Strategy Driven Organizational change, sustainable growth and Profitability

Why organizations fail at strategy Implementation

8/2/2017

Strategy Implementation
Strategy implementation is the responsibility of top, middle and lower/line managers focused on building capacity through projects and programs to strengthen the organization, and enable it to better deliver value to customers while meeting stakeholders expectations. Strategy implementation is an action-oriented process for building a capable organization that can make the selected planned/formulated strategy work as intended.

A strategy is implemented if the corporation has the capabilities, enterprise advantage, and business portfolio it wants, its corporate strategy is implemented. If the business unit has the customers, value proposition, and skills it has chosen to have, its business strategy is also fully implemented. Technically, a strategy can never actually be fully implemented because everything that was necessarily assumed when formulating the strategy - about customers, technology, regulation, labor market, competitors, and so on - is in a constant state of flux. There will always be a gap between where the company is and what its (corporate and business) strategy calls for. Closing this gap is implementation.

Why Strategy Implementation Fails
Strategy implementation can fail - not accomplishing the desired outcomes - for myriad reasons including the inability of the organization to manage its strategy very well when faced with challenging situations such as:

Economy - Economic upheavals that simply do not provide any room for new businesses to survive, grow and thrive.
Competitors - Actions of competitors.
Market - Business challenges inherent in the market.
Resource Availability - Lack of availability of adequate resources.

These challenges are not the reasons at fault, since other businesses are able to survive, grow and thrive. The real (causal) reason can be attributed to mismanagement - inability of the business organization to manage its strategy very well.

Effective Strategy Management
Effective strategy implementation management involves closing the "execution" gap - the gap between actual/current strategy performance and intended desired performance.

Strategy implementation involves change in people that typically takes over a long period of time, this makes it more likely that the conditions under which the strategy formulation took place will change and unforeseen circumstances may arise to derail the execution.

Management needs to also understand the interactions among key execution decisions and actions, and contextual forces that create significant and persistent execution gap as measured by the Operating Model. An important task of managers is to design strategic control systems for successfully implementing and executing a strategy.

Managing organizational change requires a system of controls - a tool designed by managers to help them monitor and evaluate the progress of activities directed towards executing the organization's implemented strategy. Some of the factors that influence execution success/failure include:

Bad Strategy - A bad strategy is a strategy that does not define an approach/means to respond to a challenge (opportunity/threat), or solve a known problem. Bad strategy is reflected in an organization's failure to face the problems that pose threat to its survival and profitable growth. A good strategy, for example, aligns with well diagnosed strategic issue and basic problem; and is an approach to overcoming an obstacle; or a response to a challenge. A good strategy is a mixture of policy and action designed to surmount a challenge/problem.
Bad Strategic Decisions - Strategic decisions are among the main means through which management choices are actually realized. Bad strategic decisions are strategic decisions whose outcomes are the wrong expected outcomes, and result in business failure/decline.
Poor Implementation - This is failure of strategic initiatives that define major efforts/actions required to close identified strategic gaps to achieve intended objectives, so the organization can make progress towards its strategic goals. The gaps may be (1) between strategy and organization capabilities, (2) between strategy and the reward structure, (3) between strategy and internal support systems, and (4) between strategy and the organization's culture. Poor implementation may result in weak strategic assets that do not close the strategic gap, and make successful execution is unlikely.
Inadequate Structure - The organization structure defines appropriate boundaries for lines of business, shared services and functions, centers of expertise and other integrative and coordinating methods and mechanisms that allow the company to leverage scale and expertise. The structure in addition specifies the size and shape of the organization with indicative resource levels and locations. Inadequate structure is a structure that is not aligned with the strategy and supportive of it.
Culture - Organizational culture is the overall atmosphere within the company, particularly with respect to its members and their involvement in how work gets done. The company should foster a culture of being responsible and accountable for one's actions with corresponding incentives and sanctions for good and bad behavior.
Accountability - This specifies and clarifies the Roles, Responsibilities of the main organizational entities, including ownership of P&Ls and a clear value-adding role for the corporate center. There should be clear guidelines for the roles each organizational unit will play in critical decisions. A rewards system linked to these accountability reinforces strong execution.
Poor Coordination - Implementation and Execution Takes time, Execution Involves Many People, Execution involves managers across all levels in the organization this requires leadership in coordinating management and staff in properly performing their tasks to accomplish work.
Not Managing Change - This relates to the difficulty of managing employee resistance to change. People become comfortable with the way the business is run; they know the expectations and their role within the company. When a major change disrupts their familiarity, some employees become upset; they don't want to relearn their jobs or change the way they have done things. The leadership in the organization need to support the employees and provide training for any new responsibilities to ease the transition.
Poor Leadership - Effective strategy execution requires leadership and management effectively communicate the vision and mission of the organization to employees and ensure they are aligned with the vision and mission goals and objectives. Leadership must also understand the the current climate (influenced by culture) and ensure the organization climate is appropriate to support successful strategy execution or make the appropriate and necessary changes to culture. Clarifying Decision Rights and Norms.
Poor Communication - Failing to communicate effectively creates uncertainty and makes employees feel as if they are not part of the team and decisions. This invites fear and rumors into the work environment, disrupting work and progress towards change implementation. Keeping employees updated regularly about the progress of strategy performance improves employee involvement.
Poor Planning - This results in inefficient utilization of resources such as time and labor as well as lack of capacity to managing change. Without adequate planning, change in the organization is likely to fall apart or cause more problems than benefits Poor planning may lead to strategy execution failure resulting from: bad or unrealistic schedules for project team members resulting in waste of time and poor time management; lack of clear definition of strategy and project objectives; lack of budgetary controls leading to misuse of funds, etc.

All these factors are interdependent and their influences are non-deterministic; this typically, makes it very difficult for managers to comprehend the contribution of each of the factors to successful outcomes of strategy execution. Each of the factors influences execution success/failure in a different way; if an organization fails to pay proper attention to one of these factors, it can result in execution failure, therefore an organization needs a system and approach to support management of these factors and their influence on successful execution.

Strategy Implementation Management
Strategy execution management is a process of managing people, strategy and operations. Strategy execution management is a disciplined and systematic approach to managing - directing, controlling and facilitating - the day-to-day decisions and activities undertaken at all levels in the organization involving top management through middle management, and front-line managers and workers that carryout the ongoing pursuit of a strategy and complete it.

Strategic managers create control systems to monitor the quality of products. 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 towards implementing and executing strategies. Finally, they adopt corrective actions through adjustments in the strategy if variations are detected.

Strategic control systems provide managers the tools to regulate and govern their activities through both proactive (feed forward) and reactive (feedback) mechanisms. Proactive control systems help in keeping an organization on track, anticipating future events and responding to opportunities and threats. Reactive control systems help 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 control systems can also help in encouraging employees to think about innovation. Strategic control systems make employees more responsive to customers through monitoring and evaluating employees' behavior and contact with customers.

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Understanding Strategy Implementation / Execution

8/1/2017

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Strategy Implementation / Execution
A strategy has to be successfully implemented and executed to be effective and of any use to an organization. Strategy implementation is a function of strategic management It is the process of making the selected strategy (strategic choice) operational by translating it into action plans which can executed successfully. Implementation provides the connecting loop between strategy formulation and the actual strategy realized.

The actual strategy of an organization is the strategy realized from execution; it is the combination of the executed part of the intended (deliberate) strategy - what managers have set out in advance and intend to do - as part of some important strategic plan, and emergent strategy - the executed as-needed reactions to unanticipated developments and fresh competitive pressures.

Strategy is implemented through the use of projects, programs and portfolios.

Portfolios structure investments in line with strategic initiatives and objectives, whilst balancing, aligning and scrutinizing capacity and resources.
Strategic initiatives are the means through which a company translates its goals and vision into practice. They are the specific actions or goals an organization adopts to bring its vision to life. They are the first tangible objectives of your strategy, and are crucial to the execution of the strategy and the organizations development.
Programs combine business, as usual, with projects and steady state activity dictated by strategic priorities.
Projects are transient endeavors that bring about change and achieve planned objectives.

Together, they combine to deliver the beneficial change required to implement, enable and satisfy the strategic intent of the organization.

Some examples of strategy implementation include: developing and executing a new marketing plan to help increase sales of the company's products to consumers.

Strategy implementation is a function of strategic management, and it encompasses strategy implementation planning and execution.

Strategy Implementation Planning
The planning aspects of strategy implementation is an action-oriented plan of activities that revolve around management of people, resources, and business processes. Strategy implementation planning is one way by which an organization's objectives, strategies, and policies are put into action through development of initiatives (programs and projects), budgets and procedures.

Strategy Execution
Strategy execution is the implementation of a strategic plan in an effort to reach organizational goals. It comprises the daily structures, systems, and operational goals that set your team up for success. Strategy execution makes the strategy implementation plan work as intended, and turn strategy implementation plan into organizational success. Execution involves doing things to create "fits" between the way things are done and what it takes to make the strategy work as intended. (how things should be done) within the context of the strategy implementation.

Successful strategy execution involves decisions about managing changes to appropriate elements of the organization's Operating Model. The operating model is concerned with how resources are organized and operated to get critical work done. Changes to elements of the organization's Operating Model may include: governance, accountability, or culture, and in some cases overhauling the whole structure, when a company's strategy changes. These decisions about change take place within an organizational context of power, culture, leadership, and ability to manage change. This makes it more difficult for managers to control execution.

Components of Strategy Implementation
Strategy implementation require a number of key components to be in place to be successful. These components include:

Resolving several strategic 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 thee traditional attitude toward staying with the present practices,
Overcoming pockets of disagreement,
Securing 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,
Installing support systems.

Effective strategy implementation provides the context for successful execution, and involves managing change in the organization's internal environment which then allows the organization to successfully adapt to the changing external environment in which it operates but cannot control.

[TBD]

Factors Influencing Successful Strategy Implementation
Strategy Implementation is fraught with challenges as evidenced by the low percentage of strategies that are effectively implemented. Implementation failure is influenced by myriad of factors including: including:

Poor Leadership - This is the capability the organization must possess at decent levels to enable the organization's leaders and managers to effectively organize, coordinate and communicate the organization's direction and vision to the workforce and keep them motivated and committed to achieve the mission and strategic objectives and goals. Poor leadership is manifested as follows: (1) Lack of emphasis on the interfaces within the organization, (2) Failing to get employees buy-in in the new strategy, (3) Failing to direct employee capabilities toward the new strategy, (4) Failing to keep employees motivated and committed to the strategy implementation, (5) Lack of controls in terms of progress reviews and appropriate corrective actions.
Information Availability and Accuracy - This represents an organization capacity to provide information system of processes and information flows that link the organization together and make accurate information available in a timely manner to support effective decision-making, communication and learning. Inadequate information systems capacity leading to poor Information Flows and availability of accurate information to support fast and accurate progress tracking, timely intervention, and corrective action at the right time and place.may result in the degradation in certain management functions such as: (1) Poor Coordination - Poor coordination across functional areas, (2) Poor Strategic Decision-making resulting in bad decisions such as late and/or untimely decisions, (3) Bad Strategic Decisions - Bad decisions.
Uncertainty - Uncertainty is a state of having limited knowledge of current conditions or future outcomes. Uncertainty creates obstacles and challenges to decision-making due to limited knowledge of current conditions and gaps in our understanding of future outcomes, and effects management behavior in performing their duties have on those outcomes.
Organization Structure - Organization structure provides an explanation of the decision-making process and clarifies the roles and responsibilities, allocation of human resources - the way people and tasks/work are organized and roles and responsibilities are assigned to people. The structure enables strategic alignment - effective cascading of objectives, goals, and decision rights to the appropriate people (actors) in the functional areas of the organization with the capability and capacity to perform the actions at the right time and place to accomplish the requisite goals and objectives.
Organization Culture - Organization culture defines the particular way the organization solves problems of survival through adaptation to external environment and internal integration which is supportive of the strategy. 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, vision, 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.
Human Resources - Human resources are the people that comprise the workforce including managers of an organization, and the adequacy of their competencies, knowledge and skills. Human resources represent one the category of assets employed by an organization to create and deliver products and services to customers. "Do you have enough people to implement the strategies?" and "Do you have the right people in the organization to implement the strategies?" This core issues area relates to the knowledge, experience, and skills of the people (workforce) in the organization, and .is a determining factor in implementation success. Organizations invest in recruiting and training to build this capability critical to successful implementation.
Technology Trends - 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.

All these factors that influence the successful implementation of a strategy 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 making strategy implementation very hard. Each of the factors influences implementation outcomes (closing the gap) in a different way; if an organization fails to pay proper attention to one of these factors, it can result in implementation failure, therefore an organization needs a system and approach to support management in successful execution.

Effective Strategy Implementation and Management
Strategy implementation is the responsibility of top, middle and lower/line managers focused on building capacity through projects and programs to strengthen the organization, and enable it to better deliver value to customers while meeting stakeholders expectations.

A strategy is implemented if the corporation has the capabilities, enterprise advantage, and business portfolio it wants, its corporate strategy is implemented. If the business unit has the customers, value proposition, and skills it has chosen to have, its business strategy is also fully implemented. Technically, a strategy can never actually be fully implemented because everything that was necessarily assumed when formulating the strategy - about customers, technology, regulation, labor market, competitors, and so on - is in a constant state of flux. There will always be a gap between where the company is and what its (corporate and business) strategy calls for. Closing this gap is implementation.

Strategic gap analysis attempts to determine what a company should do differently to achieve a particular goal by looking at the time frame, management, budget and other factors to determine where shortcomings lies. The implementation gap can be manifested as:

management induced gap - Gaps caused by the way management acts to implement strategic initiatives. Management can cause gaps to exist between strategy and execution through both action and inaction. Some of the ways management causes these gaps includes: failure to secure support for the plan, failure to communicate the strategy, failure to adhere to the plan, and failure to adapt to significant changes.
Process Induced Gap - Gaps caused by the failure of traditional processes (e.g., budgeting, forecasting, reporting) used to implement and monitor strategy.
.Technology Induced Gaps - Caps caused by technology systems used to support those processes such as planning, budgeting, forecasting, and reporting processes.
Culture - [TBD]

Typically, the gap between the strategic plan and its implementation - is caused by missing integrative links such as:

Focus on Strategic Initiatives - Strategic change in organizations is largely delivered through multiple projects and programs. The absence of an implementation process that is focused on a portfolio of strategy-fulfilling projects can result in an implementation gap.
Shared Top-Down Understanding - The firm's vision and strategic plan are generally created by top executives of the organization. The plan's implementation is carried out by middle and line management, and professionals and lower level employees through changes in operations and delivery of projects. Disconnects in both directions (top-down and bottom-up views) are often found to exist in the organization.
Organizational Focal Point - Lack of organizational focal point that is responsible for overseeing the implementation of all the strategic projects. A vertical implementation rather than a cross-organizational implementation, invariably occurs. Delegating responsibilities to the functional level VPs is a common problem.
Alignment Across Functions - This missing link relates to not having a cross-functional group that is responsible for strategic level decisions during implementation. The key here is making priority, resource, and other trade-off decisions among all the critically important projects.
Executive Transition Mitigation - Frequent turnover of executives at VP level or above often result in dramatic implementation slowdowns and organizational conflicts.
Feedback Loop - A missing link is a set of performance metrics and control reports that enable feedback, organizational learning, and continuous improvement over time. Sustaining competitive advantage over time makes continuous improvement mandatory.

Strategy implementation involves change - closing the gap between organization's current capacity and the capacity the strategy calls for. In a rapidly changing world any competitive advantage a firm creates is temporary and not sustainable; without systematic changes to the firm's strategy and plans so it can respond and take advantage of opportunities that emerge as a result of changes in the environment while managing emerging threats that successful execution.

[TBD]

Strategy implementation decisions and actions are the means through which management intentions and choices are actually realized. Typically, the value delivered by enhanced and strengthened existing assets or new assets is causally and temporally separated from the successful completion of the strategic initiatives that produced those assets. Any cause-effect relationships may involve two (2) or more stages; making it difficult for managers to fully comprehend the contribution of these assets to the success/failure of the execution of the strategy. In the absence of certain cause-effect relationships or experience in how these dialectical (verbal) processes between organizations will unfold, the firm can only hypothesize about the effects of different possible initiatives, and learn more about them through interaction with other actors such as competitors, regulators, customers, suppliers, and partners in its competitive landscape.

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I am a computer scientist by education and training. My interests are in modeling complex business and social systems to foster better strategic and operations management processes in delivering value to customers while meeting the expectations of stakeholders.

Specifically, I am interested in the use of modeling techniques to improve the shared understanding of the people in the organization that would intervene to make strategies work as intended by making visible intangible concepts and assets that underlie successful organizational change.

Attaining Sustainable Organizational Growth and Profitability

Why organizations fail at strategy Implementation

Understanding Strategy Implementation / Execution

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