Scand. J. Mgmt.

18 (2002) 217231

Exploring barriers to the successful implementation of a formulated strategy

Morten Heide1, Kjell Grnhaug*,2, Simen Johannessen3
Norwegian School of Economics and Business Administration, Breiviksveien 40, N-5045 Bergen, Norway Received 1 January 1997; accepted 1 January 2000

Abstract This paper reports a case study conducted to identify barriers to the successful implementation of activities as part of a planned strategy in a Norwegian ferry-cruise company. Data were gathered among workers on one of the companys vessels using a structured sequence of questions with open-ended answers. Our ndings indicate that various types of communication problem which may be inuenced to some extent by the organizational structure, constitute the key barriers to the implementation of planned strategic activities. # 2002 Elsevier Science Ltd. All rights reserved.
Keywords: Strategy implementation; Implementation barriers; Communication problem

1. Introduction A formulated strategy must be implemented before it can be of specic value to an organization. But it is recognized among both practitioners and academicians that various barriers}i.e. obstructions to the successful implementation of the strategy}can arise, thus representing a particular challenge to management (Guth & Macmillan, 1986; Vrakking, 1995). By implementation we mean here putting the formulated strategy to work. It has long been recognized that strategies can be explicit or implicit, or as Mintzberg and

*Corresponding author. Tel.: +47-55-959460; fax: +47-55-959430. E-mail address: kjell.gronhaug@nhh.no (K. Grnhaug). 1 Associate Professor at the Norwegian School of Hotel Management. 2 Professor at the Norwegian School of Economics and Business Administration. 3 Marketing Director at SAS Hotels in Alta, Norway. 0956-5221/02/$ - see front matter # 2002 Elsevier Science Ltd. All rights reserved. PII: S 0 9 5 6 - 5 2 2 1 ( 0 1 ) 0 0 0 0 7 - 0

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Waters (1985) put it, intended or deliberate and emergent. Here we focus on the implementation of intended strategies. Successful implementation requires active and premeditated actions that include the coordination of multiple actors and activities, and other actions of a transient and complex kind. Several studies have focused on aspects of the organization that may aect the success of strategy implementation. Building mainly on Olsen, Tse, and West (1992), Pearce and Robinson (1982), Hrebiniak and Joyce (1984), and Galbraith and Kazanjian (1986) we decided to focus on the following aspects that have received particular attention: (1) information systems, (2) learning, (3) allocation of resources, (4) formal organizational structure including control systems, (5) personnel management, (6) political factors, and (7) organizational culture. In our study we will examine the role of these factors with regard to strategy implementation. Information systems include all possible mechanisms that contribute to vertical and horizontal communication throughout the organization. Hambrick and Cannella (1989) emphasize the importance of selling the strategy upwards, downwards and across the organization, which in turn demands an ecient communication system. There is a vast literature on how information deciencies may hamper strategy implementation. Hax and Majluf (1984) argue that in organizations where management is unable to communicate the strategy in a meaningful manner to all relevant parties, the strategy will most likely never be implemented. Conrad (1990) emphasizes that employees generally wish that their superiors would keep them informed, especially about changes that directly aect their jobs. However, Guetzkow (1965) highlights the apparent paradox that employees who receive ample information from their superiors are the ones most likely to feel that they do not receive sucient information. Another important aspect is the medium or form in which the information is given. The potential biases of oral and written information are both well documented, which has led most theoreticians to recommend that information related to the implementation of a strategy should be communicated orally as well as in writing, and in some cases even visually too (Goldhaber & Barnett, 1988; Conrad, 1990). However, in order to implement a strategy, employees need not only to be aware of its existence but also to have the necessary knowledge and skills for implementing it. Learning thus becomes a key factor. Learning is usually a part of change. Sometimes change may precede learning, sometimes changes can be implemented without any learning taking place. Often, however, organizational actors need to increase their knowledge in order to implement a strategy successfully. According to Argyris and Schon (1978), organizational learning can be seen as a process aimed at uncovering and correcting such existing knowledge in the organization as might hinder the acquisition of new knowledge. Organizational learning may not be the same as the total of individual learning experiences. Individual learning experiences thus constitute a necessary but not a sucient condition for organizational learning (cf. Levitt & March, 1988). The allocation of adequate resources is an essential part of strategy implementation. Without sucent resources it is dicult if not impossible to implement planned

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strategic activities. Anand and Merrield (1982) argue that it is mainly by means of the capital and operational budgets that strategies are implemented. The allocation of nancial resources also aects the allocation of human resources, and thus inuences various aspects of the action plan (Olsen et al., 1992). The formal organizational structure, including the control systems, is an important factor in strategy implementation. Organizational structure can be dened as the relationship between tasks, individuals, and formal and informal channels (Olsen et al., 1992). The organizational structure aects implementation indirectly through its inuence on information, control and decision processes. Control systems, in combination with incentive systems, are essential for motivating sta and ensuring appropriate behaviour in relation to the strategy (Hrebiniak & Joyce, 1984). Personnel management is a vital part of strategy formulation and implementation, because employees have aspirations, needs and feelings that aect the organizations performance. A strategy that ignores these factors is likely to meet massive resistance when it is implemented. Organizations and their sta tend to be interdependent. The sta expect their organization to satisfy a number of economic, personal and social needs, while the organization cannot function properly without the energy and talent of its sta (Bolman & Deal, 1991). Political factors and political games occur in virtually all organizations. It has been argued that political games may have a functional role in the organization (Mintzberg & Quinn, 1991), but they may also block change. If certain employees or groups of employees perceive a planned strategy as likely to reduce their status or inuence, they may well try to behave according to their own interests, which in turn may hamper the implementation of the strategic actions planned. Organizational culture is assumed to be important to organizational activities and performance. Culture, a concept whose denition varies according to the eld of study, is generally described as containing intangible and abstract elements that are dicult to pinpoint exactly (Bang, 1988). Culture is the generic term for the cognitive systems and behavioural patterns that exist in all organizations. A companys culture can act as a kind of organizational glue, thus aecting the degree to which a strategy is successfully implemented.

2. Research methodology In this section we describe the research setting, and the collection and measurements of the data. 2.1. Research setting The research context is the ferry-cruise industry. More precisely, we examine the degree to which a formulated strategy has been implemented in a particular ship (M/S Kronprins Harald) belonging to the Norwegian ferry-cruise company, Color Line. Inc.

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(1) Color Line, Inc., is currently the predominant Norwegian ferry-cruise company, with a market share of approximately 40 per cent and a eet of six vessels serving four lines between Denmark, Germany, England and Norway. The company oers a diversied portfolio of transport and tourist products on a yearround basis. The peak season is the summer (from June to August); in 1994 the company carried more than two million passengers. Color Line is organized in a matrix structure, which means that the ferry sta report to dierent leaders. Catering division employees on board the ships report both to the line management and to Color Line Service Partner, which was established in 1993. Color Line Service Partner is responsible for the development and support of service concepts, and it actively assists the ships in the areas of merchandise sales, food and beverages, cleaning, entertainment and personnel management. The main goal of these eorts is to ensure a high level of sales and contribution margins per guest and in total, as well as providing a colourful and rewarding experience for the guests during their stay on board. Color Lines analyses indicate that the coming years will be tougher, in the sense that the demands for protability and eciency aboard its oating hotels will be more stringent. To be prepared for the future Color Line Service Partner embarked upon a strategy formulation process, which was completed in February 1994. Several of the areas for action in the strategy were aimed directly aimed at personnel development and improving the eciency of operations on board. Important actions included the introduction of a new system for shift planning, more standardization and control of the food-preparation routines, work rotation within the restaurant department, more participation in developing menus, and measures to increase sales and service quality in the restaurant department. In the case described here a detailed overview of the strategy was provided by the company, and one of the present authors was engaged to study the extent to which the various activities related to the planned strategy really had been implemented in one of their operations. (2) M/S Kronprins Harald is an eight-year-old cruise-ferry, serving the companys line between Oslo in Norway and Kiel in Germany. The ship oers a fairly wide selection of experiences for its guests, in food and drink, entertainment and shopping. There are two entertainment saloons, one pub, two restaurants and one cafe on board. Salon Harmony, which is the venue for the adult guests, oers a smorgasbord and light music during the afternoons, and live music in the evening until about 2 a.m. Salon Discovery has a nightly show and live music until the early hours. The Windjammer Pub serves simple dishes in addition to its wide selection of alcoholic and non-alcoholic drinks. There is also a small casino in conjunction with " la Carte Restaurant serves lunch and dinner from a menu the pub. The Scarlet a including Norwegian and international dishes and a wide selection of wines. The Indigo Buet Restaurant oers breakfast, lunch and dinner buets, while the Seaside Cafe serves breakfast, sandwiches, cakes, etc. A shift schedule has been established whereby the sta work 14 days on board followed by 14 days o. This work schedule has resulted in many employees spending much of their leisure time together. Sta turnover rate is low (1015 per cent), which may depend partly on the fairly high salary level (approximately 50 per

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cent higher than for kitchen and restaurant personnel working on land). The established shift schedule has resulted in minimal overlap between shifts. Some of the sta have worked together on the same shift ever since the vessel was launched. 2.2. Data collection Data was gathered from structured interviews with the respondents on an individual basis. The interview guide was based on the work mentioned above, thus focusing on the factors indicated in the previous section. The interviews were conducted with one respondent at a time, at the respondents workplace. All interviews were conducted by the same interviewer. Each interview lasted approximately 20 min and a structured interview guide with open-ended questions was employed. The respondents in the study consisted of managers, middle-managers and employees in the kitchen and restaurant departments. Respondents were included from both shifts. The two departments were included, so that potential dierences in the implementation of strategic actions could be examined; the three levels of managers and sta were included so that the level(s) where organizational barriers to implementation occurred could be determined. A total sample of 42 managers and sta was obtained from a total population of 58. The non-response gure (5842=16) was due to absence, reject, or too busy. Descriptive data of the sample are presented in Appendix A. 2.3. Measurements The interview procedure was pre-tested on two respondents who were working in the kitchen and restaurant departments on another Color Line vessel. A few corrections pertaining to the wording of the questions were made after the pre-test. In the interviews the respondents were asked about one strategic initiative at a time. As the pre-test had indicated that the respondents familiarity with the structure of the interview increased in the course of interview process, the order in which the initiatives were discussed was randomized. Respondents were questioned only about initiatives aimed at their own group. Thus, only kitchen personnel were asked about strategic initiatives to improve kitchen operations, and the same applied to the restaurant personnel. An overview of the strategic initiatives that were relevant for the dierent groups is given in Appendix B. The respondents answers were recorded verbatim, and a written record produced from each interview. The structure of the interviews is illustrated in Fig. 1. Afterwards every record was coded to determine whether the initiative in question had been implemented and, if not, what factors constituted the barriers to successful implementation. Before this was done a code book had been developed by analysing the content of the responses and forming relevant categories. Examples of statements typical for the various options were given in the code book to enable the coder to classify the answers in the records. An extract from the code book is presented in Appendix C.

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Fig. 1. Structure of the interviews.

Krippendor (1980) proposes three types of reliability measure for record analysis: stability, accuracy and reproducibility. To test stability, 25 per cent of the records were coded twice by the interviewer at an interval of one week. 104 of 110 replies (95 per cent) were coded identically, which suggests reasonably good stability. Accuracy is ensured in our opinion by the high level of structuring in the interview process, by the use of the code book that was designed in advance, and by employing two rather than only one coder. To test reproducibility, 25 per cent of the records were coded by two researchers}the main coder and an independent researcher not associated with the study. Inter-coder reliability for the dierent classications of

M. Heide et al. / Scand. J. Mgmt. 18 (2002) 217231 Table 1 Inter-coder reliability for the dierent classications of replies Classication Initiative implemented Communication barriers Resource barriers Organizational structure barriers Political barriers Learning barriers Personnel management barriers Cultural barriers ? (impossible to classify)
a

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Kappa-coecients (K )a 1.00 0.89 0.89 0.78 0.78 0.66 0.66 0.66 0.55

Per cent agreement 100 90 90 80 80 70 70 70 60

All coecients signicant at p50:05.

replies is shown in Table 1. Kappa coecient K (Cohen, 1960) was used to measure inter-coder reliability. It can be noted that the two coders have identical coding for replies indicating that the initiatives have been implemented. This is reected by the 100 per cent agreement and a coecient K of 1.00. Where the replies indicate that certain barriers have hindered implementation, agreement between the two coders is slightly lower, with 90 per cent for replies that have been coded as communication barriers, 90 per cent for resource barriers, 90 per cent for learning barriers, 80 per cent for structural and political barriers, and 70 per cent each for learning, personnel management and cultural barriers. For replies that were coded as impossible to classify, there was 60 per cent agreement between the two coders. It is our opinion that the inter-coder reliability is satisfactory.

3. Findings In this section we report the ndings from our empirical study. First we report the barriers experienced, and then the dierences in implementation barriers as between departments, shifts and organizational levels. 3.1. Implementation barriers The 42 respondents reported a total of 220 implementation barriers, of which 46 were omitted as being impossible to categorize. In fact we even found it dicult to understand why most of these were barriers at all. The frequency distribution of the remaining 174 reported barriers is given in Table 2. Table 2 shows that the major implementation barriers are related to various types of communication problem. Communication barriers are reported more frequently in the table than all the other barriers combined. (A chi-square test shows that this result is highly signicant (w2 29:79, 1 d.f., p50:01).

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Table 2 Reported implementation barriers Reported barriers Communication barriers Organizational structure barriers Learning barriers Personnel management barriers Cultural barriers Political barriers Resource barriers Total Frequency 123 19 13 8 8 3 0 174 Percentage 70 11 7 5 5 2 0 100

Table 3 Dierences between the two departments with regard to implementation rate and frequency of reported implementation barriers Report from respondents Reported implementation rate Implemented initiatives as proportion of total initiatives Reported implementation barriers Communication barriers Organizational structure barriers Learning barriers Personnel management barriers Cultural barriers Political barriers Resource barriers Total Kitchen department 0.52 Restaurant department 0.2

37 (53%) 8 (12%) 8 (12%) 8 (12%) 7 (10%) 1 (1%) 0 (0%) 69 (100%)

86 (82%) 11 (10%) 5 (5%) 0 (0%) 1 (1%) 2 (2%) 0 (0%) 105 (100%)

The major implementation barriers thus seem to be associated with communication problems and structural factors. A possible explanation of the high level of problems in communication may be the paucity of interaction and team functioning among the employees. And regarding the organizational structure, a review of the records reveals that sta and mid-level managers both say that initiatives are not being implemented because there are too many managers, and none of them show any will or ability to follow-up on implementation. 3.2. Dierences between the two departments In Table 3 the two departments are compared with regard to reported implementation rate and implementation barriers. The implementation rate appears to be higher in the kitchen than in the restaurant department. While the reports of the restaurant personnel indicate that only 20 per cent (0.2) of the initiatives have been implemented, the corresponding gure for the kitchen department is over 50

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per cent (0.54). A chi-square test shows that the dierence in reported implementation rate is highly signicant (w2 14:22, 1 d.f., p50:01). Table 3 also shows communication barriers as the most frequently reported obstacle in both departments. Table 4 also indicates that communication problems are more severe in the restaurant department, while the reported barriers have a more even distribution in the kitchen department. The dierence between the two departments with regard to the types of implementation barrier reported is highly signicant (w2 27:24, 6 d.f., p50:01). 3.3. Dierences between the two shifts As noted above, a shift schedule has been established, which yields minimal overlap between the two shifts. In Table 4 the two shifts are compared with regard to reported implementation rate and implementation barriers. We can see that shift 1 reports a higher implementation rate than shift 2. The dierence between the two shifts with regard to implementation rate is moderately signicant (w2 3:17, 1 d.f., p50:1). A possible explanation may be that shift 1 functions better as a team. Communication barriers are the category most frequently reported category by both shifts. From Table 4 it appears that organizational structure barriers are reported more frequently by shift 2. The two shifts report similar frequencies for the other types of barrier. The dierence between them as regards the types of implementation barrier reported is not very signicant (w2 10:58, 6 d.f., p 0:1). 3.4. Dierences between organizational levels Because of the low number of management-level respondents, it is dicult to perform statistical tests for dierences in responses between the various organizational levels. Even so, the frequency distribution of responses regarding implementa-

Table 4 Dierences between the two shifts with regard to implementation rate and types of implementation barrier Report from respondents Reported implementation rate Implemented initiatives as proportion of total initiatives Reported implementation barriers Communication barriers Organizational structure barriers Learning barriers Personnel management barriers Cultural barriers Political barriers Resource barriers Total Shift 1 0.43 Shift 2 0.28

67 (79%) 3 (4%) 5 (6%) 4 (5%) 4 (5%) 1 (1%) 0 (0%) 84 (100%)

56 (62%) 16 (18%) 8 (9%) 4 (4%) 4 (4%) 2 (2%) 0 (0%) 90 (100%)

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Table 5 Dierences between organizational levels with regard to implementation rate and communication barriers Department/ position Restaurant department Hotel managers Restaurant managers Head waiters Waiters Kitchen department Chefs First cooks Cooks Number of respondents Number of initiatives Reported implementation rate Proportion reported as not communicated 0.13 0.38 0.34 0.59

2 2 3 20

8 8 8 6

0.44 0.06 0.25 0.18

1 2 12

13 11 11

0.85 0.50 0.49

0.00 0.05 0.28

tion and communication barriers as shown in Table 5 does reveal some interesting points. Here we see that managers have generally reported a higher rate of implementation than the lower-level sta. The two restaurant managers are an exception, however. We can also note that the managers report relatively fewer communication barriers. In other words information about the initiatives seems to reach the managers on board from on shore the management, while communications aboard the vessel do not appear to run equally smoothly. Although this conclusion is based on a very limited number of observations, the data may suggest that the vertical communication barriers on board are more dominant than communication barriers between the ships managers and company management on shore.

4. Discussion Although it is often pointed out in the strategy literature that many factors inuence the degree of success in strategy implementation (see e.g. Galbraith & Kazanjian, 1986; Olsen et al., 1992; Pearce & Joyce, 1982), few studies have tried to identify exactly what these implementation barriers are. In our case the results indicate communication problems as the main class of implementation barriers, in both the kitchen and the restaurant departments. A good many of the sta have no idea how the strategic initiatives will aect them, and some of the initiatives they had not even heard of. These results are important and should signal to management the presence of signicant communication barriers in the organization that are hindering successful strategy implementation. Organizational factors are the second most important implementation barrier. The respondents report that the lack of routines and unclear lines of

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responsibility often mean that follow-up is inadequate, and the matrix organization produces a lot of managers who do not coordinate their activities. It is also interesting to note that none of the respondents reported a high degree of centralization as a problem when it came to implementing strategies. The data suggesting the presence of a dysfunctional organizational structure are also interesting in view of the unsatisfactory vertical communication that is reported. This may mean that many strategic initiatives fail to be implemented because the vertical lines of communication are insuciently developed. There were signicant dierences between the two departments with regard to implementation. The kitchen department reported a higher percentage of implemented initiatives than the restaurant department. In light of the ndings discussed above, this may indicate that the vertical communication between managers and sta is more decient in the restaurant department. This is an interesting idea, because it suggests that an important part of the communication barrier is to be found on board ship rather than between the managements on shore and on board. A detailed analysis of the responses supported this suggestion: while the proportion of initiatives that had not been suciently communicated from company management to the hotel managers on board was only 13 per cent, the corresponding gure for waiters was 59 per cent (Table 5). There may be several explanations for this dierence. Communication generally takes time, and one explanation could thus be that the information had not yet reached the waiters. A further explanation could be lack of interest and/or interactions among the waiters themselves as well as between them and their superiors, making it dicult to catch peoples attention and create understanding. It is also possible that managers exploit their positions to withhold information about any strategic action that they consider inappropriate or that they expect will be met with strong resistance by their sta. There were also signicant dierences between the two shifts with regard to implementation rate. Attempts have been made more recently to make the shifts more exible, for example by having middle-managers work half their schedule on each shift. Attempts to increase the overlap between the shifts is one way of trying to reduce the dierences between them. However, while this approach may reduce dierences in quality, it may also lead to a more general mediocrity in both shifts. An alternative and perhaps more suitable solution could be to focus particularly on the weaker shift, with a view to raising the implementation rate to the same level as in the other shift. While dierences could be seen between the two shifts as regards implementation rate, no highly signicant dierences were found when it came to types of barrier. Both shifts report deciencies in communication as the single most important barrier. This result may seem rather surprising, considering the dierences between the shifts as regards the share of strategic initiatives that had been implemented. This study has sought to identify barriers to strategy implementation. Because of the limited number of observations, caution should be observed in interpreting

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the data, especially as regards to dierences between the organizational levels. The study should be replicated, using a more robust research design. The use of a time-series design would make it possible to study the strategy implementation process over time, and should also be useful in monitoring the eects of management actions intended to reduce the barriers to implementation. Replications using dierent eld settings would also help to improve the external validity of the study.

Acknowledgements The authors gratefully acknowledge the useful comments and suggestions from the editor and two anonymous reviewers and Nancy Adlers help to improve the language.

Appendix A The descriptive data of the population and respondents in the sample are shown in Table 6

Appendix B The overview of strategic initiatives is shown in Table 7

Table 6 Position Chefs First cooks Cooks Restaurant managers Head waiters Waiters Total Male Female Total Age 2030 Age 3140 Age 4150 Age 5160 Total Population 2 4 14 4 4 30 58 n.a. n.a. n.a. n.a. n.a. n.a. n.a. n.a. Respondents 1 2 12 4 4 20 42 24 18 42 8 25 5 4 42 Percentage 50 50 86 100 75 67 72 57 43 100 19 60 12 9 100

M. Heide et al. / Scand. J. Mgmt. 18 (2002) 217231 Table 7 Strategic Initiatives Kitchen Department Managers Personnel management initiatives Training in sta development dialogues Implement teambuilding eorts Participation in decision making process Operational improvements, kitchen Time planning Sous-vide training Rotation within department Introduction of common mise-en-place Implement frequent quantity controls Participation from cooks in menu development Usage of raw material menu Spread information about accounts Sta planning tools Personnel policy course Personal training plans Management, service quality and sales enhancement Coaching of restaurant managers and head waiters Sales-enhancement course Introduction of service quality programme Service quality contest Mid-level mgrs. Sta Restaurant Department Managers Mid-level mgrs.

229

Sta

Appendix C Extract from the Code Book4 C.1. The initiative is communicated The initiative is communicated if the respondent has heard about the initiative and is familiar with the main features of the initiative. Examples of statements indicating that the initiative has been communicated: I have heard about this initiative. This initiative has been discussed (formally or informally). I have read about this initiative.
4

Translated from Norwegian.

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This initiative was discussed at a meeting. I came across some information about this initiative by chance. C.2. The initiative is implemented The initiative is implemented if the respondent is able to verify by facts or examples that the initiative has been executed in accordance with the plan of action. Examples of statements indicating that the initiative has been implemented: This initiative was implemented in 1994. The expected changes have taken place this year. The course was held recently. (The Code Book contains similar explanations to assist the coder in identifying the other alternatives, i.e. learning barriers, resource barriers, barriers related to organizational structure, personnel management barriers, cultural barriers and political barriers). References
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