Strategy Implementation: Eugene Miheso Swinnerstone

STRATEGY IMPLEMENTATION
Eugene Miheso Swinnerstone

Introduction
 Though important strategy formulation is
not a sufficient condition for its success.
Many times strategies fail because of poor
implementation.
 Strategy implementation is the sum total
of the activities and choices required for
the execution of a strategic plan. It
consists of processes of transforming a
plan into action and ensuring that the
intended out comes do result.
mamlakaster@gmail.com
Introduction contd.
 Strategy implementation tries to find
answers to the following questions.
 Who are the people to carry out the
strategic plan?
 What must be done to align the company’s
operations in the new intended direction?
 How is every one going to work together to
do what is needed?
 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?
Introduction contd
 The prime aim in implementing
strategy is to deliver the mission and
objectives of the organization
 Importantly, the process of
implementation relies on human
resources to carry out these tasks.
Changes in strategy may necessitate
reorganization
 Individuals and groups may need to
experiment and to learn about new
areas. They need to be organized,
given incentives and may possibly
even require to be trained
Problems frequently encountered
during strategy implementation
 Implementation may take more time than originally
planned.
 Unanticipated major problems may arise.
 Activities may be ineffectively coordinated
 Competing activities and crises may take attention away
from implementation.
 The involved employees may have insufficient capabilities
to perform the jobs.
 Lower – level employees may be inadequately trained.
 Uncontrollable external environmental factors may create
problems
 Departmental managers could provide inadequate
leadership and direction
 Key implementation tasks and activities may be poorly
defined
 The information system may inadequately monitor
activities.
The basic implementation process
Strategy Statement of the Formulation of Resource
choice main strategy Specific plans allocation and
objectives •Tasks budgeting
•Quantifiable •Tactics
•Non-quantifiable •Programmes
•Policies
•Procedures
•Deadlines
•Responsibilities
Monitoring and control

Procedures
•Objectives
•Resources
•Validity of the planned
environmental projections
The implementation process
To turn general strategies into specific implementation

plans involves four basic elements:
 Identification of general strategic 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
 Resource allocation and budgeting – indicating
how the plans are to be paid for
 Monitoring and control procedures – ensuring
that the objectives are being met and that only
the agreed resources are spent and that budgets
are adhered to.
Major components of the strategy
implementation process
 Communication of measurable corporate objectives and strategy
 Determination of key managerial tasks that need to be
accomplished
 Assigning tasks to various departments of the organization
 Establish coordination mechanisms and how authority will be
delegated
 Budgeting and allocation of resources to the implementing
departments
 Formulate and state policies and procedures as guides to the
tactical decisions and actions
 Clarify goals of various individual managers preferably through a
participatory approach like MBO
 Operationalise ways and state the indicators to measure
performance
 Build an IT based MIS to provide adequate and timely data for
business evaluation
 Install a reward system to motivate staff and achieve desirable
behavior like creativity
 Develop staff and inculcate corporate values and styles of
behavior and leadership
 Ascertain adequacy of control mechanisms
 Evaluate performance ascertain gaps and provide feed back on
regular basis mamlakaster@gmail.com
Key terms in the implementation process
 Programmes:
 A program is a statement of the activities needed to
accomplish a single use plan. The purpose to a
programme is to make the strategy action-oriented.
 Tactics
 A tactic is a specific operating plan detailing how a
strategy is to be implemented in terms of when (timing
tactics) and where (market location tactics) it is to be
put in action. By their nature tactics are narrower in
scope and shorter in their time horizon than are
strategies
 Budgets:
 A budget is a statement of a corporation’s programs in
monetary terms. After programs are developed, the
budget process begins. Planning a budget is the last real
check a corporation has on the feasibility of its selected
strategy.
Key terms in the implementation process
 Procedures:
 Procedures, sometimes termed “Standard Operating
Procedures’’ (SOPS) are a system of sequential steps or
techniques that describe in detail how particular task or
job is to be done.
 Policies
 A policy is a broad guide line for decision making that
links the formulation of a strategy with implementation.
 Policies help to ensure that;
 Strategic decisions are implemented
 There is a basis for control
 The amount of time executives spend making decisions is
reduced
 Similar situations are handled consistently
 Coordination between units occurs
Achieving synergy
 One of the goals to be achieved in strategy
implementation is synergy between and among
functions and business units, which is why corporations
commonly reorganize after an acquisition.
 Synergy is a concept that two businesses will generate
more profits together than they could separately
 Synergy can take place in one of six ways;
 Shared know-how
 Coordinated strategies
 Shared tangible resources
 Economies of scale or scope
 Pooled negotiating power
 New business creation
Objectives, task setting and
communication processes
 The process of task setting and communications will
cover what is to be done, by what time and with what
resources. Typical questions will include:
 Who developed the strategies that are now being
implemented?
 Who will implement the strategies?
 What objectives and tasks will they need to
accomplish?
 How can objectives and tasks be handled in fast-
changing environments?
 How will the implementation process be
communicated and coordinated?
 In reality, the answers to the above questions will
depend primarily on the way that the strategies have
been developed
Translating corporate objectives into
tasks in a functional organization
Corporate strategic plan objective:
Increase return on capital from
10% to 12% over three years
Marketing Finance Research and

Operations Human
Objective: objective: Development
objective: Resources
Increase market Introduce new Objective:
Decrease Objective:
share from 5% cash Complete new
manufacturing Recruit and train
to 7% over management Product
cost by 3% four new skilled
three years system to Programme to
over three years staff in
reduce finance Enhance quality
association with
costs by 2% While reducing
R&D
over 3 years Costs by 3%
Over 3 years
Human
Operations resources
Marketing Finance Research &
action plan action plan
action plan action plan Development
•Deadlines •Deadlines
•Deadlines •Deadlines action plan
•Milestones •Milestones
•Milestones •Milestones •Deadlines
•Resources •Resources
•Resources •Resources •Milestones
•etc. • etc.
•etc. mamlakaster@gmail.com•etc. •Resources
Resource Allocation
 Most strategies need resources to be allocated to
them if they are to be implemented successfully
 The resource allocation process is used to provide
the necessary funds for proposed strategies. In
circumstances of limited resources, the centre is
usually responsible for allocating funds using various
decision criteria
 Criteria for allocation include the delivery of the
organization’s mission and objectives, its support of
key strategies such as core competencies and its
risk-taking profile
 Some special circumstances such as unusual
changes in the environment may support other
resource allocation criteria
Information, Monitoring & Control
Monitoring and control procedures are an
important aspect of implementation because
information can be used:
 To assess resource allocation choices;
 To monitor progress on implementation;
 To evaluate the performance of individual managers
as they go about the achievement of their
implementation tasks;
 To monitor the environment for significant changes
from the planning assumptions and projections;
 To provide a feedback mechanism and the fine-
tuning essential for emergent strategy
implementation, especially in fast-changing markets
Information, Monitoring & Control
Main elements of a strategic control system:
 Customer satisfaction
 Quality measures
 Market share
 It may also be necessary to apply such
indicators externally to monitor competition in
order to assess the relative performance of the
organization against others in the market place
 It is important to distinguish between financial
monitoring (cash flow, earnings per share, etc)
and strategic controls which may include these
financial elements but will also have a broader
perspective
Improving strategic controls
 Concentrate on the key performance indicators
and factors for success – too many elements to
be monitored may result in information
overload
 Distinguish between corporate, business and
operating levels of information and only monitor
where relevant
 Avoid over-reliance on quantitative data.
Numbers are usually easier to measure but may
be misleading and simplistic
 As controls become established, consider
relaxing them. Eventually, they may interfere
with the most important task of clear and
insightful strategic exploration
 Create realistic expectations of what the control
system can do as it is being introduced or
upgraded mamlakaster@gmail.com
The role of Organizational structure
in strategy implementation
Generally designing the organizational structure
involves answering the following questions
 How does the firm structure itself to get effective
results?
 Which organizational structure is best in the
circumstances of the firm?
 What tasks need to be performed to accomplish the
strategy?
 To whom should these tasks be assigned?
 To what extent do these tasks depend on each other?
 How can we ensure effective performance of these
tasks
 Any change in corporate strategy is very likely to
require some sort of change in the organization
structure and in the kind of skills needed in particular
positions.
Structure follows strategy
 Changes in corporate strategy leads to
changes in organizational structure.
 Changes in the environment tend to be
reflected in changes in a corporation’s
strategy, thus leading to changes in a
corporation’s structure.
 Strategy, structure and the environment
need to be closely aligned; otherwise,
organizational performance will suffer e.g. a
business unit following a differentiation
strategy needs more freedom from
headquarters to be successful than does
another unit following a low cost strategy.
Organizational structure contd.
 Managers must therefore closely examine the way their
company is structured in order to decide what if any
changes should be made in the way work is
accomplished for example should activities be grouped
differently?
 Should the authority to make decisions be centralized
at headquarters or decentralized to managers in distant
locations?
 Should a company be organized into a tall structure
with many layers of managers, each having a narrow
span of control (that is few employees to supervise) for
better control of subordinates or should it be organized
into a flat structure with few layers of managers each
having a wide span of control (that is more employees
to supervise) to give more freedom to subordinates?
Tall versus Flat Organizations
Advantages Disadvantages
Tall  More promotional  Coordination problems
opportunities  Information distortion
 Smoother progression  Motivational problems-less
from one level to another span of control
 Small spans of control  More expensive in terms of
management overheads
lead to more personal  Extra levels of management
contact slow down decision-making
and communication
Flat  Wide span of control  Lack of personal contact

encourages more  Fewer promotions
delegation  Higher risk of failure when
 Lower management costs promoted
 Better communication
 Promotions are real and
meaningful
 Closer contract between
senior management and
lower levels
Centralization v Decentralization
The arguments for and against decentralization
Advantages Disadvantages
 Senior management free to  Loss of control – managers at all
concentrate on strategy-reduces levels can make their own decisions
information overload  Dysfunctional decisions due to a
 Reduces bureaucratic costs –reduces lack of goal congruence – many
communication and coordination decisions may make the organization
costs since information does not to loose focus of its broad objectives
have to be constantly sent to the top  Poor decisions made by
of the organization for decisions to inexperienced managers
be made.  Inappropriate for crisis situations
 Better local decisions due to local where speedy decision making and a
expertise concerted response by the whole
 Quicker responses to customer needs organization is required
 Better motivation- handling  Training costs
challenging tasks motivates low  Duplication
level managers  Extra costs re information
 Flexibility-low level managers are
authorized to make spot-on-
decisions.
 Training / career path
DIFFERENT TYPES OF STRUCTURES
 Entrepreneurial/simple structure
 This type of structure is built around the owner
manager and is typical of small companies in
the early stages of their development.
 The structure is totally centralized with all
key decisions being made by the strategic
leader.
 The entrepreneur tends to make all the
important decisions personally and is involved
in every detail and phase of the organization.
Entrepreneurial/simple structure
Advantage Disadvantages
 · Fast decision  Lack
· of
making career structure
 More  May be too
responsive to
market centralized
 Good control
 Cannot cope
 Close bond to with
workforce diversification /
growth
The Functional structure
 This type of structure is common in
organizations that have outgrown
the entrepreneurial structure and
now organize the business on a
functional basis. It is most
appropriate to small companies,
which have few products and
locations, which exist in a relatively
stable environment.
Functional structure
CEO
Marketing Dept Production Dept Finance Dept Personnel Dept
 Economies of scale  Communication
 Standardization & problems – functional
Specialization orientations
 Greater control of  Measurement problems
organizational activities  Location problems
 Conflicts between
functions
Multidivisional
structure
CEO
Chemical Division Plastics Division Electric Division

Functions
Enables product growth  Potential loss of control – dilemma
Enhance corporate financial control apportioning authority between the
Reduced overload at the center operating division and the corporate
Enhances growth and diversification head quarter
Stronger pursuit for internal Distortion of information
efficiency – divisional managers are Lack of goal congruence
more accountable Competition for resources
Training of general managers Transfer pricing
Short term research and development
focus
Bureaucratic costs
Geographic Structure
 When a company operates a geographic
structure, geographic regions become the basis
for the grouping of organizational activities.
 For example, a company may divide its
manufacturing operations and establish
manufacturing plants in different regions of the
country.
 This allows it to be responsive to the needs of
regional customers and reduces transportation
costs. Common in organizations that operate over
a wide geographic area usually used in sales and
production, accounts being centralized.
R R
e
g
Regional operations e
g
i i
o o
n n
a Central operations a
l l
o CEO o
p p
e e
r r
a a
ti ti
o o
n Regional operations n
s s
Individual stores
Enables geographic The same as for a
growth divisional structure.
Increased responsiveness- May not be appropriate for
closer to the customers very large companies
Reduced transport costs
Economies of scale
because the purchasing
function remains centralized
Clear responsibility for
areas
Training of general
mangers
Determinants of organizational design
 Age- older organizations tend to be more formal
with established structures
 Size – as organizations grow, there is usually an
increasing need for formal methods of
communication and greater coordination( more
formal structures are required)
 Environment – rapid changes in the
organization’s environment will need a structure
that is capable of responding quickly and
appropriately
 Centralization/decentralization decisions. Will
depend on:
 need for local service and responsiveness
 the nature of the business
Determinants of organizational design contd.
 Overall work to be undertaken. Value chain
linkages across the organization will clearly
need to be coordinated and controlled
 Different tasks in different parts of the
organization will require integration and
coordination
 Culture – the degree to which the
organization accepts change, the ambitions of
the organization and its desire for
experimentation are all elements to be
considered
 Leadership. The style, background and beliefs
of the leader may have an important effect on
organization design
Characteristics of effective
organizational structures
 Organize primarily around processes not task e.g.
base performance objectives on customer needs
 Flatten the hierarchy by minimizing sub division of
processes
 Entrust managers with visible leadership skills with
processes and performance
 Link performance objectives and evaluation of all
activities to customer satisfaction
 Make teams not individuals the focus of
organizational performance and design
 Combine managerial and non managerial activities
as often as possible
 Emphasize that each employee develops several
competences – multiskilling
 Maximize supplier and customer contact with
everyone in the organization.
THE MCKINSEY 7-S FRAME WORK
(Key elements of successful organizational and administrative
implementation)
STRUCTURE STRATEGY
SYSTEM SHARED
STYLE
VALUES
SKILLS STAFF
THE MCKINSEY 7-S FRAME WORK
 Strategy. First there should be a good strategy that can be
implemented to give a firm a competitive edge
 Structure. structure follows strategy .the organization should be
organized in such a way showing how different tasks are both divided
and integrated
 Systems. This refers to processes and work flows that show how an
organization gets things done. These include information systems,
manufacturing processes, quality control systems, inventory
management systems performance measurement systems etc
 Style. This refers to the management style. For effective
implementation to occur management should have good management
practices like open door policy and informal culture where employees
feel that their interest are safe with the organization.
 Staff. The should always try to attract and maintain high caliber staff
 Skills. These are both individual and collective competences
 Shared values. Finally for implementation to work smoothly the
organization should be bound together by the specific collection of
norms, standards and values that it cherishes. The sense of mission
and destiny that amplifies its strategic thrust.
IMPLEMENTING STRATEGIC CHANGE
 In the modern corporation, change rather than
stability is the order of the day. Rapid changes in
technology, competitive environment, and customer
demands have increased the rate at which
companies have to alter their strategies to survive
the market place.
 Consequently companies have to go through rapid
structural reorganizations as they out grow their
structures.
 Strategic change is the pro-active management of
change in organizations to achieve clearly identified
strategic objectives.
 It includes activities that involve the induction of
new patterns of action, beliefs and attitudes among
substantial sections of the corporation
Types of Strategic Change
 Slow organization change – introduced
gradually and is likely to meet less
resistance, progress more smoothly and
have a higher commitment from the
people involved
 Fast organizational change – introduced
suddenly, usually as part of a major
strategic initiative, and is likely to
encounter significant resistance even if it
is handled carefully
Causes of Strategic Change
 Environment – shifts in the economy,
competitive pressures and legislative
changes may call for major strategic
change
 Business relationships – new alliances,
acquisitions, partnerships and other
significant developments
 Technology shifts
 People – new entrants may have different
educational or cultural backgrounds or
expectations that require change
THE CHANGE PROCESS
 Determining the need for change
Change may be inevitable when;
 When divisions are fighting
 Competitor has introduced a superior product
 There is a gap between desired company
performance and actual performance
 Divisions have become unprofitable due lack
of innovation
 Company lacks integrating mechanisms to
enjoy synergy
The change process contd.
 Determining the obstacles to
change
Obstacles can be found at four levels in the organization.
 Corporate level change may be difficult because of the
company’s present structure and strategy and its
corporate cultures
 Change is difficult at division level if divisions are highly
interrelated and trade resources because one division’s
operations will affect other divisions
 Functional level-Like divisions, different functions have
different strategic orientations and react differently to
the changes management proposes. For example in a
decline situation sales will resist attempts to cut down on
sale s expenditures in order to reduce costs if it believes
the problem stems from inefficiency in manufacturing
 At an individual level people are notoriously resistant to
change because change implies uncertainty, which
breeds insecurity and the fear of the unknown
The change process contd.
 Implementing change
 A company can take two approaches;
top down change or bottom up change.
 With top down approach, change
implementation comes from the top
management team and emphasizes
speed of response and management of
problems as they occur.
 Bottom up is a more gradual approach
which emphasizes participation and
keeping people informed about the
change process.
The change process contd
 Evaluating change
 The last step in change process is
to evaluate the effects of the
changes in strategy and structure
on organizational performance.
 This may be measured by changes
in the stock market price, market
share or organizational flexibility
as a result of changes
Roles in the change process
 Change strategists – those responsible
for leading strategic change
 Change implementers – those who have
direct responsibility for change
management
 Change recipients – those who receive
the change programme with varying
degrees of anxiety depending on the
nature of the change and how it is
presented
Developing a Strategic Change
Programme
 The change programme needs to

address four questions:
 What areas of change are available?
 What areas to select and why?
 Will people resist change? If so, how
can this be overcome?
 How will people use the politics of an
organization to resist or embrace
change?
Why people resist change?
 Anxiety, e.g. weaknesses
revealed or loss of power or
position
 Pessimism
 Lack of interest
 Opposition strategy proposals
 Different personal ambitions
Overcoming resistance to change
 Involving those who resist in the change
process itself
 Building support networks
 Communications and discussions
 Use of managerial authority and status
 Offering assistance
 Extra incentives
 Encouraging and supporting those
involved
 Use of symbols to signal the new era

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STRATEGY IMPLEMENTATION

Eugene Miheso Swinnerstone

Monitoring and control

To turn general strategies into specific implementation

Marketing Finance Research and

Flat  Wide span of control  Lack of personal contact

Marketing Dept Production Dept Finance Dept Personnel Dept

Chemical Division Plastics Division Electric Division

 The change programme needs to

 Opposition strategy proposals

 Different personal ambitions

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