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Key Factors in Strategy Implementation

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Key Factors in Strategy Implementation

Hooshang Asheghi Oskooee


Business Management Dept. of University of Qom, Qom, Iran
h.oskooee@qom.ac.ir

Abstract: This paper seeks to determine and prioritize some of the factors affecting the strategy
implementation. It is an academic paper to introduce and discuss a problem which can be a research agenda.
The research’s strategy, is reviewing existing literature about the issue and combining it with a known
conceptual model. Using this approach, some factors related to the strategy implementation are extracted
based on previous studies. Then, some factors which are more important from the author's perspective, are
combined with the selected conceptual model. At first, the importance of strategy implementation and the
amount of successful implementation of formulated strategies, has been proposed based on research results
published in Fortune and The New York Times. A number of factors affecting the strategy implementation are
listed based on previous studies, and the reasons for delegating the strategy implementation to the chance by
top management and corporate leaders were raised. Then, the used conceptual model for theoretical analysis
has been proposed‒ Hrebiniak and Joyce (1984) typology of strategy implementations. Based on this model,
four types of intervention can be done by management to strategy implementation. Each of these
interventions has its specific costs which can create new challenges for managers. Understanding the
characteristics of these four types of intervention and proper decisions and acts about each, can facilitate
strategy implementation and reduce costs of implementation. In addition, factors that are more important
from author’s perspective (strategy, organizational structure, organizational culture, institutional coordination
and information sharing, incentives and control, change management, operational planning and power) has
been proposed and explanations are presented about their driving and restraining effects on the strategy
implementation. Finally, some of the prioritized factors (structural complexity, decision making policy, cultural
dimension, institutional coordination and information sharing rate, incentives and control system, change
management procedures, operational planning type, Power distribution and human resources strategy)
combined with the proposed conceptual model and recommendations to improve strategy implementation
process has been proposed. It is suggested that to improve strategy implementation process, it’s formulation
and implementation must not be separated, and a supportive culture, an appropriate structure to aid strategy
and to avoid mode, and a mighty financial and human resources management must be created. Furthermore,
it is also essential for a fair reward and evaluation system to be established.

Keywords: Organizational culture, Organizational learning, Organizational structure, Strategy implementation

1. Introduction
“The strategic planning process only works when strategies are implemented. Formulating those strategies
is difficult. Executing them is much harder” (Springer, 2005), because many factors affect the strategy
implementation.
Despite the experience of many organizations, implementation of strategies and programs may still be
attributed to the individual performance (particularly to the senior management performance)‒ Kind of
strategy implementation so called evolutionary implementation by Hrebiniak and Joyce (Hrebiniak and Joyce,
1984), activities that are necessary to create a great business performance. But it is not an easy task, because
many companies have repeatedly failed to motivate their employees properly (Lubit, 2001; Khan, 2016; Dutta
and Kant, 2015). Many companies and organizations, know their business and strategies they need to succeed
well. Many of them, especially large companies, are always trying to turn theory into action plans. Plans that
enable strategy to run successfully. So, they have a strategy, but studies have shown that more than 70
percent of organizations which have developed strategies, failed in their implementation (Köseoğlu, Barca and
Karayormuk, 2009; Cândido and Santos, 2015; Holowka, 2015).
Seventy percent of CEOs who failed, do so not because of bad strategy, but because of bad execution
(Charan and Colvin, 1999). In another study of 200 companies in the Times 1000, 80 percent of directors said
they had the right strategies but only 14 percent thought they were implementing them well, no doubt linked
to the finding that despite 97 percent of directors having a “strategic vision”, only 33 percent reported
achieving “significant strategic success” (Moore, 2009).
Indeed, the effective implementation of the strategy is a key factor to achieve strategic success. As it was
stated, there are several factors that affect the strategy implementation. Including strategy by itself, political
factors, organizational structure, organizational culture, coordination, sharing information, resources
allocation, communications, human resources, incentive systems, change management, organizational values,
power and influence of management and many other factors.
Many managers think formulating and implementing a strategy are two distinct issues (Hrebiniak, 2006).
Hence, as Springer (2005) mentioned it, while strategies are most often developed by the board and
stakeholders with great thought and care, implementation is often left to chance due to: (1) Leaders and
managers feeling more comfortable with planning than implementation, (2) Leaders feeling that
implementation is best left to someone else and that it is not their responsibility, (3) Implementation taking
longer to accomplish and requiring adjustments as unforeseen circumstances occur and (4) Implementation
requiring more people to be involved and continued communication over time.
As the results of various studies show, there are many problems in the way of strategy implementation.
This paper try to determine the key factors affecting the strategy implementation, prioritize them as much as
possible, describe the driving factors and inhibitors of them and finally, combine the identified factors with
typology of strategy implementations considered by Hrebiniak and Joyce (1984) in a theoretical analysis
process and give some suggestions for improving the process of strategy implementation.

2. Methodology and conceptual model


This paper is an academic paper to introduce and discuss a problem which can be a research agenda. The
research’s strategy, is reviewing some existing literature about strategy implementation and combining it with
a known conceptual model of strategy implementation. Using this approach, some factors related to the
strategy implementation are extracted based on previous studies. Then, factors which are more important to
the strategy implementation from the author's viewpoint, are combined with the selected conceptual model.
The main conceptual model of the paper is Hrebiniak and Joyce (1984) typology of strategy implementations.
According to Hrebiniak and Joyce (1984), combination of "strategic problem size" and "implementation
horizon" describes a rough taxonomy of strategy implementation efforts as shown in figure 1.

Implementation Horizon
Long Short

Sequential Complex
Strategic Problem Size
Large

Intervention Intervention

Evolutionary Managerial
Small

Intervention Intervention

Figure 1: A typology of strategy implementations


Source: Hrebiniak and Joyce (1984, p. 20)

In implementing the strategy, each of these methods creates its specific problems. “There is a logical
progression of costs among the four strategies” (Hrebiniak and Joyce, 1984: p. 20). Costs arise from
evolutionary strategic change, through managerial and sequential implementation, and ending with complex
implementations. Strategic problem size and implementation horizon are respectively two factors directly
related to the costs of strategy implementation. But the most important factor is strategic problem size.
In the following, characteristics of each four intervention proposed based on Hrebiniak and Joyce (1984)
viewpoints.

2.1 Evolutionary intervention


Utilizes when the strategic problem is small and horizon of its implementation is long. Characteristics of
this type of implementation are as follows:
1. Changes are not fundamental, and there are only differences in implementation methods.
2. Managers take local activities to improve performance, without having any implementation plan.
3. Implementation of the strategy is often dependent on the personnel and the emphasis is on
incentives, controls and motivations.
4. The relationship between the activities carried out are not recognized and suboptimization occurs.
5. The cost of implementation is low.
6. Minor inefficiencies are acceptable.
7. Operational structure is detailed and consistent with the strategic plan.
8. This method is used by "passive" organizations.
9. Contingency compliance of the organization with its environment is low.
10. Applied to environment that a major shift in strategy is not raised.

2.2 Managerial intervention


Occurs when the size of strategic problem is small and the time available for implementation is short. This
can happen because there are minor changes in the business environment that requires adjustment. But,
evolutionary implementation is not appropriate, because the time horizon is short and the opportunity costs
of suboptimal conditions are there.
Characteristics of this type of implementation are:
1. It develops implementation plans that focus only on one component such as structure or decision
related to employee.
2. Because the problem is not serious, only one of the model’s components is considered and the impact
of decisions on other components will be ignored.
3. Because implementation is small and usually secondary effects are minor, costs will be accepted.
4. Business environment is relatively stable.
5. There are no major threats.
6. Relatively constant small adjustments are necessary.

2.3 Sequential intervention


Occurs when, the size of strategic problem is large but horizon of implementation is long enough to allow
several components of the model to be implemented sequentially.
Characteristics of this type of implementation are as follows:
1. Implementation involves several components of the model.
2. Successful implementation requires attention to the relationships between components as well as the
relationships within them.
3. Planning for any major strategic change, requires changes in several areas.
4. Avoiding suboptimal conditions. There are no waivers, or in conditions very close to the desired
option waivers are acceptable.
5. Relationships between the elements of the model, are broadly identified, accommodated and
managed sequentially.
6. Implementation starts with a specific component of the process and goes step by step in order to
achieve the objectives.
7. Key requirements (contingencies) are imposed with respect to the previous process.

2.4 Complex intervention


Occurs when the strategic problem size is large and implementation horizon is too short to allow sequential
implementation activities.
Characteristics of this type of implementation are:
1. Managerial decisions about each of implementation aspects are dependent on decisions in other
areas and influence them.
2. Because of the dependence mentioned above, coordination by plan is impossible and often very
costly face to face mechanisms are needed.
3. Higher requirements for information processing arising from mutually implementation activities.
4. Use of the task forces for strategy implementation, to accommodate the needs outlined above.
5. Diverse environmental conditions.
6. More costly and complex implementation.
As business environments become more complex and turbulent, complex intervention takes place more
attention. In fast-changing environments, large and frequent adjustments of strategy is necessary. This
requires costly and complex implementations which create new challenges for managers.
It seems, understanding the characteristics of these four types of intervention and proper decisions and
acts about each, can facilitate strategy implementation and reduce costs of implementation.

3. Some of the key factors affecting the strategy implementation


It should be noted at the outset that, all factors discussed below, have a very close relationship with each
other and overlap in many cases, so prioritizing them is very difficult. The following priorities are based on
author's viewpoint, which are presented according to previous studies and experiences.

3.1 Strategy
In fact, the first key factor affecting the strategy implementation, is the strategy itself (Hrebiniak, 2013).
Because a successful implementation journey starts in the formulation stage (Rajasekar, 2014) and also, good
execution cannot overcome the shortcomings of a bad strategy or poor strategic planning effort (Hrebiniak,
2006). Good strategies that recognize the role of organization in the market, define it and associated executive
components with measurable goals, are the first effective element. Strategies should be linked to the
organization's portfolio and be designed for effective use of institutional strengths to gain advantages on the
market opportunities and challenges and show the internal weaknesses as well (Rahmanseresht, 2005).
The strategy is designed taking into account the strengths and weaknesses of the organization and the
opportunities and threats in the environment. This issue that the strategies chosen by the company are
growth, diversification, integration, joint ventures, divestiture strategy or etc., influence its implementation. In
the other words, if the strategies are not selected tailored to the strengths and weaknesses of the organization
and environmental opportunities and threats, implementation could not be successful. It may seem that
effective factors, are strengths and weaknesses and the opportunities and threats, but it should be noted that,
they are only effective when a factor as the strategy employ them. Organizational strengths and weaknesses
and environmental opportunities and threats are like tools which have no power and concept by themselves
and strategy uses them as a mechanic. One can understand that if the mechanic is not the appropriate person
to use them, what will happen.

3.2 Organizational structure


Having a structure proportional to strategy, is another key factor in the strategy implementation. Results of
various studies that are fundamentally based on Chandler theories (1990), suggest that structure follows
strategy and for successful implementation of a strategy, structure should be adjusted to suit the needs of the
strategy.
There should be a proper balance between centralization and decentralization of decision-making
(Rahmanseresht, 1993; Hrebiniak, 2013). Also, there should be a commitment to determine the costs and
benefits and organizational sections with more responsibilities, they have more resources to achieve the goals
and commitments. For example, centralization can increase efficiency through specialization and saving in the
use of the assets and decentralization cause the organization to be closer to the community (stakeholders) it
serves. The question that arises here is what aspects of strategy affects the choice of structure?, and How
structure affects the strategy implementation? For example, an organization with a concentration strategy
that targeted a particular group of citizens, a particular geographical area or a particular service, often pays
attention to decentralization as a strategy, while also understands that to achieve efficiency through
decentralized units, it needs a number of concentrated employees or an organization with growth strategy,
which usually will need decentralization over time.
When we speak of structure, in fact, we have entered an extensive discussion in which allocation of human
and financial resources are of highest importance. The discussions mainly will include financial management
(budgeting and allocation of funds to each department, determine evaluation criteria to assess the process of
strategy implementation, etc.) and human resources management (selection, hiring, training, promotion,
conflict management, etc.). As a result, we can say that a significant portion of the allocation of resources
(human and financial) in terms of priority are placed on the side of the structure. An important task that
inevitably needs to be done at the corporate level, is the allocation of limited resources to a wide array of
requests that arise from lower levels. In many organizations, senior managers encounter problems deciding
about distinguishing between projects that proposed. Because, available financial, technological and human
resources are not sufficient to support all the proposals. The main reason why the allocation of resources is a
highly centralized decision and cannot be delegated to lower levels, is limited resources.
3.3 Organizational culture
There is no unique definition of organizational culture. Specialists and researchers have presented several
different definitions. One of the definitions have been proposed as follows. Organizational culture is a system
of shared meaning held by members that distinguishes the organization from other organizations (Robbins,
2005). Anyway, what is certain is inevitable effect of organizational culture on the strategy implementation
(David, 2011; O'reilly, 2008). Because, it affects the ways of doing things and even thinking about them. For
example, the profound impact of cultural factors in the implementation of mergers and acquisitions strategies
can be seen in some cases as like Sony and Columbia Pictures, Smithkline and Beecham, Electrolux and Zanussi
and Toyo Ink and Francolor, that was driving factor in some and deterrent in others (Gupta and Radhika, 2004;
Ghoshal and Haspeslagh, 1990; De Meyer and J. Probert, 1998).
Culture has positive (Controls behavior, Encourages stability, Provides a source of identity) and negative
(Discourages change and improvement, Obstacle to diversity, Barrier to cross departmental and cross
organizational collaboration, Prevents mergers and acquisitions) functions (Scholl, 2003; Kilmann, Saxton and
Serpa, 1986).

3.4 Institutional coordination and information sharing


The next key factor is the institutional coordination and information sharing. It largely involves
communication, culture and organizational learning (Griffin and Moorhead, 2011). Coordination and
information sharing requires the following:
1. There must be a definition of how to create coordination. Whether organizational units have little
dependence? Run more independently? Coordination is done in a coalition? Or the organization supply
chain is internal and requires a high level of coordination?
2. Designing a functional plan for determining how information sharing and knowledge transfer. To
properly understand and influence the way of information sharing, it is necessary to know the
characteristics of the sender, user, the kind of information transmitted and to determine to what areas
of the organization it is related. For example, a culture based on collective cooperation provides an
insight that has positive impact on the strategy implementation. While a culture of avoiding to accept
the mistakes and blaming others for poor results, will have a negative effect on the strategy
implementation.
3. Determining the key decision makers (whether on board, the executive management, the supervision
or low levels) responsible for activating the process of coordination.

3.5 Incentives and control


The next key factor is a set of incentives which reward appropriate short-term results of implemented
strategies. “Incentives fuel and guide motivation” (Hrebiniak, 2013). It is not necessary that these incentives be
substantially cash benefits, but should strengthen motivation and steer it in the correct direction (Armstrong,
2010). They should include a celebration of the achievements that many managers have gained or will gain
when complete the tasks assigned to them.
“Controls are also vital to execution success” (Hrebiniak, 2013). Controls that are set to reward the strategy
executers, reveals responsibility and accountability and require timely and reliable information. Therefore,
revision and adjustment of strategies is vital for their successful implementation. These controls need to be
able to detect inappropriate activity (false), so that organizational learning be fulfilled. One of the barriers to
implementation of the strategy and organizational learning is poor vertical communication that make disorder
in the quality of organizational learning (Beer and Eisenstat, 2000).
Anyway, without analyzing the facts and adjusting and adapting the strategy, its successful implementation
is nothing more than an illusion.

3.6 Change management


The next key factor is creating a plan for managing change. Resistance to change, due to its complexity, is
often the single greatest obstacle to effective implementation of strategy (Hrebiniak, 2013). Employees resist
change because they consider it a threat to familiar behavioral patterns as well as financial rewards and the
current situation.
Implementation of the new strategy requires a change in current conditions and change always leads to
resistance. “Resistance to change can be considered the single greatest threat to successful strategy
Implementation” (David, 2011). The main reasons of employee for resistance to change are:
1. The shock of something new and fresh‒ Staff are skeptical to anything that disturbs the normal routine
work, conventional methods of working or conditions of their employment.
2. Economic fears‒ Such as loss of income or job security threat.
3. Difficulty‒ The change would make more difficult living conditions.
4. Symbolic fears‒ Small changes may have a symbolic effect, for example, a change in the office or in
their car park which is great changes in terms of staff.
5. Threat to interpersonal relationships‒ Anything that changes ordinary social relations between staff,
could pose a threat.
6. A threat to the status or skills‒ The staff consider change as a factor that declines their position and
ignores their skills.
7. Merit fears‒ Concerns about their ability to keep pace with the new demands of management or new
skills required.
Various models, including Lewin, Thurley, Beckhard, Bridges and more have been proposed about change
management (Qadri, Hussain and Bin Ahmad Dahlan, 2015). Here it is only enough to mention their names.
But three common ways known to make changes when implementing the strategy include (David, 2011):
1. Force change strategy‒ involves giving orders and enforcing those orders; this strategy has the
advantage of being fast, but it is plagued by low commitment and high resistance. It can paralyze the
implementation process.
2. Educative change strategy‒ is one that presents information to convince people of the need for change;
the disadvantage of an educative change strategy is that implementation becomes slow and difficult.
But it can increase commitment and reduce the resistance.
3. Rational or self-interest change strategy‒ attempts to convince individuals that the change is to their
personal advantage. When this appeal is successful, strategy implementation can be relatively easy.
However, implementation changes are seldom to everyone’s advantage.

3.7 Operational planning


Even if the strategy is formulated properly, it does not guarantee successful implementation. For successful
implementation of the strategy should be planned. Operational planning is to choose the means to achieve
short-term goals. To implement the strategy, it is necessary to design and implement appropriate operational
programs (Hrebiniak, 2013). Operational programs are divided into two categories (Robbins and Coulter,
2012):
1. Single-use plans‒ Designed to meet specific, unique and non-repetitive goals. After achieving these
goals, the programs will have no application.
2. Standing plans‒ Programs that have become standard methods and are used for predictability and
repetitive tasks.
Since the operational programs are mostly short-term and strategies are long-term horizon, to determine
whether the strategy is properly implemented and will achieve goals, it is necessary to determine appropriate
criteria and control methods for evaluating the results of the operational program. Otherwise, we will not get
any results.

3.8 Power
Finally, power is another critical factor for the successful implementation of the strategy (Hrebiniak, 2013).
If the strategy exceeds organizational values and the power structure, the implementation will fail. Power,
facilitates the development and implementation of strategy. Individuals, units and parts that are out of power
or influence, can and should form coalitions with those who have power and influence, to develop and support
the success. Of course, power can have negative performance in strategy implementation too. We have to
understand that, “People in power tend to want to stay there” (Hrebiniak, 2013) and powerful and influential
individuals or sectors, may insist on doing things that are inappropriate. when that happens, the board and
organization's leaders should change the strategy, structure, or methods of resources allocation, so change the
power structure that defines power relations again in favor of the correct implementation of the strategy.

4. Discussion and conclusion


The main issue that rises the discussion in the paper, is strategy implementation problems and the
companies failure in doing so. As it was mentioned, successful formulation of strategy cannot guarantee
successful implementation. Based on literature, there are many factors affecting strategy implementation. One
of the known models of strategy implementation is Hrebiniak and Joyce’s typology, which was used for
theoretical analysis of extracted factors.
Discussion and conclusion that will come after, is based on the following assumptions:
1. Strategic problem size, similar to the strategy implementation horizon, is a relative thing and is different
for different companies according to company size, industry type, environmental conditions, and
management perspectives etc.
2. Structure follows strategy. As mentioned in discussions about the structure, the structure includes a
wide range of other factors affecting the implementation.
3. When we talk about strategic issues, big or small, its consequences for the organization is major.
Given the above assumptions, it can provide a framework that shows how to use the identifiedidenti affecting
factors, in situations where Hrebiniak and Joyce have proposed.
For ease of understanding the proposed framework, the typology of Hrebiniak and Joyce is displayed again
in figure 2 and the framework of the research, presented and explained afterwards
a in figure 3.
3

Figure 2: A typology of strategy implementation

Figure 3: Framework of the research


4.1 Cell number one that coincided with Evolutionary intervention
In these circumstances, given that the strategic problem size is small and implementation horizon is long
and changes are not fundamental, considering other specifications of evolutionary intervention, specifications
of factors affecting the strategy implementation could be as follows:
1. The simple structure is used, because the strategic problem size is small and does not require the
complex structure.
2. Because the structure is simple and management performs local activities without having executable
program, power and decision making will be centralized and the need for institutional coordination and
information sharing will also be low.
3. Previous features, calls for the creation of a single cultural organization.
4. In such a system, simple incentives and low-cost control systems will suffice.
5. Since the structure is simple and usually small and power and decision-making is also centralized, using
force change strategy will be possible.
6. Because of local and small problems, in the case of operational planning, programs will be designed as
single-used.
7. The small size of the problem and sufficient time to implement the strategy, creates the possibility to
use people within the organization to do things.

4.2 Cell number two that coincided with managerial intervention


In these circumstances, given that the strategic problem size is small and implementation horizon is short
and there are slight changes in the business environment that requires adjustment, consideration to other
specifications of managerial intervention, specifications of factors affecting the strategy implementation could
be as follows:
1. Because it is small and not very serious the strategic problem, the structure is simple. Also, because
change is only focused on one component, complex structure is not necessary.
2. Because the simple structure is used, and only one of the components of the model is concerned,
power and decision making are centralized and the need for institutional coordination and information
sharing is also low.
3. Having a single cultural organization is justified.
4. Due to importance of opportunity cost of suboptimal conditions for organization, and because small
and relatively constant adjustments are necessary, incentives and control systems are relatively
complex and expensive.
5. Having small strategic problem and the short horizon for strategy implementation, the change can be
done by force.
6. Due to the small size of the problem and focus on one component, operational programs can be
designed as single-used.
7. Due to short horizon of implementation and lack of staff training within the organization, it is
appropriate to use the strategy of buying on the human resources required to implementation.

4.3 Cell number three that coincided with sequential intervention


In these circumstances, given that the strategic problem size is large and implementation horizon is long
and there are fundamental changes that involves several components of the model, considering other
specifications of sequential intervention, specifications of factors affecting the strategy implementation could
be as follows:
1. The complex structure is used.
2. Because of the complexity and often the wideness of the structure, and also, the extent of
implementation, Power and decision-making are decentralized and the need for institutional
coordination and information sharing is high.
3. Usually in such structures multiculturalism is inevitable.
4. Because of the need for high coordination and information sharing and also to avoid suboptimal
conditions, and not to ignore the opportunity costs, we need to create a complex and costly incentives
and control system.
5. Because the problem size is large and the strategy implementation time horizon is long, change
management strategy will be educative.
6. Due to extent of implementation and long time horizon, as well as having a large strategic problem,
using the standing plans are appropriate.
7. Having sufficient time for implementation of the strategy, creates the possibility to use people within
the organization for doing things, and If necessary, they will be trained. But the large size of strategic
problem and the expertise required for its implementation should be noted. Therefore, the human
resources strategy based on build or buy can be used (whichever is more appropriate).

4.4 Cell number four that coincided with complex intervention


In these circumstances, given that the strategic problem size is large and implementation horizon is short
and changes in any of the aspects will have a significant impact on other aspects. consideration to other
specifications of complex intervention, specifications of factors affecting the strategy implementation could be
as follows:
1. The complex structure is used.
2. Because coordination through the program is not possible, and a face to face mechanism is needed,
power and decision making are centralized and the need for institutional coordination and information
sharing is high.
3. Due to the complexity and the extent of structure, a diverse culture reigns.
4. Need to complex and costly incentives and control systems.
5. Because the strategy implementation time horizon is short, change management strategy will be force
change strategy.
6. Due to diverse environmental conditions, operational planning will be single-used.
7. Due to the short time horizon of implementation of the strategy, training within the organization will
not be possible, and the buy strategy on human resources needed will be proper.

4.5 Suggestions to improve strategy implementation process


First, It is suggested that the viewpoints expressed in this paper be investigated in form of a broad survey
research. I think the results can be very useful for all countries.
Then, as it can be seen, the proposed model encompasses the procedures for implementing strategy. In
addition to the issues raised in the model, other suggestions to be raised as follows to improve the strategy
implementation based on discussed issues:
1. Not separating strategy formulation process from its implementation.
2. Creating a supportive culture of the strategy.
3. Creating a structure that is proportional to the strategy and avoiding mode (Fashion trends).
4. Creating a mighty financial and human resources management system.
5. Establishing fair and equitable systems of motivation and control.

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