STRATEGY
IMPLEMENTATION
• There is no “perfect” strategic decision. One always has to pay
a price. One always has to balance conflicting objectives,
conflicting opinions, and conflicting priorities. The best
strategic decision is only an approximation—and a risk
• -- Peter Drucker
• Less than 10% of strategies formulated are successfully
implemented!
DIFFERENCE
• Strategy Formulation = stage of strategic management that involves
planning and decision making that lead to the establishment of the
organization’s goals and of a specific strategic plan
• Strategy Implementation = stage of strategic management that
involves the use of managerial and organizational tools to direct
resources toward achieving strategic outcomes. It is also known as
DOING STRATEGY
Strategy Implementation
• Strategy implementation is "the process of allocating
resources to support the chosen strategies".
Strategy Formulation (SF)
• Positioning forces before the action
• Focus on effectiveness
• Primarily intellectual
• Requires good intuitive and analytical skills
• Requires coordination among a few people
Strategy Implementation (SI)
• Managing forces during the action
• Focus on efficiency
• Primarily operational
• Requires special motivation and leadership skills
• Requires coordination among many people
IMPLEMENTATION: “DOING” THE STRATEGY
3 questions:
How well is the strategy resourced?
How well do the culture, structure and internal
systems fit the strategy?
How will the process of change be managed?
HOW WELL IS THE STRATEGY
RESOURCED?
Do the resources need to be increased or
decreased?
Resources include:
Physical
Financial
Human
Intellectual/intangible
NATURE OF STRATEGY IMPLEMENTATION
• SI problems can arise because of the shift in responsibility,
especially if SF decisions come as a surprise to middle- and
lower-level managers. Therefore, it is essential to involve
divisional and functional managers in SF.
• Shift in responsibility
MANAGEMENT ISSUES CENTRAL TO STRATEGY
IMPLEMENTATION
• Establish annual objectives
• Devise policies
• Allocate resources
• Alter existing organizational structure
• Restructure & reengineer
• Revise reward & incentive plans
• Minimize resistance to change
MANAGEMENT ISSUES CENTRAL TO STRATEGY
IMPLEMENTATION
• Match managers to strategy
• Develop a strategy-supportive culture
• Adapt production/operations processes
• Develop an effective human resources function
• Downsize & furlough as needed
• Link performance & pay to strategies
Managing Conflict
• MANAGING CONFLICT
• Conflict – a disagreement between two or more parties.
Interdependency of objectives and competition for limited
resources can cause conflict.
Managing Conflict
Conflict not always “bad”
Can energize opposing groups to
action
May help managers identify problems
MATCHING STRUCTURE WITH
STRATEGY
• Changes in strategy often require changes in the way an organization
is structured because:
• (1) structure largely dictates how objectives and policies will be
established (e.g., objectives and policies established under a
geographic organizational structure are couched in geographic
terms) and
• (2) structure dictates how resources will be allocated (e.g., if an
organization’s structure is based on customer groups, then resources
will be allocated in that manner)
MATCHING STRUCTURE WITH
STRATEGY
• Structure should be designed to facilitate the strategic
pursuit of a firm and, therefore, follow strategy.
• When a firm changes its strategy, the existing
organizational structure may become ineffective. For
example, new strategies to reduce payroll costs may
require a change in span of control.
Barriers to strategy
implementation
• An inability to manage change
• Poor or vague strategy
• Not having proper guidelines
• Poor or inadequate information sharing
• Unclear responsibility and accountability
• Working against the organizational structure
The major themes in strategy
formulation are:
• 1. Activating Strategies: It serves to prepare the ground for
managerial tasks and activities of strategy implementation.
• 2. Managing change: Managing change is one of the core
activity in the strategy implementation. It deals with managing
change in complex situation.
• 3. Achieving effectiveness: The last theme in strategy
implementation is the outcome of the process. It covers
functional and operational implementation.
BASIC FORMS OF STRUCTURE
Functional Structure
Divisional Structure
Strategic Business Unit Structure
(SBU)
Matrix Structure
Functional Structure
• Groups tasks and activities by business function (e.g., production,
finance, marketing, R&D, HR, IT, etc.).
Functional Structure
Divisional Structure
• Can be organized in one of four
ways:
• By geographic area
• By product or service
• By customer
• By process
Divisional Structure
Strategic Business Unit Structure (SBU)
• Groups similar divisions into strategic business units and
delegates authority and responsibility for each unit to a
senior executive who reports directly to the chief
executive officer.
Matrix Structure
• The most complex of all structures because it depends
upon both vertical and horizontal flows of authority and
communication.
Matrix Structure
Restructuring
Restructuring - reducing the size of an organization. Also
called:
Downsizing
Rightsizing
Delayering
These methods involve, respectively, reducing the number of
employees, number of divisions, and number of hierarchical
levels in a firm’s organizational structure. Reducing the size of
an organization is intended to improve its efficiency and
effectiveness.
Creating a Strategy-
Supportive Culture
1. Formal statements of organizational philosophy
2. Design of physical spaces
3. Deliberate role modeling, teaching, and coaching
4. Explicit reward and status system
5. Stories, legends, myths, and parables
Creating a Strategy-Supportive Culture
6. What leaders pay attention to
7. Leader reactions to critical incidents and crises
8. Organizational design and structure
9. Organizational systems and procedures
10. Criteria for recruitment, selection, promotion, leveling
off, retirement, and “excommunication” of people
•THANK YOU
