Strategy Implementation

Prof. Supriti Mishra

 Formulation Vs Execution
• Strategy formulation
– Part of the strategy process that involves continually gathering
information about the industry and the market, weighing
alternatives, and developing imperatives
– Output is strategy: an integrated set of choices that positions a
firm to compete successfully in an industry and generate superior
financial returns over long run
• Strategy Execution
– Part of the strategy process concerned with carrying out the
strategy – turning the integrated set of choices into action
– Involves aligning organizational tasks, structures, processes, and
capabilities to sustain superior performance
• Gap
– Performance gap: shortfall between actual and targeted results
– Execution gap: discrepancy between current results and those
achievable by pursuing a new opportunity – a new product,
technology, service, or business model
8/6/2018 Prof. Supriti Mishra, IMIB 2
 Strategy Implementation Issues
Facts
• Formulation - implementation
gap
– 66% of the formulated
strategies are never
implemented (Johnson, 2004)
• Strategy – Performance gap
– Companies realize only 63% of
the financial performance
promised by their strategies
(Mankeens & Steel, 2005)
• Formulation – connection gap
– 95% of a company’s employees
are not aware or do not
understand their company’s
strategy (Kaplan & Norton,
2005)
8/6/2018 Prof. Supriti Mishra, IMIB
Data
• 70% of all strategies fail to
achieve desired results, 30%
fail to achieve anything at all
• An Economist survey of 276
operating executives found
that 57% firms were
unsuccessful at executing
strategic initiatives over last 3
years
• 2006 White Paper of Strategy
Implementation of Chinese
Corporations found that 83%
had failed to implement their
strategy smoothly
3
 Strategy Implementation Issues
• SI must coordinate a broad range of efforts aimed
at transforming strategic intentions into action
– Realized strategies
• Managers find implementation the most difficult
part of their jobs
– Difficult than strategy analysis or formulation
– Hard part is to get the organization act on new
priorities
• Organizational Immune System
– Human beings prefer predictable and stable world
– Organizations suffer from inertia
8/6/2018 Prof. Supriti Mishra, IMIB 4
 Why Do Strategies Fail?
• Some companies recognize the need to evolve
but struggle in developing and executing a
clear strategy
– GM’s inability to execute

8/6/2018 Prof. Supriti Mishra, IMIB 5

 Why Do Strategies Fail?
• Structural Inertia
– Resistance to change rooted in the size,
complexity, and interdependence in the
organization’s structure, systems & formal
processes
• Cultural Inertia
– Institutional learning and common expectations
that are manifest in informal norms, values and
social networks and other aspects of culture over
time

8/6/2018 Prof. Supriti Mishra, IMIB 6

 Why Do Strategies Fail?
Success often leads to Inertia

Fit Success

Congruence in Size & Age Inertia

strategy, Critical
Tasks, Formal Structural, Cultural
organization,
Skills & Organizations
Competencies, get larger, more
Culture structured &
older
SUCCESS FAILURE
In stable When
environments environments fail
8/6/2018 Prof. Supriti Mishra, IMIB 7
 Strategy Execution: Congruence
Leadership

Skills &
competencies
Congruence (Software)
between Market
Strategy Results
Critical Formal
Formulation gap
tasks organization
& Execution
(Hardware)
•Performance
Culture •Opportunity

8/6/2018 Prof. Supriti Mishra, IMIB 8

 Four Building Blocks of Congruence
• Critical tasks
– Include everything connected with producing the product or
service
– Procurement, manufacturing, R &D
• Formal Organization
– Metrics
• Unit volume, revenue, earnings (mature business)
• Understanding customer problems and learning how to solve them
(emerging business)
– Milestones
• Clarity in strategy, handling customer issues, project based milestones
– Rewards
• Are the compensation and reward system sending the right message?
• Do they promote behaviour to advance strategy?
– Organizational strategy
• Does an organizational structure – hierarchies, reporting lines,
governance mechanisms – support or undercut a strategy?
8/6/2018 Prof. Supriti Mishra, IMIB 9
Four Building Blocks of Congruence
• Skills & Competencies
– Employees with the right skills
– Competencies in terms of R & D, supply chain,
technology, etc.
• Culture
– “Culture eats strategy for breakfast” (Peter Drucker)
– Collective behaviour, attitude and actions
• General work atmosphere and employee engagement
• A critical control system
– Formal policies and incentive system, informal social protocols

8/6/2018 Prof. Supriti Mishra, IMIB 10

 I
N

N
SI: Impeding Factors T
E
R
U C
M O
E
Intervention activity N
R N
O E
Organizational Work Setting C
U
T
S E
Physical D
Social factors
C setting N
O E
M S
S
P
L O
E Organizational F
Technology
X arrangements
C
V H
A
A
N
R G
I
Individual
E
A Behaviour
B E
L Organizational Outcomes L
E
E
Individual M
S Organizational E
Performance Development N
T 11
8/6/2018 Prof. Supriti Mishra, IMIB S
 SI: Impeding Factors

8/6/2018 Prof. Supriti Mishra, IMIB 12

 SI Issues
• A common pattern of failure: Activity-centered
change programmes
– Senior management, dissatisfied with past
performance, develops new strategic ideas requiring
organizational change
– They establish a programme with the intention of
producing the desired change
– Management of the programme is delegated to those
in staff positions
– Staff personnel in charge of the programme handle
senior management

8/6/2018 Prof. Supriti Mishra, IMIB 13

 SI Issues(contd.)
– The staff in charge of the programme focus only on
the range of issues under their direct control
– Performance is measured by the success of the
programme rather than the success of the
organization
– Even though most of the organization is unchanged,
the programme is declared a success
– In order to bring out the still elusive desired
organizational change, senior management carries yet
another programme
– Throughout the organization, people are confused
about the relationship between the old and the new
programme
– The organization becomes cynical about the change
programmes and begins to support the status quo
8/6/2018 Prof. Supriti Mishra, IMIB 14
 Organizational Fitness Profiling
• Unearth the Root Causes of Strategy Blockers
Step by Step (Beer and Eisenstat, 2000)
– Create a Statement about Direction
– Collect Data on barriers and Strengths
– Develop an Integrated Plan for Change
– Refine the Plan
– Implement the Plan

8/6/2018 Prof. Supriti Mishra, IMIB 15

 6 Silent Killers of SI and Learning
• Top-down senior management style
• Unclear strategy & conflicting priorities
– Different strategies competing for same resources
• An ineffective senior management team
• Poor vertical communication
• Poor coordination across functions, businesses or
borders
• Inadequate down-the-line leadership skills and
development

8/6/2018 Prof. Supriti Mishra, IMIB 16

 How the Six Strategy Killers Interact
Quality of Direction
Top-Down or
Ineffective Senior Laissez-Faire
Management Senior
Unclear Strategies & Management Style
Conflicting Policies

Quality of Learning

Poor Vertical
Communication

Poor Coordination Inadequate

Across Functions, Quality of Implementation Down-the-Line
Businesses or Borders Leadership Skills
Prof. Supriti Mishra, IMIB 17
8/6/2018
 Attacking Six Barriers to SI
Silent Killers Principles for changing silent killers
Top-Down or Laissez Faire Management •CEO engages the top management and
Style lower level managers to develop
compelling business directions
•Creates enabling organizational context
and accountability parameters
Unclear Strategy and Conflicting Priorities •Develop statement of strategy and
priorities backed by members
Ineffective Senior Management Team •Top management team is involved in
every stage
Poor Vertical Communication •Honest, fact-based dialogue with lower
managers about the new strategy
implementation and barriers
Poor Coordination across functions, •Defining new organizational roles and
businesses or borders responsibilities
Inadequate Down-the-Line Leadership •Developing skills of managers for new
Skills roles and responsibilities
8/6/2018 Prof. Supriti Mishra, IMIB 18
 Responses to the Silent Killers
• Avoidance to consultation
• Managerial Replacement
• Engaging in developing capabilities

8/6/2018 Prof. Supriti Mishra, IMIB 19

 Execution Requisites
• Organizational Ambidexterity
– Ability of senior leaders to simultaneously manage
existing core business (exploiting) and to pursue new
opportunities (exploring)
– Ex. Future group shedding Pantaloons & getting into
food processing vs Blackberry’s rigidity to changes
from smart phone industry
• Dynamic capabilities
– Ability to adapt, integrate and reconfigure
organizational skills and resources to match changing
environments in ways that are valuable to
organization but difficult for competitors to imitate

8/6/2018 Prof. Supriti Mishra, IMIB 20

 SI Essentials
• Structures
– Structural levers of implementation
• Offer an implementation tool kit for identifying key
levels that affect the formulation-implementation
process and formulation-implementation-performance
cycle

• Managerial skills
– Managerial levers of implementation:
• Behaviourial activities that managers engage in within
the structures developed by the organization

8/6/2018 Prof. Supriti Mishra, IMIB 21

 SI Essentials
• Structural levers of implementation
– Actions
• Who, what, and when of cross-functional integration
and company collaboration
• Input and cooperation of all players within organization
• Proper coordination between the three levels of
strategy: business, corporate, and functional
– Programmes
• Instilling organizational learning and continuous
improvement practices
• Facilitating enabling environment to flourish and
develop creative capital
8/6/2018 Prof. Supriti Mishra, IMIB 22
 SI Essentials
• Structural levers of implementation
– Systems
• Installing strategic support systems e.g. IT to provide
timely access to both qualitative and quantitative data
about competitors, human resources, revenues and cost,
inventory order fulfillment
• Quality of IT and security /privacy concerns are issues that
arise in implementation of the technology itself
– Policies
• Establishing strategic supportive policies with formal
guidance regarding behaviours and actions
• Consistency across geographical reasons
8/6/2018 Prof. Supriti Mishra, IMIB 23
 SI Essentials
• Managerial levers of implementation: Direction,
protection, orientation, managing conflicts, and
shaping norms
– Leadership hierarchy
• Level 1 – highly capable individual (contributions through talent,
knowledge, skills, and work habits)
• Level 2 – contributing team member( group objectives and work in
a group)
• Level 3 – competent manager (organizes people and resources)
• Level 4 – effective leader (vision and high performance standards)
• Level 5 – right executives (enduring greatness through personal
humility and skill)
– Allocating: understanding when and where to allocate
resources
– Monitoring: tying rewards with achievement
– Organizing: strategic shaping of corporate culture
8/6/2018 Prof. Supriti Mishra, IMIB 24
 SI Stages & Cross-functional Issues
•Pooling resources
•Resolving functional conflicts
•Determining implementation leadership •Informal networks
•Developing an implementation plan •Instilling a sense of urgency
•Understanding the capabilities and concerns •Achieving buy-in
of other areas

Organizing the Managing the Maximizing

Pre- implementation Implementation cross-functional
implementation effect Process performance

•Physical barriers
•Involvement in strategy •Turf barriers
implementation • Interpretive barriers
•Focusing the functional effort •Communication barriers
•Choosing functional •Differing goals
representation •Organizational resistance
•Education •Subversives
Prof. Supriti Mishra, IMIB 25
8/6/2018
 Strategy Execution & Change
Management
• Establish a sense of urgency
• Form a powerful guiding coalition of leaders
committed to the cause
• Create a Vision
• Communicate the Vision
• Empower others to act on the vision
• Plan for and create short-term wins
• Consolidate improvements and produce more change
• Institutionalize new approaches e.g. leadership and
talent development programes and succession plans

8/6/2018 Prof. Supriti Mishra, IMIB 26

 Leadership & Execution
• Guide organizations in resolving strategic
issues and exploring opportunities
• Identify performance & opportunity gaps
• Clearly articulate new strategic imperatives so
that everyone understands the game plan and
their role
• Walk the talk
• Ambidexterous leadership

8/6/2018 Prof. Supriti Mishra, IMIB 27