Ensuring Sound Strategy, Effective Strategy-Making And Implementation
Strategic Management Process
Strategic Management is a managerial process consisting of a set of managerial tasks involving managerial decisions and actions in strategy-making and strategy-implementation that determine the long-run performance of the organization. Effective strategic management is a disciplined effort involving strategic decisions, judgment, and actions that shape the nature and direction of an organization's activities in addressing concerns in various identified strategic issues. Core functions of strategic management include Establishing Direction and Purpose, Setting Objectives, Crafting Strategy, Implementing and Executing Strategy, and Performance Evaluation.
To be effective, strategic management requires that management possess the capacity to plan, organize, direct, monitor and control strategy-making and strategy-implementation and execution in adding value for customers, owners, and employees and doing its best work while avoiding misfires.
Direction and Purpose
Establishing a direction and purpose for the organization involves developing a strategic vision and business mission. Senior Deciding what business the company will be in and forming a strategic vision of where the organization deeds to be headed - in effect, setting the organization with a sense of purpose, providing long-term direction, and establishing a clear mission to be achieved. Management need to develop a carefully reasoned answer in response to the following question - "What is our vision for the company - what are we trying to do and to become?" This question pushes managers to consider what the company's business character is and should be in developing a clear picture of where the company needs to be headed in the next 5 to 10 years. Management's answer to "who we are, what we do, and where we are headed" shapes a course for the organization to take and helps establish a strong organizational identity.
Management's view of the kind of company it is trying to create and its intent to be in a particular business position represent a strategic vision for the company. A mission statement defines a company's business and provides clear view of what the company is trying to accomplish for its customers.
Strategic Management is a managerial process consisting of a set of managerial tasks involving managerial decisions and actions in strategy-making and strategy-implementation that determine the long-run performance of the organization. Effective strategic management is a disciplined effort involving strategic decisions, judgment, and actions that shape the nature and direction of an organization's activities in addressing concerns in various identified strategic issues. Core functions of strategic management include Establishing Direction and Purpose, Setting Objectives, Crafting Strategy, Implementing and Executing Strategy, and Performance Evaluation.
To be effective, strategic management requires that management possess the capacity to plan, organize, direct, monitor and control strategy-making and strategy-implementation and execution in adding value for customers, owners, and employees and doing its best work while avoiding misfires.
Direction and Purpose
Establishing a direction and purpose for the organization involves developing a strategic vision and business mission. Senior Deciding what business the company will be in and forming a strategic vision of where the organization deeds to be headed - in effect, setting the organization with a sense of purpose, providing long-term direction, and establishing a clear mission to be achieved. Management need to develop a carefully reasoned answer in response to the following question - "What is our vision for the company - what are we trying to do and to become?" This question pushes managers to consider what the company's business character is and should be in developing a clear picture of where the company needs to be headed in the next 5 to 10 years. Management's answer to "who we are, what we do, and where we are headed" shapes a course for the organization to take and helps establish a strong organizational identity.
Management's view of the kind of company it is trying to create and its intent to be in a particular business position represent a strategic vision for the company. A mission statement defines a company's business and provides clear view of what the company is trying to accomplish for its customers.
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Strategy Formulation
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Implementation
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Execution
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Performance Evaluation
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Setting Objectives
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Strategy Formulation
"Strategy is the scope and direction of the organization over the long term which achieves advantage for the organization through its configuration of resources, within a changing environment, to meet the needs of markets and to fulfill stakeholders' expectations" (Johnson & Scholes, 2002). The strategy of an organization consists of the moves made and approaches taken by management to produce successful performance of the organization. Strategy in a business organization is about how the organization seeks to survive and prosper within its environment over the long-term. Strategy is a management's game plan for the business; strategies guide how the an organization conducts its business, and how it will achieve its objectives.
Strategy formulation is a stage in the strategic management process involved in strategy-making based on rational approaches and/or an emergent approaches. Management develops strategies to guide how the organization conducts its business and how it will achieve its target objectives. Strategies are developed to deal with those strategic issues identified during strategic planning and written into the strategic plan (which is your organization's "road map" to guide your excursion into the future). A well formulated strategy is an integrated and environments oriented concept of how a firm will achieve its objectives.
Strategies are the statements of how an organization is going to achieve its mission and realize its vision. The strategy statement is a hypothesis of the means by which strategic goals i.e., sustainable growth, are achieved. Goals and objectives provide the milestones for measuring the success of the strategy in achieving the mission and vision. Goals are statements of what needs to be done to implement the strategy. Objectives are specific milestones for meeting a specified goal.
A strategy has to be sound, implemented and executed to have value. Core strategic management functions are crafting and implementing strategies for the business. A sound strategy consists of an integrated set of choices/options from two (2) categories: corporate, business and competitive strategies.
The Rational Approach defines an objective in advance, describes "where we are now", and uses a prescriptive approach in which "the three core area" - strategy analysis, strategy development, and implementation - are linked together as co-incident processes. The emergent approach (also termed realized) states that the three (3) core areas are interrelated and the analysis is in advance of the other two. The different styles/approaches of strategy making complement each other.
What is Strategy?
There are three (3) dimensions of strategy that can be recognized in every real life strategy problem situation, namely: strategy process, strategy content, and the strategy context. Strategy process refers to the manner in which strategies come about. Strategy content is the actual strategy i.e., the action to be performed, and is a product of the strategy process. Context is the environment within which strategy operates and develops. It is the set of circumstances in and under which both strategy process and strategy content are determined. (DeWit & Meyer, 2004). The actual strategy of an organization is the outcomes of the combination of executed parts of deliberate strategy and emergent strategy - "realized pattern " that was not expressly intended but emerged as a result of actions undertaken by the organization in response to environments factors.
Formulating "Deliberate" Strategy - Rational/Prescriptive Approach
The Prescriptive Approach (also termed deliberate, rational and intended) means that the core areas are linked sequentially; this means you do analysis to develop strategy which is then implemented and executed. “Deliberate strategies provide the organization with a sense of purposeful direction. Strategy formulation is primarily an intellectual and creative act involving developing solutions to known strategic problems identified and defined through diagnosis of strategic issues and events. The formulation process is the procedures that a company can adopt to guide the way the company goes about making strategy decisions with respect to refining the elements of its current strategy - where the organization is now - to where its vision and goals indicate it wants to be,. The process involves the following steps: The focus of deliberate focuses the organization on directions and control i.e., getting things done.
Deliberate strategy is top-down, akin to strategic planning, and much needed for coordinating action upon three (3) conditions:
Successful strategy formulation produces a clear set of recommendations, with supporting justifications, that revise as necessary the mission, its supply of resources and objectives (in meeting the expectations of the stakeholders). Effective formulation, and implementation will link rhetoric (what people say), choices (what people decide and are willing to pay for), and actions (what people do) into a consistent pattern across level, function, and time.
"Strategy is the scope and direction of the organization over the long term which achieves advantage for the organization through its configuration of resources, within a changing environment, to meet the needs of markets and to fulfill stakeholders' expectations" (Johnson & Scholes, 2002). The strategy of an organization consists of the moves made and approaches taken by management to produce successful performance of the organization. Strategy in a business organization is about how the organization seeks to survive and prosper within its environment over the long-term. Strategy is a management's game plan for the business; strategies guide how the an organization conducts its business, and how it will achieve its objectives.
Strategy formulation is a stage in the strategic management process involved in strategy-making based on rational approaches and/or an emergent approaches. Management develops strategies to guide how the organization conducts its business and how it will achieve its target objectives. Strategies are developed to deal with those strategic issues identified during strategic planning and written into the strategic plan (which is your organization's "road map" to guide your excursion into the future). A well formulated strategy is an integrated and environments oriented concept of how a firm will achieve its objectives.
Strategies are the statements of how an organization is going to achieve its mission and realize its vision. The strategy statement is a hypothesis of the means by which strategic goals i.e., sustainable growth, are achieved. Goals and objectives provide the milestones for measuring the success of the strategy in achieving the mission and vision. Goals are statements of what needs to be done to implement the strategy. Objectives are specific milestones for meeting a specified goal.
A strategy has to be sound, implemented and executed to have value. Core strategic management functions are crafting and implementing strategies for the business. A sound strategy consists of an integrated set of choices/options from two (2) categories: corporate, business and competitive strategies.
The Rational Approach defines an objective in advance, describes "where we are now", and uses a prescriptive approach in which "the three core area" - strategy analysis, strategy development, and implementation - are linked together as co-incident processes. The emergent approach (also termed realized) states that the three (3) core areas are interrelated and the analysis is in advance of the other two. The different styles/approaches of strategy making complement each other.
What is Strategy?
There are three (3) dimensions of strategy that can be recognized in every real life strategy problem situation, namely: strategy process, strategy content, and the strategy context. Strategy process refers to the manner in which strategies come about. Strategy content is the actual strategy i.e., the action to be performed, and is a product of the strategy process. Context is the environment within which strategy operates and develops. It is the set of circumstances in and under which both strategy process and strategy content are determined. (DeWit & Meyer, 2004). The actual strategy of an organization is the outcomes of the combination of executed parts of deliberate strategy and emergent strategy - "realized pattern " that was not expressly intended but emerged as a result of actions undertaken by the organization in response to environments factors.
Formulating "Deliberate" Strategy - Rational/Prescriptive Approach
The Prescriptive Approach (also termed deliberate, rational and intended) means that the core areas are linked sequentially; this means you do analysis to develop strategy which is then implemented and executed. “Deliberate strategies provide the organization with a sense of purposeful direction. Strategy formulation is primarily an intellectual and creative act involving developing solutions to known strategic problems identified and defined through diagnosis of strategic issues and events. The formulation process is the procedures that a company can adopt to guide the way the company goes about making strategy decisions with respect to refining the elements of its current strategy - where the organization is now - to where its vision and goals indicate it wants to be,. The process involves the following steps: The focus of deliberate focuses the organization on directions and control i.e., getting things done.
- Establishing/Clarifying the Vision and Mission - This involves the identification and formulation of the organization's mission which sets out the reasons for the organization's existence and vision - the "ideal" state that the organization aims to achieve. The mission defines the basic purpose of the organization as well as its scope of operations and guides the identification and formulation of key organization goals and major performance objectives the organization expects to achieve to be successful. The vision clarifies the long-term direction of the company and its strategic intent.
- Define or review Values, Community vision, and Principles - Every organization has values, and these values should be coherent with the strategy. Values assessment involves looking into the personal values of the members of the organization, organization values, and the organization's operating philosophy. The Core Values are the essence of the organization's corporate culture and the expression of its "personality"; they are the strong enduring beliefs and principles that the company uses as a foundation for its decisions.
- Review SWOT Analysis - This involves analyzing the organization's external/internal environments to identify any opportunities and/or threats; and strengths and weaknesses. It involves continuous monitoring of environments conditions for changes in environments' factors that may affect your organizations performance. The SWOT analysis helps executives summarize the major facts and forecasts derived from external and internal analyses.
- Strategic Issues Diagnosis and Identification - Strategic issues are fundamental policy questions affecting the organization's mandates, mission and values, product-mix/service-mix, clients, users or payers, cost, financing,management or organization design. This step involves identification and resolution of issues relevant to the organization's success.
- Strategic Options Development- This involves analyzing strategic issues and crafting strategies to respond to identified problems in areas such as corporate strategy, business/competitive strategies, and possibly operations strategies. Corporate strategy is about domain selection; and includes decisions about the markets in which the firm will compete, against whom, and how. Business/competitive strategy is about how the company will compete against rival firms in order to create value for customers. Companies can increase the value of what they offer customers by decreasing the costs of their goods and services (cost leadership strategy), or by increasing the benefits their products/services provide (Differentiation Strategy), or some combination of the two. Options development involves identification of practical and creative alternatives for resolving identified strategic issues. For each of the alternatives, enumerate the barriers to achieving the alternative. Prepare proposals for achieving the alternatives subject to the barriers.
- Selecting Strategic Choice - Selection of strategic options based on evaluation criteria that look at factors such as described in the evaluation section below. Strategic choice refers to the decision-making process of selecting strategic option from a number of alternatives for implementation. Selecting a given approach from "approaches" (or means) among all options and choices that can be made at a given point in time; that "approach" becomes the "strategy" (strategic option). Every decision, every action taken from then on, will be based on (or aligned with) that "strategy".
Deliberate strategy is top-down, akin to strategic planning, and much needed for coordinating action upon three (3) conditions:
- Management has to address all critical details in order for the strategy to succeed; and those implementing the strategy have to be aware of these details in light of the larger picture of senior management's deliberate strategy.
- Management has to stress collective action and paint a picture of the strategy to align everyone so that actions will be consistent and appropriate.
- Management has to take into account that there are some external influences that cannot be fully anticipated, arising from external environment PESTEL factors and market forces. As such preparations must be made to, as far as possible, allow for the realization of strategy with these influences in mind.
Successful strategy formulation produces a clear set of recommendations, with supporting justifications, that revise as necessary the mission, its supply of resources and objectives (in meeting the expectations of the stakeholders). Effective formulation, and implementation will link rhetoric (what people say), choices (what people decide and are willing to pay for), and actions (what people do) into a consistent pattern across level, function, and time.
Emergent Strategy Formulation Process - Emergent/Realized Approach
Emergent strategy is a set of actions, or behavior, consistent over time, “a realized pattern [that] was not expressly intended” in the original planning of strategy. When a deliberate strategy is realized, the result matches the intended course of action. Emergent strategy is bottoms up, akin to strategic learning through feedback mechanisms to properly respond to and adapt to changes in the business environment in order to be profitable.
An emergent strategy develops when an organization takes a series of actions that with time turn into a consistent pattern of behavior, regardless of specific intentions. Emergent strategy implies that an organization is learning what works in practice. Emergent strategy is realized pattern that was not expressly intended or planned that emerged from execution. The emergent approach to strategy formulation is characterized by trial, experimentation, and discussion, that is, by a series of experimental approaches rather than a final objective. Emergent strategies rely on the organization's ability to learn from actual experiences of all employees at all levels.
Emergent strategy is undertaken by an organization that analyzes its environment constantly and implements its strategy simultaneously (Lynch, 2000; 26). Emergent strategy formulation process is a learning process in which cycles of events are characterized as an ongoing process of experience, reflection, interpretation, and action (Kim, 1993; Kolb, 1976). An example model of learning in an emergent strategy approach involves the following steps:
The process of interpretation calls for an imagination process in which associations are made among different elements: the symbols, the question, the "objective" conditions. This action that follows from interpretation is taken in full awareness that as much remains unrevealed as has been revealed. Once action is taken, the world is transformed and new causal factors become significant. Emergent strategy is more of a cumulative effect from bottom-up - the ground engineers, sales people, and other executive staff. These are daily tactical operations decisions made by those who are not in the position or state of mind to conceptualize such strategies.
Crafting a Sound Strategy
Strategies are developed to deal with those strategic issues identified during strategic planning and written into the strategic plan (which is your organization's "road map" to guide your excursion into the future). A well formulated strategy is an integrated and environments oriented concept of how a firm will achieve its objectives. A sound strategy consists of an integrated set of choices/options from two (2) categories: corporate, business and competitive strategies.
Corporate Strategy
Corporate level strategy is about positioning the organization in order to achieve intended business goals. The positioning may be for growth, stability, or exiting the business.
Formulating Corporate strategy consists of basic choices/decisions made by CEOs and top executives that provide answers to questions on issues such as:
Answers to these questions involve fundamental choices issues that corporate strategy comprises, and they should frame and guide all the decisions that a company's corporate executives, functions, and staff make every day, including how they run the place, what they buy, what markets they enter, how they measure success, etc.
Business and Competitive Strategy
The business and competitive strategy comprise key decisions and choices that cannot be delegated by its leaders; these involve answers to questions about issues such as:
Answers to these questions provide fundamental choices and options that comprise a business strategy and drive marketing function level decisions and goals which in turn influences the other functional strategies - i.e., production, HR, R&D, finance, etc., as well as what decisions a business management team, functions, and staff make every day.
Strategy Statement Development
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. The statement consists of three (3) components objective, scope, and competitive advantage. Defining the objective, scope and competitive advantage requires trade-offs which are fundamental to strategy.
A well written strategy statement will help employees and the organization to understand their roles when executing the company's strategy. Mixing the deliberate and emergent strategies in some way helps the organization to control its course while encouraging the learning process.
Emergent strategy is a set of actions, or behavior, consistent over time, “a realized pattern [that] was not expressly intended” in the original planning of strategy. When a deliberate strategy is realized, the result matches the intended course of action. Emergent strategy is bottoms up, akin to strategic learning through feedback mechanisms to properly respond to and adapt to changes in the business environment in order to be profitable.
An emergent strategy develops when an organization takes a series of actions that with time turn into a consistent pattern of behavior, regardless of specific intentions. Emergent strategy implies that an organization is learning what works in practice. Emergent strategy is realized pattern that was not expressly intended or planned that emerged from execution. The emergent approach to strategy formulation is characterized by trial, experimentation, and discussion, that is, by a series of experimental approaches rather than a final objective. Emergent strategies rely on the organization's ability to learn from actual experiences of all employees at all levels.
Emergent strategy is undertaken by an organization that analyzes its environment constantly and implements its strategy simultaneously (Lynch, 2000; 26). Emergent strategy formulation process is a learning process in which cycles of events are characterized as an ongoing process of experience, reflection, interpretation, and action (Kim, 1993; Kolb, 1976). An example model of learning in an emergent strategy approach involves the following steps:
- Sense a possible threat or opportunity;
- Interpret the message;
- Decide on an action,
- Act;
- Repeat the cycle.
The process of interpretation calls for an imagination process in which associations are made among different elements: the symbols, the question, the "objective" conditions. This action that follows from interpretation is taken in full awareness that as much remains unrevealed as has been revealed. Once action is taken, the world is transformed and new causal factors become significant. Emergent strategy is more of a cumulative effect from bottom-up - the ground engineers, sales people, and other executive staff. These are daily tactical operations decisions made by those who are not in the position or state of mind to conceptualize such strategies.
Crafting a Sound Strategy
Strategies are developed to deal with those strategic issues identified during strategic planning and written into the strategic plan (which is your organization's "road map" to guide your excursion into the future). A well formulated strategy is an integrated and environments oriented concept of how a firm will achieve its objectives. A sound strategy consists of an integrated set of choices/options from two (2) categories: corporate, business and competitive strategies.
Corporate Strategy
Corporate level strategy is about positioning the organization in order to achieve intended business goals. The positioning may be for growth, stability, or exiting the business.
- Growth Strategy - This looks at methods to get more revenues from sales of products/goods and services. Growth strategies may be vertical and horizontal strategies. Vertical strategies involve an organization seeking growth by taking over various components of operations. Horizontal growth strategy refers to method used by an organization extending its reach of existing products and services to new geographic areas or new target markets. Portfolio Strategy - Diversification strategy is a corporate strategy to enter into a new market or industry in which the business doesn't currently operate, while also creating new products and services for that new market
- Stability Strategy - This is strategy employed by an organization that has reached its optimal market share goals. This strategy requires a focus on customer retention and replacing customers lost through attrition.
- Exit Strategy - This involves plans and actions leading to exiting a business.
Formulating Corporate strategy consists of basic choices/decisions made by CEOs and top executives that provide answers to questions on issues such as:
- What business should the organization be in?
- What business should we acquire or divest?
- What should be the company's comparative advantage in adding value to the organization's individual businesses?
- What should be the capabilities that distinguish the company? i.e., which markets offer opportunities that fit our strengths?
Answers to these questions involve fundamental choices issues that corporate strategy comprises, and they should frame and guide all the decisions that a company's corporate executives, functions, and staff make every day, including how they run the place, what they buy, what markets they enter, how they measure success, etc.
Business and Competitive Strategy
The business and competitive strategy comprise key decisions and choices that cannot be delegated by its leaders; these involve answers to questions about issues such as:
- Who should be the customers that define the target market?
- What should be the value proposition that differentiates the products and services offered to those customers? What is the mission of this business? What are the strategic objectives of this business?
- What should be the capabilities that make our business better than any other in delivering that value proposition? How do we compete in this business?
Answers to these questions provide fundamental choices and options that comprise a business strategy and drive marketing function level decisions and goals which in turn influences the other functional strategies - i.e., production, HR, R&D, finance, etc., as well as what decisions a business management team, functions, and staff make every day.
Strategy Statement Development
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. The statement consists of three (3) components objective, scope, and competitive advantage. Defining the objective, scope and competitive advantage requires trade-offs which are fundamental to strategy.
- Objective - The Objective defines the ends that the strategy is designed to achieve within a specific time frame. Objectives are the "ends," and strategy is the "means" of achieving them. The strategic objective is the single, specific objective that will drive your organization. This must not be confused with the company's vision, mission or values. The objective must be specific, measurable and time bound. It must be a single goal (i.e., growth or profitability), although subordinate goals may follow from the strategic objective.
- Scope - The Scope is the domain of the business - the part of the business landscape in whuich the company will operate. The company's scope revolves around three (3) dimensions - the target ciustomers, location and products. The scope must emphasize where the business direction and focus will go.
- Competitive Advantage - The Competitive Advantage is the essence of your strategy. It determines what you will do differently or better than the competition to achieve your objective. This component describes your strategies on how and why you will succeed and what makes you different from your competitors.
A well written strategy statement will help employees and the organization to understand their roles when executing the company's strategy. Mixing the deliberate and emergent strategies in some way helps the organization to control its course while encouraging the learning process.
Strategic Choice and Strategic Options
Strategic choice refers to the decision-making process of selecting a strategic option for implementation. Selecting a given approach from "approaches" (or means) among all options and choices that can be made at a given point in time; that "approach" becomes the "strategy". The selection criteria may include:
Strategic choice is a set of related options (typically combining options for products/markets and services, and resources) that form a potential strategy. An option is a course of action that it appears possible to take. The simplest form of choice is therefore between taking an option or not taking it - doing it or not doing it. Most choices have more shades of possibility than this.
Every decision, every action taken from then on, will be based on (or aligned with) the "strategy". The strategy must be technically workable, politically acceptable to key stakeholders, and must accord with the organization's core values and principles. Strategy formulation must consider the cost and feasibility of generating and maintaining strategic assets or competencies, at the function strategy level, that will provide the basis for sustainable competitive advantage.
Modeling Selected Strategic Option
A strategic option is a set of of related options from a options network that address a strategic issue. The options network defines a view of the intended target states (as goals) and their contribution relations (influence relations) links to the expected outcomes (objectives) of the business organization. The options network may include possibly decisions about product and services and market segments, market mix, product positioning, etc.
Strategic Choice Evaluation
Strategic choice refers to the decision-making process of selecting a strategic option for implementation. Selecting a given approach from "approaches" (or means) among all options and choices that can be made at a given point in time; that "approach" becomes the "strategy". The selection criteria may include:
- Value - Will strategy contribute to meeting agreed-upon goals?
- Appropriateness - Is the strategy consistent with the organization's mission, values and operating principles?
- Feasibility - Is the strategy practical, given personnel and financial resources and capacity?
- Acceptability - Is the strategy acceptable to the Board, key staff, and other stakeholders?
- 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?
Strategic choice is a set of related options (typically combining options for products/markets and services, and resources) that form a potential strategy. An option is a course of action that it appears possible to take. The simplest form of choice is therefore between taking an option or not taking it - doing it or not doing it. Most choices have more shades of possibility than this.
Every decision, every action taken from then on, will be based on (or aligned with) the "strategy". The strategy must be technically workable, politically acceptable to key stakeholders, and must accord with the organization's core values and principles. Strategy formulation must consider the cost and feasibility of generating and maintaining strategic assets or competencies, at the function strategy level, that will provide the basis for sustainable competitive advantage.
Modeling Selected Strategic Option
A strategic option is a set of of related options from a options network that address a strategic issue. The options network defines a view of the intended target states (as goals) and their contribution relations (influence relations) links to the expected outcomes (objectives) of the business organization. The options network may include possibly decisions about product and services and market segments, market mix, product positioning, etc.
Strategic Choice Evaluation
Strategy Implementation
Strategy implementation is a stage in the life cycle of a strategy and the strategic management process. It provides the connecting loop between strategy formulation and strategy execution and control. It is a continuous process of closing the gap between where the company is, and what the future vision indicates it wants it to be; with the set of actions (action plan) identified for the selected alternative strategy. Strategy implementation process puts plans and strategies into action to reach desired strategic goals.
Strategy implementation is key to any organization's survival and growth; and its focus may be organizational change, enhanced collaboration, or supportive culture. Firms adopting a Change Model, focus on structure, incentives and control systems; those with a Collaborative Model, focus more on the communication between planners and implementers; and those with a Cultural Model, focus on the lower-level employees (Thorpe and Morgan 2007). Strategy implementation is the responsibility of top, middle and lower/line managers focused on building capacity through projects and programs to strengthen the organization, and enable it to better deliver value to customers and meeting stakeholders expectations.
Strategy Implementation Process
Strategy Implementation consists of all the decisions and action plans required to turn strategic choices into reality, and requires competencies such as leadership skills, precision planning, organizing of resources and activities, as well as motivation to ensure people's commitment to the new strategy. Strategy implementation is the responsibility of top, middle and lower/line managers focused on the creation of new strategic assets (new capabilities and competencies), and/or enhancement and strengthening of existing strategic assets in order for the organization to maintain its ability to achieve future outcomes. The strategy implementation is comprised of the following steps:
Step #1 - Evaluation and Communication of the Strategic Plan
The strategic plan and selected strategies are evaluated with respect to the initiatives, budgets and performance objectives prior to distribution to areas of the organization responsible for implementation. The following are the sub-steps to be undertaken in this step.
Step #2 - Development of an Implementation Structure
Create a structure that will serve as a framework and guide the implementation and execution of strategies. The structure must be clearly defined with well established lines of authority and responsibility within the organization's "chain of command" structure. Each member of the organization must know who s/he is accountable to, and who s/he is responsible for. The development sub-steps include:
Step #3 - Development of an Implementation-Support Policies and programs
These are policies and procedures that would be employed in aid of strategy implementation. The policies help define the guidelines to how members of the organization should behave. This establishes the organizational culture - the overall atmosphere within the company, particularly with respect to its members.
Step #4 - Budgeting and Allocation of Resources
The focus of this step is to equip the managers, responsible for implementing strategy, with the tools and other capabilities to perform their tasks and functions. This step includes the following sub-steps:
Step #5 - Discharge of Functions and Activities
This step involves making the tactics operational and putting the strategies into action, aided by strategic leadership, utilization of participatory management and leadership styles. This involves actual performance of tasks and activities; as well as management providing leadership and controlling the performance of activities or tactics in various levels of the organization. Throughout this step, the organization should also ensure the following:
The results of accomplishments in this step #5 will be the input in the third stage of Strategic Management: "Strategy Evaluation"
Strategic Gap Analysis
Strategic gap analysis attempts to determine what a company should do differently to achieve a particular goal by looking at the time frame, management, budget and other factors to determine where shortcomings lies. After conducting this analysis, the company should develop an implementation plan of the strategic initiatives and programs to pursue to eliminate the gaps. Strategic gap analysis allows a company or organization to determine whether it is getting the best return out of its resources and abilities.
Strategy implementation is key to any organization's survival; and requires the collaboration of everyone inside the organization, and on many occasions parties outside the organization. Technically, a strategy can never actually be fully implemented because every thing that was necessarily assumed when formulating the strategy - about customers, technology, regulation, labor market, competitors, and so on - is in a constant state of flux. The strategic gap is the result if you assess the difference between what a company must do to realize its potential from what it is currently doing. Closing this gap is essential to attain and sustain competitive advantage. There will always be a gap between where the company is, and what its strategies call for; Closing this gap is implementation.
Typically, the implementation gap - the gap between the strategic plan and its implementation - is caused by missing integrative links such as:
Strategy implementation is a stage in the life cycle of a strategy and the strategic management process. It provides the connecting loop between strategy formulation and strategy execution and control. It is a continuous process of closing the gap between where the company is, and what the future vision indicates it wants it to be; with the set of actions (action plan) identified for the selected alternative strategy. Strategy implementation process puts plans and strategies into action to reach desired strategic goals.
Strategy implementation is key to any organization's survival and growth; and its focus may be organizational change, enhanced collaboration, or supportive culture. Firms adopting a Change Model, focus on structure, incentives and control systems; those with a Collaborative Model, focus more on the communication between planners and implementers; and those with a Cultural Model, focus on the lower-level employees (Thorpe and Morgan 2007). Strategy implementation is the responsibility of top, middle and lower/line managers focused on building capacity through projects and programs to strengthen the organization, and enable it to better deliver value to customers and meeting stakeholders expectations.
Strategy Implementation Process
Strategy Implementation consists of all the decisions and action plans required to turn strategic choices into reality, and requires competencies such as leadership skills, precision planning, organizing of resources and activities, as well as motivation to ensure people's commitment to the new strategy. Strategy implementation is the responsibility of top, middle and lower/line managers focused on the creation of new strategic assets (new capabilities and competencies), and/or enhancement and strengthening of existing strategic assets in order for the organization to maintain its ability to achieve future outcomes. The strategy implementation is comprised of the following steps:
Step #1 - Evaluation and Communication of the Strategic Plan
The strategic plan and selected strategies are evaluated with respect to the initiatives, budgets and performance objectives prior to distribution to areas of the organization responsible for implementation. The following are the sub-steps to be undertaken in this step.
- Clarifying the organization's strategy - 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 communicates what top management wants and their expectation. 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.
- Evaluate Strategic Plan and Choice - Evaluate the strategic plan (strategic choices) with respect to the initiatives, budgets and performance. This would include:
- Aligning the strategies with the initiatives - Check the strategies to ensure they are following the same path leading to the mission and strategic goals of the organization.
- Aligning budgets to the annual goals and objectives - This involves conducting financial assessments to identify budgetary issues that could impact the attainment of objectives, and ensure the budget provides sufficient support for it. In the event that there are budgetary constraints or limitations, they must first be addressed before launching fully into implementation mode.
Step #2 - Development of an Implementation Structure
Create a structure that will serve as a framework and guide the implementation and execution of strategies. The structure must be clearly defined with well established lines of authority and responsibility within the organization's "chain of command" structure. Each member of the organization must know who s/he is accountable to, and who s/he is responsible for. The development sub-steps include:
- Establish a linking or coordination mechanism between and among the various departments and their respective divisions and units. This is mainly for the purposes of facilitating the delegation of authority and responsibility.
- Formulate the work plans and procedures to be followed in the implementation of the tactics in the strategies.
- Determine the key managerial tasks and responsibilities to be performed and the qualifications required of the role who will perform them.
- Determine the key operational tasks and responsibilities to be performed, and the qualifications/role rtequired of the person who will perform them.
- Assign the tasks to the appropriate departments of the organization. Enacting the operations plan involves allocation of resources to carry out the actions in achieving the goals. The implementation of the Operational Plan requires management to regularly monitor achievement and exert control to reduce any variance from the plan
- Evaluate the current staffing structure, checking if you have enough manpower, and if they have the necessary skills and competencies to carry out the tasks. This may result in to some extent in reorganization or reshuffling of people. In some cases, this may also require additional training for current staff members, or even hiring new employees with the required skills and competencies. This sub-step provides the focus to address two questions about the people in the organization essential to effective strategy execution, such as: "Do you have enough people to implement the strategies?", and "Do you have the right people in the organization to implement the strategies?"
- Communicate the details to the members - Management should also define the lines of communication throughout the organization. Employees, even those on the lowest tier of the organizational hierarchy ("chain of command"), must be able to communicate with their supervisors and top management, and vice versa. Ensuring an open and clear communication network will facilitate the implementation process.
Step #3 - Development of an Implementation-Support Policies and programs
These are policies and procedures that would be employed in aid of strategy implementation. The policies help define the guidelines to how members of the organization should behave. This establishes the organizational culture - the overall atmosphere within the company, particularly with respect to its members.
- Establish Performance Tracking and Monitoring System - The tracking and monitoring system will provide the basis for evaluating the progress of the implementation of strategies, and monitoring the rate of accomplishments of results, or if they were accomplished at all. Define the indicators for measuring the performance of every employee, of every unit or section, of every division, and of every department. This may include establishing annual objectives that relate logically to the strategy's long-term objectives. This establishes the basis: for allocating resources; as a mechanism for evaluating managers; as the major instrument for monitoring progress towards achieving long-term objectives; and for establishing organizational priorities.
- Establish Performance Management (Reward and Recognition) System - Encourage employee involvement through a recognition and reward system that enables performance management. Ensure the reward structure has clear and direct links to the accomplishment of results which will be indicated in the performance tracking and monitoring system.
- Establish Information and Feedback System - Establish a system that will enable you to gather feedback and results data, that will be used for strategy evaluation later on.
- Communicate these policies and programs to the members of the organization.
Step #4 - Budgeting and Allocation of Resources
The focus of this step is to equip the managers, responsible for implementing strategy, with the tools and other capabilities to perform their tasks and functions. This step includes the following sub-steps:
- Allocate the Resources - Allocating resources to various departments depending on the results of financial assessments as to their budgetary requirements. Budgets are financial statements of the resources required to achieve a set of finite objectives or put into action a formulated strategy. Resource allocation as expressed in the budget needs to be carefully linked to strategy. BCG Product Portfolio Matrix is one of the tools that can be used to link resource allocation decisions to choice of strategy. Budgets can be classified into the following categories: Capital Budgets, Revenue Budgets, and Expenditure Budgets.
- Disburse Resources - Disburse the necessary resources to the departments, making sure everything is properly and accurately documented.
- Monitoring and Control - Maintain a system of checks and balances to monitor whether the departments are operating within their budgetary limits, or if they have gone above and beyond their allocations.
Step #5 - Discharge of Functions and Activities
This step involves making the tactics operational and putting the strategies into action, aided by strategic leadership, utilization of participatory management and leadership styles. This involves actual performance of tasks and activities; as well as management providing leadership and controlling the performance of activities or tactics in various levels of the organization. Throughout this step, the organization should also ensure the following:
- Continuous engagement of personnel training and reorientation.
- Enforcing the applicable control measures in the performance of the tasks.
- Evaluating performance at every level and identifying performance gaps, if any, to enable adjustment and corrective actions. It is possible that corrective actions may entail changes in policies, programs and structures established and set in earlier steps. Make these changes when necessary.
The results of accomplishments in this step #5 will be the input in the third stage of Strategic Management: "Strategy Evaluation"
Strategic Gap Analysis
Strategic gap analysis attempts to determine what a company should do differently to achieve a particular goal by looking at the time frame, management, budget and other factors to determine where shortcomings lies. After conducting this analysis, the company should develop an implementation plan of the strategic initiatives and programs to pursue to eliminate the gaps. Strategic gap analysis allows a company or organization to determine whether it is getting the best return out of its resources and abilities.
Strategy implementation is key to any organization's survival; and requires the collaboration of everyone inside the organization, and on many occasions parties outside the organization. Technically, a strategy can never actually be fully implemented because every thing that was necessarily assumed when formulating the strategy - about customers, technology, regulation, labor market, competitors, and so on - is in a constant state of flux. The strategic gap is the result if you assess the difference between what a company must do to realize its potential from what it is currently doing. Closing this gap is essential to attain and sustain competitive advantage. There will always be a gap between where the company is, and what its strategies call for; Closing this gap is implementation.
Typically, the implementation gap - the gap between the strategic plan and its implementation - is caused by missing integrative links such as:
- Focus on Strategic Implementation - Strategic change in organizations is largely delivered through multiple projects and programs. The absence of an implementation process that is focused on a portfolio of strategy-fulfilling projects can result in an implementation gap.
- Common Top-Down Understanding - The firm's vision and strategic plan are generally created by top executives of the organization. The plan's implementation is carried out by middle and line management, and professionals and lower level employees through changes in operations and delivery of projects. Disconnects in both directions (top-down and bottom-up views) are often found to exist in the organization.
- Organizational Focal Point - Lack of organizational focal point that is responsible for overseeing the implementation of all the strategic projects. A vertical implementation rather than a cross-organizational implementation, invariably occurs. Delegating responsibilities to the functional VPs is a common problem.
- Alignment Across Functions - This missing link relates to not having a cross-functional group that is responsible for strategic level decisions during implementation. The key here is making priority, resource, and other trade-off decisions among all the critically important projects.
- Executive Transition Mitigation - Frequent turnover of executives at VP level or above often result in dramatic implementation slowdowns and organizational conflicts.
- Feedback Loop - A missing link is a set of performance metrics and control reports that enable feedback, organizational learning, and continuous improvement over time. Sustaining competitive advantage over time makes continuous improvement mandatory.
Strategy Implementation Challenges
Strategy Implementation is fraught with challenges as evidenced by the low percentage of strategies that are effectively implemented. A number of drivers/factors that contribute to effective implementation have been identified in the literature (Floyd and Wooldridge 1992; Beer and Eisenstat 2000; Rapert, Velliquette, and Garretson 2002; Dobni 2003; Crittenden and Crittenden 2008), these include:
Strategy Implementation is fraught with challenges as evidenced by the low percentage of strategies that are effectively implemented. A number of drivers/factors that contribute to effective implementation have been identified in the literature (Floyd and Wooldridge 1992; Beer and Eisenstat 2000; Rapert, Velliquette, and Garretson 2002; Dobni 2003; Crittenden and Crittenden 2008), these include:
- Clear strategies and strategic focus -
- Cross-functional integration
- Support from senior management
- Good Communications
- Strategic consensus among members
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 occurs in the context of strategy implementation; it entails the decisions and activities undertaken at all levels in the organization involving top management through middle management, and front-line managers and workers to turn implemented strategy into commercial/social success.
Strategy Execution - Process View
Strategy execution as a step-by-step process provides both a high level direction as well as some detail necessary for to capture strategy execution success. The steps include:
Strategy execution as a process is a decision-making, and involves complex mix of processes of managing people, strategy and operations. The execution process takes much longer period of time compared to formulation, making it harder for managers to focus. It is imperative to have well designed controls to enable managers to manage the process
Strategy execution is one of the three (3) co-incident determinants of the strategic management process including strategy formulation and strategy implementation. Strategy execution occurs in the context of strategy implementation; it entails the decisions and activities undertaken at all levels in the organization involving top management through middle management, and front-line managers and workers to turn implemented strategy into commercial/social success.
Strategy Execution - Process View
Strategy execution as a step-by-step process provides both a high level direction as well as some detail necessary for to capture strategy execution success. The steps include:
- Visualizing the strategy - One of the most pressing challenges in strategy management is understanding what the strategy is. This helps users understand what the strategy is. An effective way to improve understanding is through visualization methods that illustrate the strategy in terms of its components and how they relate to each other. The goals network model of the strategy enables visualization and helps improve this understanding by illustrating both the important elements of the strategy and how each relates to one another and to end state.
- Measuring the strategy - Key elements of the visualized strategy are assigned easily understood performance or health measures. The full complement of strategic measures are organized into a performance dashboard, e.g., Balanced Scorecard, or some other framework, so the reader can determine that progress is being made towards the desired ends.
- Reporting Progress - Review the strategy regularly to determine if the strategy is producing results as opposed to controlling performance.
- Making Decisions - Management must remain be vigilant, and assess the environment, and make corrections as conditions change. As part of the regular reporting, leaders must make ongoing strategic decisions to keep the strategy current and on course. The strategy execution decisions have to be timely. Timeliness refers to "when" in the evolution of changes in the organization the decisions are made, rather than how much time the decision maker has to make the decision.
- Identify Strategy Projects - Organizations may have scores, if not hundreds, of projects ongoing at any point; to get a firm grasp of the type and range of these projects the organization needs to organize all projects and udentify strateggy projects in particular to improve project-oriented strategy execution.
- Align Strategy Projects - Once projects are captured they must then be aligned to the strategies or goals for the organization. Assess all projects - either proposed or ongoing; only those projects that directly impact the strategy should be resources and continued.
- Managing Initiatives - The organization must develop a capability in project management in order to execute the strategy effectively. The full complement of projects in the organization should be coordinated and controlled by a project management office with the responsibility of also monitoring both progress and performance. Monitoring progress creates feedback about the performance of the strategy and its execution allowing organizations to make adjustments accordingly.
- Communicating Strategy - Leaders must communicate visualized strategy to the workforce that will help them understand not only what needs to be done, but why. It is difficult to execute a strategy when it is not well understood, or performance relative to it is not communicated.
- Aligning Individual Roles - Senior leaders must ensure that employees at all levels can articulate and evaluate their personal contribution towards achieving specific strategic goals.
- Rewarding Performance - After explaining the strategy and aligning the workforce to it, senior management institutes the incentives that drive behaviors consistent with the strategy.
Strategy execution as a process is a decision-making, and involves complex mix of processes of managing people, strategy and operations. The execution process takes much longer period of time compared to formulation, making it harder for managers to focus. It is imperative to have well designed controls to enable managers to manage the process
Strategy Execution Tasks
Strategy execution is about decision-making; it 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 decisions and actions include;
Successful execution is the best possible results a strategy and its implementation will allow; and results in the organization's actual or realized strategy. Execution demands ownership at all levels of management and workers at customer touch points. People must commit to and own the process and actions to control effective execution.
Barometers of Capacity Development
There are three (3) levels/points as identified by the UNDP where capacity is grown and nurtured: in an enabling environment, in an organization, and within individuals.
Core Issues
Organization growth is most effective in addressing challenges in core issues areas such as:
Strategic management is concerned with identifying the challenges in core issues areas such as listed above that inhibit an organization from achieving its strategic goals; and building, facilitating, and supporting projects to address these challenges.
Strategy execution is about decision-making; it 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 decisions and actions include;
- Establishing Annual Objectives - These represent the basis for allocating resources; provide primary mechanism for evaluating managers; the major instruments for monitoring progress towards achieving long-term objectives; establishes organizational, divisional and departmental priorities.
- Setting goals
- developing plans for the business
- Establishing the right incentives
- Allocating resources - Resource allocation as expressed in the budget needs to be linked to strategy. In a multiple business unit firm, this may involve series negotiation among managers. Allocation of resources can occur at both the corporate and functional levels.
- Manage initiatives and projects - Prioritize initiatives and projects to drive resource allocation; monitor and evaluate performance.
- Monitor Progress
- Evaluating performance and Change
Successful execution is the best possible results a strategy and its implementation will allow; and results in the organization's actual or realized strategy. Execution demands ownership at all levels of management and workers at customer touch points. People must commit to and own the process and actions to control effective execution.
Barometers of Capacity Development
There are three (3) levels/points as identified by the UNDP where capacity is grown and nurtured: in an enabling environment, in an organization, and within individuals.
- Enabling Environment - This is the broad social system within which people and organizations function. It includes all the rules, laws, policies, power relations and social norms that govern civic engagement. It is the enabling environment that sets the overall scope for capacity development.
- The Organization Level - This refers to the internal structure, policies and procedures that determine an organization’s effectiveness. It is here that the benefits of the enabling environment are put into action and a collection of individuals come together. The better resourced and aligned these elements are, the greater the potential for growing capacity.
- Individuals Level - These are the skills, experience and knowledge that allow each person to perform. Some of these are acquired formally, through education and training, while others come informally, through doing and observing. Access to resources and experiences that can develop individual capacity are largely shaped by the organizational and environmental factors described above, which in turn are influenced by the degree of capacity development in each individual.
Core Issues
Organization growth is most effective in addressing challenges in core issues areas such as:
- Leadership - This is the ability to influence, inspire, and motivate others to achieve or even go beyond their goals. It is also the ability to anticipate and respond to change. Leadership can exist at the enabling environment, organization, and individual levels; as well as help at many levels in the organization.
- Institutional Arrangements - Institutional arrangements refer to the policies, procedures and processes that allow systems to function and interact effectively and efficiently in an organized setting. Such arrangements/relationships can be rules which may be binding, e.g., legislation or contractual arrangements, or non-binding, e.g., codes of conduct, norms, and values that are unwritten but are widely accepted. Within the enabling environment, institutional arrangements are policy and legal frameworks; at the organizational level, they include strategy, processes, and technology that enable operations, as well as internal accountability mechanisms.
- Accountability - Accountability exists when rights holders are able to make duty bearers deliver on their obligations.From a capacity development perspective, the focus is on the interface between service providers and their clients, or service providers and oversight bodies. Accountability is important because it allows organizations and systems to monitor, learn, self-regulate and adjust their behavior in interaction with those to whom they are accountable.
- Knowledge - Knowledge is literally, what an people or organizations know; knowledge underpins their capacities and hence their capacity development. Knowledge traditionally has been fostered at the individual level, mostly through education. But it can also be created and shared within an organization, such as, through on-the-job training or through general life experience, nd supported through an enabling environment of effective educational systems and policies.
Strategic management is concerned with identifying the challenges in core issues areas such as listed above that inhibit an organization from achieving its strategic goals; and building, facilitating, and supporting projects to address these challenges.
Performance Evaluation and Control
Evaluate performance, 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.
Strategic 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 can help to assess whether the decisions match the intended strategy requirements. Among the Qualitative factors are subjective evaluation of factors such as - skills and competencies, risk taking potential, flexibility etc.
Evaluation is about being open to continuing feedback and adjusting your program(s) accordingly. Any effective evaluation of the strategy begins with defining the parameters to be measured; these parameters should mirror the goals set in the direction setting stage of the strategic management function. The three main types of evaluation methods are goal based, process based and outcomes based. Goal based evaluations measure if objectives have been achieved. Process based evaluations analyze strengths and weaknesses.
[TBD]
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.
Performance Measurement System
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.
Monitoring
Evaluation
Any effective evaluation of the strategy begins with defining the parameters to be measured; these parameters should mirror the goals set in the direction setting stage of the strategic management function.
Review
The review process relies on a system of measures such as provided by the Balanced Scorecard of metrics to guide review decisions. The review process may be formal periodic reviews or informal, however it is the style and openness of the review process that makes all the difference whether the organization will:
The review meeting can be a control tool as well as problem-solving session where the organization examines what it has learned since the last review, with data (the metrics), that serves as a basis for ongoing adjustments for even better performance. These adjustments are in the form of how resources should be allocated, and how people in the organization will use their time. Determine your progress by measuring the actual results versus the plan.
Monitoring
Monitoring internal and external factors to identify issues will also enable you to react to any substantial change in your business environment. Effective and ongoing monitoring provide organizations early signal that a strategy and/or plan (strategic, tactical/action, and operational) are failing. Monitoring of plans, activities, and results provide information for future action.
Monitoring Premises and Assumptions
These are planning premises and assumptions established early on in the strategic planning process and act as a basis for formulating strategies. The premise control app has been designed to check systematically and continuously whether or not the premises set during the planning and implementation processes are still valid. It involves the checking of environmental conditions. Premises are primarily concerned with two types of factors:
Monitoring Strategic Thrusts and Milestones
Monitoring strategic thrusts and milestones provide an additional source of feed forward information. Implementation control is designed to assess whether the overall strategy should be changed in light of unfolding events and results associated with incremental steps, and actions that implement the overall strategy.
Strategic Surveillance
Monitoring a broad range of events inside and outside the company that are likely to threaten the course of the firm’s strategy is necessary to safeguard the established strategy in a continuous way.
Management Corrective Actions
Managers can use the scorecard information to control organization performance in the following ways:
This involves assessing a firm's effectiveness which may happen at the end and beginning of the planning cycle since the information provided is the input needed for the next cycle.
Evaluate performance, 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.
Strategic 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 can help to assess whether the decisions match the intended strategy requirements. Among the Qualitative factors are subjective evaluation of factors such as - skills and competencies, risk taking potential, flexibility etc.
Evaluation is about being open to continuing feedback and adjusting your program(s) accordingly. Any effective evaluation of the strategy begins with defining the parameters to be measured; these parameters should mirror the goals set in the direction setting stage of the strategic management function. The three main types of evaluation methods are goal based, process based and outcomes based. Goal based evaluations measure if objectives have been achieved. Process based evaluations analyze strengths and weaknesses.
[TBD]
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.
Performance Measurement System
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.
Monitoring
Evaluation
Any effective evaluation of the strategy begins with defining the parameters to be measured; these parameters should mirror the goals set in the direction setting stage of the strategic management function.
Review
The review process relies on a system of measures such as provided by the Balanced Scorecard of metrics to guide review decisions. The review process may be formal periodic reviews or informal, however it is the style and openness of the review process that makes all the difference whether the organization will:
- quickly seek effective course adjustments
- seek excuses or praise with little real direction change
- ignore much of the scorecard (system of measures)
The review meeting can be a control tool as well as problem-solving session where the organization examines what it has learned since the last review, with data (the metrics), that serves as a basis for ongoing adjustments for even better performance. These adjustments are in the form of how resources should be allocated, and how people in the organization will use their time. Determine your progress by measuring the actual results versus the plan.
Monitoring
Monitoring internal and external factors to identify issues will also enable you to react to any substantial change in your business environment. Effective and ongoing monitoring provide organizations early signal that a strategy and/or plan (strategic, tactical/action, and operational) are failing. Monitoring of plans, activities, and results provide information for future action.
Monitoring Premises and Assumptions
These are planning premises and assumptions established early on in the strategic planning process and act as a basis for formulating strategies. The premise control app has been designed to check systematically and continuously whether or not the premises set during the planning and implementation processes are still valid. It involves the checking of environmental conditions. Premises are primarily concerned with two types of factors:
- Environmental factors from PESTEL Analysis for example, inflation, technology, interest rates, regulation, and demographic/social changes.
- Industry factors from Five Forces Analysis and Industry Analysis for example, competitors, suppliers, substitutes, and barriers to entry.
Monitoring Strategic Thrusts and Milestones
Monitoring strategic thrusts and milestones provide an additional source of feed forward information. Implementation control is designed to assess whether the overall strategy should be changed in light of unfolding events and results associated with incremental steps, and actions that implement the overall strategy.
- Monitoring Strategic Thrusts (new or key strategic programs) is useful in enacting implementation controls focused on (1) Early agreement in the planning process on which thrusts are critical in the success of the strategy or of that thrust; (2) Use stop/go assessments linked to a series of meaningful thresholds (time, costs, research and development, success, etc.) associated with particular thrusts.
- Milestone Reviews - Milestones are significant points in the development of a program, such as points where large commitments of resources must be made.
Strategic Surveillance
Monitoring a broad range of events inside and outside the company that are likely to threaten the course of the firm’s strategy is necessary to safeguard the established strategy in a continuous way.
Management Corrective Actions
Managers can use the scorecard information to control organization performance in the following ways:
- Investigating on a regular basis what has been achieved, and what has not.
- Implementing corrective action where tasks are not achieved, or achieved on time.
- Checking that resources will be available when needed.
- Supervising, supporting and motivating the people of the organization to ensure tasks are undertaken.
- Adjusting the operational plan if there is a need.
- Reporting problems to superiors, e.g., directors, committee personnel, the Board members of the organization.
This involves assessing a firm's effectiveness which may happen at the end and beginning of the planning cycle since the information provided is the input needed for the next cycle.
Setting Objectives
The purpose of setting objectives is to convert managerial statements of business mission and company direction (strategic vision) into specific targets, something, by which, the organization's progress can be measured. Strategic Objectives convert the strategic vision and mission into measurable objectives and performance targets.Objectives serve as yardsticks for tracking an organization's performance and progress. The challenge of trying to close the gap between actual and desired performance pushes an organization to be more inventive, to exhibit some urgency in improving both financial performance and non-financial performance (business position).
The two (2) types of performance yardsticks/measures are:
Financial objectives are needed because acceptable financial performance is critical to preserving an organization's viability and well-being. Strategic measures make it explicit that management not only must deliver financial performance but must also deliver on strengthening the organization's long-term business and competitive position.
[TBD]
Evaluating Formulated Strategy
The evaluation is based on a set of selection that ensures the chosen strategies will be effective. An effective strategy is defined in terms of the degree to which the strategy meets certain criteria including:
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.
Evaluating Implemented Strategy
Strategy evaluation ensures that all key supporting elements of the business systems including Measures and Rewards, Structures and Processes, Culture and People are aligned behind the chosen strategies and hinged on the mission, vision, values and critical success factors (CSF) of the organization. The evaluation and control process is concerned with defining, attaining, and presenting constructive information for reviewing alternatives to the analyzed action plan. The evaluation method is comprised of the activities defined by the process steps below.
Evaluation Process Steps
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.
The purpose of setting objectives is to convert managerial statements of business mission and company direction (strategic vision) into specific targets, something, by which, the organization's progress can be measured. Strategic Objectives convert the strategic vision and mission into measurable objectives and performance targets.Objectives serve as yardsticks for tracking an organization's performance and progress. The challenge of trying to close the gap between actual and desired performance pushes an organization to be more inventive, to exhibit some urgency in improving both financial performance and non-financial performance (business position).
The two (2) types of performance yardsticks/measures are:
- Financial Objectives - These typically focus on such measures as earnings' growth, return on investment, cash flow.
- Strategic Objectives (Measures) - These provide consistent direction in strengthening a company's overall business position. They relate more directly to a company's overall competitive situation and involve such performance measures as growing faster than the industry's average and making gains in market share.
Financial objectives are needed because acceptable financial performance is critical to preserving an organization's viability and well-being. Strategic measures make it explicit that management not only must deliver financial performance but must also deliver on strengthening the organization's long-term business and competitive position.
[TBD]
Evaluating Formulated Strategy
The evaluation is based on a set of selection that ensures the chosen strategies will be effective. An effective strategy is defined in terms of the degree to which the strategy meets certain criteria including:
- 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..
- Value - Will the strategy contribute to meeting agreed-upon goals?
- Advantage - The strategy must provide for the creation and/or maintenance of a competitive advantage in the selected areas of activity.
- Feasibility . Is the strategy practical, given personnel and financial resources and capacity? The strategy must neither overtax available resources not create unsolvable sub-problems.
- Acceptability - Does it fit with the values of the company and the employees? Is the strategy acceptable to the Board, key staff, and other stakeholders?
- 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.
Evaluating Implemented Strategy
Strategy evaluation ensures that all key supporting elements of the business systems including Measures and Rewards, Structures and Processes, Culture and People are aligned behind the chosen strategies and hinged on the mission, vision, values and critical success factors (CSF) of the organization. The evaluation and control process is concerned with defining, attaining, and presenting constructive information for reviewing alternatives to the analyzed action plan. The evaluation method is comprised of the activities defined by the process steps below.
Evaluation Process Steps
- Define the strategy to evaluate - Managers need to specify the implemented strategy and the progress results that need to be evaluated. Such results have to be objectively measurable and consistent; and can be defined using goals modeling.
- Outline Predetermined Standards - Managers need to outline standards according to the chosen implemented strategy. These standards often consist of a tolerance of range which defines adequate variations.
- Obtain data to Map Out Onto Set Standards - Data to obtain consists of results from the actions taken on the chosen strategies.
- Measure Performance - Assess the performance of the mapped out data.
- Performance Match Standards -if the performance of the identified strategy achieves the standards within the tolerance range then the process stops here; otherwise, Take Corrective Action.
- Take Corrective Action - The performance measured does not achieve the standards; managers must take necessary actions to resolve and amend the implementation Process.
The implementation evaluation method assists managers in deciding whether or not the chosen strategies are steering the organization in the right direction towards achieving the strategic objectives and mission, It provides an intuitive and model-driven approach to assess the execution feasibility of the chosen strategy implementation. The evaluation method allows an organization to take into consideration a lot of the points that can influence successful implementation before an ideal strategy can be implemented. It is important to note that for a given organization and business environment not all strategies are executable.
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