NUANCES OF STRATEGIC IMPLEMENTATION

Strategy implementation Functional Strategies and Policies Operationalising the Strategies Institutionalizing the strategy Matching structure and strategy Strategic leadership and organizational culture Management of Change

Strategy Implementation

Nature of Strategy Implementation

Action Orientation:

Putting the formulated strategies into action through the management processes. Different aspect involved in strategy implementation cover practically everything that is included in the discipline of management studies.

Comprehensive in Scope:

Ex. A marketing manger may develop the marketing budget, allocate sales to sales territories, launch an advertising campaign etc.

Demanding Varied Skills:

The strategist has to bring wide range of skills, knowledge, attitudes and abilities. To allocate the resources, design structures and systems, formulate functional policies etc.

Wide ranging involvement:

Strategy implementation require the involvement of middle-level managers.

Integrated Process:

The various task in strategy implementations are interrelated and therefore, strategy implementation has to act in holistic manner.

Barriers to Strategy Implementation

Strategy implementation is much more difficult than strategy formulation. Major obstacles are:

An inability to mange the change Poor or vague strategy Not having guidelines or a model to guide implementation efforts. Poor or inadequate information sharing Unclear responsibility and accountability Working against the organizational power structure

Interrelationship of formulation and Implementation

The formulation and implementation process are interrelated. Two type of linkages exist between two phases of strategic management:

The forward linkages

The impact of formulation on implementation

The backward linkages

The impact of implementation on formulation

The forward linkages is stronger than the second one.

A model of strategy Implementation

Activating Strategies Project Implementation Strategic Plan Procedural Implementation Managing Change Achieving Effectiveness

Structural Implementation Leadership Implementation Behavioral Implementation

Functional Implementation Operational Implementation

Evaluation & control

Resource Allocation

Feed Back

Major themes in Strategy implementation

Activating strategies:

Project implementation Procedural implementation Resource allocation Structural Implementation Leadership implementation Behavioral implementation Functional implementation Operational implementation

Managing change.

Achieving Effectiveness

Strategy Implementation Stoppers

Strategy formulation

External failure Internal failure

Strategy Implementation

Strategies seldom fail because of wrong formulation

It is because they are not implemented properly

WHY STRUCTURE ?
structure is the bones of the organization

It will protect the weak points

structure represents the formalized systems of the organization

structure has a human element in it. We all want to know our position in the structure !

Purposes of structure
Division of labor Mechanism for coordination Organizational boundaries Comparison with informal structure Political structure Legitimate basis of authority

MATCHING STRUCTURE TO STRATEGY

Pinpoint key tasks in the value chain that are essential Structure should evolve around them If linear system cannot be structured, develop bridges Determine degree of authority Systems create their own structures

TYPES OF STRUCTURES
linear

chain of command is easily established

Hierarchy based structures

SBU, Functional

non-linear

chain of command unformulated

Management Practices in Organization

Hierarchy Leadership Authority of position Matrix Technical and functional mangers negotiate Cluster Leadership rotates to the task component

Perf. Appraisal

Supervisor alone
Grades, individual performance managers Single ladder length of service

Project and Functional mangers

Same as in hierarchy Managers and project leaders Dual ladders, experience

Cluster leaders, peers

Compensation system Resource allocation Career management

Base salary, group bonus etc

Cluster leaders and central management Multiple job experiences

STRUCTURE VS STRATEGY
We dont always have the luxury of a new structure From the strategy set, the CEO is biased to choose the strategy that is easily adapted to existing structure Once strategy is chosen, structure must be modified to suit that strategy

MATCHING STRUCTURE TO STRATEGY

Functional specialization Decentralized business divisions Strategic business units Matrix structures with dual lines of authority

Functional Strucutre
Chief Executive Officer Public Relation Legal

Finance

Marketing

HRM

Operation

FUNCTIONAL ORG. STRUCTURES

Advantages
Centralized control Well suited for single businesses Promotes in depth functional expertise Conducive to learning curve Enhances operational efficiency where tasks are routine or repetitive

Disadvantages
Excessive fragmentation Inter-functional rivalry Multi-layered decision making process Forces profit responsibility to top Functional bias Myopia works against creativity, and cross functional core comp.

Divisional Structure
Chief Executive Officer Corporate Finance Corporate Legal / PR

General Manager Division A

Marketing Operation HRM

General Manager Division B

Marketing Operation HRM

Divisional Structure
Advantages Good for delegation responsibility Allocates resp. For strategy to specific environment Allows each business to develop own value chain CEO to concentrate on corporate issue Puts clear profit responsibility Disadvantages Duplication of staff cost disadvantage What to decontrol, prices ? May lead to division rivalry Lack of synergy, conflicting goals Corporate management becomes heavily dependant on business unit managers Corporate level looses touch with business level problems

SBU ORGANIZATIONAL STRUCTURE

Chief Executive Officer Group Head SBU 1 Division A Division B Division C Group Head SBU 2 Group Head SBU 3

Division A
Division B Division C

Division A
Division B Division C

SBU ORGANIZATIONAL STRUCTURE

Advantages Strategically relevant Facilitates co-ordination within SBU Promotes cohesiveness among new initiatives Most relevant for strategic planning Makes strategic review easier Most rational way to allocate resources Disadvantages How to define an SBU ? Another layer of top management Role & authority of CEO need to be well defined Unless SBU head is strong, very little co-ordination across business unit inside the SBU Performance recognition gets blurred

MATRIX ORGANIZATIONAL STRUCTURE

Chief Executive Officer Finance Marketing HRM Operation

Project Manager A
Project Manager B Project Manager C Functional Specialist

MATRIX ORGANIZATIONAL STRUCTURE

Advantages Gives formal attention to each dimension of strategic priority Creates checks and balances among view points Facilitates capture of functional based strategy. Fits Promotes what is best for the organization Encourages co-operation, consensus, conflict etc.. Disadvantages Complex to manage Hard to maintain balance between authority & responsibility Shared authority can result in communications loss Not good for quick decisions Promotes organizational bureaucracy, expert groups

SUPPLEMENTING THE BASIC O.S.

special project teams cross functional task forces venture teams self contained work teams process teams contact managers

Evaluating Organizational Structure

Efficiency of resource utilization Efficiency of time utilization Responsive to the environment Adaptability over time Equality of the responsibility and authority syndromes

Druckers check list

Clarity

as opposed to simplicity In control

Economy

Direction of vision

Of product rather than process

Of individuals role At the lowest levels Not rigidity Structure must be open to new ideas

Understanding

Decision making

Stability

Perpetuation and self renewal

Corporate Governance and Strategic Management

The management of relationship between the directors and managers of the organization and the other stakeholder is called corporate governance. The relationship between the stakeholders and the managers of the organization is called an agency relationship.

Relating Corporate governance to Strategic Management

Corporate governance is the governance of an organization that deals with the relationship of different stakeholders. Different linkage between strategic management and Corporate governance
Corporate governance and Strategic intent Corporate governance and strategic formulation Corporate governance and strategic Implementation Corporate governance and strategic formulation

Corporate Governance And Strategic Intent

The strategic intent of the organization deals with its vision and mission, business definition, business model and objectives. Corporate governance plays an important role in each of these aspects. Corporate governance, through its mechanisms, helps the stakeholders to develop a consensus through a process of mutual understanding and compromise.

Corporate governance and strategic formulation

While preparing the strategy the top management have to follow the guidance provided by he Board of director as well as keep the objectives that the strategies are designed to achieve in view. Corporate governance mechanisms are needed to reconcile the differences in the goals that the shareholders and managers try to achieve.

Corporate Governance and Strategic Implementation

The area of strategy implementation is almost fully under the control of the managers of the organization.
Strategy implementation determines whether the strategies formulated achieve the desired level of success. The board of directors or the shareholders have little say or scope for direct intervention. The Corporate Governance mechanisms need to be in place to ensure that the risk of manager to deviate from the commitment does not occurs.

Corporate governance and Strategy Evaluation

The shareholders and directors have an effective role to play in helping the organization evaluate the effectiveness of its strategies. This is done by the means of operational and strategic controls. Corporate governance mechanisms such as reporting the annual performance of the organization, help the shareholders to evaluate whether the organization is on right path.

Strategic Leadership
Managers provide leadership to an organization. Organizational leaders influence the behavior of subordinates so that they willingly and enthusiastically work towards the achievement of organizational objectives. Among the strategic leaders we have managers operating at different levels of an organization: corporate level, business level, functional level, operational level.

The task of Strategic Leader

The task that the strategic leaders required to perform:

Determining strategic Direction

Strategic direction is concerned with the future shape of the organization.

Effectively managing the organizational resources portfolio.

Strategic leaders are called upon to manage effectively, the portfolio of organizational resources.

Sustaining an effective organizational Culture.

Strategic leader try to build and sustain an effective organisational culture.

Emphasizing ethical practices

Strategic leaders emphasize on ethical practices in word and deed when the strategies are being implemented.
Strategic leaders use a combination of financial and non-financial controls to help the organisation achieve its objectives.

Establishing balanced organisational Controls

Corporate Culture and Strategic Management

Organisational culture is the set of important assumptions-often unstated-that the members of an organisation share in common. The manifestations of corporate culture in an organisation are evident in

Shared things Shared saying Shared actions Shared feelings

Strategy Culture Relationship

Corporate culture can be a source of sustainable competitive advantage. The manner in which corporate culture contributes to the competitive advantages is by defining the boundaries of the organisation in a manner that facilitates individual interaction and/or by limiting the scope of information processing to appropriate levels. Managerial behavior arising out of corporate culture can either facilitate or obstruct the smooth implementation of strategy.

The strategist have four approaches to create a strategy supportive culture.

1.

2.

3.

4.

To ignore corporate culture To adapt strategy implementation to suit corporate culture To change the corporate culture to suit strategic requirement To change the strategy to fit the corporate culture

1. To ignore corporate culture

This approach may be followed when it is nearly impossible to change the culture. This is advisable because it is really difficult to change corporate culture.

2. To adapt strategy implementation to suit corporate culture

It is easier to change the implementation to suit the requirements of the corporate culture. This is possible because the behavioral aspects of implementation offer a range of flexible alternatives to strategists, in terms of structure, systems and processes. These variable can be manipulated to sub serve the interests of the corporate culture.

3. To change the corporate culture to suit strategic requirement

As we have discussed it is very difficult to change corporate culture. But in some cases, it may be imperative.

4. To change the strategy to fit the corporate culture

Rather than changing the culture to suit a strategy, it is better and more economical to consider the cultural dimension while formulating the strategy is first place. One of the important factor is commitment to past strategic actions, which should take care that strategic changes are not but incremental.

Functional Strategies and Policies

Functional strategies deal with a relatively restricted plan which provides the objectives for a specific function.
Functional strategies are derived from business and corporate strategies and are implements through functional and operational implementation.

Vertical and Horizontal fit

Corporate-level Strategies
Business-level Strategies Functional-level Strategies Marketing Plans and Policies Financial Plans and Policies Operations Plans and Policies Human resource mgt. Info. Mgt.

Strategies operate at different levels and there has to be congruence and coordination among these strategies. Such congruence is the vertical fit. There has to be congruence and coordination among different activities taking place at the same level. This is the horizontal fit.

Functional plans and Policies

Functional plans and Policies

For effective implementation, strategist have to provide direction to function manager regarding the plans and policy to be adopted. The effectiveness of strategic management depends critically on the manner in which strategies are implemented.

Need for Functional Plans and Policies

1. The strategic decisions are implemented by all 2.

3.

4.
5.

the part of organisation. There is basis available for controlling activities in the different functional areas of business. The time spend by functional manager in decision-making is reduced as plans lay down clearly. Similar situation occurring in different functional areas are handled in a consistent manner. Coordination across the different functions takes place where necessary.

Development of Functional Plans and Policies

The development of functional plan and policies is aimed at making the strategies formulated at the top management level, practically feasible at the functional level. The process of development of functional plans and policies whether formal or informal- is similar to that of strategy formulation. Functional areas have been traditionally segregated into finance, marketing, production and personnel.

Financial Plans and Policies

The financial plan and policies of an organisation are related to the availability, usage and management of funds. The significant plans and policies are;
Sources of Funds Usage of Funds Management of Funds

Marketing Plans and Policies

Plans and policies related to marketing have to be formulated and implemented on the basis of the 4Ps of the marketing mix.
Product Pricing Place Promotion

Operational Plans and Policies

The plan and policies for operation are related to the production system, operational planning and control and research and development. The corporate and business level strategy adopted determine the bases of competing that in turn affect the nature of product and services, the markets to be served and the manner in which the markets are to be served. The component of operation plans and Policies

Production System Operations Planning and control Research and Development

Personnel Plans and Policies

Personnel plans and policies related to the personnel system, organisational and employee characteristics and industrial relations. The component of personnel plans and Policies
Personnel System Organisational and Employee characteristics Industrial relation

Operational Implementation
Operational effectiveness The areas of operational effectiveness Productivity Processes People Pace