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Week 25 Implementing strategy in organisations - Coggle Diagram
Week 25 Implementing strategy in organisations
1 Strategy implementation
where strategies fail, it is often as a result of poor implementation (Hrebiniak, 2006).
the complexity of strategy implementation and the need to make adjustments, iteration is necessary.
important to involve a variety of organisational members in the implementation of strategy.
strategy formulation and strategy implementation (or execution) should go hand in hand if the strategy is to be realised.
Relatively little research has been done on strategy implementation in comparison to strategy analysis
Communication is important to align people and create commitment at all levels of the organisation.
Professor Charles Baden-Fuller and Mr Maurizio Paolella:
1.1 The strategy implementation process
Richard Lynch. For Lynch (2015), strategy implementation needs to start by addressing the following questions:
What activities need to be undertaken in order to achieve the agreed objectives?
What is the timescale for the implementation of these plans?
How will progress be monitored and controlled?
five basic elements
in the implementation process (Lynch, 2015, p. 442):
Strategic recommendations
: establishing the starting orientation, which is usually a strategy formulation in one form or another.
Statement of the main strategy objectives:
specifying the general results expected from the strategy initiatives.
Formulation of specific plans:
taking the general objectives and turning them into specific tasks and deadlines (these are often cross-functional).
Resources allocation and budgeting:
indicating how the plans are to be paid for (this quantifies the plans and permits integration across functions).
Monitoring and control procedures:
ensuring that the objectives are being met, that only the agreed resources are spent and that budgets are adhered to.
1.2 Monitoring and control
Strategic monitoring and control systems are attempts by organisations to monitor and control key variables
Simons (1994, 1995) advocates a
comprehensive approach
for establishing strategic control systems, especially for organisations faced with continuous change.
leaders need to have systems for gathering information and for deciding what information needs to be gathered, beyond simple goal-oriented activities.
strategic control systems must
accommodate
not just intended strategies but also
strategies that emerge from local experimentation and independent employee initiatives
key element of monitoring and control:
diagnostic control systems
feedback
enables managers to adjust and modify inputs and processes, so that future outputs will more closely match the goals.
Three principles drive the management of diagnostic control systems (Witcher and Chau, 2010):
the ability to measure the outputs of a process
the ability to set predetermined standards against which actual results can be compared
the ability to correct deviations from these standards.
principles assume that managers can control outputs through careful selection of inputs and can deal with critical performance variables
article
A strategy control system ensures action.
Adapting the strategy to changed circumstances.
plans are bound to change,
Building a strategy control system.
Monitoring requires clear objectives.
Use progress reports to monitor the execution.
Build dashboards to track progress.
Meet regularly in execution review sessions.
Adapt the execution when objectives are not achieved.
Assign clear responsibilities.
Hold people accountable.
Address poor execution performance.
Create a culture of accountability.
Employees are not motivated to execute the strategy.
1.3 Stakeholdership in strategy implementation
stakeholdership issues in strategy implementation. In this regard, Lynch (2015, p. 446) suggests five questions that need to be asked
Who developed the strategies being implemented?
Who will implement the strategies?
What goals and tasks will they need to accomplish?
How can goals and tasks be handled in fast-changing environments?
How will the implementation process be communicated and co-ordinated?
2 Barriers to strategy implementation
over 50% of strategies fail (Nutt, 1999)
Alexander (1985) identifies five possible barriers:
1.When key tasks are not defined in enough detail.
2.When problems requiring intervention by top management are not communicated to them soon enough.
3.When changes in roles and responsibilities are not clearly defined.
4 .When key formulators of the strategic decision do not play an active enough role in implementation.
5.When major problems surface during implementation, which had not been identified beforehand.
2 & 4 human element
resistance to change
culture links to week 24
feedback not fed back through lower levels of management
lack of involvement
2.1 An alternative view on strategy implementation barriers
Laurence Hrebiniak (2006) offers an alternative
1.Where managers are trained to plan, not execute.
2.Where implementation is left to the ‘grunts’.
3.Where planning and implementation are not interdependent.
4.Because implementation is a process that takes longer than formulation.
5.Because implementation involves more people than strategy formulation does.
1, 2 & 5 human element -
organisational structure underpins 1-5, week 23 strategic fit or misfit
strategy and structure are not aligned.
who implements? top down or middle managers?
lack of involvement
2.2 Overcoming barriers to implementation
Hickson et al. (2003) identify 8 factors to adrdess barriers of implementation:
Familiarity:
managers know it
Assessability:
targets clear set in advance greater chance suces
Specificity:
detailed
Resourcing:
staffing, financing, time etc
Acceptability:
"that stakeholders "buy-in"
Receptivity:
culture within org has to work with
Structural facilitation:
org structure has to be right
Priority:
implementation needs to be high priority compared to other tasks
Week 24 section 4 -Handy’s (2007) culture typologies, which link together issues of strategy, structure and culture.
3 Strategic change
often requires alot sof change i an org
3.1 External drivers of change
STEEPLE
Distruptive innovation
new markets
new tech
new political rules
new business models
new needs and behaviours
unthinkable vents
911 - caused changes in flights
3.3 Strategic drift
occurs when an organisation (or its management) gets further and further out of step with its environment, while believing that it is doing everything possible to keep up.
Johnson et al. (2019) strategic drift, can occur for at least five main reasons:
1. The problem of hindsight:
managers may be understandably wary of changing what has been a winning strategy in the past on the basis of what might be only a fad or a temporary downturn in demand. Alternatively, significant changes in the environment (such as disruptive innovations) are often hard to detect as they are happening and may only be truly understood retrospectively.
2. Building on the familiar:
when managers encounter complex and confusing signals from the external environment, the temptation is to ignore them in favour of concentrating on change signals that are familiar and therefore understandable in the dominant managerial worldview.
3. Core rigidities:
as you learnt in Week 10, the capabilities that help to ensure an organisation’s success can become core rigidities if they no longer deliver success. The taken-for-granted way of doing things may inhibit an organisation as its external environment evolves.
4. Relationships restrain strategic thinking
: long-term relationships with customers, suppliers and other stakeholders are needed for an organisation to perform effectively, but can also become barriers to making fundamental changes to strategy that will affect accepted ways of working.
5. Lagged performance effects:
during the early stages of drift, financial performance may continue to hold up. Loyal customers may continue to purchase from an organisation because the cost of transferring to another supplier may be too great. However, the ‘costs’ of staying with the supplier may become too much and customers may eventually shift their business to the new supplier.
The dangerous time for an organisation occurs in phase 3 of the strategic drift (see Figure 25.8), when a period of flux is triggered by one or more of the five reasons above.
rganisations can find themselves in phase 4 of the strategic drift. The likely outcome will be one of three possibilities:
the organisation may collapse and cease to function as an organisational entity
it may get taken over by another organisation
it may go through a period of transformational change.
Transformational change can take one of two forms:
it can consist of a small number of major changes, for example, when a car manufacturer moves into a new market sector such as the hybrid fuel vehicle market
it can consist of a huge number of smaller changes aimed at returning the organisation to a greater fit with its environment – in short, re-establishing strategy and external environment alignment.
organisations need to engage in strategic change programmes at periodic times in their lifecycle to avoid strategic drift
4 Types of strategic change
Balogun and Hope (2008) identify four generic types of strategic change
that reflect the extent of change required (the desired end state) and the nature of the change process (particularly the speed of change required).
Evolution
Johnson et al. (2019), this is arguably the most challenging type of strategic change since it involves building on and exploiting existing strategic capabilities while also developing new strategic capabilities.
planned but rolled out incrementally in stages
changing the business model and culture gradually as it evolves from its existing strategic position to a new one
Revolution
is a change strategy that requires rapid and major strategic and cultural change.
eg environmental or competitive pressures might require fundamental change, the organisation has failed to respond.
fast strategic change but, very likely, also for deep cultural change.
Adaption
Change is gradual, - builds on, rather than fundamentally changes, prior strategy.
kaizen, - continuous improvement that allows for small, marginal changes
Reconstruction (for turnaround)
is a rapid change involving a good deal of upheaval in an organisation, but which still does not fundamentally change the culture or the business model.
often cost-cutting
(speed)’) covers how swiftly the change is implemented.
(‘end result (extent)’) varies from ‘transformation’ (involving a change in organisational culture) to ‘realignment’ (a less radical change which leaves the organisation’s existing culture largely intact).