Why Strategies Fail at Execution
There are a myriad of factors that contribute to strategy execution failure or success. These factors may be grouped under the following categories:
All these factors are interdependent and influence each other and, to varying degrees, the success/failure of strategy implementation (or organizational change). Because they are interdependent and their influences are non-deterministic it is typically very difficult for managers to comprehend the contribution of these factors to the successful outcomes of strategy execution or organizational change success or failure. If an organization fails to pay proper attention to one of them, it can result in organizational change failure, therefore we need a systemic approach to understanding the influences of these factors.
Factors Contributing to Strategy Execution Success/Failure
There are a myriad of factors that contribute to strategy execution failure or success. These factors can be grouped into categories with respect to type and dimension of influence and on success/failure such as follows:
Complexity is the state of a system having many parts connected or related to each other. This is one of the biggest barriers to successful strategy execution. Complexity can be classified into Technical Complexity and Social Complexity.
This involves the presence of high levels of uncertainty and decision complexity.
The sources of Social Complexity may derive from:
Poor Leadership Style
Poor leadership results in the failure to clearly communicate the reasons for the new strategy and garner the appropriate support to create consensus and enthusiasm in order to overcome any pockets of doubt and resistance to change. In addition, poor leadership results in failure to orchestrate the processes and major initiatives as well as coordination of management and staff in properly performing their tasks to accomplish work.
A strategy is a way through a difficulty; an approach to overcoming an obstacle; a response to a challenge. A bad strategy is a strategy that does not define an approach/means to respond to a challenge (opprtunity/threat) or solve a known problem. It reflects an organization's failure to face the problem. A good strategy is a mixture of policy and action designed to surmount a challenge/problem.
Strategy execution involves strategic alignment and coordination of organizational behavior that drive actionable decisions. The strategic objectives and goals are cascaded to of cascaded to the appropriate actors in the organization with the capability and capacity to perform the actions that accomplish the requisite goals and objectives. This is essentially strategy alignment - linking strategy to actions at every level in the organization.
Bad Strategic Decisions
Bad strategic decisions are strategic decisions whose outcomes result in business failure/decline. Bad decisions may result from incomplete or short-circuited decision processes. The decision's outcomes are usually contingent on effects - the behavior of other actors (individuals or organizations) affected by the decision. These recursive relationships between decisions, decision outcomes, and effects on other actors' behavior make strategic decisions messier and more complex than operations decisions.
Strategic decisions are the product (outputs) of strategic decision-making processes. Strategic decision-making processes can be identified by the strategic 'issues', events or factors that trigger them. These triggers may include observed issues such as decrease in sales or sales growth, a new product entry by competitor(s); and events such as request for action from executive management, or simply a regular planning cycle. Strategic decisions are long-term in their impact; they affect and change the direction of the whole business/organization. Strategic decisions are among the main means through which management choices are actually realized. They are difficult or expensive to reverse because they substantially alter (and irrevocably so in the short run) the relationships between the decision makers' organization and customers, competitors, etc. Examples of strategic decisions include:
Poor planning may lead to strategy execution failure due to: bad or unrealistic schedules for project team members resulting waste of time and poor time management; l;ack of clear definition of strategy and project objectives; lack of buidgetary controls leading to misuse of funds, etc.
Why Strategies Fail at Implementation
Strategy implementation consists of all the decisions and activities/actions required to turn strategic choices, resulting from the corporate and business/competitive strategy formulation processes, into reality. It involves analysis to determine and close any gaps between where the organization is now (current state of Operating Model) and where it needs to be in the future (future state of Operating Model) as the strategies call for. if the there are no gaps, the strategy is implemented; otherwise there are invest decisions in initiatives and projects to formulate, establish and implement appropriate responses to close the gaps. Strategies are never fully implemented because the assumptions underlying the formulated strategy are constant flux, and keep changing requiring the strategic choices to be evolved in order to stay relevant and competitive.
Strategies fail at implementation for a myriad of reasons including the following factors that empirical evidence show have the most critical impact:
All these factors are interdependent and influence each other and, to varying degrees, the success/failure of strategy implementation (or organizational change). Because they are interdependent and their influences are non-deterministic it is typically very difficult for managers to comprehend the contribution of these factors to the successful outcomes of strategy implementation or organizational change success or failure. If an organization fails to pay proper attention to one of them, it can result in organizational change failure, therefore we need a systemic approach to understanding the influences of these factors.
Detailed Discussion of Impact of Contributing Factors
The factors that contribute to the success/failure of organizational change are:
The leadership style affects implementation by driving the strategy, maintaining focus, being visionary, and acting as a driver for change management necessitated by the new strategy. Leadership is a role of top management and comprises managing strategic processes, managing relationships within the organization, managing managers' training. This role has the following responsibilities: coordinating activities, streamlining of processes, aligning organizational structure with strategy, keeping employees motivated and committed to strategy implementation, and enhancing communication within the organization.
Poor leadership is reflected in the following ways:
Information Availability and Accuracy
Information systems support the decision-making process through the quality and quantity of information available for executives and management to use in decision-making. Availability of information systems to support fast and accurate progress tracking, timely intervention, and corrective action at the right time and place.
Uncertainty - Effects of Uncertainty
Uncertainty is a state of having limited knowledge of current conditions or future outcomes. Uncertainty deals with possible outcomes that are unknown; and is a major component of risk, which involves the likelihood or scale of negative consequences. Risk is a certain type of uncertainty that involves the real possibility of loss.
Uncertainty is reflected in the following ways:
Organization structure provides an explanation of the decision-making process, clarifies roles and responsibilities, allocates human resources, and ensures a level of flexibility to respond to unexpected circumstances. The organization structure design with focus on effectively managing complexity and coordination and control of organizational behavior is critical as the cascade grows because the structure and operating principles as well as governance of the organization becomes more complex and critical to manage. Within the structure, rules, policies, and procedures are uniformly and impersonally applied to exert control over organizational members’ behaviors.
Poor Structure - the lack of structure alignment with strategy (structure follows strategy) - is reflected in the following ways:
Organizational culture is the collective behavior of humans who are part of an organization, and the meanings they attach to their actions. Culture includes the organizational values, visions, norms, working language, systems, symbols, beliefs and habits. Culture manifests itself in the particular way things are done in an organization including how decisions are made. It affects who gets hired, how they get trained (formally or informally), what behaviors get rewarded, who gets promoted, and virtually all organizational procedures and administrative protocols.
Organizational culture can be supportive of the following: Learning and Development (Growth), Participatory Decision-Making, Power Sharing, Support and Collaboration, Tolerance for risk and conflicts. The implementation of the strategy can fail due to cultural misalignment such as:
Human resources are the people that comprise the workforce including managers of an organization. Human resources represent one the category of assets employed by an organization to create and deliver products and services to customers. Human resource management is a function in an organization that is concerned with ensuring that the organization obtains and retains the skilled, committed and well-motivated workforce it needs.
Strategic human resource management is concerned with the role of Human Resource Management Systems in organization performance, particularly focusing on the alignment of human resources as a means of gaining competitive advantage. Poor Human Resource Management is reflected in the following ways:
Technological trends include not only the glamorous invention that revolutionizes the lives of the actors in the organization and its environments, but also the gradual painstaking improvements in methods, in materials, in design, in application, unemployment, and the transportation and commercial base nd their diffusion into new industries and efficiency.
The rate of technological change varies considerably from one industry to another. Changing technology can offer major opportunities for improving goal achievement, or threaten the existence of the firm. Lack of organizational capability to adapt to technology changes is reflected in the following ways:
Strategic Issues Diagnosis & Modeling
In most organizations and enterprises strategic planning involves the identification and formulation of strategies (i.e., corporate, competitive, operational and functional), and development of plans to guide implementation and execution of these strategies. In order to deliver value, a strategy has to enable change and adaptation of the organization to a problem; this requires that there are known problems to be solved. Yet identifying these problems is hard, partly because of complexity induced by the complicated structures (composed of many interrelated sub-problems, possibly from different domains, e.g., such as expressed through business architecture domains, etc.) of these problems, uncertainty due to incomplete information, and turbulence in the environment.
Identifying problems of strategic relevance and formulating appropriate strategies to respond to these problems is difficult. It often requires you to build a model of the problem, collect some data and information to test your hypotheses and assumptions underlying the problem to even discover what the real problems are to solve. The process is akin to an “empirical discovery loop” that enables systematic discovery and formulation of problems in complex real world situations such as strategy and policy making. Deciding how to solve the problem creates the need for more information and analysis, and simulation.
Strategic issues diagnosis (problem formulation) and strategy formulation involve decision-making processes that are distinct but related/linked. The nature of strategic decisions makes it possible for example, for decision makers e.g., managers within an organization, to have widely varying and incorrect beliefs about environmental factors such as market facts, for example:
These beliefs influence the choice of assumptions underlying the manager’s strategic decisions and determine decision success/failure. Most managers don’t understand that their choice of assumptions is arbitrary influenced by their beliefs and that they might not accord with reality so strategic decisions logically flowing from bad/erroneous assumptions can lead to bad/poor decisions which can in turn lead to poor/bad decisions and ultimately to strategies failing at execution.
Strategic Issues Diagnosis Modeling
The substantive outputs of the strategic issues diagnosis processes including assumptions, cause-effect understandings, and predictive judgments can constrain or facilitate decision-making during the issues diagnosis and subsequent strategy formulation stages of strategic management. Analytical models of the diagnosis substantive outputs include elements such as assumptions, cause-effect understandings, and predictive judgments as well as symbolic output of elements such as domain language and labels. Assumptions and cause-effect understandings, tacitly accepted or consciously explicated, are materialized in the form of predictive judgments. Some examples of predictive judgments include:
The Value of Modeling Strategic Issues Diagnosis
Modeling strategic issues diagnosis has a number of benefits including:
Ideas, Strategy & Strategic Ideas
An idea is a way of doing things never attempted or succeeded before; a "strategy" is a well thought out "approach to reach a goal. While an idea is a real new way of doing something; a strategy need not be a new approach of achieving a goal. Most of the time a strategy is chosen from among a set of "proven" strategies. Some examples include:
A strategic idea is a way of doing things that is;
There are many more such strategies known to businesses, as well as new ones; but the strategy you choose must fit your situation and objectives in order for it to succeed. In essence, you need to have a thorough understanding of your company, the business, the market and customers in order to choose the right right strategy to reach your goals.
Organizational change is both the process and "product" (output) of strategic decision making process. It involves the transformation and evolution of organization system elements (e.g., operating system components such as competencies and capabilities, policies and procedures that define institutional arrangements, organization structures, human systems growth, etc.) in order to better respond to and adapt to changes in its environment including opportunities, threats, and strategic issues).
Successful organizational change is driven by successful strategy development (formulation and implementation) and execution in response to identified strategic issues and diagnosed underlying problems. Organizational change not linked to a strategy that address well defined problems has a high likelihood of failure. The following are some logical steps that can improve an organization's chances of successfully implementation organizational change:
There a myriad of factors that influence the success/failure of organizational change similar to those factors that influence strategy implementation and execution failure/success. All these factors are interdependent and influence each other as well as organizational change implementation success/failure to varying degrees. Because they are interdependent and their influences are non-deterministic it is typically very difficult for managers to comprehend their contribution to organizational change success or failure. If an organization fails to pay proper attention to one of them, it can result in organizational change failure, therefore we need a systemic approach to understanding the influences of these factors.
Strategic decisions are the product (outputs) of strategic decision-making processes. Strategic decision-making is an ongoing cognitive process whose outcomes are usually contingent on the behavior of other actors (individuals or organizations) affected by the decision’s outcomes. These recursive relationships between decisions, decision outcomes, and effects of other actors' behavior make strategic decisions messier and complex. Strategic decisions are long-term in their impact; they affect and change the direction of the whole business/organization. They are difficult or expensive to reverse because they substantially alter (and irrevocably so in the short run) the relationships between the decision makers' organization and customers, competitors, etc. Strategic decisions are among the main means through which management choices are actually realized. A decisive strategic decision is one that is “important in terms of the actions taken, the resources committed, or the precedents set”.
Factors Influencing Success/Failure of Strategic Decision-Making
The most troublesome challenges in dealing with strategic decisions from a decision analytics perspective are technical complexity and social complexity. Complexity is the state of a system having many parts connected or related to each other. This is one of the biggest barriers to successful strategy execution.
This involves the presence of high levels of uncertainty and decision complexity.
The sources of Social Complexity may derive from:
Examples of Strategic Decisions and Decision-Making
Strategic decision-making processes can be identified by the strategic 'issues', events or factors that trigger them. These triggers may include observed issues such as decrease in sales or sales growth, a new product entry by competitor(s); and events such as request for action from executive management, or simply a regular planning cycle. Examples of strategic decisions include:
Improving Strategic Decision Through Modeling
Strategic decisions and decision-making can be improved and made to work most effectively through analytic decision models to enable systematic integration of each decisive strategic decision (with connected network of actions) with others in the context of the organization as system. This provides the support to:
Strategic decisions deal with the future and always represent risk. They typically involve high degree of uncertainty, high stakes, major resource implications, and long-term consequences.
What is an Organization?
A model of the organization can be defined as a 4-tuple, composed by a set of goals and objectives, a set of (direct internal) sub-organizations, a set of institutional relationships, and a set of external organizations.
An organization as a system is a set of interacting or interdependent functional entities and individuals/groups of individuals forming an integrated whole. It can be one organization, a set of organizations, population groups or individuals. Organization systems are “open”, social systems. Open systems are systems that continuously interact with their environments through acquisition of input, production of output, and exchange of information; they survive and grow by continuously adapting to their environment. An organization is a system in that it is greater than the sum of its parts. How it performs cannot be calculated by adding up all the work arrangements - like departments - with the resources and processes that connect it all together.
Organizations are social systems that depend on norms and rules - policies. Policies are recognized descriptions which act as enforcement mechanisms to restrain individual behavior and regulate all sorts of organizational interactions such as delegation, dependency relationships with internal/external organizational entities as well as defining concepts within the organizational setting.
Organization as Social Systems
Organizations as social systems are configurations of "actors" (human systems or people) connected to each other to compose a system with a common purpose and a set of objectives. The central conceptual modeling construct in modeling social systems in real world situations is the "actor". It is an abstraction which is used to refer to people (the active elements/entity) that is capable of independent action. In creating social network models of real world situations, we adopt as a premise that the social world is unknowable and uncontrollable with respect to the behavior of "actors" (human agents, individual or groups of individuals). Social systems are essentially goal-seeking, information feedback systems.
Organization System Sructures
The organization structure defines the arrangement of accountability, authority and responsibility of a group of people in a hierarchy, and network of functional and business units, and the governance relations between these units. The organization structure is designed to enhance communication and information flow among organization system elements (people or groups of people) that comprise the organization social system. Within the structure, rules, policies, and procedures are uniformly and impersonally applied to exert control over members’ behaviors.
Organizational structures are the manifestation of strategic orientations and regulate information flows, decision making, and patterns of behavior, that is, the “internal allocation of tasks, decisions, rules, and procedures for appraisal and reward, selected for the best pursuit of a strategy. Structures develop due to the need to organize behavior in a meaningful way and provide orientation for organizational members to set actions that comply with organizational strategy, organizational culture, and, as a result, accepted patterns of behavior. The structure is comprised of organization units that organize activity within these units (business units, bureaus, teams, or departments) in which people perform specialized functions such as manufacturing, sales, IT, human resource management, accounting/finance, etc. People who perform similar functions (tasks) are clustered together.
Actors represent the perspectives and objectives of the individuals themselves responsible and accountable for implementing the organization design and strategy through their behavior. Actors are taken to be inherently autonomous, i.e., their behaviors are not fully controllable, or are they perfectly knowable. Although the behavior of actors is not perfectly knowable or fully controllable, they are nonetheless not completely random. The behavior of actors can be explained and rationalized through the motivations and intentions attributed to actors.
Organization System Behavior
The behavior of an organization is usually guided by its strategic and tactical goals. The performance of the organization can be expressed through goal-based performance indicators and measures. Behavior and performance unfolds as observable manifestations (phenomena) of predefined strategies as regulated by organizational structures. This domain puts into effect patterns of behavior, derived from strategies and structures. It makes an organization’s existence as a market player visible.
Organizational System Dynamics
Organizations are dynamic social systems which are a collection of people with a common purpose. The dynamics of social systems are expressed in terms of the intentional properties of the actors that comprise the system, and the interaction relationships between these actors rather than the actual behavior of the actors. An intentional description of actors' behavior offers a way of characterizing actors that respects the autonomy premise underlying the actor concept.
Organization System Interactions
Interactions between actors can occur to satisfy goals that are either common to actors or global goals which pertain to the society (organization) as a whole and lay outside the scope of any one individual actor. Considering sub-organizations as a kind of structured logical actor, interactions among the sub-organization units can be viewed as a way of realizing society goals.
Introduction - Concept of strategy
The term “strategy” is an overloaded in everyday conversations because most people including professional practitioners do not bother to explicitly establish their point of view into what is essentially a layered concept. Essentially, when people use the word “strategy”, they are expressing concerns/interest in one of the layers of a layered concept; strategic intent, competitive strategy operational strategy, or “functional” strategy.
What is a Strategy?
Conceptually, a strategy in any of its myriad interpretation and manifestations in any of these layers is about decision making, Regardless of the person using the term, and the “type” of strategy being pursued the fundamental meaning of the word with respect to strategy type remains the same.
Modeling a Strategy
A corporate and/or competitive strategy must be formulated to ensure it is good and acceptable to the organization; successfully implemented and executed for it to have value to the organization. The actual strategy emerges from good formulation, and successful implementation and execution. The different types of strategies described above can be represented through goal models as follows:
Corporate strategy model is concerned with the strategic decisions of CEOs and top executives on the following basic questions:
Answers to these questions help frame and guide the decisions executives, functions, and staff make every day including how they run operations, what they buy, what markets they enter, how they measure success, etc.
Business (competitive) strategy model is concerned with strategic decisions business unit managers on the following basic choices:
Answers to these questions are the choices that comprise a business strategy and they drive the decisions of business unit management team, functions, and staff in their everyday activities including pricing, R&D, where to manufacture, etc.
Managerial processes are linked chains of actions that aid the structuring, investigation, analysis, decision-making, and communication of the orchestration and coordination of activities and events, and engaging others in tasks so that the desired ends are realized. Managerial processes are social processes in that they are concerned with relations between people, and the series of actions that lead to accomplishment of objectives. Managerial processes enable managers to work with, and through other people to get work done. Managerial processes should be seen as a support and not a replacement for management judgment.
Managerial processes help managers grapple with a range of challenges facing an organization such as:
In a broad sense these are questions of process, they involve how things are done, rather than the content or substance of ideas of policies. Managerial processes can be grouped into three (3) categories:
Examples of managerial processes include strategic planning, product planning, expense and capital budgets planning, operational planning, management cost accounting control, performance measurement systems, etc. All these processes have different purposes and critical skills requirements, but they all depend on communications, pattern recognition of situational context to act, sensitivity to relationships, and an understanding of the organization's power structure. They involve common choices about how to involve others and relate to them as the organization moves forward.
Managerial processes involve complex contingent choices about how best to transform goal intentions into implementation intentions (plans) and subsequently into value creation and delivery results. They are influenced by organization values, culture as well as individual values and beliefs. They focus on how goals are developed, on how resources are allocated, and on how efforts of individuals are coordinated to achieve particular goals.
Planning is a managerial process, the focus and output of which are implementation intentions (plans). The purpose of planning is the development of implementation intentions (plans) which are specifications of actions to take in resp0onse to the goal intentions (goals) developed as part of strategy formulation stage. Some examples of types of planning include:
Business planning involves the creation of business plans. A business plan is a formal statement of business goals, reasons they are attainable, and plans for reaching them.
The strategic planning process is about setting a direction for the organization, devising goals and objectives and identifying a range of strategies to pursue so that the organization might achieve its goals.
The Product planning process is focused both creating customer value and realizing the benefits of new products for the firm's investors and stakeholders.
The capital budgeting process is based financial market disciplines that encourage wise investment.
Modeling Planning Processes As Intentional Models
Planning as implementation intentions (plans) that specify where, when, and how goal intentions (goals) shou;d be implemented can be modeled as goal models. The plan goals model is a refinement and elaboration of the goals intentional' goal model within the context of the organization-as-system and its environments. The organization goal refinement method is based on a systematic technique of identifying human actors or social systems and exploring alternative responsibility assignments. The underlying principles are to refine goals until they are assignable to single logical actors defined by positions; and to assign a goal to a logical actor only if the aactor possesses the capability to realize that goal. Elaborating goals involve Operationalizing goals through connected links to organizational methods/actions performed by the appropriate actors assigned the responsibility for attainment of those goals. Goal refinement and elaboration decisions are critical and decisive in the planning process as alternative actor assignments define alternative system proposals. A prioritized implementation time schedule and budgets can be generated from the planning model.
Plan execution require the cooperation and collaboration of the human actors that comprise the organizational social network and employ technical systems and tools such as software systems in performing their respective responsibilities and obligations.
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