
an operational process.
6. Strategy Implementation requires co-
ordination among many individuals.
7. Strategy Implementation requires
specific motivational and leadership
traits.
8. Strategy Implementation follows
Strategy Formulation.
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Operationalizing Strategy
• Well-implemented strategic planning provides
the vision, direction and goals for the
organization.
• operational planning translates that strategy into
the everyday execution tactics of the business
that will ultimately produce the outcomes
defined by the strategy.
• Most companies would receive a failing grade for
their operational planning efforts. This is largely
due to a lack of understanding of how such
planning should be done
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Operationalizing Strategy
• The biggest difference is that organization must
adjust their thinking to the day-to-day business
operations and consider all the constraints,
inhibitors and accelerators that must be
evaluated and factored into tactical planning.
• The discipline required is a mix of strategic
planning with good old fashioned program and
project management.
• Operational planning must be done if strategic
goals are to be accomplished
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Steps in Strategic Implementation
i)Resource Allocation.
ii) Organization Structure Design.
iii) Planning Framework.
iv) Leading and Staffing.
v) Change and Communication.
vi) Evaluation.
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Resource Allocation.
This has vital significance in strategy
implementation. In a single product firm, it may
involve assessment of the resource needs of
different functional departments. In a multi
divisional organization, it implies assessing the
resource needs of different SBUs or product
divisions.
Methods of resource allocation include use of:
i. Percentage of sales or profits
ii. BCG matrix
iii. Budgeting system
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Organization Structure
Appropriate organization structure is to be designed to
make strategy implementable. The relation between
strategy and structure is established based on
organizational life cycle, corporate development stages
and international businesses. Organization design
involves changes like:
Job design- Making the jobs more challenging by job
analysis and role redefinition.
Reengineering- Reengineering is a radical redesign of
business process to achieve major gains in cost, service
and time. It is an effective way of implementing turn
around strategy. It breaks away old rules and
procedures
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Planning Frame Work
The managers involved in implementation should plan and develop
programmes, budgets and procedures. They should also work for
achieving synergy among the divisions and functional areas in order to
maintain distinctive competence.
• Programme
Programmes make strategy action oriented. Ex: Reliance vertical (forward)
integration strategy for growth.
• Budgets
This begins after programmes. It is a check on the feasibility of selected
strategy. Budget is expression of programmes in quantitative terms.
Without budgets implementation becomes impractical
• Procedures
After programmes and budgets, studied operating procedures (SOPS)
must be developed. They detail the various activities that must be carried
out to complete a corporation’s programme. The change during the
change process, Ex: Mc Donald’s developed very detailed procedure to
ensure that policies are carried out in its fast food retail outlets.
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Leadership and Staffing
Implementation involves leading people to utilize
their abilities and skill efficiently and effectively
to meet organizational goals. Leaders are the key
organic elements, who help the organization cope
with changes. Failure of leadership may result in
goal incongruence, communication break down,
ambiguity etc,.
Leaders help in transformation in three phases
 Recognizing need for revitalization
 Creating a new vision
 Institutionalizing change
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Staffing
• Staffing issues involve hiring new people with
new skills, firing unskilled or inappropriately
skilled people, or training employed to acquire
new skills. Staffing requirements are likely to
follow a change in human resource strategy
relating to number and quality of people.
• Eg:
GE’s aircraft engine group used training to
maintain its market shone even though work
force was cut from 42,000 to 33,000 between,
1991 to 1993.
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Downsizing Involves
Elimination of unnecessary work
 Contract out those works that can be
done cheaper
 Plan long run efficiencies
Communicate the resources for
downsizing
 Invest in remaining employees
 Develop value added jobs.
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Change and Communication
• Change is inevitable during implementation.
Rationale for strategic changes should be
communicated to workers through newsletters
and speeches and even in training programmes.
• Companies in which major cultural changes took
place have the following.
 The CEO with strategic vision, who
communicated their vision to employees at all
levels and constantly compared themselves with
competitors for updating.
Vision , that is translated into key elements for
implementation. They are widely communicated
through contests, recognition, rewards etc.
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Evaluation
• The importance of strategic evaluation lies in
its ability to coordinate the tasks performed
by individual managers, and also groups,
division or SBUs, through the control of
performance. In the absence of coordinating
and controlling mechanisms, individual
managers may pursue goals, which are
inconsistent with the overall objectives of the
department, division, SBU or the whole
organization.
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Annual Objective
• Establishing annual objectives is a
decentralized activity that directly involves all
managers in an organization. Active
participation in establishing annual objectives
can lead to acceptance and commitment.
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Why Annual Objective are needed
• (1) represent the basis for allocating
resources;
• (2) are a primary mechanism for evaluating
managers;
• (3) are the major instrument for monitoring
progress toward achieving long-term
objectives;
• (4) establish organizational, divisional, and
departmental priorities.
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Annual Objectives
• Considerable time and effort should be
devoted to ensuring that annual objectives are
well conceived, consistent with long-term
objectives, and supportive of strategies to be
implemented.
• Approving, revising, or rejecting annual
objectives is much more than a rubber-stamp
activity.
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Characteristics of Annual Objective
• Annual objectives serve as guidelines for action,
directing and channeling efforts and activities of
organization members.
• They provide a source of legitimacy in an
enterprise by justifying activities to stakeholders.
• They serve as standards of performance.
• They serve as an important source of employee
motivation and identification.
• They give incentives for managers and employees
to perform. They provide a basis for
organizational design.
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Purpose of Annual Objectives
• Annual objectives should be Clearly stated and communicated
• Objectives are critical to success in all types and sizes of firms.
• Annual objectives, stated in terms of profitability, growth, and market
share by business segment, geographic area, customer groups, and
product, are common in organizations.
• Objectives should be consistent across hierarchical levels and form a
network of supportive aims.
• Horizontal consistency of objectives is as important as vertical
consistency of objectives. For instance, it would not be effective for
manufacturing to achieve more than its annual objective of units
produced if marketing could not sell the additional units.
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Essential of Annual Objectives
• Annual objectives should be measurable
• , consistent,
• reasonable,
• challenging,
• clear,
• communicated throughout the organization,
• characterized by an appropriate time dimension, and
• accompanied by commensurate rewards and sanctions.
• Too often, objectives are stated in generalities, with little operational
usefulness.
• Eg: Annual objectives, such as “to improve communication” or “to improve
performance,” are not clear, specific, or measurable.
• Objectives should state quantity, quality, cost, and time---and also be
verifiable. Terms and phrases such as maximize, minimize, as soon as
possible, and adequate should be avoided.
• Annual objectives should be compatible with employees’ and managers’
values and should be supported by clearly stated policies.
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Developing Functional Strategies
• Functional experts like R&D, operations, finance, marketing
and human resources devise functional strategies.
• The characteristics of Functional strategies are as follows.
 Short term
 They provide short-term operational details for achieving
long term
 objectives systematically.
 Limited scope
Functional strategy deals with a relatively restricted plan,
which provides the objectives for a specific function, for the
allocation of resources among different operations within
that functional area and for enabling coordination between
them for an optimal contribution to the achievement of the
business-and corporate-level objectives
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Developing and Communicating
policies
• Policies are directives designed to guide the
thinking, decisions, and actions of managers
and their subordinates in implementing a
firm’s strategy
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Creating Policies That Empower
1. Policies establish indirect control over independent
action
2. Policies promote uniform handling of similar
activities
3. Policies ensure quicker decisions by standardizing
answers to recurring questions
4. Policies institutionalize basic aspects of
organization behavior
5. Policies reduce uncertainty in repetitive and day-
to-day decision making
6. Policies counteract resistance
7. Policies afford managers a mechanism for avoiding
hasty decisions
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Advantages of Formal,
Written Policies
1. They require managers to think through the policy’s
meaning, content, and intended use
2. They reduce misunderstanding
3. They make equitable and consistent treatment of
problems more likely
4. They ensure unalterable transmission of policies
5. They communicate the authorization or sanction of
policies more clearly
6. They supply a convenient and authoritative reference
7. They systematically enhance indirect control and
organization wide coordination of the key purposes of
policies
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Skills
Strateg
y
Style
Syst
ems
Super
ordinat
e
goals
Stru
ctur
e
Staff
Mckinsey 7’ S Model

1. Structure refers to the authority relationships,
the hierarchical arrangement of positions in the
organization.
2. Systems’ may be called the ‘infrastructure’ and
include sub-systems relating to production
planning and control, cost accounting
procedures, capital budgeting, recruitment,
training and development, planning and
budgeting, performance evolution, etc. Rules,
regulations and procedures constitute ‘systems’
in the framework, which complement the
organizational structure.
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3. Strategy refers to the long range plan of
action with a set of goals for accomplishment
Structure Super ordinate goals Strategy
Systems Skills Style Staff.
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4. Staff ’ carriers a specific meaning in the 7-S framework. It refers to
the way organizations induct young recruits into the mainstream of
activities and the manner in which they manage their careers as the
new entrants develop into managers.
5. Skills refer to the ‘distinctive competence’ which reflects the
dominant skills of an organization, and may consist of competence
in terms of engineering skills, or competence in the area of new
product development, customer service, quality commitment,
market power, and so on.
6. Style is another variable, which may determine the effectiveness of
organizational change effort. According to the 7-S framework, the
style of an organization becomes evident through the patterns of
actions of the top management team over a period of time, the
emphasis laid on aspects of business, reporting relationships and
aspects of organizational culture.
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7. Shared values (or super ordinate goals) in the
Mckinsey model refer to the set of values and
aspirations that go beyond the formal statement
of corporate objectives. In other words, these are
fundamental ideas around which a business is
built and which constitute its main values.
Typical examples are: Hewlett-Packard’s
“innovative people at all levels in organization” as
the dominant aspiration or value; A T & T’s
“universal services” goal; “customer service”
which guides IBM’s marketing drive.
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Significance of Mckinsey 7’ S Model in
Strategic Planning
It provides a good framework of the seven ‘s’ and
align them to energies and executive strategies
It is an excellent multivariate model of
organizational change
It provides a convenient means of checking
whether an organization has the necessary
conditioning for implementing strategy.
Organizational capabilities (strengths and
weaknesses may be evaluated along each of the
seven dimensions)
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Institutionalization Strategies
• Steps in Institutionalization Strategies
1. Needs Assessment
• Conduct a needs assessment.
2. Teamwork
• Know your organization and stakeholders.
• Who are the leaders and policy makers on your
Organization?
• Who are other stakeholders?
• How can stakeholders become involved in
activities and/or in advisory capacities?
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Steps in Institutionalization Strategies
3. Administrative Support
• Garner support from Top Management ,
departments, and service units organization -
wide; create linkages and collaborations.
4. Professional Development for Staff and
Managers:
training and development of Staff for cross
cultural change and continuous update
upgrading and advance Change.
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5.Customer Development for Students
• Consider ways to get Development customer
and new way to reach them .
6.Promotion and Advertisement
• Communicate the change to market, Staff and
Customers
• Raise the visibility
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7.Network with External Organizations /
Strategic Group
• Develop a regional model with a set of
consistent practices. Work collaboratively and
individually with companies working in Same
Strategic Group.
8.Evaluation
• Measure the impact of your Strategies.
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Matching Structure to Strategy
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Jitendra Patel, Assistant
Professor, PIMR, Indore
12 | 38
Implementing Strategy Through
Organizational Design
Figure 12.1
Organizational structure, control, and culture shape people’s
behaviors, values, and attitudes – and determine how they will
implement an organization’s business model and strategies.
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Building Blocks of Organizational
Structure
 Grouping tasks, functions, and divisions
How best to group tasks into functions – and functions into
business units or divisions to create distinctive competencies and
pursue a particular strategy
 Allocating authority and responsibility
How to allocate authority and responsibility to these functions and
divisions
 Integration and integrating mechanisms
How to increase the level of coordination or integration between
functions and divisions as a structure evolves and becomes more
complex
An organization structure assigns people to tasks
and connects the activities of different people and
functions:
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 Group Tasks, Functions and
Divisions
– Organizational structure – follows the range and variety of
tasks that an organization pursues.
– Companies group people and tasks into functions and then
functions into divisions.
• A function is a collection of people who work together and perform
similar tasks or hold similar positions.
• A division is a way of grouping functions to allow an organization to
better serve its customers.
• Handoffs are the work exchanges between people, functions, and
subunits.
Bureaucratic costs result from the inefficiencies surrounding
these handoffs.
Choice of structure is made on its ability to implement
company’s business model and strategies successfully:
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 Allocating Authority and
Responsibility
• Organizational Structure
– Span of control (number of subordinates)
– Tall versus flat organizations
 Flexibility  Communication problems  Response time
 Expense  Distortion of commands
• Decision Making: Centralized versus Decentralized
– Delegating and empowering employees
 Requires fewer managers  Reduces information overload
 Increases motivation and accountability
– Centralized decisions
 Easier coordination of activities
 Decisions fit broad organizational objectives
To economize on bureaucratic costs and effectively
coordinate the activities, company must develop a
clear and unambiguous hierarchy of authority :
Principle of the Minimum Chain of Command:
Choose hierarchy with the fewest levels of authority necessary
to use organizational resources efficiently and effectively.
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Tall and Flat Structures
Figure 12.2
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 Integration and Integrating
Mechanisms
• Direct contact
– Creates a context within which managers across functions or
divisions can work together
• Liaison roles
– Increases coordination
– Gives one manager in each function or division the
responsibility for coordinating with the other
• Teams
– Use when multiple functions share mutual problems
Integration and integrating mechanisms:
are used to increase communication and
coordination among functions and divisions
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Organizational Structure and Strategy
• Organizational structure specifies:
– The firm’s formal reporting relationships,
procedures, controls, and authority and decision-
making processes
– The work to be done and how to do it, given the
firm’s strategy or strategies
• It is critical to match organizational structure
to the firm’s strategy.
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Benefits of Organizational Structure
• Effective structures provide:
– Stability
– Flexibility
• Structural stability provides:
– The capacity required to consistently and predictably
manage daily work routines
• Structural flexibility provides for:
– The opportunity to explore competitive possibilities
– The allocation of resources to activities that shape
needed competitive advantages
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Relationships between Strategy and
Structure
• Strategy and structure have a reciprocal
relationship:
– Structure flows from or follows the selection of
the firm’s strategy but …
– Once in place, structure can influence current
strategic actions as well as choices about future
strategies.
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Strategy
and
Structure
Growth
Pattern
Sales Growth
Coordination and Control Problems
Efficient implementation of
formulated strategy
Simple Structure
Functional Structure
Sales Growth
Coordination and Control Problems
Multidivisional Structure
Efficient implementation of
formulated strategy
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11–48
Strategy and
Structure Growth
Pattern
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What is Structure?
• How the firm is organized?
• Includes
– Reporting relationships
– How coordination is achieved
– Authority
– Degree of centralization
– Degree of integration
– Formalization
• Used to control, coordinate, and motivate
employees and the activities they perform
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Structuring the Work Effort to Promote Successful Strategy
Execution
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Implementing Strategy - Culture & Leadership
•Creating strategy-supportive corporate culture
- what is culture?
- where does it come from?
- strong v. weak cultures
•Creating good fit between strategy & culture
•Building ethical values & support into culture
•Driving implementation through strategic leadership
•Leading the process of corrective adjustments
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Culture is a set of shared values, attitudes…
‘a way of life’…. Patterns of ‘how we do things around here’, the
company lore…
Unique to business philosophy, principles & strategy…manifested
in values, practices, standards & policies..
Can originate anywhere but usually by founders & leaders
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•Can be a very powerful tool in implementation process
- system of informal values, peer pressures, standards &
culturally acceptable behaviour & identification with
strategy & vision.
•Can energise org. in strategy-supportive way
•Sizeable mismatch weakens management actions
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•Emergent & embedded cultures
•Multiple cultures & sub-cultures
•Strong / adaptive / entrepreneurial cultures
•Weak / unadaptive cultures
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•Culture reinforced through value system, reward system,
co. lore, ceremonies, rites
•Continuity of leadership, small size, stable groups,
geographic concentration & org. success all contribute to
strong culture.
•Being overly political, hostile to change, not valuing
initiative & leadership, complacency & insular thinking all
contribute to weak cultures.
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References
1. David, F.D. (2011), “Strategic Management Concept And Cases”,
Thirteenth Edition, Prentice Hall, South Carolina, USA.
2. Dess, G.G., Lumpkin, G.T. and Marilyn, L. T. (2005), “Strategic
Management”. 2 ed. New York: McGraw-Hill Irwin.
3. Hitt, M. A. , Ireland, R.D., and Hoskissen, R.E. (2007), “Strategic
Management Competitiveness and Globalization: Concepts and
Cases”, Seventh Edition, Thomson South Western.
4. Ihrig , M and MacMillan, I (2015) “MANAGING YOUR MISSION-
CRITICAL KNOWLEDGE” Harvard Business Review, 81-87.
5. Kazmi, A. (2008),“Strategic Management & Business Policy, Tata
McGraw-Hill Publishing Company Limited, New Delhi.
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References
6. Key Differences.com. (2016), “Strategic Formulation Vs Strategic
Implementation”, Retrieved from
https://keydifferences.com/difference-between-strategy
formulation-and-strategy-implementation.html, Last Assessed on
15 September 2016.
7. Nedelea, S. and Păun, L.A. (2009) “The Importance of the
Strategic Management Process in the Knowledge-Based Economy”
, Review of International Comparative Management , 10(1), 95-
105.
8. Neilson, G.L., Martin, K.L., and Powers, E. (2008), “ The Secrets to
Successful Strategy Execution”, Harvard Business Review. 1-21.
9. O. C. Ferrell, Michael Hartline (2014), Marketing Strategy, Text and
Cases Sixth Edition South-Western Cengage Learning.
10. Olsen, E (2009), “Strategic Planning Kit For Dummies”, 2nd Edition,
Willey Publication.
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