STRATEGY IMPLEMENTATION

AGUS TATO , DRS. DIP. TEFL, DIP. TM, ELT. CCP. MM

WHILST MANY ORGANISATIONS CRAFT GREAT STRATEGIES, FEW EXCUTE WELL…

“70% of companies believe they select the right “In the majority of cases – we estimate 70% - the
business strategy, but fail to execute it due to short- problem isn’t bad strategy but … bad execution” –
comings in their management system” – Accenture Fortune Magazine
Report “ex-e-cu-tion (ek si kyoo shun), n 1. The missing link. 2. The
main reason companies fall short of their promises. 3.
“…only 11% of companies employ a fully fledged The gap between what a company’s leaders want to
strategic control system” – Ashridge Strategic achieve and the ability of their organisations to deliver
Management Centre it…” – Larry Bossidy and Ram Charan, Execution: The
discipline of getting things done
“… over 66% companies with over $500M in
revenue set targets that exceeded 9% real growth, yet
less than one company in ten achieved this level of “90% of organisations fail to execute their strategy” –
success.” – Chris Zook, Havard Business Review David Norton, Balanced Scorecard Report

THE CEO PERSPECTIVE… Key Execution Problems • Poorly Deployed/Communicated Strategy • Unclear Accountability • Poorly Defined Roles/Responsibilities • Inadequate Execution and Performance Monitoring • Don’t have or poor risk management system .

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THE EVIDENCE BACKS-UP THESE HYPOTHESES … “95% Employees don’t understand their companies strategy” Kaplan and Norton. Harvard Business Report “86% of executive teams spend less than one hour a month reviewing strategy” Kaplan and Norton. Harvard Business Report . Harvard Business Report “<27% employees have access to their company’s strategic plan” Kaplan and Norton.

. it I’ll lose it.WHAT HAPPENS IN REALITY… The Off-site Strategy Day The Ivory Tower Exercise •Grow Sales of New Product •Customer Focus Poorly Defined Divisional President •Invest in China •Improve employee satisfaction Goals ..ppt deck Unclear Accountabilities Functional Heads The Ad Hoc Cascade Give me Way too much! It’s close enough for your numbers... . Cut by 25%! Military work. Departmental Heads Project Project The Budget Dance Project Middle Managers Funding Projects Constraints Employees I need to include If I don’t include some contingency. STRATEGY EXECUTION .....

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Some Critical Challenges Now Days • Time to market for new products • Time to market for new products and services from concept to and services from concept to realization realization • Time to deliver products and • Time to deliver products and services to the customer services to the customer • Time to close the books • Time to close the books • Time to hire new staff • Time to hire new staff • Time to deploy new staff • Time to deploy new staff • Time for new staff to achieve full • Time for new staff to achieve full productivity productivity • Time to make key decisions • Time to make key decisions .

Some more Critical Challenges .

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. 2002). Mankins & Steele. Kaplan and Norton (2005) believed that 95% of a company’s employees are unaware of or do not understand their company’s strategy. . According to Johnson (2004). 2005). In most cases. 2005).Organizations fail to implement about 70 per cent of their new strategies (Franken et al. 66% of corporate strategy is never executed.. Miller. companies’ strategies deliver only 63% of their promised financial value (Mankins & Steele. 2009. It was found that 40-60 per cent of the potential value of the strategic plan is never realized and captured due to insufficiencies in planning and implementation (Franken et al. 2009.

. Unfortunately. 2013).It is believed that strategy formulation is difficult while executing or implementing it throughout the organization is even more difficult. no business strategy can succeed. 1998. most managers know far more about developing strategy than they do about executing it (Epstein & Manzoni. Without effective implementation. Hrebiniak. 2006.

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p. 1999. (Wheelen and Hunger. adoption. 120). p. 320) . 5) “… the sum total of the activities and choices required for the execution of a strategic plan”.2012. Strategy implementation has been variously be defined as: “The communication. interpretation. p. and enactment of strategic plans” (Noble.Strategy Implementation Definitions According to Miller and Dess (1996). strategy implementation involves a broad range of efforts which focus on the transformation of strategic intentions into actions. “…designing appropriate organizational structures and control systems to put the organization’s chosen strategy into action” (Hill et al.. 2007.

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This ‘fit’ provides the internally consistent design which also matches with the organization’s product-market strategy. information and decision process and reward systems for the successful implementation of strategies. people. .Galbraith & Kazanjian (1986) presented a conceptual strategy implementation framework and highlighted that a strong ‘fit’ is required among task. organizational structure.

Determine general elements which will influence success. Establish evaluation procedure. Develop and enact appropriate reporting procedures. Develop a strategic plan or review/modify the current plan. 7. Determine who is going to be responsible for what. 2. Initiate use of procedures by managerial personnel. Followed by identification. Identify a selected number of critical success factors (CSFs). 3. These nine steps include. Provide structure for the design process. Select the strategic performance indicators (SPls). 5. 1. these factors were used to monitor the progress in implementation of strategic change. 8.Jenster (1987) proposed a strategy planning and strategic control process based on the case study of 128 manufacturing firms which was closely integrated with the firm’s information system. 9. 6. Jenster found that firms which had a high return on equity identified their critical success factors for the implementation of strategies. Based on these findings. . 4. Jenster propose a nine step strategic process and information system for integrating planning and control.

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Wheelen (2006) Environmental Evaluation Strategy Formulation Strategy Implementation Scanning & Control External: Mission Societal Reason for Environmental Objectives existance Strategies What results Industry Analysis Policies to accomplish Plan to achieve by when the mission Programs Broad Internal: & objectives guidelines Activities Budgets Structure for decision to accomplish Cost of the Procedures making a plan Culture programs Sequence of Performance Resources steps needed to do the job Actual results Source: T. USA. Wheelen. New Jersey. “Strategic Management and Business Policy”. 2006 .L.L. STRATEGIC MANAGEMENT MODEL by T.

2012 .Implementasi Strategi seringkali disebut sebagai rencana operasional (oepartional planning) karena terdiri dari sejumlah aktivitas (program) yang melibatkan SDM perusahaan (people) dan didukung prosedur pelaksanaan yang terstandarisasi (prosedur) serta anggaran perusahaan yang layak (budget). 3P+1B Rufaidah.

Key Performance PEST : 7 C. Misi. Input Data ANALYSIS DECISION ACTION PERFORMANCE Eksternal Strategic Situation Strategy Strategy Strategy Evaluation 7C : • Customer Analysis Formulation Implementation and Control • Channel (SSA) (SF) (SI) (SEC) • Company • Complementor • Competitor • Center External Environment • Change (PEST) Analysis • Visi. PEST (TO) Sasaran • Program Indicator (KPI) *1 • Political-Legal • Strategi • Budget • Economical • Socio-culture EFAS : • Policy • Guidance (Opportunities & Threats) • Tecnology IFAS : • Corporate Management Input Data (Strength & Weakness) Review *2 Internal Values BFA : Internal Environment • Marketing Analysis • Financial • Operational BFA (WS) • Human Resource • Innovation Feed Back 13 .

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L. THREE TYPES OF STRATEGY by T. growth. cooperative • Approach at functional area to achieve corporate and business objectives & strategies by maximizing resource productivity. Corporate • Catagories: Stability. Functional . Wheelen (2006) • Overal direction toward growth & management of its businesses and product lines. retrenchment • Conduted at business unit or product level • Improvement of competitive position of a product or services in the specific industry or market segement Business • Catagories: competitive. • It is concerned with developing and nurturing distinctive competence.