Strategy implementation

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 companys 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.
 Implementation activities
01 - Convert master plan into annual/ action
plan
Annual objectives
Policies
Resource allocation
Functional plans
A Framework for Executing Strategy.
Converting the organizations 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.
 Structure Follows Strategy

Changes in corporate strategy lead to changes

in organizational structure

6
 02 - Develop an organizational structure

Structure and environment

Structure and technology
Structure and strategy
Structure and size and life cycle of the
organization
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.
 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.
 Strategy Implementation

Network Structure:
non structure elimination of in-
house business functions
Termed virtual organization
Useful in unstable environments
Need for innovation and quick response
 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