Making Good Ideas Happen
System of Strategic Management Decisions, 3 effective approaches to Sustainable Competitive Advantage
Strategic Management
Strategic management is an ongoing process to develop and revise future oriented strategies that allow an organization to achieve its objectives, considering its capabilities, constraints, and the environment of in which it operates. Strategic management is concerned with analyzing internal/external environments factors, to determine opportunities and risks, and creating specific strategies to better exploit those opportunities while mitigating strategic risks. In organizations and in the practice of strategic management, strategies must be implemented to achieve the intended results. Strategic management involves managing the strategy-producing value chain of an organization. This 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.
Strategic Management Decisions
Strategic management is done through strategic decision-making process. Strategic management is an ongoing decision-making process through which management intentions and ideas are realized through strategic decisions. Strategic management decisions involve strategic thinking - the ability of the organization to plan - and strategic choice. For these decisions, decision makers can actively influence outcomes (using their abilities to make things happen); and success means doing better than rivals. Success depends on the ability of managers to influence the desired outcomes through its people, and the need/expectation to outperform rivals. By definition, these decisions require executives (decision makers) possess the ability to influence outcomes by the way they lead and communicate, and through their ability to inspire and encourage people to perform better than the competition.
Strategic management decisions link rhetoric (what people say), choices (what people decide and are willing to pay for), and actions (what people do) in shaping the nature and direction of an organization. In practice, most managers deal with all the strategic management process steps simultaneously; they engage in strategic analysis (environmental scanning) to update their analytical view of the organization, they are implementing and executing strategies formulated in the past, they are formulating strategies to execute in the future, and so on. This require managers to think systematically and strategically and apply their thoughts to actions.
Strategic thinking is more about making decisions directed towards achieving defined outcomes. Strategic thinking is active and ongoing, and is a way of understanding the fundamental drivers of a business organization. Strategic thinking requires envisioning what you want to accomplish and formulating solutions to problems. Strategic thinking represents the "why" and the "what" of the work you want to accomplish in a particular context and the whole configuration of interconnected and continuous interacting components and systems. Strategic thinking connects the organization's current state and the "to be" future state in order to bridge the differences and close the gap to gain/maintain competitive advantage.
Strategic Decisions
Strategic decisions are those decisions that have an influence over years, decades, and even beyond the lifetime of the project. Once a strategic decision is made, it is very unlikely to be altered in the short term. Strategic decisions are concerned with whole environment in which the firm operates, the entire resources and the people who form the company and the interface between the two. Strategic decisions are major choices of actions that affect and influence the business organization as a whole. In general, they are complex, unstructured and novel.
Strategic decisions are influenced by the decision makers knowledge, available information, and mind-set - values and beliefs. A manager/decision maker has to apply his/her business judgment, evaluation and intuition into the definition of the problem statement and decision choices. Strategic decisions are long-term in scope and affect the competitiveness of the company as a whole. Strategic decision-making is directed towards achieving outcomes, and involve Strategic thinking.
Strategic Decision-Making
Strategic decision-making is a process of understanding the interaction of decisions and their impact upon the organization to gain an advantage. Wrong decisions taken at the wrong time, may result in catastrophic consequences. Strategic decision-making is a long-term process that takes a lot of resources and has many uncertainties. Strategic decision making involves decisions that are made according to a company's goals or mission. These decisions could take the company into new directions that may or may not succeed. Managers can apply strategic thinking against decisions to determine the viability of the strategic and action plans and assess alignment with organizational and strategic goals. Strategic thinking and strategic management work in partnership; because even the best insight (idea) is futile, without a plan to actually realize it (make it happen - implement and successfully execute).
Strategic management is an ongoing process to develop and revise future oriented strategies that allow an organization to achieve its objectives, considering its capabilities, constraints, and the environment of in which it operates. Strategic management is concerned with analyzing internal/external environments factors, to determine opportunities and risks, and creating specific strategies to better exploit those opportunities while mitigating strategic risks. In organizations and in the practice of strategic management, strategies must be implemented to achieve the intended results. Strategic management involves managing the strategy-producing value chain of an organization. This 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.
Strategic Management Decisions
Strategic management is done through strategic decision-making process. Strategic management is an ongoing decision-making process through which management intentions and ideas are realized through strategic decisions. Strategic management decisions involve strategic thinking - the ability of the organization to plan - and strategic choice. For these decisions, decision makers can actively influence outcomes (using their abilities to make things happen); and success means doing better than rivals. Success depends on the ability of managers to influence the desired outcomes through its people, and the need/expectation to outperform rivals. By definition, these decisions require executives (decision makers) possess the ability to influence outcomes by the way they lead and communicate, and through their ability to inspire and encourage people to perform better than the competition.
Strategic management decisions link rhetoric (what people say), choices (what people decide and are willing to pay for), and actions (what people do) in shaping the nature and direction of an organization. In practice, most managers deal with all the strategic management process steps simultaneously; they engage in strategic analysis (environmental scanning) to update their analytical view of the organization, they are implementing and executing strategies formulated in the past, they are formulating strategies to execute in the future, and so on. This require managers to think systematically and strategically and apply their thoughts to actions.
Strategic thinking is more about making decisions directed towards achieving defined outcomes. Strategic thinking is active and ongoing, and is a way of understanding the fundamental drivers of a business organization. Strategic thinking requires envisioning what you want to accomplish and formulating solutions to problems. Strategic thinking represents the "why" and the "what" of the work you want to accomplish in a particular context and the whole configuration of interconnected and continuous interacting components and systems. Strategic thinking connects the organization's current state and the "to be" future state in order to bridge the differences and close the gap to gain/maintain competitive advantage.
Strategic Decisions
Strategic decisions are those decisions that have an influence over years, decades, and even beyond the lifetime of the project. Once a strategic decision is made, it is very unlikely to be altered in the short term. Strategic decisions are concerned with whole environment in which the firm operates, the entire resources and the people who form the company and the interface between the two. Strategic decisions are major choices of actions that affect and influence the business organization as a whole. In general, they are complex, unstructured and novel.
Strategic decisions are influenced by the decision makers knowledge, available information, and mind-set - values and beliefs. A manager/decision maker has to apply his/her business judgment, evaluation and intuition into the definition of the problem statement and decision choices. Strategic decisions are long-term in scope and affect the competitiveness of the company as a whole. Strategic decision-making is directed towards achieving outcomes, and involve Strategic thinking.
Strategic Decision-Making
Strategic decision-making is a process of understanding the interaction of decisions and their impact upon the organization to gain an advantage. Wrong decisions taken at the wrong time, may result in catastrophic consequences. Strategic decision-making is a long-term process that takes a lot of resources and has many uncertainties. Strategic decision making involves decisions that are made according to a company's goals or mission. These decisions could take the company into new directions that may or may not succeed. Managers can apply strategic thinking against decisions to determine the viability of the strategic and action plans and assess alignment with organizational and strategic goals. Strategic thinking and strategic management work in partnership; because even the best insight (idea) is futile, without a plan to actually realize it (make it happen - implement and successfully execute).
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Formulation
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Implementation
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Execution
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Evaluation/Control
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Strategic Intent
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Strategy Formulation
Strategy formulation is the process of using available knowledge to document the intended direction of a business and the strategies crafted to reach its goals. Strategy formulation is primarily an intellectual and creative act involving developing strategies to known strategic problems identified and defined by the strategic issues diagnosis and events.
Strategy formulation occurs at a number of levels - corporate, business and functional - in the organization, and produces a clear set of recommendation, with supporting justifications, that revise, as necessary, the mission and objectives of the organization, and apply the strategies for accomplishing them. The sets of recommendations for each of the levels must be internally consistent and fit together in a mutually supportive manner that forms an integrated strategy hierarchy. In formulation, we are trying to modify the current objectives and strategies in ways to make the organization more successful. This includes trying to create "sustainable" competitive advantage.
Formulating strategy brings into play the critical managerial issue of how to achieve the targeted results (defined by the objectives in the strategic intent) in light of the organization's situation and prospects. The process of identifying the best strategy alternative (strategic option/courses of action) require people to think strategically (e.g., plan) then apply that thought to actions. In effect, strategy as an idea, is a pattern of strategic decisions (options) that management has to consider, along the dimensions of the strategy hierarchy. Strategy formulation can occur at three (3) levels, namely: Corporate, Business and Operations strategy levels.
Corporate Strategy Formulation
Corporate strategy is the way in which a business strives to create value, develop a unique corporate/comparative advantage, and captures market share. Corporate strategy determines the long-term orientation and the development of corporate activities. It involves evaluating the organization's current market positions and identifying the investment priorities for the businesses.
Corporate strategy is concerned with decisions about what businesses or industries should make up the organization's portfolio? What should be the direction? Should the organization diversify or vertically integrate? How should resources be allocated across operating units, given differences in competitive conditions and growth possibilities across industries.
These key corporate strategic decisions are influenced by factors, such as; economic environment, social environment, political environment, and company's values and ethics.
Corporate strategy formulation is concerned with broad decisions about the total organization's scope and direction. Basically, we consider what changes should be made in our growth objective and the strategy for achieving it, the lines of business we are in, and how these lines of business fit together. The types of corporate strategy may include:
Growth strategies will help a company to consistently grow and meet financial expectations. Directional strategies can include short term goals, long-term goals, new product strategies, strategies to protect products and services, diversification strategies, geographic strategies, and market-based strategies.
Growth strategy involves developing a "grand strategy" or master plan that is consistent with organization's chosen direction and its life cycle stage of development. Grand strategy options (types of growth strategy) and the potential sub-options (pathways) through which each grand strategy option is accomplished include:
Corporate level strategy has to be consistent to the life-cycle stage of the organization. Organizations are "born" (established or formed), they grow and develop, they reach maturity, they begin to decline and age, and finally they die. Organizations at any stage of the life-cycle are impacted by the external environment as well as internal environment factors.
Several components are involved in developing comprehensive corporate strategy; these components may include visioning, objective setting, resource allocation and prioritization.
An effective corporate strategy is founded upon honest self-evaluation, which is derived by asking key questions about your business. These questions may include: "what's the current state of the company?"; "Where do you want your company to be in the next three (3) to five (5) years?"; "How does the company get there?"; and "What people, resources and finances are best capable of helping the company arrive there?".
Business/Competitive Strategy Formulation
Business strategy is a system of decisions that are aimed at shaping both the long-term competitive strategy of the company. The focus is in how to compete successfully in each of the lines of business the company has chosen to engage in, and with what generic strategy - cost leadership, differentiation, or focus - to compete. A company has competitive advantage whenever it can attract customers and defend against competitive forces better than its rivals. Successful competitive strategies usually involve building uniquely strong or distinctive competencies in one or several areas crucial to success and using them to maintain a competitive edge over rivals. Some examples of distinctive competencies are superior technology and/or product features, better manufacturing technology and skills, superior sales and distribution capabilities, and better customer service and convenience.
Business strategy development entails 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 a clear set of plans, actions, and goals that outlines how a business will compete in a particular market, or markets, and with product, or a number of products and services. Business strategy by identifying clear plan for how an organization will reach its goals, allows you to focus on capitalizing your strengths, using them as competitive advantage that makes your company unique in the market place.
The central thrust if business strategy is how to build and improve the company's competitive position for each of its lines of business.
It is concerned with decisions and choices regarding products and services, and competition within a given industry. The emphasis is on industry analysis and the external forces/factors as thee business positions itself for competitive advantage. Business strategy decisions provide answers to the following questions:
These key strategic decisions are influenced by factors such as: customer/market dynamics, competitor activity, core technology dynamics, and financial constraints.
Generic Strategy
Generic Competitive Strategy as defined by Porter may include the following:
These generic competitive strategies provide the foundation for a business strategy. A choice of one of these generic competitive strategies provides the foundation for a business strategy, however there can be many variations and elaborations; among these are competitive tactics such as timing tactics and market location tactics, as well as cooperative strategies.
Operations Strategy Formulation
Formulating operations strategy is the practical process of articulating the various objectives and decisions that make up the operations strategy. It is essentially, about the different ways of aligning plans, activities, and objectives. Operations strategy formulation involves comprehensive analysis of the operations capability from a number of perspectives, such as: top-down, bottoms-up, market requirements and operations resources perspectives. These perspectives on operations strategy help companies examine and implement effective and efficient systems to achieve corporate and business objectives.
The top-down perspective of operations strategy represents the top-down reflection of what the business wants to do. The bottom-up perspective reflects bottom-up activities where operations improvements cumulatively build strategy. The marketing perspective involves translation of market requirements into performance objectives that drive operations decisions on and exploits the capabilities of operations resources in chosen markets. The operations resource perspective involves translation of a broad understanding of what resources, processes and capabilities operations may possess within its resources to an identification of key decisions (based on specific categorization of structure and infrastructure) that operations managers will need to take in order to exploit, build on and develop those capabilities. The operations strategy binds the various operations decisions and actions into a cohesive consistent response to competitive forces/factors by linking firm policies, programs, systems, and actions into a systematic response to the competitive priorities chosen and communicated by the corporate or business strategy. In simpler terms, the operations strategy specifies how the firm will employ its operations capabilities to support the business strategy.
Operations strategies connect the firms programs, policies, guidelines and workforce in a way that allows each part of the organization (functional areas) to support others in achieving a common goal. An effective operations strategy considers a company's long-term objectives and creates steps that cohesively bond business plans with resources, capacity, time, location, and competition. The operations strategy must be aligned with the company's business strategy and enable the company to achieve its long-term plan. By developing operations strategies a company can examine and implement effective and efficient systems for using resources, personnel and the work processes.
Operations strategy is the collective complete actions chosen, mandated, or stipulated by corporate/business strategy. The role of operations strategy is to provide a plan for the operations function so that it can make the best use of its resources.
Operations strategy decisions are the actual decisions that are taken over time and shape the operations strategy of a company. These decisions can be classified into categories - structural and infrastructure decisions.
Operations Strategy Decision Areas
Operations strategy formulation is a decision-making process that shapes an organization's long-term plans to achieve the objectives in its mission statement. Operations strategy consists of a series of decisions that organizations make in order to effectively implement and execute their business and competitive strategies. Operations strategy is the system of decisions that shape the long-term capabilities of a company's operations and their contribution to overall strategy through the ongoing reconciliation of market requirements and operations resources. Key operations strategy strategic decisions include:
These key strategic decisions are influenced by factors such as: skills of the function's staff, current technology, and recent performance of the function. Operations strategy is the plan that specifies the design and use of resources to support the business strategy. This includes the location, size, and type of facilities available; worker skills and talents required; use of technology, special processes needed, special equipment; and quality control methods.
Functional Strategy
Functional strategy refers to the strategies of the business functions areas such as marketing, HR, Finance, etc., and includes operations/production. A functional strategy focuses on the major functional areas of the the company and is formulated primarily to support business level strategy as well as the corporate level and operations level strategies in the strategy hierarchy. Functional strategies deal with how each of the functional areas/units will carry out its functional activities to be efficient and effective, and maximize resource productivity. Functional strategies are relatively short-term activities that each functional area within a company will carry out to implement the broader, longer-term corporate-level and business-level strategies. Functional strategy is the short-term game plan for key functional areas, within a company, required to reinforce the implementation and execution of organization's strategy. These strategies are more localized and have shorter-horizon than corporate and business strategies. Functional strategy comprises the set of management decisions and actions taken in an organization's functional areas, such as marketing, HR, finance, Operations, etc., to enhance resources and organizational capabilities to better achieve the organization's strategic goals and objectives. Functional strategies are concerned with the effectiveness and efficiency of methods/tactics used in implementing strategic choices; and commitments regarding resources.
Development of functional strategies help in implementation of strategic choices - corporate, business and operations levels - by organizing and activating specific sub-units of the organization to pursue the organization's business strategy in daily activities. Functional strategies are linked through agenda set by markets to corporate, business and operations objectives. Functional strategies help in implementation of strategic choices by organizing and activating specific sub-units of the organization to pursue the corporate, business and operations strategy in daily activities through tactics.
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it is implemented in the operations function. Operations strategy comprises specific actions management wants to take to achieve a specific aspect of a company's operations. When implemented successfully, operations strategies strengthen a company's overall strategy and may help achieve market place advantage over the competition. It can also improve an organization's competencies and infrastructure allowing it to better serve customers and keep or extend its competitive advantage over others in the market.
Strategy Statement
A strategy is hypothesis of a set of decisions on what actions to take to achieve some specified objectives in some desired but uncertain future situation. A strategy describes how the ends (goals) will be achieved by the means (resources). A strategy would be enhanced by system thinking because it looks at each part of the business (lines of business, functional areas)in relation to the profitability and long-term success of the whole organization.
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.
Crafting a strategy is a creative decision-making process/act, involving generating ideas about what new solutions/products the business should offer, and in which markets to operate in order to survive, grow and thrive. It 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 a decision making process informed by SWOT analysis - a synthesis of the results of the analyses of the organization's external environment, internal environment, and industry to identify any opportunities and/or threats based on established strengths and weaknesses.
Strategy formulation is the process of using available knowledge to document the intended direction of a business and the strategies crafted to reach its goals. Strategy formulation is primarily an intellectual and creative act involving developing strategies to known strategic problems identified and defined by the strategic issues diagnosis and events.
Strategy formulation occurs at a number of levels - corporate, business and functional - in the organization, and produces a clear set of recommendation, with supporting justifications, that revise, as necessary, the mission and objectives of the organization, and apply the strategies for accomplishing them. The sets of recommendations for each of the levels must be internally consistent and fit together in a mutually supportive manner that forms an integrated strategy hierarchy. In formulation, we are trying to modify the current objectives and strategies in ways to make the organization more successful. This includes trying to create "sustainable" competitive advantage.
Formulating strategy brings into play the critical managerial issue of how to achieve the targeted results (defined by the objectives in the strategic intent) in light of the organization's situation and prospects. The process of identifying the best strategy alternative (strategic option/courses of action) require people to think strategically (e.g., plan) then apply that thought to actions. In effect, strategy as an idea, is a pattern of strategic decisions (options) that management has to consider, along the dimensions of the strategy hierarchy. Strategy formulation can occur at three (3) levels, namely: Corporate, Business and Operations strategy levels.
Corporate Strategy Formulation
Corporate strategy is the way in which a business strives to create value, develop a unique corporate/comparative advantage, and captures market share. Corporate strategy determines the long-term orientation and the development of corporate activities. It involves evaluating the organization's current market positions and identifying the investment priorities for the businesses.
Corporate strategy is concerned with decisions about what businesses or industries should make up the organization's portfolio? What should be the direction? Should the organization diversify or vertically integrate? How should resources be allocated across operating units, given differences in competitive conditions and growth possibilities across industries.
- What are the industries and markets in which the firm competes through its products (product positioning) and business units (portfolio strategy)? What business to be in? Which products to offer in target markets? Which geographic regions to compete in?
- What should be our strategic direction? Strategic direction focuses on the plans and actions you need to implement in order to progress towards a vision for the organization's future. Establishing a strategic direction helps a company achieve its vision and helps it fulfill the goals of its organizational strategy. Strategic direction can be established in a number of ways including: Mission, Culture, Values, Ideology, Principles, and Grand Strategy.
- What is the manner in which management coordinates activities and transfers resources and cultivates capabilities among product lines and business units (Parenting strategy)? How to allocate cash? Decisions concerning the most efficient allocation of human and capital resources.
These key corporate strategic decisions are influenced by factors, such as; economic environment, social environment, political environment, and company's values and ethics.
Corporate strategy formulation is concerned with broad decisions about the total organization's scope and direction. Basically, we consider what changes should be made in our growth objective and the strategy for achieving it, the lines of business we are in, and how these lines of business fit together. The types of corporate strategy may include:
- Growth or directional strategy - What should be our growth objective? This could range from retrenchment through stability to varying degrees of growth; and how do we accomplish this. Growth strategies will help a company to consistently grow and meet financial expectations.
- Portfolio strategy - What should be our portfolio of lines of business? This implicitly requires reconsidering how much concentration or diversification we should have.
- Parenting strategy - How we allocate resources and manage capabilities and activities across the portfolio. Where do we put special emphasis, and how much do we integrate various lines of business?
Growth strategies will help a company to consistently grow and meet financial expectations. Directional strategies can include short term goals, long-term goals, new product strategies, strategies to protect products and services, diversification strategies, geographic strategies, and market-based strategies.
Growth strategy involves developing a "grand strategy" or master plan that is consistent with organization's chosen direction and its life cycle stage of development. Grand strategy options (types of growth strategy) and the potential sub-options (pathways) through which each grand strategy option is accomplished include:
- Growth Strategy Option - Growth strategy option implies expanding the number of markets served, the products (goods and services) offered through current or new business. The growth strategy option aims to achieve considerable business growth in the areas of revenue, market share, etc., through types of growth strategies including Horizontal Integration, Vertical Integration, Diversification, and Market penetration. Growth for example, may be achieved through pathways such as concentration - where the company is still focusing on its core business and builds it out; through diversification - where the company decides to diversify based on a number of different approaches; product expansion - creating new products; market expansion - reaching new audiences (market development).
- Stability Strategy Option - The stability strategy option implies a state of status quo, or rather a state where the activity level is significantly lower than in that of the growth stage. Stability strategies are geared towards getting "more" out of the existing business (i.e., profitability driven strategy) because the current situation already works well for the organization. This strategy assumes your company is doing well under its current business model. Since the pathway to growth is uncertain, employing a stability strategy to ensure incremental progress that still bring in revenue is a viable approach.
- Renewal Strategy Option - When an organization faces a challenging circumstances part of the corporate strategy will involve retrenchment or turnaround. Retrenchment requires you to strongly consider switching your business model. These approaches could include selling (exiting) part of the business or spinning it off.This set of strategies is almost the opposite of status-quo or growth strategies. It is a defensive strategy where the main objective is to change the negative trajectory and improve the company's position either through aggressive changes or "cutting off" the parts that pull it down.
- Re-invention Strategy - Re-invention strategies often include taking the existing company which has not changed for decades and reinventing them. Here one can distinguish between evolutionary strategies and revolutionary strategies.
Corporate level strategy has to be consistent to the life-cycle stage of the organization. Organizations are "born" (established or formed), they grow and develop, they reach maturity, they begin to decline and age, and finally they die. Organizations at any stage of the life-cycle are impacted by the external environment as well as internal environment factors.
Several components are involved in developing comprehensive corporate strategy; these components may include visioning, objective setting, resource allocation and prioritization.
- Visioning - This involves setting the high-level direction of the organization - namely establishing the vision, mission, and corporate values - is the overriding purpose of the visioning component. In creating a corporate vision statement, the primary goal should be to respond to how leadership sees the company evolving in the future.
- Objective Setting - This is the process of developing the visioning aspects created and turning them into a series of high-level objectives for the company, typically spanning 3-5 years in length. Strategic objectives are the big-picture goals for the company: they describe what the company will do to try to fulfill its mission. Having strategic objectives in place allows a company to measure its progress. Clearly communicating these objectives to personnel ensures that everyone is focused on the highest-priority tasks and is operating under the same assumptions about the company's future.
- Resource Allocation - This component refers to the decisions which concern the most efficient allocation of human and capoital resources in the context of stated goals and objectives. Resource allocation involves planning, managing and assigning resources in a form that helps to reach a company’s strategic goals. In an effort to maximize the value of the entire firm, leaders must determine how to allocate these resources to the various businesses or business units to make the whole greater than the sum of the parts.
- Prioritization or Strategic Tradeoffs - This involves identifying the strategic tradeoffs, and balancing risk and return on investment ro ensure that the desired levels of risk management and return generation are being pursued. Since it’s not always possible to take advantage of all feasible opportunities, and because business decisions almost always entail a degree of risk, companies need to take these factors into account in arriving at the optimal strategic mix.
An effective corporate strategy is founded upon honest self-evaluation, which is derived by asking key questions about your business. These questions may include: "what's the current state of the company?"; "Where do you want your company to be in the next three (3) to five (5) years?"; "How does the company get there?"; and "What people, resources and finances are best capable of helping the company arrive there?".
Business/Competitive Strategy Formulation
Business strategy is a system of decisions that are aimed at shaping both the long-term competitive strategy of the company. The focus is in how to compete successfully in each of the lines of business the company has chosen to engage in, and with what generic strategy - cost leadership, differentiation, or focus - to compete. A company has competitive advantage whenever it can attract customers and defend against competitive forces better than its rivals. Successful competitive strategies usually involve building uniquely strong or distinctive competencies in one or several areas crucial to success and using them to maintain a competitive edge over rivals. Some examples of distinctive competencies are superior technology and/or product features, better manufacturing technology and skills, superior sales and distribution capabilities, and better customer service and convenience.
Business strategy development entails 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 a clear set of plans, actions, and goals that outlines how a business will compete in a particular market, or markets, and with product, or a number of products and services. Business strategy by identifying clear plan for how an organization will reach its goals, allows you to focus on capitalizing your strengths, using them as competitive advantage that makes your company unique in the market place.
The central thrust if business strategy is how to build and improve the company's competitive position for each of its lines of business.
It is concerned with decisions and choices regarding products and services, and competition within a given industry. The emphasis is on industry analysis and the external forces/factors as thee business positions itself for competitive advantage. Business strategy decisions provide answers to the following questions:
- How will we position ourselves against our competitors?
- What capabilities will we employ to differentiate us from the competition?
- What unique approaches will we apply to create new markets?
These key strategic decisions are influenced by factors such as: customer/market dynamics, competitor activity, core technology dynamics, and financial constraints.
Generic Strategy
Generic Competitive Strategy as defined by Porter may include the following:
- Cost Leadership - This is a cost advantage strategy where the organization is trying to be the lowest cost producer. In many industries high capital costs limit competitors. This is not true in professional services, this usually means lowering the cost of talent by using professionals from countries or regions with lower wages or employing more automation in the firms business process.
- Differentiation Leadership - This is a differentiation strategy. With differentiation strategy an organization is attempting to establish and maintain meaningful differences between the firm and its competitors.
- Focus Strategy - This is a specialization strategy. The focus dimension of a competitive strategy recognizes that either a cost advantage or differentiation strategy can be applied to a very broad market or a more narrow (niche) market.
These generic competitive strategies provide the foundation for a business strategy. A choice of one of these generic competitive strategies provides the foundation for a business strategy, however there can be many variations and elaborations; among these are competitive tactics such as timing tactics and market location tactics, as well as cooperative strategies.
Operations Strategy Formulation
Formulating operations strategy is the practical process of articulating the various objectives and decisions that make up the operations strategy. It is essentially, about the different ways of aligning plans, activities, and objectives. Operations strategy formulation involves comprehensive analysis of the operations capability from a number of perspectives, such as: top-down, bottoms-up, market requirements and operations resources perspectives. These perspectives on operations strategy help companies examine and implement effective and efficient systems to achieve corporate and business objectives.
The top-down perspective of operations strategy represents the top-down reflection of what the business wants to do. The bottom-up perspective reflects bottom-up activities where operations improvements cumulatively build strategy. The marketing perspective involves translation of market requirements into performance objectives that drive operations decisions on and exploits the capabilities of operations resources in chosen markets. The operations resource perspective involves translation of a broad understanding of what resources, processes and capabilities operations may possess within its resources to an identification of key decisions (based on specific categorization of structure and infrastructure) that operations managers will need to take in order to exploit, build on and develop those capabilities. The operations strategy binds the various operations decisions and actions into a cohesive consistent response to competitive forces/factors by linking firm policies, programs, systems, and actions into a systematic response to the competitive priorities chosen and communicated by the corporate or business strategy. In simpler terms, the operations strategy specifies how the firm will employ its operations capabilities to support the business strategy.
Operations strategies connect the firms programs, policies, guidelines and workforce in a way that allows each part of the organization (functional areas) to support others in achieving a common goal. An effective operations strategy considers a company's long-term objectives and creates steps that cohesively bond business plans with resources, capacity, time, location, and competition. The operations strategy must be aligned with the company's business strategy and enable the company to achieve its long-term plan. By developing operations strategies a company can examine and implement effective and efficient systems for using resources, personnel and the work processes.
Operations strategy is the collective complete actions chosen, mandated, or stipulated by corporate/business strategy. The role of operations strategy is to provide a plan for the operations function so that it can make the best use of its resources.
Operations strategy decisions are the actual decisions that are taken over time and shape the operations strategy of a company. These decisions can be classified into categories - structural and infrastructure decisions.
Operations Strategy Decision Areas
Operations strategy formulation is a decision-making process that shapes an organization's long-term plans to achieve the objectives in its mission statement. Operations strategy consists of a series of decisions that organizations make in order to effectively implement and execute their business and competitive strategies. Operations strategy is the system of decisions that shape the long-term capabilities of a company's operations and their contribution to overall strategy through the ongoing reconciliation of market requirements and operations resources. Key operations strategy strategic decisions include:
- Capacity - Amount, Timing, and Type.
- Facilities - Size, :Location, Specialization.
- Technology - Equipment, Process, Automation, and Linkages.
- Vertical Integration (Supply Networks) - Direction, Extent and Balance.
- Workforce - Skill Level, Wage Policies, Employment Security.
- Quality - Defect prevention, Monitoring, and Intervention.
- Production Planning/Materials Control - Sourcing policies, Centralization, Decision Rules
- Organization - Structure, Control/Reward systems, Role of staff groups
These key strategic decisions are influenced by factors such as: skills of the function's staff, current technology, and recent performance of the function. Operations strategy is the plan that specifies the design and use of resources to support the business strategy. This includes the location, size, and type of facilities available; worker skills and talents required; use of technology, special processes needed, special equipment; and quality control methods.
Functional Strategy
Functional strategy refers to the strategies of the business functions areas such as marketing, HR, Finance, etc., and includes operations/production. A functional strategy focuses on the major functional areas of the the company and is formulated primarily to support business level strategy as well as the corporate level and operations level strategies in the strategy hierarchy. Functional strategies deal with how each of the functional areas/units will carry out its functional activities to be efficient and effective, and maximize resource productivity. Functional strategies are relatively short-term activities that each functional area within a company will carry out to implement the broader, longer-term corporate-level and business-level strategies. Functional strategy is the short-term game plan for key functional areas, within a company, required to reinforce the implementation and execution of organization's strategy. These strategies are more localized and have shorter-horizon than corporate and business strategies. Functional strategy comprises the set of management decisions and actions taken in an organization's functional areas, such as marketing, HR, finance, Operations, etc., to enhance resources and organizational capabilities to better achieve the organization's strategic goals and objectives. Functional strategies are concerned with the effectiveness and efficiency of methods/tactics used in implementing strategic choices; and commitments regarding resources.
Development of functional strategies help in implementation of strategic choices - corporate, business and operations levels - by organizing and activating specific sub-units of the organization to pursue the organization's business strategy in daily activities. Functional strategies are linked through agenda set by markets to corporate, business and operations objectives. Functional strategies help in implementation of strategic choices by organizing and activating specific sub-units of the organization to pursue the corporate, business and operations strategy in daily activities through tactics.
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it is implemented in the operations function. Operations strategy comprises specific actions management wants to take to achieve a specific aspect of a company's operations. When implemented successfully, operations strategies strengthen a company's overall strategy and may help achieve market place advantage over the competition. It can also improve an organization's competencies and infrastructure allowing it to better serve customers and keep or extend its competitive advantage over others in the market.
Strategy Statement
A strategy is hypothesis of a set of decisions on what actions to take to achieve some specified objectives in some desired but uncertain future situation. A strategy describes how the ends (goals) will be achieved by the means (resources). A strategy would be enhanced by system thinking because it looks at each part of the business (lines of business, functional areas)in relation to the profitability and long-term success of the whole organization.
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.
Crafting a strategy is a creative decision-making process/act, involving generating ideas about what new solutions/products the business should offer, and in which markets to operate in order to survive, grow and thrive. It 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 a decision making process informed by SWOT analysis - a synthesis of the results of the analyses of the organization's external environment, internal environment, and industry to identify any opportunities and/or threats based on established strengths and weaknesses.
Strategic Choices/Options Selection
Strategic choice is the mental process of selecting the best or most appropriate strategy from the stock of alternatives that serves the company's objectives. Strategic choices are the result of elements like judgment, bargaining, and analysis. To choose a good strategic option past data, current data, forecast data, and various other factors should be examined. Those various other factors may include: Environmental Constraints; Dynamism of Market Sector; Organizational Internal Factors, i.e., mission, vision, strategic intent, goals, etc.; Corporate Culture; Industry and Cultural Background; Personal Values and Preferences; Value System; Pressure from Stakeholders; Impact of Past Strategies; Managerial Attitude towards Risk; Managerial Power Relations; coalition phenomenon; time dimension, i. e., time pressures, time frames, time horizon, and timing; Information Constraints; Competitors' Reactions; Styles of Decision Making; Governmental Policies; Critical Success Factors and Distinctive Competencies; Execution Capacity.
Each strategy option has to pass through the following tests:
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'.
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Developing Strategic Options
In effect, strategy as an idea, is a pattern of strategic decisions (options) that management has to consider, along the dimensions of the strategy hierarchy. such as corporate, business and operations strategy.
The time-scales for developing resources and capabilities may be very long, and may be longer than the time-scale for market entry.
Strategic choice is the mental process of selecting the best or most appropriate strategy from the stock of alternatives that serves the company's objectives. Strategic choices are the result of elements like judgment, bargaining, and analysis. To choose a good strategic option past data, current data, forecast data, and various other factors should be examined. Those various other factors may include: Environmental Constraints; Dynamism of Market Sector; Organizational Internal Factors, i.e., mission, vision, strategic intent, goals, etc.; Corporate Culture; Industry and Cultural Background; Personal Values and Preferences; Value System; Pressure from Stakeholders; Impact of Past Strategies; Managerial Attitude towards Risk; Managerial Power Relations; coalition phenomenon; time dimension, i. e., time pressures, time frames, time horizon, and timing; Information Constraints; Competitors' Reactions; Styles of Decision Making; Governmental Policies; Critical Success Factors and Distinctive Competencies; Execution Capacity.
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'.
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Developing Strategic Options
In effect, strategy as an idea, is a pattern of strategic decisions (options) that management has to consider, along the dimensions of the strategy hierarchy. such as corporate, business and operations strategy.
- 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.
Strategy Implementation
Strategy implementation is an action-oriented activity, it revolves around the management of people resources, and business processes. Strategy implementation is concerned with making the chosen strategy operational by translating it into action plans so it can be executed successfully. Implementation provides the connecting loop between the strategic choice - selected strategic option from formulation - and execution and control.
Implementation assumes the existence of an operations infrastructure such as; organization structure, systems (e.g., payroll system, performance management system, employee compensation and benefits system, employee onboarding system, etc.). This infrastructure is dependent of operations structure such as: facilities, processes, etc. Successful implementation depends on the following "organization as system" elements being in place
These component elements have to be in place for competent implementation; and are generally in agreement with the key success factors or prerequisites for effective strategy implementation as identified by McKinsey 7S.
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.
Strategy Implementation Plan
Strategy implementation process is one way by which an organization's objectives, strategies, and policies are put into action through development of initives (programs and projects), budgets and procedures. Strategy implementation is an action-oriented process for building a capable organization that can make the selected planned/formulated strategy work as intended, through execution of those plans to realize the actual strategy. Implementation planning involves the following:
A strategy is fully implemented, if the corporate strategy is fully implemented, i.e., the corporation has the capabilities, comparative (enterprise) advantage, and business portfolio it wants; and the business business strategy is fully implemented, i.e., the business unit has the customers, value proposition, and skills it has chosen to have. In practice a strategy is never fully implemented since the environment factors on which strategy assumptions were based are in constant flux. 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 strategy call for. Closing this gap is implementation.
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Implementation plan includes several different components that need to be coordinated and managed through the assignment and direction of personnel to carry out the plan. Implementation deals with organizational design changes and structural modifications, motivational plans, reward and punishment systems, leadership style, and control and information systems. There are three (3) approaches to implementation control, including authority, persuasion, and policy.
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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Strategy implementation means the strategic plans are carried out and translated into positive actions. These are essentially two (2) aspects/parts to implementation:
The planning aspects of implementation revolve around decisions about managing people and processes, taking into consideration management issues central to strategy implementation.
Once planning goals are set in the strategy formulation stage, managers organize the human resources and other resources that are identified as necessary by the plan to reach the planned goals.
Although strategy implementation requires a customized approach, the following are some general tasks that managers must perform to successfully implement the selected/chosen strategy.
These are some of the various strategy implementation tasks common m=to most companies that strategy implementation needs and strategy implementors need to take care of while giving careful consideration tothe emerging changes that regularly take place in the organization.
Strategy Implementation consists of all the decisions and actions, and plans required to turn strategic choices into reality. Although a manager may talk about "implementing a differentiation strategy", the real implementation of a strategy happens at the bottom of the strategy hierarchy and the organizational hierarchy, in the actions of operational employees who carry out planned tasks that add value to the company's product. Such tasks may include: research and development to add new features, monitoring production to ensure company's products meet high quality standards, and marketing the product to add brand value in the eyes of consumers.
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Goal Setting and Objectives
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 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.
Corporate Objectives
Corporate objectives are those that relate to the business as a whole. They are usually set by the top management of the business and they provide the focus for setting more detailed objectives for the main functional activities of the business.
Corporate objectives tend to focus on the desired performance and results of the business. It is important that corporate objectives cover a range of key areas where the business wants to achieve results rather than focusing on a single objective. Peter Drucker suggested that corporate objectives should cover the following areas:
Implementing the Selected Strategy
Strategy implementation from a strategy content perspective involves implementation of corporate, business and operations strategy re-enforced by the implementation of the relevant functional strategies.
Implementing Corporate Strategy
Corporate strategy at its core concerns itself with the entirety of a business, where decisions are made in regard to its overall growth and direction. Corporate strategy implementation entails making corporate strategy operational by translating corporate level strategy goals into programs and projects that accomplish those goals. If the corporation has the capabilities, enterprise advantage, and business portfolio it wants its corporate strategy is fully implemented.
Corporate strategy entails a clearly defined, long-term vision that organizations set, seeking to create corporate value and motivate the workforce to implement the proper actions to achieve customer satisfaction. When clearly defined, a corporate strategy will work to establish the overall value of a business, set strategic goals and motivate employees to achieve them. The pillars of corporate strategy include; allocation of resources, organization (structure) design, portfolio management, and strategic trade-offs.
Implementing corporate strategy involves:
Corporate-level strategy is an action taken to gain a comparative advantage through the selection and management of combination of businesses competing in several industries or product markets. For multi-business firms, the resource-allocation process - how cash, staffing, equipment, and other resources are distributed - is established at the corporate level.
Implementing Business Strategy
Business level strategy at its core is concerned with the actions and decisions a company plans to take to reach its goals and objectives.
Implementing business competitive strategy may involve the following:
The business strategy is fully implemented, if the business unit has the customers, value proposition and skills it has chosen to have.
Implementing Operations Strategy
Operations strategy refers to the methods companies use to reach their objectives. Developing operations strategies enables an organization to examine and implement effective and efficient systems for using resources, personnel and work processes. Service-oriented companies also use basic operations strategies to link long- and short-term corporate decisions and create an effective management team.
There are two (2) parts to implementing (making strategy operational) a strategy; both parts require that an appropriate operations infrastructure is in place. The two (2) parts involve consideration of a number of important points relevant to strategy execution such as:
Implementation means the strategic plans are carried out and translated into positive actions.
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During implementation stage, organizations may also find that they have to perform further planning, especially in the discovery of issues that must be addressed.
Implementation Decisions and Tasks
Implementation of planned strategies involves the process by which an organization translates its chosen strategy into action plans and activities which will steer the organization in the direction set out in the strategy, and enable the organization to achieve its strategic objectives. Translating strategy aims - goals and objectives - into actionable processes in an ordered fashion is, however, not easy. The setting of priorities and development of plans may present organizations with formidable management challenges.
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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.
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Structure Decisions
Structural decisions of operations strategy are decisions that define the overall tangible shape and architecture (e.g., facility, capacity, technology, etc.) of the operations of an organization.
Infrastructure Decisions
The operations infrastructure consists of the following: organizational structure and the systems, human resources, culture and resources to support it. Within this framework managers have to consider:
The appropriate operations infrastructure needed to support an operations strategy has to be in place for strategy implementation to begin.
Organization Management Structure
An organizational structure divides the organization into distinct parts, and defines the relationships between those parts. The structure shows who has responsibility for what,who has authority over whom, and who reports to whom. The main options are: functional structure, product structure, hybrid structure combining the two, some time of matrix structure, or self-managed groups.
Human Resources and Staffing
The human resources aspects of the organization as a system involve decisions and actions about staffing and staff levels, job responsibilities, employment conditions, motivation, etc.
Organizational Culture
Organizational culture is an intangible aspect of the the organization as system. It is defined by the values and norms, beliefs and assumptions, and influences the way people within the organization think and behave.
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.
Strategy implementation is an action-oriented activity, it revolves around the management of people resources, and business processes. Strategy implementation is concerned with making the chosen strategy operational by translating it into action plans so it can be executed successfully. Implementation provides the connecting loop between the strategic choice - selected strategic option from formulation - and execution and control.
Implementation assumes the existence of an operations infrastructure such as; organization structure, systems (e.g., payroll system, performance management system, employee compensation and benefits system, employee onboarding system, etc.). This infrastructure is dependent of operations structure such as: facilities, processes, etc. Successful implementation depends on the following "organization as system" elements being in place
- Resources - One of the basic activities of strategy implementation is the allocation of resources, both financial and non-financial resources, that are (a) available to the organization, and (b) are lacking but required for strategy implementation. Do you have adequate funding (financial strength) to support implementation, covering the costs and expenses that must be incurred in the execution of the strategies?" and "Do you have enough time to see the strategy throughout its implementation?" Financial strength is a factor in its won right that influences other internal environment factors.
- People - These refer to the human resources. There are two issues to be addressed; (1) "Do you have enough people to implement the strategies? (2) "Do you have the right people in the organization to implement the strategies?"
- Structure - Is the structure clear-cut with lines of authority and responsibility defined and underlined in the "chain of command?" "Are the lines of communication throughout the organization clearly defined by management?" Organization structure essentially defines how the work needed to carry out the mission is divided among the workforce/people.
- Systems - What systems, tools, and capabilities are in place to facilitate the implementation of the strategies? What are the specific functions of these systems? How will these systems aid in the implementation? The availability of the appropriate systems can significantly impact the implementation and execution performance. If the right systems are not available, or the available systems are not up to expected standards then workers and management may be hindered in the performance of the duties. If the inadequate systems are used by customers then customer satisfaction will suffer. These are systems that support the organizational structure; they include:system of accounts, communication systems, information systems, order processing systems, customer relations systems, and other basic systems that support operations. These systems basically collect data, analyze the data and move the results around the organization to inform management decisions and actions.
- Culture - Organization culture is influenced by the values and beliefs of the organization, and manifested in the attitudes of employees and partners, and their ability to "go the extra mile". Negative attitudes can severely and adversely impact the organization's capacity to successfully implement and execute its strategies.
- Management - The capability of the management team and the leadership styles employed by managers will also have a major impact on employee morale and motivation, and organizational culture.
These component elements have to be in place for competent implementation; and are generally in agreement with the key success factors or prerequisites for effective strategy implementation as identified by McKinsey 7S.
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.
Strategy Implementation Plan
Strategy implementation process is one way by which an organization's objectives, strategies, and policies are put into action through development of initives (programs and projects), budgets and procedures. Strategy implementation is an action-oriented process for building a capable organization that can make the selected planned/formulated strategy work as intended, through execution of those plans to realize the actual strategy. Implementation planning involves the following:
- 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.
- Establish Strategic Objectives - Identify the goals the new strategy should achieve. Goals help establish a clear picture of what you are trying to attain. Account for variables that might hinder your team's ability to reach the identified goals and lay out contingency plans. Usually, strategic choices selected for implementation are expressed as high-level statements that resonate with the board, and executive level management. Ensure the strategic choices are sound and described in statements that clearly communicate what top management wants and expects. The statements should be expressed in terms that middle-level and line management would understand; such as the products and services to offer and in which markets; what resources, capabilities, and competencies are needed to support these products and services; how to acquire or build these resources.
- Cascade Strategy - Translating the selected strategic choices into organizational methods (functional strategies). This 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 successful implementation of the selected strategic choices.
- Delegate Work - Determine who needs to do what and when. 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.
- Putting Plan into Action - Execute the plan, Monitor progress and performance, and provide continued support. One effective strategy for monitoring progress is to use daily, weekly, and monthly status reports, and check-ins to to provide updates; reestablish due dates and milestones, and ensure all teams are aligned.
- 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.
- Get Closure on the Project, and Agreement on the Output - Everyone on the team should agree on what the final product should look like based on the goals set at the beginning. When you’ve successfully implemented your strategy, check in with each team member and department to make sure they have everything they need to finish the job and feel like their work is complete.
- Review of How the Process Went - Conduct a retrospective. Once your strategy has been fully implemented, look back on the process and evaluate how things went. Ask yourself questions like:
- Did we achieve our goals?
- If not, why? What steps are required to get us to those goals?
- What roadblocks or challenges emerged over the course of the project that could have been anticipated? How can we avoid these challenges in the future?
- In general, what lessons can we learn from the process?
A strategy is fully implemented, if the corporate strategy is fully implemented, i.e., the corporation has the capabilities, comparative (enterprise) advantage, and business portfolio it wants; and the business business strategy is fully implemented, i.e., the business unit has the customers, value proposition, and skills it has chosen to have. In practice a strategy is never fully implemented since the environment factors on which strategy assumptions were based are in constant flux. 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 strategy call for. Closing this gap is implementation.
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Implementation plan includes several different components that need to be coordinated and managed through the assignment and direction of personnel to carry out the plan. Implementation deals with organizational design changes and structural modifications, motivational plans, reward and punishment systems, leadership style, and control and information systems. There are three (3) approaches to implementation control, including authority, persuasion, and policy.
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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Strategy implementation means the strategic plans are carried out and translated into positive actions. These are essentially two (2) aspects/parts to implementation:
- Planning - The cascade of objectives - decisions and actions down through the organization; this requires that there exists an appropriate operations infrastructure.
- Controlling - Monitoring performance to make sure that planned results - outcomes of successful execution - are actually achieved.
The planning aspects of implementation revolve around decisions about managing people and processes, taking into consideration management issues central to strategy implementation.
Once planning goals are set in the strategy formulation stage, managers organize the human resources and other resources that are identified as necessary by the plan to reach the planned goals.
Although strategy implementation requires a customized approach, the following are some general tasks that managers must perform to successfully implement the selected/chosen strategy.
- Exerting Strategic Leadership - Strategic leadership is a potential source of competitive advantage, and, therefore, highly essentia for successful strategy. Strategic leadership is construed as the ability to anticipate, envision, maintain flexibility, and empower others to create strategic change as necessary. Strategic leadership is concerned with nanaging the entire organization and addressing the environmental changes in the industry and outside the industry, Successful strategic leaders in organizations effectively and gainfully influence the employees' behavior and thoughts. They are capable of creating intellectual capital.
- Building a Capable Organization - This includes the following steps (1) developing competent personnel, this involves putting together a strong management team, and recruiting and retaining employees with the needed experience, technical skills, and intellectual capital; (2) developing competitive organizational capaboilities, this involves building core competencies, and competitive capabilities; and (3) dynamic organizational structure, this involves structuring the organization and work effort. It includes organizing business functions and processes, value chain activities, and decision making in such a way that help successful ‘strategy execution.
- Linking Budget to Strategy - Effective strategy implementation requires reallocating resources to ensure that relevant business function/divisions/departments have sufficient budgets to do their work successfully. Budgetary requirements must be determined carefully, so that fund allocation can be made judiciously. When managers change strategy, resource realoocation becomes necessary if a partcular business function/area has to play a more critical strategic role.
- 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. It is important that managers formulate policies and procedures in such a way that they can provide support to effective strategy implementation and execution. Wnen a company embarks on implementing a new competitive strategy, the senior management should undertake a comprehensie review of the company's existing policies and procedures.
- Intituting Best Practices - Best practices refer to the innovative manner in which activities or business processes are performed by companies, which are considered 'best-in-industry' or 'best-in-world'. In other words, best practices are those business activities of competitors or some other organizations that have proved very successful in achieving business goals. A company may have best practices, for example, in exceeding customer expectations or in motivating employees. A company can identify the best practices of other companies through benchmarking. Benchmarking is searching out the best practices of other companies. It finds out how well a company performas particular activities and processes against the best in the world. Benchmarking best practices and then adopting them is important for successful strategy implementation.
- Intituting Mechanisms for Continuous Improvement - Mechanisms for continuous improvement of business operations and processes (including products and services) are many. Some of the most widely used of these are: Business Process Reengineering, Total Quality Management, and Six Sigma.
- Installing Support Systems - Successful strategy implementation entails the establishment of several support systems to carry out/on business operations. Well established support systems strengthen company capabilities and at the same time faciitate better implementation of the strategy.
- Design Strategy-Supportive Reward Systems - The Reward and motivation systems in the company need to be such that they promote better strategy implementation. The reward system should be linked to strategy related performance and measures.
- 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 the inbuilt existing corporate culture into a strategy-supportive culture.
- 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.
These are some of the various strategy implementation tasks common m=to most companies that strategy implementation needs and strategy implementors need to take care of while giving careful consideration tothe emerging changes that regularly take place in the organization.
Strategy Implementation consists of all the decisions and actions, and plans required to turn strategic choices into reality. Although a manager may talk about "implementing a differentiation strategy", the real implementation of a strategy happens at the bottom of the strategy hierarchy and the organizational hierarchy, in the actions of operational employees who carry out planned tasks that add value to the company's product. Such tasks may include: research and development to add new features, monitoring production to ensure company's products meet high quality standards, and marketing the product to add brand value in the eyes of consumers.
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Goal Setting and Objectives
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 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.
Corporate Objectives
Corporate objectives are those that relate to the business as a whole. They are usually set by the top management of the business and they provide the focus for setting more detailed objectives for the main functional activities of the business.
Corporate objectives tend to focus on the desired performance and results of the business. It is important that corporate objectives cover a range of key areas where the business wants to achieve results rather than focusing on a single objective. Peter Drucker suggested that corporate objectives should cover the following areas:
- Market standing - Market share, customer satisfaction, product range.
- Innovation - New products, better processes, using technology.
- productivity - Optimum use of resources, focus on core activities.
- Physical and Financial Resources - Factories, business locations, finance, supplies.
- Profitability - Levels of profit, rates of return on investment
- Management - Management structure; promotion and development
- Employees - Organizational structure; employee relations
- Public Responsibility - Compliance with laws; social and ethical behavior.
Implementing the Selected Strategy
Strategy implementation from a strategy content perspective involves implementation of corporate, business and operations strategy re-enforced by the implementation of the relevant functional strategies.
Implementing Corporate Strategy
Corporate strategy at its core concerns itself with the entirety of a business, where decisions are made in regard to its overall growth and direction. Corporate strategy implementation entails making corporate strategy operational by translating corporate level strategy goals into programs and projects that accomplish those goals. If the corporation has the capabilities, enterprise advantage, and business portfolio it wants its corporate strategy is fully implemented.
Corporate strategy entails a clearly defined, long-term vision that organizations set, seeking to create corporate value and motivate the workforce to implement the proper actions to achieve customer satisfaction. When clearly defined, a corporate strategy will work to establish the overall value of a business, set strategic goals and motivate employees to achieve them. The pillars of corporate strategy include; allocation of resources, organization (structure) design, portfolio management, and strategic trade-offs.
Implementing corporate strategy involves:
- Understand the strategic goals - Understand the goals in terms of various strategic initiatives that the goals really represent to establish the business portfolio the organization wants.
- Translate Goals into major programs - Translate goals into major initiatives at the beginning of operational planning. This is accomplished mapping the goals into chunks of work.
- Map programs to Organizational Structure - With grouping of initiatives into programs completed, the question is "How do initiatives impact the organization?" Profit and Loss accountability, organizational structure and resource control must be understood with respect to how they relate to strategy programs. Where will resources need to be shared? How will program funding affect budgets across the organization's structure?
- Define Accountability for the programs - Accountability must be clear in terms of time frames. RACI models can aid in mapping out Responsibility, Accountability, Consult and Inform roles relative to the programs or initiatives supporting the plans.
- Break programs down into projects - Operations planning is about execution, so estimating work effort and time to complete correctly, for chunks of work is important. Programs are too unwieldy to be estimated and managed without breaking down the effort into smaller chunks, i.e., projects.
Corporate-level strategy is an action taken to gain a comparative advantage through the selection and management of combination of businesses competing in several industries or product markets. For multi-business firms, the resource-allocation process - how cash, staffing, equipment, and other resources are distributed - is established at the corporate level.
Implementing Business Strategy
Business level strategy at its core is concerned with the actions and decisions a company plans to take to reach its goals and objectives.
Implementing business competitive strategy may involve the following:
- Assess Business situation - Give due consideration to your business situation and make sure your competitive strategy is developed in the context of that business situation. Is the company a mature firm with well-developed brand and reputation for stability, or a brand new startup? What are your business imperatives? Do you need to grow in size or maximize profitability? These kinds of business objectives shape whats possible and what's optimal.
- Research target markets and competitive environment - There are two (2) types of research of relevance here; research on your target markets and research on the competitive environment. This type of research offers you the opportunity to understand how your firm is, or could be different from competitors in ways that are meaningful to your potential clients/customers.
- Identify Current or potential sources of competitive advantage - In the research step,you may have identified some likely potential advantages; you may consider these and add additional ones for evaluation. Evaluation involves applying the following tests: is the potential advantage true? i.e., is it grounded in reality?; id it relevant?; and is it provable? Is there objective support for your claim?
- Validate your Competitive Strategy - The choices of competitive strategy are high stake strategic decisions; it is prudent to validate your selection of advantages before implementing them.
- Develop your competitive strategy - There are two (2) types of implementation cases an organization might need to consider:
- Type 1 - Some competitive advantage may already have been fully implemented in your company, or you are planning on. In those cases your task is to focus on communicating those advantages to the market place. This element of the plan is called marketing or building brand strategy and focuses on target audiences, messages, communications techniques, budget and schedule.
- Type 2 - You are planning to implement a new strategy that involves developing a completely new characteristic of the organization; it involves planning how (tactics) this is going to happen. Does it involve new hires? Training existing staff? Changing policies and procedures? Acquisitions? These sort of organizational changes do not happen on their own. They must be planned for and deliberately implemented.
The business strategy is fully implemented, if the business unit has the customers, value proposition and skills it has chosen to have.
Implementing Operations Strategy
Operations strategy refers to the methods companies use to reach their objectives. Developing operations strategies enables an organization to examine and implement effective and efficient systems for using resources, personnel and work processes. Service-oriented companies also use basic operations strategies to link long- and short-term corporate decisions and create an effective management team.
There are two (2) parts to implementing (making strategy operational) a strategy; both parts require that an appropriate operations infrastructure is in place. The two (2) parts involve consideration of a number of important points relevant to strategy execution such as:
- Activation of lower decisions - This involves the cascading of decisions and actions through out the organization. The process entails 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 (functional) units with the right competencies and capability (as defined by their functional strategies) to ensure success implementation of the selected strategic choices.
- Controlling Results - This involves monitoring performance to make sure the planned results are actually achieved. It involves the implementation of performance control systems.
Implementation means the strategic plans are carried out and translated into positive actions.
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- 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 to 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.
Implementation Decisions and Tasks
Implementation of planned strategies involves the process by which an organization translates its chosen strategy into action plans and activities which will steer the organization in the direction set out in the strategy, and enable the organization to achieve its strategic objectives. Translating strategy aims - goals and objectives - into actionable processes in an ordered fashion is, however, not easy. The setting of priorities and development of plans may present organizations with formidable management challenges.
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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.
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Structure Decisions
Structural decisions of operations strategy are decisions that define the overall tangible shape and architecture (e.g., facility, capacity, technology, etc.) of the operations of an organization.
Infrastructure Decisions
The operations infrastructure consists of the following: organizational structure and the systems, human resources, culture and resources to support it. Within this framework managers have to consider:
- the way operations function fits into the broader organization.
- support systems such as information, communication, financial, control and other support systems.
- internal policies, methods and culture that support the implementation.
- budgets and resources for operations.
- integrated supply chains to ensure the flow of materials.
- motivation of people to pursue targets.
- leadership to drive implementation forward and to continually look for improvements.
The appropriate operations infrastructure needed to support an operations strategy has to be in place for strategy implementation to begin.
Organization Management Structure
An organizational structure divides the organization into distinct parts, and defines the relationships between those parts. The structure shows who has responsibility for what,who has authority over whom, and who reports to whom. The main options are: functional structure, product structure, hybrid structure combining the two, some time of matrix structure, or self-managed groups.
Human Resources and Staffing
The human resources aspects of the organization as a system involve decisions and actions about staffing and staff levels, job responsibilities, employment conditions, motivation, etc.
Organizational Culture
Organizational culture is an intangible aspect of the the organization as system. It is defined by the values and norms, beliefs and assumptions, and influences the way people within the organization think and behave.
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.
Implementation 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.
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.
Implementation plan
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.
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?
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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 Evaluation
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.,:
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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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.
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.
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.
Implementation plan
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.
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?
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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 Evaluation
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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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.
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 control process involving a series of integrated decisions/actions that take place over time, and inextricably changes the organization and its relationship with its environments. It is concerned with managing initiatives - this is where strategy is translated into practice or remains on paper - and building adequate organization strategic capability. Strategic capability refers to the organization's ability to harness all its skills, organizational capabilities, and resources in order to gain competitive advantage, and thus survive and increase its value over time. The focus of strategic capability is on the organization's assets, resources, market position in projecting how well it will be able to employ strategies in the future.
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Execution involves integration of both top-down and bottoms-up flows. The top-down integration involves cascaded flows of coordinated decisions and actions (participation and communication) through the implemented layers of corporate strategy, business strategy and operations strategy in the organization. The bottom up flows of participation and communication of information up to the organization managers through feedback mechanisms. Successful execution requires the capacity to monitor and evaluate changing environment factors and take decisive corrective action. The whole execution system/engine is synchronized by functional strategy that provide resources and capabilities to all three (3) strategy levels.
Strategy Execution Tasks and Process
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. These strategic decisions have to be timely - this 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. Successful execution is the best possible results a strategy and its implementation will allow in the actual realized strategy.
Strategy execution tasks may include:
Strategy execution is the continuous process of closing the gap between where the company is, and what the strategy calls for. The execution flow involves both top-down flows and bottom-up flows of feedback.
Once the dyadic information flow is completed, further refinement of the whole process might start again, based on the outcome of this process.
The successful execution results in a company's actual/realized strategy - typically a combination of (1) planned - deliberate and purposeful actions and (2) emergent - as-needed reactions to unanticipated developments and fresh competitive pressures. A realized strategy is the strategy that an organization actually follows. Realized strategies are a product of a firm’s intended strategy (i.e., what the firm planned to do), the firm’s deliberate strategy (i.e., the parts of the intended strategy that the firm continues to pursue over time), and its emergent strategy (i.e., what the firm did in reaction to unexpected opportunities and challenges).
Execution Process 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:
These building blocks are inextricably linked in a coherent system.
Strategy Execution Management
Execution management involves integration of the series of decisions/actions that take place over time, and inextricably changes the organization and its relationship with its environments. The change may be planned or emergent.
Strategy execution management facilitates systematic planning, performance measurement standards, monitoring, evaluation of performance and corrective action of strategic initiatives. Strategy execution management involves control of execution. It is the constant monitoring of the progress of the strategy, its implementation and assessing whether the planned results are being achieved. In order to exercise control, managers have to take the following steps:
After a strategy is selected, it is implemented over time so as to guide a firm within a changing environment. Managers want to know if the company is headed in the right direction and if current company trends and changes are keeping them on that right path. To answer this question requires the implementation of strategic control.
A firm’s successive strategies are greatly affected by its past history of implemented and executed strategies 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.
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:
These decisions take place within the organizational context of power, culture, leadership and the ability to manage change.
Strategy execution is the process of translating strategy into the best business results possible, within the framework of its implementation.
Strategy Execution Tasks
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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 control process involving a series of integrated decisions/actions that take place over time, and inextricably changes the organization and its relationship with its environments. It is concerned with managing initiatives - this is where strategy is translated into practice or remains on paper - and building adequate organization strategic capability. Strategic capability refers to the organization's ability to harness all its skills, organizational capabilities, and resources in order to gain competitive advantage, and thus survive and increase its value over time. The focus of strategic capability is on the organization's assets, resources, market position in projecting how well it will be able to employ strategies in the future.
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Execution involves integration of both top-down and bottoms-up flows. The top-down integration involves cascaded flows of coordinated decisions and actions (participation and communication) through the implemented layers of corporate strategy, business strategy and operations strategy in the organization. The bottom up flows of participation and communication of information up to the organization managers through feedback mechanisms. Successful execution requires the capacity to monitor and evaluate changing environment factors and take decisive corrective action. The whole execution system/engine is synchronized by functional strategy that provide resources and capabilities to all three (3) strategy levels.
Strategy Execution Tasks and Process
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. These strategic decisions have to be timely - this 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. Successful execution is the best possible results a strategy and its implementation will allow in the actual realized strategy.
Strategy execution tasks may include:
- 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. The execution flow involves both top-down flows and bottom-up flows of feedback.
- Top-Down: 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),
- Bottoms-Up: Bottom-up flows of information resulting from day-to-day decisions and actions taken in operations influencing corporate level strategic decisions,
Once the dyadic information flow is completed, further refinement of the whole process might start again, based on the outcome of this process.
The successful execution results in a company's actual/realized strategy - typically a combination of (1) planned - deliberate and purposeful actions and (2) emergent - as-needed reactions to unanticipated developments and fresh competitive pressures. A realized strategy is the strategy that an organization actually follows. Realized strategies are a product of a firm’s intended strategy (i.e., what the firm planned to do), the firm’s deliberate strategy (i.e., the parts of the intended strategy that the firm continues to pursue over time), and its emergent strategy (i.e., what the firm did in reaction to unexpected opportunities and challenges).
Execution Process 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 Management
Execution management involves integration of the series of decisions/actions that take place over time, and inextricably changes the organization and its relationship with its environments. The change may be planned or emergent.
Strategy execution management facilitates systematic planning, performance measurement standards, monitoring, evaluation of performance and corrective action of strategic initiatives. Strategy execution management involves control of execution. It is the constant monitoring of the progress of the strategy, its implementation and assessing whether the planned results are being achieved. In order to exercise control, managers have to take the following steps:
- Setting performance standards - Every function in the organizations begins with plans which specify objectives or targets to be achieved. In the light of these, standards are established which are criteria against which actual results are measured.
- Measuring actual performance,
- Analyzing variance, and
- Taking corrective actions.
After a strategy is selected, it is implemented over time so as to guide a firm within a changing environment. Managers want to know if the company is headed in the right direction and if current company trends and changes are keeping them on that right path. To answer this question requires the implementation of strategic control.
A firm’s successive strategies are greatly affected by its past history of implemented and executed strategies 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.
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 change.
Strategy execution is the process of translating strategy into the best business results possible, within the framework of its implementation.
Strategy Execution Tasks
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Strategy Execution as a System
Strategy execution depends on each member of the organization's daily tasks and decisions, so its vital to ensure everyone understands not only the broader strategic goals, but how their individual responsibilities make achieving them possible. Strategy execution system is a social-technical system that provide the framework to integrates strategic decisions and actions such as:
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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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.
Strategy execution depends on each member of the organization's daily tasks and decisions, so its vital to ensure everyone understands not only the broader strategic goals, but how their individual responsibilities make achieving them possible. 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.
Strategic Control - Strategy 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 evaluation is a necessarily intertwined with strategic control. In practice, the term strategic control is used to include evaluative aspects, because unless the resuts of an action are known, corrective action cannot be taken. The evaluation and control process is concerned with defining, attaining, and presenting constructive information for reviewing alternatives to the analyzed action plan. This is a process for making necessary adjustments based on monitoring and control information and strategy performance review.
Strategy evaluation
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. An 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.
Implemented Strategy Evaluation
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 is comprised of the activities defined by the process steps below.
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.
Strategic Control
Strategic control involves monitoring a strategy as it is being implemented, evaluating deviations, and making necessary adjustments. Strategic control is related to that aspect of strategic management through which an organization ensures whether it is achieving its objectives contemplated in the strategic action. If not, what corrective actions are required for strategic effectiveness. Management 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. Strategic control is required to steer the company towards its long term strategic direction and avoid pitfalls and obstacles. Strategic control is related to that aspect of strategic management through which an organization ensures whether it is achieving its objectives contemplated in the strategic action. If not, what corrective actions are required for strategic effectiveness.
Strategic control may involve:
Types of Strategy Controls
Strategic control is concerned with tracking the strategy as it is being implemented, detecting problems or changes in the premises and making necessary adjustments. The types of strategic control techniques include:
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.
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Strategic Control System
A control system monitors the performance of operations and adjusts the strategy to improve performance. There are five (5) parts to a control system, including:
[TBD]
The errors associated with strategic control are usually major, such as failing to anticipate customers’ reaction to a competitor’s new product. BlackBerry had a strong position in the business cell phone market and did not quickly see that its business customers were switching to the iPhone. BlackBerry could not recover.
TBD]
A control system monitors the performance of operations and adjusts the strategy to improve performance. The levels of control may include: strategic control, operational control and tactical control. Strategic control always comes first, followed by operations then tactics.
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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. 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.
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 evaluation is a necessarily intertwined with strategic control. In practice, the term strategic control is used to include evaluative aspects, because unless the resuts of an action are known, corrective action cannot be taken. The evaluation and control process is concerned with defining, attaining, and presenting constructive information for reviewing alternatives to the analyzed action plan. This is a process for making necessary adjustments based on monitoring and control information and strategy performance review.
Strategy evaluation
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. An 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.
Implemented Strategy Evaluation
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 is comprised of the activities defined by the process steps below.
- 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.
Strategic Control
Strategic control involves monitoring a strategy as it is being implemented, evaluating deviations, and making necessary adjustments. Strategic control is related to that aspect of strategic management through which an organization ensures whether it is achieving its objectives contemplated in the strategic action. If not, what corrective actions are required for strategic effectiveness. Management 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. Strategic control is required to steer the company towards its long term strategic direction and avoid pitfalls and obstacles. Strategic control is related to that aspect of strategic management through which an organization ensures whether it is achieving its objectives contemplated in the strategic action. If not, what corrective actions are required for strategic effectiveness.
Strategic control may involve:
- The reassessment of a strategy due to an immediate, unforeseen event. For example, if a company’s main product is becoming obsolete, the company must immediately reassess its strategy.
- Monitoring the progress of strategy Implementing, which often involves a series of activities that occur over a long period time, at various milestones, or intervals at . Managers can effectively monitor the progress of a strategy at various milestones, or intervals to determine whether the overall strategy is unfolding as planned.
- Monitoring internal and external events. Multiple sources of information are needed to monitor events. These sources include conversations with customers, articles in trade magazines and journals, activity at trade conferences, and observations of your own or another company’s operations. For example, Toyota gives tours of its plants and shares the “Toyota Way” even with competitors.
Types of Strategy Controls
Strategic control is concerned with tracking the strategy as it is being implemented, detecting problems or changes in the premises and making necessary adjustments. The types of strategic control techniques include:
- Premise Control - Every strategy is founded on certain assumptions relating to environmental and organizational forces. Premise control serves to test continuously these assumptions to determine whether they are still valid or not. This facilitates the strategists to take necessary corrective action at the right time than just pulling on with the strategy based on vitiated or invalid postulations.
- Implementation Control - In order to implement a chosen strategy, there is need for preparing quite good number of plans, programs and projects. The purpose of implementation control is to evaluate as to whether these plans, programs and projects are actually guiding the organization towards its pre-determined goals or not. This type of control is a step-by-step assessment of implementation activities. It focuses on the incremental actions and phases of strategic implementation, and monitors events and results as they unfold. Is each action or project happening as planned? Are the proper resources and funds being allocated for each step? There are two (2) basic types of implementation control:
- Monitoring Strategic Thrusts -This is the assessment of specific projects or thrusts that have been created to drive the larger strategy;
- Reviewing Milestones - During strategic planning, you likely identified important points in the implementation process. When these milestones are reached, your organization will reassess the strategy and its relevance. Milestones could be based on timeframes, such as the end of a quarter, or on significant actions, such as large budget or resource allocations. Implementation control can also take place via operational control systems, like budgets, schedules, and key performance indicators.
- Strategic Surveillance - If premise and implementation strategic controls are more specific by nature, strategic surveillance, is more generalized and overriding control which is designed to monitor a broad range of events both inside and outside the organization which are likely to threaten the very course of a firm’s strategy. 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.
- Special Alert Control - When something unexpected happens, a special alert control is mobilized. This is a reactive process, designed to execute a fast and thorough strategy assessment in the wake of an extreme event that impacts an organization. The event could be anything from a natural disaster or product recall to a competitor acquisition. In some cases, a special alert control calls for the formation of a crisis team—usually comprising members of the strategic planning and leadership teams—and in others, it merely means activating a predetermined contingency plan.
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.
[TBD]
Strategic Control System
A control system monitors the performance of operations and adjusts the strategy to improve performance. There are five (5) parts to a control system, including:
- Review the goals, objectives and constraints of the operations strategy,
- Monitor conditions and changes in the operations and their environment,
- Measure actual performance in key areas,
- Compare actual performance with plans from the strategy and identify gaps,
- Adjust the strategy to improve performance, moving or adding resources, revising plans, or in the extreme changing the whole strategy,
[TBD]
The errors associated with strategic control are usually major, such as failing to anticipate customers’ reaction to a competitor’s new product. BlackBerry had a strong position in the business cell phone market and did not quickly see that its business customers were switching to the iPhone. BlackBerry could not recover.
TBD]
A control system monitors the performance of operations and adjusts the strategy to improve performance. The levels of control may include: strategic control, operational control and tactical control. Strategic control always comes first, followed by operations then tactics.
[TBD]
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. 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.
Establishing Strategic Intent
Strategic intent is the term used to describe the aspirational plans, overarching purpose or intended direction of travel needed to reach an organizational vision. Beneficial change results from the strategic intent, ambitions and needs of an organization. The term strategic intent was popularized by Gary Hamel and C.K Prahalad. They defined strategic intent as the reason of existence of an organization and the ends it wants to achieve. It shows the beliefs and values of an organization. To achieve a certain future state and to achieve certain ends the organization should take certain courses of action. These ends can be either long-term or short-term. While the long-term ends have broad focus, the short-term ends are narrow in nature.
Strategic intent hierarchy is comprised of the following elements; vision, mission, business definition, goals, and objectives. These elements serve to unify the ideas and resources towards a certain direction. These elements are not only beginning points but also the milestones at various levels. These elements act as a foundation for planning and directing activities. Strategic intent also provides a way and assures that all the efforts lead to organization-wide progress.
This concept applies to both the product and service organizations. Business definition is usually marketing oriented. It focuses on customers as they are the strength of the organization. As an external stakeholder the customers have the power to make or break the organization. Business definition outlines the scope of an organization.
After collectively considering the products and services demanded by customers, strengths and weaknesses of competitors, the environment, and the firm's own strengths, weaknesses, cultures, and resources, proficient firms can formulate their vision as expressed through the mission statement. This statement expresses the organization's values and aspirations, basically, its reason or purpose for existence. Based on this mission statement the firm will define its business strategic goals and objectives. Once s firm has set its strategic objectives, it then must turn to the question of how it will achieve them. This involves crafting/creating strategies that describe the approach to be taken at the corporate, business and functional/operations levels of the organization. Each function within the business can then derive its own strategy in support of the firm's overall business strategy (financial strategy, marketing strategy, and operations strategy).
Delivering Strategy
Strategic intent refers to the pre-defined future state that the organization is planning to reach within a stipulated period of time. Delivering strategy is enabled through the use of projects, programs and portfolios. Portfolios structure investments in line with strategic objectives, whilst balancing, aligning and scrutinizing capacity and resources. 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.
Strategic intent drives organizations to maintain competitive advantage or seek a new one (i.e. change). The strategic intent leads to the development of specific change initiatives within a portfolio structure. Specific initiatives, aligned to the strategic intent, are selected on the basis of available capabilities and resources that can be deployed.
Strategic intent is the term used to describe the aspirational plans, overarching purpose or intended direction of travel needed to reach an organizational vision. Beneficial change results from the strategic intent, ambitions and needs of an organization. The term strategic intent was popularized by Gary Hamel and C.K Prahalad. They defined strategic intent as the reason of existence of an organization and the ends it wants to achieve. It shows the beliefs and values of an organization. To achieve a certain future state and to achieve certain ends the organization should take certain courses of action. These ends can be either long-term or short-term. While the long-term ends have broad focus, the short-term ends are narrow in nature.
Strategic intent hierarchy is comprised of the following elements; vision, mission, business definition, goals, and objectives. These elements serve to unify the ideas and resources towards a certain direction. These elements are not only beginning points but also the milestones at various levels. These elements act as a foundation for planning and directing activities. Strategic intent also provides a way and assures that all the efforts lead to organization-wide progress.
- Vision - The vision is a mental perception of the kind of environment and individual or an organisation aspires create within a broad time horizons and the underlying conditions for the actualization of this perception. Vision statement can be referred as the statement defining company's long term goals.
- Mission - A mission provides the basis of our awareness of a sense of purpose, the competitive environment degree to which the firms mission hit its capabilities and the opportunity which the government offers. A mission statement refers to the corporate reason for the existence of an organisation. Mission statement does not outline the outcome. It has no time frame or measurement associated with it. It highlights the current position and future scenario of an organisation in terms of product, market, pricing, customer service etc. Mission has a little touch of philosophy in it, as it talks about the aspects for which an individual is destined to be in this world. It provide the ground on resource allocation as per the objective. Mission defined as the fundamental, unique purpose that sets a business apart from other firms of its type and identifies the scope of its operations in product and market terms.
- Business Definition - Business definition refers to the description of products, services, activities, functions, and markets in which an organization deals. It is a component of mission statement which forms the foundation for all the strategic planning processes and shows the organization a way to achieve success. It also helps the organization in estimating the changes as well as their effects. Business definition outlines the current position and the desired future positions. It discusses the operations of the business but does not exactly specify the reasons behind particular operation. Some of questions that need to be answered whie defining the business include:
- What are the products, services, or markets in which the organization operates?
- Who are the target customers?
- Which activities and functions are performed to satisfy the customers?
- What are the resources and capabilities utilized to satisfy the customers?
This concept applies to both the product and service organizations. Business definition is usually marketing oriented. It focuses on customers as they are the strength of the organization. As an external stakeholder the customers have the power to make or break the organization. Business definition outlines the scope of an organization.
- Goals - Organizational goals refer to the ideal situations to be achieved in undefined time-duration in future. These goals direct the daily activities and decisions. However, goals do not essentially lead to the quantifiable outcomes. These statements are related to the vision and mission statements. Goals can be followed for day-to-day operational activities and decisions, not essentially tied up with quantifiable results. Organizational goals provide the standards to measure the performances for achieving the wide-ranging objectives. These are the targets that convert the vision and mission into reality. Goals help in portraying a positive image of the organization in the industry. It plays an important role in maintaining public relations and encourages support from various groups. Goals can be classified into types such as:
- Official Goals - Official goals are the common objectives of the organization. These goals validate the activities of the organization and stabilize the organization in its environment. These goals are mentioned in the documents published in the organization periodically, such memorandum of association, annual performance report, etc.
- Operative Goals - Operative goals indicate the actual targets that an organization wishes to achieve. These can be considered as the operating policies. These goals help the managers in reducing the possibilities of uncertainty while remaining attentive. The operating goals help in selecting the alternative designs for organization.
- Operational Goals - These goals are set by the middle level managers for supervising or controlling the subordinates. These goals help in measuring the performance of the employees.
- Objectives - Objectives are states or outcomes of behavior that are desired. An organization may desire either to obtain something that it does not currently have or to retain something it already has. Hence, objectives may be either acquisitive or retentive. Strategic objectives are those aims that are formulated to bring major changes in response to the changes, competition, and issues in the environment. These objectives are formulated to address various internal and external issues such as target customers, target markets, product, and changes in technology, etc. Precisely, these objectives are the ultimate aim that an organization needs to attain to remain competitive in the market and for its long-term survival. Strategic objectives determine the direction of the organization in long-term and helps in allocating organizational resources. Strategic objectives are the specified targets to be achieved in a stipulated period of time. These objectives help the managers in evaluating performances of the employees in term of quality and quantity. Strategic objectives answer the questions like what to achieve, how much to achieve, when to achieve, how to achieve and who must achieve it. The objectives identify the activities of the organization. While formulating strategies, objectives help in decision-making by assisting the managers in various perspectives. The objectives also provide measures for evaluating the final performance of employees.
After collectively considering the products and services demanded by customers, strengths and weaknesses of competitors, the environment, and the firm's own strengths, weaknesses, cultures, and resources, proficient firms can formulate their vision as expressed through the mission statement. This statement expresses the organization's values and aspirations, basically, its reason or purpose for existence. Based on this mission statement the firm will define its business strategic goals and objectives. Once s firm has set its strategic objectives, it then must turn to the question of how it will achieve them. This involves crafting/creating strategies that describe the approach to be taken at the corporate, business and functional/operations levels of the organization. Each function within the business can then derive its own strategy in support of the firm's overall business strategy (financial strategy, marketing strategy, and operations strategy).
Delivering Strategy
Strategic intent refers to the pre-defined future state that the organization is planning to reach within a stipulated period of time. Delivering strategy is enabled through the use of projects, programs and portfolios. Portfolios structure investments in line with strategic objectives, whilst balancing, aligning and scrutinizing capacity and resources. 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.
Strategic intent drives organizations to maintain competitive advantage or seek a new one (i.e. change). The strategic intent leads to the development of specific change initiatives within a portfolio structure. Specific initiatives, aligned to the strategic intent, are selected on the basis of available capabilities and resources that can be deployed.
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