Model-Based Approach to Effective Strategic Management and Sustainable Competitive Advantage

All organizations are endowed with an initial set of resources which they employ, through Strategic Management, to create output such as: strategy, policies, rules and regulations, etc.; those output in turn guide Operations Management in the creation and delivery of value to customers and enhancing stakeholders' value. The strategic management process allows the organization to formulate sets of decisions, actions and measures – collectively known as strategies – that are subsequently implemented and executed in order to achieve organizational goals and objectives. These myriad of decisions involve people at various levels throughout the whole organization. Strategic management is considered to be one of the most vital activities of any organization, since it encompasses the organization’s entire scope of strategic decision-making.

Model-Based Approach to Strategy Development
Strategy development involves decisions and choices that relate directly or indirectly to broader management functions, such as: strategy formulation, strategy implementation - involving planning (developing plans for) and execution - and strategy evaluation.

The Strategic Engine is the abstract machine utilized by strategic management in to define how the organization should evolve in order to achieve long-term success through the development of a viable and acceptable strategy. The Strategic Engine provides a model of strategy that integrates strategic management decisions at the corporate, business, and operations strategy levels as well as the functional level. The structure is intentional in the sense of making sure that all the decisions and tasks necessary to accomplish the goals are assigned to people who can do them the best. The strategic engine output - strategy content - is the set of actual decisions made at the various management levels in the organization from board of directors, executive management, middle management and line/operational management.

Formulation
Implementation Plan
Plan Execution
Evaluation
Execution Control

Strategy Formulation
Strategy formulation is the stage in strategy development requiring people to think strategically then apply their thought to defining strategy concept. The process involves formulating ideas about what new solutions, services and concepts the business should offer, and in which markets to operate in order to survive, grow and thrive. It involves analyzing the organization's internal and external environment, and identifying and selecting the optimum set of grand strategies that will give the organization sustainable competitive advantage in achieving its long-term goals and objectives.

Successful strategy formulation involves crafting a set of good strategic options, and a clear set of recommendations for the selected alternative. Those recommendations revise, as necessary, the organization's mission, its supply of resources and objectives in meeting the expectations of the stakeholders.

Vision and Mission Formulation
Mission-vision Formulation involves reevaluating of the organization's mission-vision, including broad statements about its purpose, philosophy, and goals. In stating what the organization hopes to become, it is essential to view this in abstract terms as the satisfaction of the needs of significant groups which cooperate to ensure the organization's continued existence. These groups may include: customers, managers, employees, stockholders, and owners. The key to organization success is its ability to identify the important needs of each of these groups to establish some balance among them, and work out a set of operating policies which permits their satisfaction. This set of policies, as a pattern, identifies what the organization is trying to become. A policy states how goals are to be attained. It tells people what they should and should not do in order to contribute to achievement of corporate goals.

Mission and Vision Statements
In stating what the organization hopes to achieve, it is necessary to state what it hopes to do with respect to its environment - external "systems" such as markets, industry, the economy, the community, and other social systems. In each case there are unique relationships to observe (e.g., with competitors, municipal leaders, congress, etc.). Corporate level goals are indications of what the organization as a whole is trying to achieve and to become.

The vision and mission are related in a layered model with the mission statement supporting the vision statement.

Mission Statement - This is a statement of what the organization seeks to do and to achieve for its stakeholders. Mission statement also have stated goals - what the organization aspires to be for its stakeholders. Mission clarifies the long-term future direction of the company and its strategic intent. The mission statement describes the purpose and reason for the organization to exist. A mission statement establishes the organization's future course and outlines who we are, what we do, and where the organization needs to be headed - in effect, setting the organization with a sense of purpose, providing long-term direction, and establishing a clear mission to be achieved.

Vision Statement - The vision statement usually describes some broad set of goals - what the organization aspires to look like in the future. Developing a vision requires senior management to develop carefully reasoned answer to the question: "what is our vision for the company - what are we trying to do and to become?" - This question pushes managers to consider what the company's business character is, and should be, and to develop a clear picture of where the company needs to be headed over the next 5-10 years. The vision statement describes some broad goals - what the organization aspires to look like in the future.

Values Formulation
Core values define the organization in terms of the principles nd values the leaders will follow in carrying out the activities of the organization. Every organization has values, and these values should be coherent with the strategy. The Core Values are the strong enduring beliefs and principles that the company uses as foundation for its decisions; they determine how people will behave and how they think in carrying out their job functions. These values are shared by the Board and staff, strongly held and not easily changed. Values assessment involves looking into the personal values of the members of the organization, organization values, and the organization's operating philosophy. They are the essence of the company’s culture and expression of its “personality”.

Organizational Goals Formulation
The Organizational "Official" goals statements are described in an organization's public statements such as corporate charter, mission statements and annual reports. Official goals help build the organization's public image and reputation; and help communicate the general purpose of the organization and describe what the organization would like or hopes to achieve.

Crafting Strategy
Crafting a strategy is an exercise in entrepreneurship searching for opportunities to (1) do new things, or (2) do existing things in new and better ways. It is primarily an intellectual and creative act involving developing solutions to known strategic problems identified and defined by the strategic issues agenda and events. Crafting strategy brings into play the critical managerial issue of how to achieve the targeted results in light of the organization's situation and prospects. It involves decisions and choices in crafting the organization's strategy hierarchy - corporate, business and operations strategy.

Strategic options are creative alternative action-oriented responses to the external situation that an organization faces. Strategic options take advantage of facts and actors, trends, opportunities and threats of the outside world. A Strategic Option typically combines options for products/markets (Market-Based View) and options for resources/capabilities and methods of implementation (Resource-Based View), to form a strategy. The time-scales for developing resources and capabilities may be very long, and may be longer than the time-scale for market entry. An option is a course of action that it appears possible to take.

Strategy Hierarchy
Strategy hierarchy is a layered model of strategy that underlies the Strategic Engine. It is composed of three (3) levels: corporate strategy, business strategy, and operations strategy levels. A strategy hierarchy model is company specific, customized to the company's own situation and performance objectives.

Corporate Strategy (CS) - Corporate strategy are the fundamental choices that a executive management makes with regards to: (1) What should be the capabilities that distinguish the company? (2) What should be the company's comparative advantage in adding value to its individual businesses? (3) What businesses should the company be in?. Corporate strategy comprises strategic choices that frame and guide all the decisions that a company's corporate executives, functions, and staff make every day. Corporate strategy is concerned with choices regarding strategic positioning and direction, and sets the context for business strategy and operations strategy. Corporate strategy decisions/choices determine the long-term orientation of organization development, and corporate activities that evaluate current market positions and identifies investment priorities for the portfolio of businesses. The mission of Corporate strategy is to create competitive advantage through corporate comparative advantage by adding value to corporate whole, more than the sum of its business units.
Business Strategy (BS) - Business strategy are informed decisions that provide answers to fundamental questions such as: (1) Who should be the customers that define our target market? (2) What should be the value proposition that differentiates our products and services with those customers? (3) Market geography? These business strategy choices drive the decisions of business units' management teams, functions, and staff that make every day decisions on pricing, R&D, where to manufacture, etc. Business strategy is concerned with how the organization competes within a specific industry/market. It involves decisions and choices regarding competitors, and the nature of competition and competitive advantage. It is concerned with how the organization competes within a specific industry/market. It involves decisions and choices regarding competitors, and the nature of competition and competitive advantage. It involves formulating responses to changes in the industry, crafting competitive moves and market approaches leading to sustainable competitive advantage by building valuable, rare and hard to copy competencies and capabilities. Business strategy is to create competitive advantage through differentiation by increasing the difference between buyer's willingness-to-pay and supplier's willingness-to-sell, and in the same time being greater than the same competitor's difference. Business strategy mission is to create competitive advantage through differentiation by increasing the difference between buyer's willingness-to-pay and supplier's willingness-to-sell, and in the same time being greater than the same competitor's difference.
Operations Strategy (OS) - Operations strategy represents top-down reflection of what the business wants to do, simultaneously with bottom-up activity where operations improvements cumulatively build strategy. It involves translation of market requirements into operations decisions and exploits the capabilities of operations resources in chosen markets. Operations strategy mission is to create operations comparative advantage through achieving economies of scale. Operations strategy is concerned with optimal combination of all five (5) performance objectives - quality, cost, dependability, flexibility, and speed.

This involves operations management decisions on the organization's structure - physical attributes of operations or infrastructure - refers to the people, systems and software aspects. Structural decisions include facilities, capacity to produce, process technology and supply network. Infrastructure decisions include planning and control systems, quality management, work organization, human resources, new product development, and performance management of employees. Operations strategy has a vertical relationship with overall business/corporate strategy and has a horizontal relationship with other functional strategies. Operations strategy can also be characterized as top-down - i.e., operations strategy might come down from business strategy, or bottom-up - from within operations to Improve Resources and Capabilities (What should be the capabilities that make our business better than any other in delivering that value proposition?). Operations strategy mission is to create competitive advantage through operations comparative advantage by achieving optimal combination of all five (5) performance objectives.

In this model, CS and BS provide the right scope and direction for strategy development - formulation and execution. OS provides estimated details for the right implementation and establishment of the right processes. The three (3) levels of strategy hierarchy are interrelated through a specific dual integration, built through a vertical orientation: top-down and bottom-up approaches. The unique combination of top-down (CS and BS) and bottom-up (OS and BS) ensures the right fit of strategy levels. The success of both approaches is reinforced by functional strategy such as; marketing, finance, IT, HR, sales, etc., that appear simultaneously at all three levels of the strategy hierarchy. The whole engine activity/processing is synchronized by functional strategy that provide resources and capabilities to all three (3) strategy levels. In case synchrony is lost due to lack of proper resources and capabilities, no strategy will generate any advantage for the company.

Competitive Advantage
A competitive advantage is what makes an organization's goods or services superior to all of a customers' other choices. An organization is unlikely to achieve sustainable competitive advantage leading to sustainable growth and profitability if it fails to effectively convert ideas into good strategies, and translate those strategies into workable and effective actions which are executable. Competitive advantages are attributed to a variety of factors including: cost structure, branding, quality of product offering, the distribution network, intellectual property, and customer service. the more sustainable the competitive advantage, the more difficult it is for competitors to neutralize the advantage.

To be successful, you need to be able to articulate the benefit you provide to your target market that's better than the competition. This is your competitive advantage. You must reinforce that message in every communication to your customers and employees through advertising, public relations, sales aids; and even your store front and messaging to employees.

Types of Competitive Advantage
Competitive advantage can be of two (2) types:

Comparative advantages - A firm's capability to produce a good or service more efficiently than its competitors, which leads to greater profit margins, creates competitive advantage. Economies of scale, efficient internal systems, and geographic location can also create a comparative advantage. Comparative advantage does not imply a better product (good/service), though, it shows the firm can offer a product of the value at a lower cost.
Differential advantages - A differential advantage is when a firm's products differ from its competitors' offering and are seen as superior. Advanced technology, patent-protected products or processes, superior personnel, and strong brand identity are all drivers of differential advantage. These factors support wide margins and large market shares.

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These elements are comprised of factors that allow the productive organization to generate more sales or superior margins compared to its market rivals leading to sustained profitable organization growth.

Strategy Statement
Strategy is the integrated vision and direction of the organization, including the manner in which it determines, communicates, and implements that vision and direction. It answers the question: how will we position ourselves in the market to secure a sustainable competitive advantage. It is a road-map, and although it's not highly detailed, it provides a framework for decision making.

The strategy statement describes what the organization's competitive game plan will be. A strategy statement communicates the company's intended strategy to everyone within the organization. A well written strategy statement will help employees and the organization to understand their roles when executing the company's strategy. Mixing the deliberate and emergent strategies in some way helps the organization to control its course while encouraging the learning process.

The statement consists of three (3) components objective, scope, and competitive advantage.

Objective - The Objective defines the ends that the strategy is designed to achieve within a specific time frame. Objectives are the "ends," and strategy is the "means" of achieving them. The strategic objective is the single, specific objective that will drive your organization. This must not be confused with the company's vision, mission or values. The objective must be specific, measurable and time bound. It must be a single goal (i.e., growth or profitability), although subordinate goals may follow from the strategic objective.
Scope - The Scope is the domain of the business - the part of the business landscape in which the company will operate. The company's scope revolves around three (3) dimensions - the target customers, location and products. The scope must emphasize where the business direction and focus will go.
Competitive Advantage - The Competitive Advantage is the essence of your strategy. It determines what you will do differently or better than the competition to achieve your objective. This component describes your strategies on how and why you will succeed and what makes you different from your competitors.

Defining the objective, scope and competitive advantage requires trade-offs which are fundamental to strategy. The strategy statement is a hypothesis of the means by which strategic goals i.e., sustainable growth, are achieved. Goals and objectives provide the milestones for measuring the success of the strategy in achieving the mission and vision. Goals are statements of what needs to be done to implement the strategy. Objectives are specific milestones for meeting a specified goal. A strategy has to be sound, implemented and executed to have value.

Strategy Testing
Each strategy option has to pass through the following tests:

Aligned - in that it conforms to strategic intent. This answers the question "Does this option take us towards where we want to go?"
Feasible - in that the capabilities and resources necessary for success can be made available. This answers the question "Will it work?"
Acceptable - in that it will win the approval of both those who will have to approve it and those who will have to implement it. This answers the question "Will this option be acceptable?"

Any strategy has to pass all three (3) tests to be viable. if more than one strategic option passes these tests, they may have to be compared with each other to choose the 'best'.

Strategy Implementation
Strategy implementation is one of the three (3) co-incident determinants of the strategic management process including strategy formulation and strategy evaluation. Strategy implementation is about planning - investment decisions and plans - to build a capable organization that can make the formulated strategy work as intended, and execution of those plans to realize the actual strategy. The implementation plan is a complex mix of decisions and activities on managing people, strategy, and operations in creating "fits" between the ways things are done and what it takes for effective strategy execution to make the strategy work as intended. Planning involves thinking strategically first, then applying that thought to actionable implementation decisions.

There are three (3) types of plans generated during the implementation phase;

Plan of Action - This involves the definition of objectives, the timing of strategy, the formulation of sub-strategies - functional strategy - relating to markets, production, finance, marketing (distribution, pricing), R&D, investment, and HR - personnel placement. Actions are the means, or specific activities, planned to achieve the objectives. The terms strategies and tactics refer to planned courses of action.
Plan of Implementation - Implementation involves the assignment and direction of personnel to carry out the plan. The three approaches to implementation are authority, persuasion, and policy. This deals with organizational design changes and structural modifications, motivational plans, reward and punishment systems, leadership style, and control and information systems.
Plan of Policies - This covers changes in values, rules, policies and procedures.

Objectives are statements of future conditions, that a manager hopes to achieve. All sets of objectives have three characteristics: priority, timing, and measurement. The phrase priority of objectives implies that at a given time, accomplishing one objective is more important than accomplishing others. Time dimensions imply that an organization's activities are guide by different objectives, depending on the duration of the action being planned. Effective planning requires measurement of objectives. A variety of measurements exists to quantify objectives in the eight areas that management expert Peter Drucker suggests: market standing, innovations, productivity, physical and financial resources, profitability, manager performance and responsibility, worker performance and attitude, social responsibility.

Resources are constraints on the course of action. It also involves budgeting - identifying the sources and levels of resources that can be committed to the courses of action. Management can select the type of budget that best suits the planning needs of the organization.

Strategy Implementation Management Issues and Decisions
The transition from strategy formulation to implementation requires a shift in responsibility from executive management and strategists to divisional and functional managers. Managers and employees throughout the organization should participate early and directly in strategy-implementation decisions. Strategy implementation is all about “how” the activities will be carried out, “who” will perform them, “when” and how often will they be performed, and “where” will the activities be conducted. And it does not refer only to the installation or application of new strategies but also to existing strategies that have always worked well in the past years, and are still expected to yield excellent results in the coming periods. Reinforcing these strategies is also a part of strategy implementation.

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Establish Organization Structure - Determine and define Roles, Responsibilities and Relationships that build an organization for achieving those goals and objectives. Set expectations among your team, and clearly communicate your implementation plan, so there’s no confusion. Document all the resources available including employees, teams, and departments that will be involved.
Cascade Strategy - Translating the selected strategic choices into organizational methods (functional strategies) involves translating the organization's strategic goals into annual objectives and the actions needed over the next one or two years to implement the major proposed key objectives. The objectives are then assigned to organization units with the right competencies and capability (as defined by their functional strategies) to ensure success implementation of the selected strategic choices.
Delegate the work - Develop action plans to help determine "what" specific actions or activities need to be carried out by "who", and "when" in order to achieve a goal within the constraints defined by the objective statements. An action plan gives a time table for implementing a strategy.
Establishing strategy-supportive policies and procedures - The organizational policies and operating procedures/work procedures must have conformity with strategy. Strategy-supportive policies are essential, as they provide useful guides for decision making. Similarly, strategy-supportive work procedures or work practices are unavoidable as any deviation from the existing ones may create resistance from employees.
Design Strategy-Supportive Reward Systems - The Reward and motivation systems in the company need to be such that they promote better strategy implementation.
Design Strategic Control Systems - This involves managers selecting a strategy to implement and appropriate organization structure then creating control systems to evaluate and monitor the progress of activities directed towards implementing the strategies. This provides managers with the tools to regulate and govern their activities. Managers adopt corrective actions through adjustments in the strategy if variations are detected. Strategic controls can be both proactive and reactive.
Build a strategy-supportive culture - Strategy implementation is made relatively easy when the corporate culture is compatible with the strategy. When the corporate culture does not fit the strategy either the factors/aspects of the culture is changed or the strategy id modified. Managers face real challenges in changing corporate culture.
Execute the plan - Monitor progress and performance, and provide continued support.
Take corrective action - Adjust or revise as necessary. Implementation is an iterative process, so the work doesn’t stop as soon as you think you’ve reached your goal. Processes can change mid-course, and unforeseen issues or challenges can arise. Sometimes, your original goals will need to shift as the nature of the project itself changes.

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Strategy Implementation consists of all the decisions and actions, and plans required to turn strategic choices into reality. The planning aspects of implementation revolve around decisions about managing people and processes, taking into consideration management issues central to strategy implementation. These issues may include:

Establish Annual Objectives - Establishing annual objectives is a decentralized activity that directly involves all managers in the organization. This involves managers identifying and defining the short-term objectives that turn the strategic long-term goals and objectives (of what is to be accomplished) defined in the formulation stage, into short-term objectives - specific, measurable, time-sensitive statements - of what is to be achieved and when they will be achieved. Account for variables that might hinder your team's ability to reach them, and layout a contingency plan. Annual objectives are essential for strategy implementation because they: represent the basis for allocating resources; are a primary mechanism for evaluating managers; are the major instrument for monitoring progress towards achieving long-term objectives; establish organizational, divisional, and departmental priorities.
Devising policies for execution of strategies - Changes in a firm's strategic direction do not occur automatically. On a day-to-day basis, policies are needed make the strategy work as intended. Policies let both employees and managers know what is expected of them, thereby increasing the likelihood that strategies will be implemented successfully. Policies guide and constrain decision makers and ensures that the various functional strategies are integrated and complementary. Policies establish the conditions to enable effective execution.
Allocating resources - This involves allocation of resources - financial, physical, human, and technological resources - to the departments and function areas responsible for executing the strategy. Resource allocation is a central management activity that allows for strategy execution. Strategic management enables resources to be allocated according to priorities established by annual objectives.
Managing Conflict - Approaches for managing and resolving conflict may include: Avoidance, Diffusion, and Confrontation.
Matching Strategy with Structure - Changes in strategy often require changes in existing organizational structure for two (2) basic reasons: structure largely dictates how objectives and policies will be established; and structure dictates how resources will be allocated. Structure should be designed to facilitate the strategic pursuit of a firm and, therefore, follow strategy.
Linking performance and pay to strategies - Develop incentive and compensation plans that link performance and pay to strategies through mechanisms such as profit sharing, gain sharing, bonus programs, etc.
Minimizing resistance to change - Creating an organizational climate conducive to change
Matching managers with strategy -
Developing a strategy-supportive culture - []
Adapting production/operations processes.

During implementation stage, organizations may also find that they have to perform further planning, especially in the discovery of issues that must be addressed.

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Develop action plans to help determine "what" specific actions or activities need to be carried out by "who", and "when" in order to achieve a goal within the constraints defined by the objective statements. An action plan gives a time table for implementing a strategy by defining the initiatives - "what" tasks must be carried out, "how" and "when" - to be pursued, if corporate, business and operations strategies are to be implemented successfully. [Actual performance of tasks and activities]

Leadership and Control - Controlling the performance of activities or tactics in various levels of the organization.

Tactical planning is intermediate-range (one to three years) planning that is designed to develop relatively concrete and specific means to implement the strategic plan. Middle-level managers often engage in tactical planning. Operational planning generally assumes the existence of organization-wide or sub-unit goals and objectives and specifies ways to achieve them. Operational planning is short-range (less than a year) planning that is designed to develop specific action steps that support the strategic and tactical plans.

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, and requires competencies such as leadership skills, precision planning, organizing of resources and activities, as well as motivation to ensure people's commitment to the new strategy. Strategy implementation is a building process by which established strategic plans - strategy ideas and concepts - are moved closer to realization through organization methods and function strategy.

Implementation (Action) Plan Model
Implementation intentions are modeled as action goals in the action plans that specify an anticipated critical situation linked to it and to an instrumental goal-directed response. Implementation intentions (plans) have the structure of "If situation X is encountered, then I will perform the goal-directed response Y!". Holding an implementation intention commits an individual to perform the specified goal-directed response (action) once the critical situation is encountered. The choices to pursue an implementation intentions (plans) that specify an anticipated critical situation linked to it and to an instrumental goal-directed response. Both strategy formulation and implementation intentions (goals models) are set in an act of willing. The former specifies the intentions to meet a goal or standard; the latter refers to the intention to perform a plan. Commonly, implementation intentions are formed in the service of goal intentions, because they specify the where, when, and how of respective goal-directed responses.

A plan specifies a set of goals and objectives that need to be achieved to successfully satisfy the intended goals of the plan. The goals of the plan are assigned to functional areas (that define key organizational capabilities) or departments and then cascaded to the resources in key capability areas for implementation and execution. The cascade within a particular capability area terminates when the organization unit that abstracts that area reaches individual or team of individual resources that fill the relevant positions in the organization unit. The cascading process is based on goal refinement techniques. The goal refinement network model that represents the cascaded goals can be elaborated by associating with each cascaded goal element assigned to a position filled by resources responsible for employing the means to be employed in accomplishing actions/tasks/activities to achieve the specified goals and objectives. 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.

Action Plans
The action plans are schedules for actions to be taken, and policies and procedures that guide resource allocation and prioritization decisions. The implementation plan defines the responsibility of top, middle and lower level managers focused on the creation of new strategic assets and/or enhancement and strengthening existing strategic assets needed by the entity in order to build an organization capable of carrying out the strategy and maintaining its ability to achieve future outcomes. The basic elements of the action plan are a list of activities needed for implementation, and time table showing when, responsibilities for each activity, time table of activities, budgeted costs, expected flow of funds, resources needed, etc.

Operations Plans
The Operations Plan describes milestones, conditions for success and explains how or what portions of a strategic plan will be put into operation during a given operations period. The operations plan is a basic tool that directs the day-to-day activities of organizational staff. An operational plan addresses four basic questions: Where are we now? Where do we want to be? How do we get there? How do we measure our progress?

Evaluating Implemented Strategy
Strategy evaluation ensures that all key supporting elements of the business systems including Measures and Rewards, Structures and Processes, Culture and People are aligned behind the chosen strategies and hinged on the mission, vision, values and critical success factors (CSF) of the organization. The evaluation and control process is concerned with defining, attaining, and presenting constructive information for reviewing alternatives to the analyzed action plan. The evaluation method is comprised of the activities defined by the process steps below.

Evaluation Process Steps

Define the strategy to evaluate - Managers need to specify the implemented strategy and the progress results that need to be evaluated. Such results have to be objectively measurable and consistent; and can be defined using goals modeling.
Outline Predetermined Standards - Managers need to outline standards according to the chosen implemented strategy. These standards often consist of a tolerance of range which defines adequate variations.
Obtain data to Map Out Onto Set Standards - Data to obtain consists of results from the actions taken on the chosen strategies.
Measure Performance - Assess the performance of the mapped out data.
Performance Match Standards -if the performance of the identified strategy achieves the standards within the tolerance range then the process stops here; otherwise, Take Corrective Action.
Take Corrective Action - The performance measured does not achieve the standards; managers must take necessary actions to resolve and amend the implementation Process.

The implementation evaluation method assists managers in deciding whether or not the chosen strategies are steering the organization in the right direction towards achieving the strategic objectives and mission, It provides an intuitive and model-driven approach to assess the execution feasibility of the chosen strategy implementation.

The evaluation method allows an organization to take into consideration a lot of the points that can influence successful implementation before an ideal strategy can be implemented. It is important to note that for a given organization and business environment not all strategies are executable.

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The evaluation is based on a set of selection criteria/factors that ensures the chosen strategies will be effective. A viable strategy is defined in terms of the degree to which the strategy meets those criteria i.e.,:

Consistency - The strategy must not represent mutually inconsistent goals and policies.
Suitability (Appropriateness) - Is the strategy consistent with the organization's mission, values, and operating principles? Does it fit with the vision and mission?
Consonance - The strategy must represent adaptive response to the external environment and to the critical changes occurring within it as defined by the SWOT Analysis information..
Advantage - The strategy must provide for the creation and/or maintenance of a competitive advantage in the selected areas of activity.
Flexibility - Can it be adapted and changed as needed?
Cost-Benefit - Is the strategy likely to lead to sufficient benefits to justify the costs in time and other resources?
Timing - Can and should the organization implement this strategy at this time, given external factors and competing demands?

The whole point about strategy is that the critical factors determining its quality are often not directly observable or simply measured; and by the time strategic opportunities/threats do directly affect operating results, it may well be too late for an effective response.

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Strategic Objectives
A strategic objective is a business need that is defined in quantifiable and measurable terms. Strategic objectives are big-picture performance indicators (goals) for a company, and they describe what the company will do to try and fulfill its mission. The business need must be bound by both a baseline and a target (how much?), as well as time (by when?). We must know the level of improvement required and how much time we have to achieve the established targets. An objective is an outcome measure, not the measure of a process designed to achieve the outcome. If you can’t establish baseline or target numbers, it’s a sign that your objectives aren’t really goals. In reality, they are strategies or tactics. Strategic and operational planning most often use time, dollars, percentages, and numerical counts to measure strategic goals/objectives. Strategic objectives are typically a type of performance goals - for example, launch a new product, increase profitability, grow market share for the company's product, etc.

SWOT Analysis
A SWOT analysis looks at the company's Strengths (e.g. assets, resources, knowledge, good reputation), Weaknesses (e.g. high production costs, limited service line, limited marketing budget), Opportunities (e.g. government incentives, local business partnerships, strong market growth) and Threats (e.g. discounting by competitors, increasing supplier costs, technology and systems becoming obsolete). This involves various stakeholders providing their judgments (points of view) about the organization's strengths, weaknesses, opportunities, and threats. This leads to better buy-in from the various constituencies involved in implementing the strategies and policies. Strengths - The internal positive attributes of your company that are within your control; Weaknesses - These are negative factors that detract from your strengths; Opportunities - These are external factors in your business environment that are likely to contribute to your success; Threats - These are external factors you have no control over that negatively influences your success.

Developing Strategic Options

Pattern of Decisions
In effect, strategy is the pattern of strategic decisions (options) that management has to consider, such as:.

Options for Markets and Products

Market and Product - Market Penetration, Market Development, Product Development, or Diversification (related or unrelated). While research may measure how successful different forms of market or product development are in general, the management choice has to focus on the relative attractiveness of available options.

Options for Building Resources, Capabilities, and Competences

Strategic assessment might have identified the strengths and weaknesses in existing resources and capabilities in comparison to competitors; this may lead to identifying improvements to shore up existing weaknesses, or to build on existing strengths.
It is also likely that potential product/market options will require supporting changes in resources and capabilities.

The time-scales for developing resources and capabilities may be very long, and may be longer than the time-scale for market entry.

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Strategy Execution
Strategy execution is one of the three (3) co-incident determinants of the strategic management process including strategy formulation and strategy implementation. Strategy execution takes place within the context of strategy implementation, and is a change process involving a series of integrated decisions/actions that take place over time, and inextricably changes the organization and its relationship with its environments. Strategy execution involves the decisions and activities the organization undertakes in order to turn the implemented strategy into commercial success. These decisions and activities encompass the thousands of decisions and actions taken every day by executive, middle and line managers, and employees acting according to information they may have, and their own self-interest as influenced by organizational culture, and constrained by organizational policies and procedures.

Strategy Integration Process
The strategy integration process is comprised of vertical orientation - top-down direction and bottom-up direction of the dual flow of information in the strategy hierarchy.

T0p-Down Direction - The whole process starts with establishing Corporate Strategy goals, posing questions about business portfolios, and investment decisions, such as "Where?", "How much?" and "What kind of?". Then it follows Business Strategy identifying how to compete in specific markets and industries, trying to find coherent answers to a generic question "How?", and with which generic strategy to compete. And finally, the Operations Strategy comes, that should provide the right answer to a specific question "How?" ("Which way to compete?"), to deliver the highest result from the sum of basic performance objectives - speed, quality, dependability and flexibility at appropriate cost.
Bottom-up Perspective - Operations Strategy strives to improve these objectives, supports and reinforces the final outcome of Business Strategy - to achieve sustainable competitive advantage that in turn, contributes to achieve superior economic returns on a corporate level. Based on the results of Business Strategy, corporate strategists/owners may decide on entering/leaving markets, enlarging/shortening the value chains or pursuing business diversification.

Once the dyadic information flow is completed, further refinement of the whole process might start again, based on the outcome of this process.

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Strategy Execution - process for executing the strategic choices by means of budgeted resource allocations; focus on getting the work of the business done efficiently and effectively;

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Successful execution involves decisions about:

Strategy - This is a hypothesis (educated guess) of the intended approach/means to accomplish specified actions/tasks that contribute to desired goals and objectives. Strategy is achieved through the constant interplay between doing, planning and evaluation in closing the performance gap.
Structure -
Coordination -
Information Sharing -
Incentives and Controls - []

These decisions take place within the organizational context of power, culture, leadership and the ability to manage chage.

Enacting Organization System Instance
Organizations as social systems exist in the real world through people who are members of the organization and some physical structures (such as offices and facilities). Enacting an organization involves translation from the abstract model of the formal definition to concrete system elements, such as assigning individual actors (people) to positions in the organization structure (for example, organized around functional areas) in specific locations and facilities. The assignment of actors to positions is formally made through the signing of legal contracts (created and regulated through organization policies) with the actors. The signature of this contract represents a conveyance of the goals of the position to the actor(s) who are assuming that position, i.e., the goals of the position are expected to be executed by the actor(s) enacting that position.

Strategy execution is the process of translating strategy into the best business results possible, within the framework of its implementation.

Strategy Execution Tasks
Strategy execution is a systematic way of exposing reality and acting on it. It involves decisions made every day by employees acting, according to the information they have and their own self-interest, within the context of strategy implementation, and activities undertaken at all levels in the organization involving top management, middle management, and front-line managers and workers to turn implemented strategy into commercial/social success. The strategy execution decisions have to be timely. Timeliness refers to "when" in the evolution of changes in the organization the decisions are made, rather than how much time the decision maker has to make the decision.
Strategy execution step-by-step task view includes:

Visualize the Strategy - Visualization of the strategy enables shared understanding of what the strategy is. An effective way to visualize the strategy to improve understanding is an illustration that shows the important elements of the strategy and how each related to one another and to the mission goals. Frameworks such as the Strategy Map by Kaplan and Norton, etc. help in this regard.
Measure the Strategy - The key goals elements of the strategy should be assigned an easily understood performance measure. The full set of strategic performance measures can be organized into a Balanced Scorecard based dashboard to help managers determine the progress or lack there of of the strategy execution.
Report Progress, Compare and Learn - Your strategy is a hypothesis, its your best estimate of the route to success. It is essential to check your hypothesis at the end of an execution cycle (just like budgets are reviewed monthly to ensure financial commitments are being kept), to ensure the strategy is producing results, versus controlling performance. Compare your initial strategic assumptions with what you have learnt from the reality of the results from the completed execution cycle. In addition, look back at your Strategy Execution Capability as well to ensure it is supportive of your strategy.
Make Decisions and Update strategy - Strategy execution is much like sailing a boat toward a planned destination. A defined course and full complement of navigational charts will not eliminate the need to remain vigilant, to assess the environment, and to make corrections as conditions change while on the journey. As part of the regular reporting process leaders must make ongoing strategic decisions and update the strategy to keep it current and on course. A company needs to update its strategy based on changes in its competitive environment and on the strategy execution feedback from reporting on the previous cycle, as well as update and fine tune your execution capabilities if necessary..
Manage Initiatives - This is about selecting, prioritizing, and executing the right initiatives - those actions/plans - that will lead to achieving specific strategic objectives or closing objective performance gap. Strategic initiatives are new plans or actions to improve strategic asset or solve a strategic problem.
Manage Projects - Develop a capability in project management to coordinate and control - monitor and report progress - the execution of critical strategic projects focused on improving an organization's delivery on its mission. These projects statements include scope, budget, and start/end dates.
Communicate Strategy - Leaders must communicate their visualized strategy to the workforce in a way that will help them understand not only what needs to be done, but why.
Align Workforce Individual Roles - Set individual performance goals and objectives for managers and employees. Make to link all individual objectives with the strategy at the organization level. Aligning Individual Roles - Senior leadership must ensure that employees at all levels can articulate and evaluate their personal contribution towards achieving specific strategic goals.
Reward Performance - After explaining the strategy and aligning the workforce to it, senior managers must institute the incentives that drive behaviors consistent with the strategy. Monitor and coach regularly to motivate and provide feedback in the right way.
Evaluate Performance - Most organizations conduct a formal performance evaluation and review at the end of the individual performance management cycle. The evaluation should answer the basic question; "have the individual performance objectives been achieved?"

Strategy execution is the continuous process of closing the gap between where the company is, and what the strategy calls for. This results in a company's actual strategy - typically a combination of (1) planned - deliberate and purposeful actions and (2) emergent - as-needed reactions to unanticipated developments and fresh competitive pressures.

Execution Building Blocks
The ideal execution process for each organization is different, but all include some basic and fundamental building blocks that enable executive management to influence the actions of employees in all areas of the organization that result in effective execution of intended and emergent strategy. These building blocks include:

Clarifying decision rights and norms - How decisions are made; How people instinctively act or take action.
Designing Information flows and Mindsets - How data and knowledge are processed; How people make sense of their work and environment.
Motivators and Commitments (Aligning motivations of employees with organization purpose) - How people are encouraged to perform; How people are inspired to contribute.
Aligning Organizational Structure and Network to Strategy - How work and responsibilities are allocated; How connections are made beyond the organizational chart.
Allocation of resources - This is a set of basic activities in implementation that refers to both financial and non-financial resources that are (a) available to the organization and (b) are lacking but required for strategy implementation. How much funding would be needed to support implementation, covering the cost and expenses that must be incurred in the execution of the strategies? Another resource is time - Is there more than enough time to see the strategy throughout its implementation?

These building blocks are inextricably linked in a coherent system.

Strategy Execution as a System
Strategy execution system is a social-technical system that provide the framework to integrates strategic decisions and actions such as:

Strategic decisions, and actions taken resulting from those decisions.
Operations management decisions and activities performed resulting from decisions.
Observing the outputs and outcomes of strategic actions through reporting and monitoring environment changes.
Diagnosing the issues resulting from the patterns of organization behavior effected by organization outputs.
Timely adaptation to changes in environment and timely response to any identified opportunities or threats to achieving the mission objectives and strategic goals.

Successful execution is the best possible results a strategy and its implementation will allow in the actual realized strategy that closes the strategy-to-performance ('strategy-execution') gap.

A company's actual strategy is typically a combination of (1) planned - deliberate and purposeful actions and (2) emergent - as-needed reactions to unanticipated developments and fresh competitive pressures.

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Execution
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Integrating Functional Strategies - Identify and give due consideration to the cross-functional implications of strategy at implementation when the critical issues of strategy are appraised. [Horizontal Integration]
Develop Tactical plans for functional areas such as marketing, production, personnel, finance, and plant facilities. Implementation requires outstanding collaboration between all members of the various groups throughout the whole organization from top management to line workers.
Developing budgets that steer resources into those internal activities critical to strategic success.
Finalizing strategic plan with input from all invested parties.
Aligning the budget to annual goals.
Producing various versions of the plan for each group.
Establishing a system for tracking and monitoring the plan.
Establishing a performance management and reward system.
Presenting the plan to the entire organization.
Building annual department plans around the corporate plan.

The role of managers is to guide the organization towards goal accomplishment. Managers are responsible for combining and utilizing organizational resources to ensure their organizations achieve their purposes.

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Monitoring Process
Execution control requires constant monitoring of the progress of the strategy, its implementation and execution to assess whether the planned results are being achieved. A firm’s successive strategies are greatly affected by its past history of implemented and executed strategies (actionable decisions) which determine its current state, emergent strategy, and actual/realized strategy. It is important to reexamine past assumptions, and compare actual results with earlier hypotheses.

The control system is comprised of key performance indicators in the following areas:

Planning - These are indicators that allow organizations to monitor and measure planning premises such as environmental factors and industry factors.
Implementation - These are indicators that provide feed-forward information to inform decisions on whether the strategy should be changed in light of unfolding events and results from incremental steps. The basic types of implementation control are: strategic thrusts (new or key strategic programs/initiatives performance, and Milestones Reviews).
Strategic Surveillance - These are indicators that provide information designed to safeguard the established strategy in a continuous way. They allow the organization to monitor a broad range of events and conditions inside and outside the company that are likely threaten the successful achievement of the firm's strategic objectives. This provides the opportunity to uncover important, yet unanticipated information.

Performance indicators such as customer satisfaction is influenced greatly by day-to-day decisions of front-line employees (i.e., a barber) responding to a customer requests, and in so doing making a choice about how to represent the company - a choice directly related to the fundamental value proposition the company is offering.

Evaluation and Control
Strategy evaluation involves the assessment of performance measures collected through monitoring of projects and programs to determine the effectiveness of a strategy in meeting strategic objectives. Strategic control involve actions that may include performance measurements, monitoring, consistent review of internal and external issues and factors, and making corrective actions when necessary.

Strategy Evaluation
Evaluation & Review - process for making necessary adjustments based on monitoring and control information and strategy performance review.

Performance Evaluation
Performance Evaluation entails the process of evaluating the performance of a strategy, reviewing new developments and initiating corrective action to make adjustments in long-term direction, objectives, strategy, or implementation in light of actual experience, changing conditions, new ideas, and new opportunities. Any effective evaluation of the strategy begins with defining the parameters to be measured; these parameters should mirror the goals set in the direction setting stage of the strategic management function. To evaluate performance, firms' need to establish a set of "desired" outcomes as well as the metrics they will use to monitor how well their organizations delivered against those outcomes. Those outcomes may include: achieving certain levels of productivity, revenues, profits, market share, market penetration, customer satisfaction, etc.

Review Process
The review process relies on a system of measures such as provided by the Balanced Scorecard of metrics to guide review decisions. The review process may be formal periodic reviews or informal, however it is the style and openness of the review process that makes all the difference whether the organization will:

quickly seek effective course adjustments
seek excuses or praise with little real direction change
ignore much of the scorecard (system of measures)

The review meeting can be a control tool as well as problem-solving session where the organization examines what it has learned since the last review, with data (the metrics), that serves as a basis for ongoing adjustments for even better performance. These adjustments are in the form of how resources should be allocated, and how people in the organization will use their time. Determine your progress by measuring the actual results versus the plan.

Strategic Control
Control is the process for tracking a strategy as it's executed, detecting problems or changes in its underlying premises, and reporting to appropriate management levels;

Monitoring Process
Execution control requires constant monitoring of the progress of the strategy, its implementation and execution to assess whether the planned results are being achieved. A firm’s successive strategies are greatly affected by its past history of implemented and executed strategies (actionable decisions) which determine its current state, emergent strategy, and actual/realized strategy. It is important to reexamine past assumptions, and compare actual results with earlier hypotheses.

The control system is comprised of key performance indicators in the following areas:

Planning - These are indicators that allow organizations to monitor and measure planning premises such as environmental factors and industry factors.
Implementation - These are indicators that provide feed-forward information to inform decisions on whether the strategy should be changed in light of unfolding events and results from incremental steps. The basic types of implementation control are: strategic thrusts (new or key strategic programs/initiatives performance, and Milestones Reviews).
Strategic Surveillance - These are indicators that provide information designed to safeguard the established strategy in a continuous way. They allow the organization to monitor a broad range of events and conditions inside and outside the company that are likely threaten the successful achievement of the firm's strategic objectives. This provides the opportunity to uncover important, yet unanticipated information.

Strategy Execution Control System
Strategy execution system is a management control system that supports an organization in executing its strategic choice. It facilitates systematic planning, performance measurement standards, monitoring, evaluation of performance and corrective action of strategic initiatives. The system enables the effective management of the strategy-producing value chain. The value chain of managing an organization starts by formulating a strategy, translating the strategic choice(s) into objectives organized around strategic themes, goals and initiatives that will enable management to develop action plans for implementation and execution.

Execution System Model
The logical flow of execution decisions and actions defines a two-way process involving participation and communication up and down the organization, as well as lateral flows of information and coordination across operating units. Execution leads to organizational learning, so the flow includes feedback loops, and the controls portion comprises feedforward, concurrent and feedback controls. Successful execution is the best possible results a strategy and its implementation will allow in the actual realized strategy that closes the strategy-to-performance ('strategy-execution') gap.

Successful execution involves decisions about strategy, organization structure, coordination, information sharing, incentives and controls within an organizational context of power, culture, leadership and the ability to manage change. The model elements include:

Strategy - This refers to strategic decisions at the corporate, business and operations strategy levels.

Corporate Strategy - This refers to decisions about: what businesses or industries should make up the organization's portfolio; whether the organization should diversify or vertically integrate; and how resources should be allocated across operating units, given differences in competitive conditions and growth possibilities across industries.
Business Strategy - This refers to decisions about products, services, and competition in a given industry.Emphasis is on industry analysis and the external forces as the business positions itself for competitive advantage. Business level strategy is vital to the success of corporate strategy. The execution of Business strategy is affected by constrains posed by corporate, as well as the type of business strategy (i.e., cost leadership) and the demands it places on the organization, and the need to translate strategy into short-term objectives and action plans.
Operations Strategy - Operations strategy is the collective complete actions chosen, mandated, or stimulated by corporate strategy; and its implemented within the operations function. Most firms share access to the same processes and technology, so they usually differ little in the areas of distinctive competency. What is different is the degree to which operations matches its processes and infrastructure to its strategic objectives and goals.

Organization Structure - This refers to corporate structure and business structure.

Corporate Structure - This is the organizational arrangement created in response to the demands of corporate strategy. The result of decisions about structure is that different units focus on different tasks or specialties. To achieve unity of effort and to combine the activities of these diverse units, companies must pay formal attention to integrative methods and mechanisms. Thus, structural integration refers to business processes that coordinate corporate functions with business unit operations.
Business Structure - Business structure is also key to execution of strategy. Business level strategy and short-term operating objectives affect the choice of business unit structure. The structure of a business should reflect, and be driven primarily by, the nature of its strategy.
Operations Structure - This refers to Operations Infrastructure - the people, systems, and information (software) attributes of operations. Infrastructure decisions include: planning and control systems, quality management, work organization, work systems, human resources, new product development, and performance management of employees.

Integration - Integration is relevant to execution at the business level, since individual businesses must develop their own ways of achieving coordination across operating units or functions.
Organizational Context - Strategy execution occurs in an organizational context of power, culture, leadership and the ability to manage change (change management capability). The execution context is susceptible to four kinds of environment factors:

Change Management - Managing people resistance to change.
Culture - Culture affects much of what goes on in the organization. It can affect the problems and opportunities that managers focus on. It helps define performance outcomes and determines how work gets done, what behaviors are valued, how mistakes are treated, and what management styles are appropriate. Culture reflects and affects the ownership that individuals feel for execution-related goals. A company's levels of management commitment and ownership are excellent predictors of execution success.
Organization's Power Structure - Those in power identify external needs or opportunities, define new markets and customers, and determine the company's direction.
Leadership Climate - []

Bringing the strategy 'execution gap' may require addressing the shortcomings in the implementation and/or flawed execution plans. Technically, a strategy can never actually be fully implemented because every thing 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.

Strategy Execution Decisions and Actions Types
Strategy as a pattern of actionable decisions may include:

Moves to diversify a company's revenue base by entering new industries and business.
Responding to changing industry conditions -shifting demand patterns, new government regulations, exchange rates instabilities, etc.
Improving productivity.
Fresh offensive moves to strengthen the company's long-term competitive position and secure competitive advantage.
Moves and approaches that define how key functions and activities are managed.
Defensive moves to counter the actions of competitors, and defend against external threats.
Efforts to broaden/narrow the product/service lines, alter product quality, or modify customer service.
Capitalizing on new opportunities, new technologies, product innovation, acquisition of rival company, new trade agreements that open up foreign markets.
Backward/forward integration.
Altering geographic coverage.

Corporate strategy choices - capabilities, enterprise advantage, and business portfolio it wants; and business and competitive strategy choices - customers, value proposition and skills it has chosen to have.

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An important task of managers is to design strategic control systems for successfully implementing a strategy. Strategic control systems provide managers 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 strategies.
Finally, they adopt corrective actions through adjustments in the strategy if variations are detected. Strategic controls can be both proactive and reactive.
When proactive, control systems help in keeping an organization on track, anticipating future events and responding to opportunities and threats. When reactive, strategic controls 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 managers can measure efficiency by comparing the total inputs with the total outputs (how many units of inputs are used to produce a unit of output).
Strategic managers create a control system to monitor the quality of products. When customers’ complaints are nonexistent or negligible and hardly customers return the product (such as machinery/equipment) for repair, managers indicate the quality of products.
The strategic control system can also help in encouraging the employees to think about innovation through the decentralization of authority, empowerment of employees, and monitoring the performance of each workgroup/team.
Lastly, the strategic control system makes employees more responsive to customers through evaluating and monitoring employees’ behavior and contact with customers.
Strategic controls are mainly of three types:

Financial Control.
Output Control.
Behavior Control.

Managers use a financial control system to measure a company’s financial performance.
For effective financial control, they establish financial goals (e.g., growth, profitability, return to shareholders) and then measure the actual achievement of those goals.
In the case of the output control system, managers forecast performance goals for each unit and employee. They measure the actual performance of the units and employees.
Lastly, they compare the actual performance against the goals already set for them.
When the performance of employees or units is linked to the reward system, the output control itself provides an incentive structure for employee motivation in the organization.
A behavior control system refers to a comprehensive system of rules and procedures. These are prescribed to direct the behavior/actions of employees at each level of the organization.
Rules and procedures standardize the way of reaching the goals.
Two forms of behavior control are;

operating budgets and
standardization of inputs, conversion activities (programming work activities so that they are done the same way time and again), and outputs.

Successful strategy implementation requires, among others, a control system that matches the organization’s strategy. Strategic managers should ensure that financial and output controls are supplemented with behavior controls for efficient achievement of goals.