EMPLOYING STRATEGY IMPLEMENTATION LEVERS

EIGHT LEVERS OF STRATEGY IMPLEMENTATION

Strategy Implementation F-I-P Cycle Implementation: A Gap Why 8 Levers?

Structural Levers
Managerial Levers Levers Use at Different Stages Conclusion
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FORMULATION AND IMPLEMENTATION

Strategy formulation The central, integrated, externally oriented concept of how we will achieve our objectives
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Strategy implementation

Arenas Staging Vehicles Differentiators Economic logic

Implementation Levers & Strategic Leadership

THREE QUESTIONS

When a firm is experiencing difficulties, its good to ask three questions

Is its strategy flawed?

Is the implementation of its strategy flawed? Are both strategy and Implntation flawed?

KNOWING VS. DOING GAP

Percent of large companies who

regarded themselves as good or excellent at generating new knowledge

46%

reported having launched new products based on the application of new knowledge

14%

(of the same firms)

Source: J. Pfeiffer and R.I. Sutton, The Knowing Doing Gap (Boston: Harvard Business School Press, 2000)

STRATEGY IMPLEMENTATION

Strategy Implementation is the translation of chosen strategy into organizational action so as to achieve strategic goals and objectives. Broader aspect of Strategy Implementation is all about Developing and Utilizing its important parameters viz;

Organization Structure Control Systems Culture

Strategy Formulation

Strategy Implementation

Performance

F-I-P CYCLE
Performance Strategy implementation shapes the next round of strategy formulation. Implementation Formulation

Poor Performance Poor Formulation Good Implementation Poor Performance Good Formulation Poor Implementation
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CAUSES OF THE KNOWING DOING GAP: INTERNAL & EXTERNAL RESISTANCE

When Compaq tried to copy Dells direct-sales model, it met stiff resistance from Comp USA, Best Buy, and other retailers
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External

SAP attempted to launch consulting service to supplement its core technology offering but failed to align with SAP culture

Internal Business units Culture

IMPLEMENTATION A GAP

Research of Management Strategists: Mankins & Steele (2005)

Companies realize only 63% of performance promised by their strategies. Poor implementation is to the fact that 95% of employees do not understand companys strategy.

Kaplan & Norton (2005)

Johnson (2004)

66% of the corporate strategy is never implemented.

Top-down or Laissez-Fair Senior Management Style Unclear Strategy and conflicting priorities. An Ineffective senior management team. Poor vertical communication. Poor coordination across functions, businesses or borders. Inadequate down-the-line leadership skills and development

Beer & Eisenstat (2000) Six Silent Killers

CEO CHALLENGE IMPLEMENT

[T]he strategist will not be able to nail down every action step when the strategy is first crafted, nor should this even be attempted. However, he or she must have the ability to look ahead at the major implementation obstacles and ask, Is this strategy workable? Can I make it happen?

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Source: Hambrick and Cannella, Strategy Implementation as Substance and Selling

KEY FACETS OF STRATEGIC IMPLEMENTATION

Organization structure
Systems and processes People and rewards Implementation Levers
Intended Strategy
Realized & Emergent Strategies
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Strategic Leadership

Lever and resource

allocation decisions Communicating the strategy to stakeholders

ORGANIZATIONAL STRUCTURE ALIGNED TO STRATEGY

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Organizational Structure
Insures Control Coordinates Information, Decisions, and activities

Strategy

STRUCTURAL LEVERS
Who, what and when of cross functional integration Actions

Installing strategic support systems

Policies

Programs

Establishing Strategy Suppo policies

Systems

Installing organizational learning and continuous improvement practices

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ACTIONS
FOSTERING CROSS FUNCTIONAL INTEGRATION AND COMPANY COLLABORATION.

Input and Collaboration of all the members at all the levels of strategy

Eg: Lack of support from pilots was one of the roadblocks to the cost cutting strategy of AI

Cross Functional Integration

Integration between the all the activities of the value chain Eg: At ICICI bank aggressive sales pitch is backed by streamlined operations.
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PROGRAMS

Organizational learning & continuous improvement must incorporate innovation into the implementation lever

Creation of Innovation Chain to include global partners in the innovation effort

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POLICIES
Institutionalizes
strategy-supportive practices & operating procedures thereby pushing daily activities in the direction of efficient strategy execution

Limits

independent action and discretionary decisions and behavior. Policy communicates what is expected, guides strategyrelated activities, and restricts unwanted variations

Aligns

actions & behaviors with strategy, thereby minimizing divergent decisions and conflict

Shape

character of work environment and translates corporate philosophy into how things are done, how people are treated, and what corporate beliefs and attitudes mean in everyday terms; determines the fit between corporate culture & strategy

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SYSTEMS: INSTALLING STRATEGIC SUPPORT

Cross-functional decision criteria gave better results then functionally anchored decision criteria
Enabled managers to quantify subjective interaction into more easily understood framework Provides timely access to both qualitative and quantitative data Estimate how much to invest, which business model to support and which capabilities are needed Concerns related to security/ privacy of data are issues related to implementation of IT system Development of a decision-support model to assist in making complicated cross functional issue easier to understand

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STRATEGIC LEADERSHIP COMMUNICATING WITH KEY STAKEHOLDERS

Convince top management of a new strategy (e.g., Intels shift to microprocessors) Upward Managers must sufficiently communicate in 4 directions Downward Win cooperation of external stakeholders including customers and distributors (e.g., Compaq failed to do this with retailers)

Win support of other units within the firm

Across

Outward

Enlist support of those who implement

Strategic Leadership 18

MANAGERIAL LEVERS
The exercising of strategic leadership

Interacting

The strategic shaping of corporate culture

Organizing

Allocating

Understanding when and where to allocate resources

Monitoring

Tying rewards to achievements

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INTERACTING

Strategic Leadership is a critical implementation lever for building a capable organization.

Direction Responsibilities under Strategic implementation Protection Orientation Motivation Managing Conflict
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INTERACTING.CONTD.

Five levels of Leadership hierarchy:-

Highly capable individuals

Contributing team member

Competent manager

Effective Leadership

Executive
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ALLOCATING

Allocation of Resources: Understanding when and where to allocate resources

Resources

Encompasses the use of major resources such as money, people and capabilities. In addition to financial resources; Physical capital Human capital Organizational capital

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MONITORING
Results of Strategy Performance

Reward

Achievement

Outcome

Two major probabilities of outcome

Favorable

Non Favorable

Ways of taking performance to next level

Monetary

Non Monetary

Corrective Actions

o Popular Technique: Tying reward to achievements is linking executive pay to organization's overall ROE . The lever suggests using multiple type of awards for motivating and encouraging employees E.g. Genpact has the system of awarding - Gold, Silver and Bronze Recognition Certificates to their employees along with the commensurate performance bonuses

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ORGANIZING

Organization Culture is a powerful strategic implementation tool for business Culture is a system of shared values and norms in an organization Culture

Internal (operational)

Engineering Culture (Core technology)

Executive Culture (A Model to follow)

Shaping of Organizational Culture requires:

Clarity Consistency Comprehensiveness

The Strategy formulation performance gap can only be removed if the organization culture is ready to adapt to higher standards and develop appropriate attitude and behaviour in the long run

USE OF LEVERS AT DIFFERENT STAGE

Entrepreneur needs to understand the impact of each of the levers and its strengths and weaknesses Early Stage An analytical tool to identify levers that might serve as barrier to companys long term success.

Entrepreneur knows the role and impact of each lever to overcompensate one lever weakness with another lever strength

Established Stage
successful implementation of well formulated and appropriate strategy for established firms to achieve overall corporate success

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CONCLUSION
Role : facilitated the formulation and implementation of strategies

Resistance :Unless weak lever were identified and overcome, it would constraint future strategy formulation

Relaxation : Use of all eight levers are not necessary , a clear understanding of each levers role and its impact on ability to suceed is necessary

Result : Strategy Implementation helps create future

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