Strategy Driven Organization Change for Sustainable Profitable Growth
Strategy execution is a disciplined and systematic process of directing and controlling actionable decisions and activities that make an implemented strategy work. Execution usually takes a long time - longer than the formulation of strategy; 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 by making it more difficult for managers to control execution. Execution also involves more people at all levels in the organization than strategy formulation, this creates a challenge in communicating down the organization and/or across different functions relevant to the effective implementation of the strategy. .
Successful execution involves decisions about strategy, structure, coordination, information sharing, incentives and controls. These decisions take place within an organizational context of power, culture, leadership and capacity to manage change; and the capacity to understand and manage the interactions among those decisions and contextual forces. The execution flow involves both top down flows of decisions and actions from corporate strategy decisions through business strategy decisions to strategy implementation decision and actions (participation and communication down and across operating units), and bottom up flows of participation and communication information up the organization. Execution leads to organizational learning so the flows include feedback loops, and the controls portion comprises feedback and change.
Obstacles to Effective Strategy Execution
Strategies may fail at execution for a myriad of reasons including the following obstacles:
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 in successful execution.
Poor Leadership Style
Poor leadership is manifested in a variety of ways, including:
Good execution begins with good strategy. A good strategy aligns with well diagnosed strategic issue and basic problem. A strategy may be defined variously as an approach to overcoming an obstacle; or a response to a challenge. 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. 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.
Corporate structure - the organizational arrangement created in response to the demands of corporate strategy. The result of the decisions about structure is that different units focus on different tasks and specialties. To achieve unity of effort and to combine the activities of these units, companies must pay formal attention to integrative methods and mechanisms through structural integration. Thus, structural integration refers to business processes that coordinate corporate functions with business unit operations.. Structure affects real costs and benefits. Different ways of organizing affect outcomes, but creating the right organizational structure is a real challenge.
This results in failure of strategic initiatives that define major efforts required to close identified strategic gaps so the organization can make progress towards its strategic goals. Poor implementation may result in weak strategic assets that do not close the strategic gap, and since execution takes place within the context of the implemented strategy, successful execution is unlikely.
Bad Strategic Decisions
Bad decisions result in the wrong outcomes. Bad strategic decisions are strategic decisions whose outcomes result in business failure/decline. Bad decisions may result from incomplete or short-circuited decision processes.
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. The decision's outcomes are usually contingent on effects - the behavior of other actors affected by the decisions and outcomes. These recursive relationships between decisions, decision outcomes, and effects on other actors' behavior make strategic decisions messier and more complex than operations decisions.
This results in inefficient utilization of resources such as time and labor as well as lack of capacity to managing change. 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.
Strategy Execution System
The actual strategy of an organization is realized through combined execution of the intended strategy - what managers have set out in advance and intend to do - as part of some important strategic plan, and as-needed reactions to unanticipated developments and fresh competitive pressures to realize the actual strategy New circumstances always emerge, whether important technological developments, rivals successful new products introductions, newly enacted government regulations and policies, etc., that create enough uncertainty about the future that makes it impossible for managers to plan every strategic action in advance and pursue their intended strategy without alteration.
Organizations need a system to support managers in influencing the effectiveness of planned actions (top-down) and as-needed adaptive reactions to unforeseen conditions ("unplanned" bottom-up strategy responses) in order to improve the likelihood of successful execution:
A strategy has to be implemented and executed to be of any use to an organization. The Strategy implementation stage is one of three co-incident stages (formulation, implementation and execution) of the strategic management process; Implementation provides the connecting loop between formulation and execution and control. Strategy implementation is key to any organization's survival and growth; and requires the collaboration of everyone inside the organization, and on many occasions parties outside the organization. The primary concerns of Strategy implementation is making the selected strategy operational throughout the entire organization. Making the selected strategy operational involves several actions and activities that must take place, including:
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 Gap
Strategy implementation involves change - closing the gap between organization's current capacity development and the capacity development that the corporate and business strategy calls for. The implementation gap can be manifest as follows:
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. Strategy implementation decisions and actions are the means through which management intentions and choices are actually realized.
Factors Influencing Strategy Implementation Success/Failure
Strategy Implementation is fraught with challenges as evidenced by the low percentage of strategies that are effectively implemented. Strategy implementation require a number of key components to be successful, including:
All these factors are interdependent and their influences on implementation success/failure are non-deterministic.
The failure in leadership to properly perform the leadership functions can lead to management induced gap and implementation failure. Failure in leadership manifests itself as follows:
Information Availability and Accuracy
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 obstacles to successful implementation because of the degradation in certain management functions such as:
Uncertainty - Effects of Uncertainty
Uncertainty creates obstacles and challenges to decision-making due to limited knowledge of current conditions and gaps in our understanding of future outcomes and affects management behavior in performing their duties such as:
Uncertainty deals with possible outcomes that are unknown; and is a major component of risk (the likelihood or scale of negative consequences).
Structure Alignment problems - the overall strategy not properly aligned (i.e., working) with the current structure; the way people and tasks/work are organized, and roles and responsibilities are assigned to people not aligned with strategy would lead to implementation gap. Structure not driven by the strategy can create obstacles to successful implementation manifested in the following ways::
The organization structure design and the degree to which it effectively enables managing complexity, coordination and control of organizational behavior is critical to effective decision-making as the decision rights cascade during strategy implementation and execution grows. Within the structure, rules, policies, and procedures are uniformly and impersonally applied to exert control over organizational members’ behaviors. .
Weak culture is by definition not supportive of the new strategy and leads to organizational behavior and performance problems that present obstacles and challenges to successful implementation. unsupportive culture is reflected in organizational behavior such as::
Execution requires supportive culture and demands ownership at all levels in the organization including management and workforce. People must commit to and own the processes and actions central to effective execution.
Poor Human Resource Management is manifested in the following ways:
Human resource management is a function concerned with ensuring that the organization obtains and retains the skilled, committed and well-motivated workforce it needs. Strategic Human Resource Management is particularly focused on the alignment of human resources as a means of gaining competitive advantage. in terms of the adequacy of their knowledge competencies, and skills.
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 conditions and gaps:
Changing technology can offer major opportunities for improving goal achievement, or threaten the existence of the firm due to unpredictable problems
Effective Strategy Implementation
Effective strategy implementation and execution 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.
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.
The key factors that support successful implementation and execution are the following internal environment elements:
These factors are generally in agreement with the key success factors or prerequisites for effective strategy implementation as identified by the McKinsey.
Organization capacity development can be measured in terms of changes in the enabling environment, organizational, and individual levels.
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. The 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.
Typically, the implementation gap - the gap between the strategic plan and its implementation - is caused by missing integrative links such as:
I am a computer scientist interested in modeling of complex business systems, and model-driven analysis and evaluation of strategic management and operations management and the interplay between them. Specifically, I am interested in the use of modeling to improve understanding of strategy, its formulation, implementation and execution, and the interplay between intended strategy, emergent strategy and leaning to inform better strategic decision-making.