STRATEGY IMPLEMENTATION

AGUS TATO , DRS. DIP. TEFL, DIP. TM, ELT. CCP. MM

 WHILST MANY ORGANISATIONS CRAFT GREAT STRATEGIES, FEW EXCUTE WELL
70% of companies believe they select the right
business strategy, but fail to execute it due to short-
comings in their management system Accenture
Report
only 11% of companies employ a fully fledged
strategic control system Ashridge Strategic
Management Centre
over 66% companies with over $500M in
revenue set targets that exceeded 9% real growth, yet
less than one company in ten achieved this level of
success. Chris Zook, Havard Business Review
In the majority of cases we estimate 70% - the
problem isnt bad strategy but bad execution
Fortune Magazine
ex-e-cu-tion (ek si kyoo shun), n 1. The missing link. 2. The
main reason companies fall short of their promises. 3.
The gap between what a companys leaders want to
achieve and the ability of their organisations to deliver
it Larry Bossidy and Ram Charan, Execution: The
discipline of getting things done
90% of organisations fail to execute their strategy
David Norton, Balanced Scorecard Report
THE CEO PERSPECTIVE

Key Execution Problems

Poorly Deployed/Communicated Strategy

Unclear Accountability
Poorly Defined Roles/Responsibilities
Inadequate Execution and Performance
Monitoring
Dont have or poor risk management system
 THE EVIDENCE BACKS-UP THESE HYPOTHESES

95% Employees dont understand their companies strategy Kaplan and

Norton, Harvard Business Report

<27% employees have access to their companys strategic plan Kaplan

and Norton, Harvard Business Report

86% of executive teams spend less than one hour a month reviewing
strategy Kaplan and Norton, Harvard Business Report
 STRATEGY EXECUTION - WHAT HAPPENS IN REALITY

The Off-site Strategy Day The Ivory Tower Exercise

Grow Sales of New
Product
Customer Focus
Poorly Defined Divisional President
Invest in China
Improve employee
satisfaction Goals
.ppt deck

Unclear
Accountabilities
Functional Heads
The Ad Hoc Cascade
Give me Way too much! Its close enough for
your numbers... Cut by 25%! Military work... Departmental Heads

Project
Project
The Budget Dance Project
Middle Managers
Funding Projects
Constraints
Employees
I need to include If I dont include
some contingency... it Ill lose it...
Some Critical Challenges Now Days
Time to market for new products
and services from concept to
realization
Time to deliver products and
services to the customer
Time to close the books
Time to hire new staff
Time to deploy new staff
Time for new staff to achieve full
productivity
Time to make key decisions
Time to market for new products
and services from concept to
realization
Time to deliver products and
services to the customer
Time to close the books
Time to hire new staff
Time to deploy new staff
Time for new staff to achieve full
productivity
Time to make key decisions
Some more Critical Challenges
Organizations fail to implement about 70 per cent of their new strategies (Franken
et al., 2009; Miller, 2002).

It was found that 40-60 per cent of the potential value of the strategic plan is
never realized and captured due to insufficiencies in planning and implementation
(Franken et al., 2009;

Mankins & Steele, 2005). In most cases, companies strategies deliver only 63% of
their promised financial value (Mankins & Steele, 2005).

Kaplan and Norton (2005) believed that 95% of a companys employees are
unaware of or do not understand their companys strategy. According to Johnson
(2004), 66% of corporate strategy is never executed.
It is believed that strategy formulation is difficult
while executing or implementing it throughout the
organization is even more difficult. Without effective
implementation, no business strategy can succeed.
Unfortunately, most managers know far more about
developing strategy than they do about executing it
(Epstein & Manzoni, 1998; Hrebiniak, 2006, 2013).
Strategy Implementation Definitions
According to Miller and Dess (1996), strategy implementation
involves a broad range of efforts which focus on the
transformation of strategic intentions into actions. Strategy
implementation has been variously be defined as:
The communication, interpretation, adoption, and enactment of
strategic plans (Noble, 1999, p. 120).

designing appropriate organizational structures and control

systems to put the organizations chosen strategy into action
(Hill et al., 2007, p. 5)

the sum total of the activities and choices required for the
execution of a strategic plan. (Wheelen and Hunger,2012, p.
320)
Galbraith & Kazanjian (1986) presented a conceptual
strategy implementation framework and highlighted that a
strong fit is required among task, people, organizational
structure, information and decision process and reward
systems for the successful implementation of strategies.

This fit provides the internally consistent design which also

matches with the organizations product-market strategy.
Jenster (1987) proposed a strategy planning and strategic control
process based on the case study of 128 manufacturing firms which
was closely integrated with the firms information system. Jenster
found that firms which had a high return on equity identified their
critical success factors for the implementation of strategies.
Followed by identification, these factors were used to monitor the
progress in implementation of strategic change. Based on these
findings, Jenster propose a nine step strategic process and
information system for integrating planning and control. These nine
steps include;
1. Provide structure for the design process.
2. Determine general elements which will influence success.
3. Develop a strategic plan or review/modify the current plan.
4. Identify a selected number of critical success factors (CSFs).
5. Determine who is going to be responsible for what.
6. Select the strategic performance indicators (SPls).
7. Develop and enact appropriate reporting procedures.
8. Initiate use of procedures by managerial personnel.
9. Establish evaluation procedure.
 STRATEGIC MANAGEMENT MODEL
by T.L. Wheelen (2006)
Environmental Evaluation
Strategy Formulation Strategy Implementation
Scanning & Control
External: Mission
Societal
Reason for
Environmental Objectives
existance
Strategies
What results
Industry Analysis Policies
to accomplish Plan to achieve
by when the mission
Programs
Broad
Internal: & objectives guidelines Activities Budgets
Structure for decision to accomplish
Cost of the Procedures
making a plan
Culture programs Sequence of Performance
Resources steps needed
to do the job Actual results

Source: T.L. Wheelen, Strategic Management and Business Policy, New Jersey, USA, 2006
Implementasi Strategi seringkali disebut sebagai
rencana operasional (oepartional planning) karena
terdiri dari sejumlah aktivitas (program) yang
melibatkan SDM perusahaan (people) dan didukung
prosedur pelaksanaan yang terstandarisasi (prosedur)
serta anggaran perusahaan yang layak (budget).

3P+1B

Rufaidah, 2012
 Input Data ANALYSIS DECISION ACTION PERFORMANCE
Eksternal
Strategic Situation Strategy Strategy Strategy Evaluation
7C :
Customer Analysis Formulation Implementation and Control
Channel (SSA) (SF) (SI) (SEC)
Company
Complementor
Competitor
Center External Environment
Change (PEST) Analysis Visi, Misi, Key Performance
PEST : 7 C, PEST (TO) Sasaran Program Indicator (KPI) *1
Political-Legal Strategi Budget
Economical
Socio-culture EFAS : Policy Guidance
(Opportunities & Threats)
Tecnology IFAS : Corporate Management
Input Data (Strength & Weakness) Review *2
Internal
Values
BFA : Internal Environment
Marketing Analysis
Financial
Operational BFA (WS)
Human Resource
Innovation

Feed Back
13
 THREE TYPES OF STRATEGY
by T.L. Wheelen (2006)

Overal direction toward growth & management of its businesses and

product lines.
Corporate Catagories: Stability, growth, retrenchment

Conduted at business unit or product level

Improvement of competitive position of a product or services in the
specific industry or market segement
Business Catagories: competitive, cooperative

Approach at functional area to achieve corporate and business

objectives & strategies by maximizing resource productivity.
It is concerned with developing and nurturing distinctive competence.
Functional