Strategy implementation

W.P. Gamage
 Strategic Implementation

“The best game plan is the world never blocked or

tackled anybody.”
V. Lombardi

“We would be in some form of denial if we didn’t

see that execution is the true measure of
success.”
C. Michael Armstrong
 Formulation Vs Implementation
Formulation Implementation
Positioning forces before the Managing forces during the
action action
Focuses on effectiveness Focuses on efficiency
Intellectual process Operational process
Requires good intuitive and Requires special motivation
analytical skills and leadership skills
Requires coordination among Requires coordination among
a few individuals many individuals
• Why strategy implementation is more difficult
than strategy formulation?
 Strategic Implementation

“People think of execution as the tactical side of business,

something leaders delegate while they focus on the
perceived ‘bigger issues’. This idea is completely wrong.
Execution has to be built into a company’s strategy, its
goals, and its culture. And the leader of the organization
must be deeply engaged in it.”
Larry Bossidy,
 Implementation
• Why it is harder?
• More time consuming challenge
• Wide array of managerial challenges
• Many options to proceed
• Demanding people-management skills
• Perseverance to get initiatives moving
• Number of unexpected issues
• Resistance to change, misunderstandings.
• Difficulties of integrating efforts across groups.
 The ‘Big 8’ Components of
Implementation.
Build an organization
Exercise the strategic with the competencies,
leadership needed to capabilities, and resource Allocating ample
drive implementation strengths needed for resources to
forward. successful strategy strategy-critical
execution. activities.

Shaping the work Establish

environment and strategy-supportive
corporate culture Strategy policies.
to fit the strategy Implementer

Instituting best practices

and pushing for
Tying rewards and continuous improvement.
incentives to the
achievement of key
Installing information, operating
strategic targets.
and operating systems that enable
company personnel to better carry
out their strategic roles proficiently.
 Implementation activities
01 - Convert master plan into annual/ action
plan
Annual objectives
Policies
Resource allocation
Functional plans
A Framework for Executing Strategy.
• Converting the organization’s strategic plan
into action and results.

• Job for the whole management team.

• Affects every part of the firm.
• Each manager must answer, ‘what has to be done in
my area to implement our part of the strategic plan,
and what must I do to get these things accomplished?’
• All managers become strategic implementers in their
areas and all employees are participants.
 02 - Develop an organizational structure

• Structure and environment

• Structure and technology
• Structure and strategy
• Structure and size and life cycle of the
organization
 Matching structure with strategy
Chandler’s strategy-structure relationship
New admin Organizational
New strategy performance
problems
is formulated declines
emerge

Organizational A new organizational

performance improves structure is established
Evolution and Revolution as Organizations Grow
A Model of How Organizations Develop

• Age of the Organization

• Size of the Organization
• Stages of Evolution
• Stages of Revolution
• Growth Rate of the Industry
 Age of the Organization

• The same organizational practices are not

maintained throughout a long life span.
 Size of the Organization

• Problems tend to change with increased employees and sales

revenue.
• Coordination and communication becomes more difficult.
• New functions emerge.
• Structural hierarchy increases.
• Jobs become more interrelated.
• Formalized processes - for control

“Organizations that do not grow can maintain the same

structure for longer periods of time” Greiner.
 Large versus Small Organizations

LARGE SMALL

Economies of scale Responsive, flexible

Global reach Regional reach
Vertical hierarchy Flat structure
Mechanistic Organic
Complex Simple
Stable market Niche finding
 Stages of Evolution

• Also known as evolutionary periods.

• As organizations grow, different evolutionary
periods emerge.
• Growth will usually continue at a steady pace
until a revolutionary stage is reached.
 Stages of Revolution

• Revolution: stages of crisis.

• Here practices become outdated.
• Companies that do not change will fold or
cease to grow.
• Often solutions for one crisis become a major
problem in the next crisis.
 Growth Rate of the Industry

• Business growth is determined by market

environment of its industry.

• Examples:
– Microsoft- fast revolution.
– Delta- slow revolution.
 high
growth
industry

Medium
growth
industry

Low
growth
industry
 5 Phases of Growth

1. Creativity
2. Direction
3. Delegation
4. Coordination
5. Collaboration

Organizational priorities – different in each phase

 1. Creativity
• The birth stage of an organization.
• The founders are usually technically or
entrepreneurially oriented.
• Communication is frequent and informal.
• Long hours of work are rewarded with modest
salaries and the promise of ownership benefits.
• Decisions and motivations are highly sensitive to
market feedback.
• Normal structure
• Lack of direction
 2. Direction
• Functional bureaucratic structure.
• Different departments are designed.
• Formal communication results as hierarchy
and employees increase.
• Increased efficiency.
Direction(cont.)
Eventual Problems: “Crisis of Autonomy.”
The next decision for management is decentralization.
 3. Delegation

• Functional structure-The successful application

of a decentralized organizational structure.
• Greater empowerment of managers -Greater
responsibility given to lower management.
• Profit centers and bonuses are used to
motivate employees.
• Diversification of products.
Delegation(cont.)
Eventual Problems: “Crisis of Control.”
• Lower-level management begins running their
own show without coordinating with the rest
of the organization.

Management must again focus on control.

 4. Coordination
• Formation of product groups: Strategic Business
Units (decentralized units are grouped together).
• Each group is treated like an investment center.
• Staff members are hired to initiate company-wide
control programs.
• Stock options and company wide profit sharing
are used to motivate employees.
• Capital allocation decisions are carefully reviewed
and analyzed
• Divisional, SBU or project structures
 4. Coordination(cont.)
Eventual Problems: Red Tape Crisis”: Procedures take
precedence over problem solving
• Formal planning procedures - Everything is a procedure.
• Conflict between the line and staff

Management must promote interpersonal collaboration.

 5. Collaboration
• Matrix structure to handle the right teams for
right problems.
• Social control and self-discipline replace
formal control.
• Formal control systems are simplified.
• Conferences are held weekly.
• Rewards are geared for team performance.
 03 – Managing day to day activities

• Leadership
• Motivation
• Communication
• Coordination
 Implementation Issues
• Over half of 93 Fortune 500 companies surveyed had
execution problems:
• Took more time than planned.
• Unanticipated major problems.
• Ineffective coordination.
• Loss of focus on implementation.
• Employees incapable, inadequately trained.
• Environmental factors
• Inadequate leadership
• Tasks poorly defined
• Information systems inadequate to monitor properly.
 Strategy Review, evaluation and control

• Is the strategy internally consistent?

• Is the strategy consistent with the environment?
• Is the strategy appropriate in view of available
resources?
• Does the strategy involve an acceptable degree of
risk?
• Does the strategy have an appropriate time
framework?
• Is the strategy workable?
• Control process
• Control methods